Roda & Ors & Roda & Anor
[2013] FamCAFC 27
•11 March 2013
FAMILY COURT OF AUSTRALIA
| RODA AND ORS & RODA AND ANOR | [2013] FamCAFC 27 |
| FAMILY LAW ─ APPEAL AND CROSS-APPEAL ─ PROPERTY ─ Common intention to sever joint tenancy ─ Whether the trial Judge erred in rejecting the contentions of the husband and the father that the husband and the mother intended to sever the joint tenancy with respect to the property ─ Where the Court was not persuaded that the trial Judge erred in failing to find that the common intention of the husband and the mother was to acquire the property as tenants in common in equal shares ─ Where the Court was not persuaded that the evidence established, either as attorney under power in the case of the husband, or as agent in the case of the mother, that the father’s intentions should have been imputed to the husband or the mother ─ Challenge unsuccessful. FAMILY LAW ─ APPEAL AND CROSS-APPEAL ─ PROPERTY ─ Joint tenancy severed due to partnership ─ Where it was submitted that the property, having been “commercial land” acquired by the husband and the mother as a commercial investment, the husband and mother were presumed to hold the property on trust for themselves as tenants in common in equal shares ─ Where it was submitted that the presumption having arisen, and there being no evidence to rebut it, that the husband and the mother at all material times held the property as tenants in common in equal shares ─ Where the Court was not persuaded that the evidence before the trial Judge established that a partnership in the strict sense ever existed between the husband and the mother ─ Where the real issue was whether, in the absence of a permissible finding of a partnership in the strict sense between the husband and the mother, the presumption of an intention to acquire as tenants in common in equal shares applied in the circumstances of this case ─ Discussions of the principles arising from the authorities ─ Where the Court was persuaded that the facts in this case gave rise to the presumption of an intention to acquire the property as tenants in common in equal shares ─ Challenge successful. FAMILY LAW ─ APPEAL AND CROSS-APPEAL ─ PROPERTY ─ Agreement to sever joint tenancy ─ Whether the trial Judge erred in failing to find that the deed entered into by the husband and the mother in 1996 severed their joint tenancy of the property ─ Where it was submitted that the “logic” of the Court in Pfeiffle applied in the present circumstances, given the acknowledgement in the 1996 deed that the property was “owned by the above parties in equal shares” ─ Where the Court found that it was difficult to suggest an intention to preserve the right of the surviving joint tenant to acquire the whole of the property by survivorship upon the death of the other joint tenant in the face of such a clear defining of the beneficial interests of the registered proprietors of the property ─ Where the Court was satisfied that the 1996 agreement sufficiently evidenced the registered proprietors’ of the property’s intention to sever their joint tenancy ─ Challenge successful ─ Appeal and cross-appeal allowed. |
| Family Law Act 1975 (Cth) Part VIII Partnership Act 1958 (Vic) s 6 |
| Abela v Public Trustee [1983] 1 NSWLR 308 Allesch v Maunz (2000) 203 CLR 172 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Delehunt v Carmody (1986) 161 CLR 464 Federal Commissioner of Taxation v McDonald (1987) 15 FCR 172; (1987) 78 ALR 588 Fenato v Antonello [2006] NSWSC 76 Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549 Public Trustee v Pfeiffle [1991] 1 VR 19 Saleeba v Wilkie (2007) ANZ ConvR 664 Scott v Scott [2009] NSWSC 567 Sprott v Harper [2002] ANZ ConvR 54; (2000) Q ConvR 54-545; [2000] QCA 391 Stassinopoulos v Stassinopoulos [2011] VSC 647 Xenou v Katsaras (2002) 7 VR 335; (2003) V ConvR 54-670; [2002] VSC 515 |
| APPELLANTS: | X, Executor of the estate of the late K Roda S Roda |
| RESPONDENT: | Ms Roda |
| CROSS-APPELLANT: | Mr Roda |
| FILE NUMBER: | SYC | 2084 | of | 2007 |
| APPEAL NUMBER: | EA | 30 | of | 2011 |
| DATE DELIVERED: | 11 March 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Strickland and Ainslie-Wallace JJ |
| HEARING DATE: | 4 December 2012 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 February 2011 |
| LOWER COURT MNC: | [2011] FamCA 77 |
REPRESENTATION
| COUNSEL FOR THE APPELLANTS: | Dr Hardingham QC with Mr Allen |
| SOLICITOR FOR THE APPELLANTS: | Wisewould Mahony Lawyers |
| COUNSEL FOR THE RESPONDENT: | Dr Birch SC with Ms Bateman |
| SOLICITOR FOR THE RESPONDENT: | East Coast Family Lawyers |
| COUNSEL FOR THE CROSS-APPELLANT: | Mr Gersbach |
SOLICITOR FOR THE CROSS-APPELLANT: | Taperell Rutledge Lawyers |
Orders
The appeal be allowed.
The cross-appeal be allowed.
Orders 1 and 2 made on 21 February 2011 by Cohen J be set aside.
That it be declared that the Husband is the owner of a one half share of the land known as and located at G, Victoria, being the whole of the land in Certificate of Title Volume … Folio … (“G property”), as a tenant in common in equal shares with the Estate of Ms E Roda.
That the Husband and X as the Executor of the Estate of K Roda each do all acts and things necessary to cause the record of title to G property to be correctly recorded with Land Registry, Department of Sustainability and Environment in the State of Victoria.
The operation of the declarations made this day be stayed until 28 days of the date hereof, or the further order of the Court.
Liberty be reserved to any party to apply in relation to orders 4 and 5 hereof within 28 days.
Written submissions in support of any application for costs be filed and served within 28 days.
Written submissions in opposition to any application for costs be filed and served within 56 days.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Roda & Roda and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 30 of 2011
File Number: SYC 2084 of 2007
| X, Executor of the estate of the late K Roda Y Roda |
Appellants
And
| Ms Roda |
Respondent
And
| Mr Roda |
Cross-Appellant
REASONS FOR JUDGMENT
introduction
By Further Amended Notice of Appeal filed 27 September 2011 X, as executor of the estate of K Roda appealed against orders made by Cohen J on 21 February 2011 in proceedings for settlement of property between Ms Roda (“the wife”) and Mr Roda (“the husband”) with respect to property known as and situate at G (“G property”) in the State of Victoria, being the whole of the land contained in Certificate of Title ... , the registered proprietors as joint tenants of which were the husband, and his deceased mother, Ms E Roda.
K Roda, the father of the husband, and widower of Ms E Roda died subsequent to the date of the trial Judge’s judgment, and, by consent order made on 16 November 2012, his executor, X, was substituted as the appellant. Ms E Roda died in 2000.
Throughout these reasons, notwithstanding that each of K Roda and Ms E Roda are deceased, and with no disrespect to them intended, in the interests of clarity, we shall refer to them as “the father” and “the mother” respectively.
The husband filed a Notice of Cross-Appeal on 13 April 2011, seeking relief in the same terms as relief was sought by the father. The wife resisted the appeal and the cross-appeal. As was the case before the trial Judge, the mother’s estate has not been represented in the appeal.
The proceedings before the trial Judge on 14 September 2009 concerned whether, as the father and the husband asserted, notwithstanding that the husband and his mother were the registered proprietors of G property as joint tenants, they held the property as tenants in common in equal shares or, as the wife contended, the legal title reflected the equitable interests of the registered proprietors of G property.
Had the father and the husband been successful, the “property” of the husband for the purpose of the matrimonial cause between himself and the wife pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) would have been one half of the equity in G property. The mother having died, the whole of the equity in G property would have been the property of the husband by survivorship if, as transpired, the legal interest was held to reflect the equitable interest of the registered proprietors at the date of the mother’s death.
Sensibly, the determination of the extent of the husband’s equitable interest in G property was dealt with as a discreet issue prior to the determination of the matrimonial cause between the husband and the wife. No part of the appeal to this Court involves any challenge to the jurisdiction to thus determine the extent of the husband’s interest in G property.
The orders of the trial Judge of 21 February 2011 provided:
1. It is hereby declared that the husband as the registered joint tenant with [his mother], deceased, of real property at and known as [G], in the State of Victoria being the whole of the land contained in the Certificate of Title volume [...] pursuant to the Transfer of Land Act 1958 (Vic) holds such land by survivorship in trust for himself as to a one half interest as tenant in common and for the estate of [his mother], deceased, as to a one half interest as tenant in common pursuant to the deed executed by the husband on 19 August 2005 and entitled Nominee Trust Deed in Respect of Land marked Exhibit “F” a copy of which is annexed hereto.
2. It is hereby declared that he husband is not by any document agreement or deed he has executed or otherwise bound to sell his interest in the said land in the event that he wishes to sell that land to any specific person or for any predetermined price.
3. Costs are reserved to the judge who finally decides the s. 79 proceedings between the husband and the wife.
The father and the husband sought in this Court that the trial Judge’s orders be set aside, and that a declaration be made that the husband is the owner of a one half share of G property as tenant in common with the estate of the mother. A number of consequential orders were also sought. The wife sought to maintain the trial Judge’s orders.
background
Some background to the proceedings is hopefully instructive. As is not in doubt, although it has been submitted that certain critical conclusions based upon them were not reasonably open to the trial Judge, neither the appeal nor the cross-appeal, or the notice of contention filed on behalf of the wife ultimately involves challenges to findings of fact made by his Honour.
The husband and wife married in January 1999, and separated under the one roof in August 2006. Those dates have little significance for present purposes.
In 1995 the father owned a sales business in G. G property, which was a neighbouring property, came on the market for sale in 1995. The father caused G property to be purchased, without discussing the purchase with the husband. Well after the purchase had been completed, the husband learned that G property had been acquired in his and his mother’s names as joint tenants.
The purchase price of G property was $552,000. The sum of $300,000 of the purchase price was made available by way of a loan which the father arranged in the husband’s and his mother’s names. The balance of the purchase price was provided equally by funds withdrawn from bank accounts in the husband’s name which were administered by his father, as to one half, and, as to the other half, by funds provided by the father from accounts in his and/or his wife’s name/s.
On 10 February 1996 the husband signed an agreement with his mother which the father had drafted. In essence, the agreement recorded that if the husband or his mother were to sell his or her interest in G property, the interest would be offered for sale to the other party to the agreement for $275,000.
The husband’s mother died in the year 2000.
The trial Judge rejected the contention of the father and the husband that the agreement of 10 February 1996 severed the joint tenancy by which the husband and his mother held G property. The trial Judge also rejected the contention of the father and the husband that the husband and his mother severed the joint tenancy by mutual agreement. The trial Judge further rejected the contention of the husband that he and his mother had mutually treated their interests in G property as being a tenancy in common.
On 19 August 2005, the husband executed a document entitled “Nominee Trust Deed in Respect of Land” by which the husband declared that, at the time of becoming the registered proprietors of G property, it was the intention of himself and his mother that they become owners as tenants in common in equal shares of a half share each. The husband further declared that at all times he held G property as tenant in common in equal shares with the mother but that, if the joint tenancy had not been severed, he held one half of G property as tenant in common in trust for his late mother’s estate. As the submissions of Senior Counsel for the father and Counsel for the husband make clear, only if the joint tenancy with respect to G property remains, does the effect of the nominee trust deed assume significance.
The trial Judge concluded that, the joint tenancy having not been severed in any of the ways asserted by the father and the husband, the husband acquired the whole of G property by survivorship on the death of his mother in 2000, and could thus declare that he held a one half interest as tenant in common on trust for his late mother’s estate, albeit, in the matrimonial cause, that declaration could possibly be set aside.
the grounds of appeal
The “central contention” that immediately before the mother’s death, the husband and the mother were, in equity, tenants in common in equal shares of G property so that, on the mother’s death, her half interest in the property passed under her will as part of her estate, was articulated by Senior Counsel for the father via three grounds of appeal. The comprehensive, and cogent submissions of Senior Counsel for the wife, and Counsel for the husband engaged with the three challenges agitated on behalf of the father.
Common intention to sever joint tenancy
The first challenge advanced on behalf of the father, which finds expression in grounds 1 and 2 of the Further Amended Notice of Appeal, asserted that:
1. His Honour erred in failing to find in all the circumstances that the husband (“the husband”) and his mother, the late [Ms E Roda] (“the mother”), held the land known as and located at [G], Victoria, being the whole of the land described in Certificate of Title Volume [...] (“[G property]”), in equity as tenants in common in equal shares notwithstanding that their ownership was registered as a joint tenancy.
2. His Honour erred in failing to find that it was the common intention of the husband and mother at all times they should hold the land as tenants in common, and that, as a consequence of that common intention, any joint tenancy was severed ab initio.
Senior Counsel for the father submitted:
3. First, when the first appellant (“the father”) caused title to the land to be vested in the husband and the mother, he intended that title be vested in them as tenants in common in equal shares; due to a mistake, title was vested in the husband and the mother as joint tenants; the father’s intention should have been imputed to the husband and the mother so that, from the very beginning in 1995, it was their common intention that the land belonged to them as tenants in common in equal shares. Such a common intention would have brought about a severance of the legal joint tenancy in equity. ... (Original emphasis)
In support of his contentions, Senior Counsel for the father relied upon the decision of the Supreme Court of New South Wales in Scott v Scott [2009] NSWSC 567 (“Scott”) in which Ward J said:
61. Accordingly, absent proof of an agreement or conduct evincing a common intention to sever their joint tenancy, on the sale of the Soldiers Point property the joint interest of the deceased and Mrs Scott in the land would have been converted into a joint interest in the sale proceeds (see, for example, Re Allingham [1932] VLR 469 where the unilateral conduct of the husband in paying the whole of the deposit into a separate bank account did not sever the joint tenancy).
62. In Fenato v Antonello [2006] NSWSC 763, Campbell J considered the question whether in that case there had been effective severance of a joint tenancy (also in the context of a Family Provision Act application). There, his Honour considered that the execution of a severance document had amounted to an effective severance of the joint tenancy in equity, noting what was said by Rath J in Abela v Public Trustee:
(i.) Severance is effected by agreement to sever the joint tenancy;
(ii.) The agreement need not be specifically enforceable or even binding as a contract at law;
(iii.) Subsequent repudiation of the agreement does not affect its operation as severance
(iv.) Severance may be effected by conduct of the joint tenants not evidenced in an agreement to sever but showing a common intention that the joint tenancy shall be severed
63. In Abela, Rath J held that a consent order agreed between husband and wife, after inconclusive negotiations and applications for distribution of property, evidenced the parties’ agreement that they no longer intended the tenancy to operate as a joint one so that it automatically effected a severance whether or not that agreement was binding.
The decision of the Supreme Court of New South Wales in Abela v Public Trustee [1983] 1 NSWLR 308 (“Abela”) was also relied upon Senior Counsel for the father. In Abela, Rath J, at page 315, said:
There was a principle that “equity leans against joint tenancies” because the right of survivorship unduly favoured the person of longevity: cp Meagher, Gummow and Lehane, Equity (1975) par 325 at 69. The legislature has now “interposed”, as suggested by Sir William Page Wood (Conveyancing Act, 1919, s 26(1)), and the court should no longer be driven by “minute grounds” to hold a severance to have taken place. The joint tenancy in the present case was expressly created, as it frequently is in similar circumstances. In the case of husband and wife, joint tenancy, in favouring longevity, is usually achieving the object for which it was created; but once the matrimonial relationship has broken down the original purpose of the joint tenancy is at an end, and a common intention of severance may more readily be inferred from a course of conduct.
The conclusions as to severance of a joint tenancy by agreement and conduct that I draw from the authorities are as follows:
1.Severance is effected by an agreement to sever the joint tenancy.
2.The agreement need not be specifically enforceable or even binding as a contract at law.
3.Subsequent repudiation of the agreement does not affect its operation of severance.
4.Severance may also be effected by conduct of the joint tenants not evidencing an agreement to sever but showing a common intention that the joint tenancy shall be severed.
Senior Counsel for the father also relied upon the passage from the judgment of Campbell J in Fenato v Antonello [2006] NSWSC 763, to which Ward J referred (at paragraph 62) in Scott. We have set out that passage at paragraph 22 above.
In Public Trustee v Pfeiffle [1991] 1 VR 19 (“Pfeiffle”) to which Senior Counsel for the wife and Counsel for the husband referred extensively, and in a passage relied upon by Senior Counsel for the father, McGarvie J at pages 29-30 said:
Conscious that survivorship frequently operates unfairly, courts applying principles of equity have leant towards severance and have facilitated it by treating a mutual intention of the parties to sever as sufficient to effect severance in equity: Burgess v. Rawnsley [1975] Ch. 429. The mutual intention to sever may be an expressed intention (Calabrese v. Miuccio (No. 2) [1985] 1 Qd. R. 17, at p. 26 (underlying intention revealed by agreement)) or may be inferred from the conduct and dealings of the parties: Re Pozzi [1982] Qd. R. 499, at p. 501 and Burgess v. Rawnsley [1975] Ch. 429, at pp. 439, 440, 444, 446 and 447. The mutual intention to sever does not need to be expressed in an enforceable contract (Burgess v Rawnsley [1975] Ch. 429, at pp 439, 440, 444 and 446) or in any contract: Abela v. Public Trustee [1983] 1 N.S.W.L.R. 308, at pp. 313-15.
Senior Counsel for the father referred, accurately there is no doubt, to a number of findings of fact made by the trial Judge recording that:
·in 1990 the husband, who was going overseas, appointed the father his attorney under power “so he could continue to manage the husband’s financial affairs” (Judgment para. 4);
·between 1992 and 2000 the husband spent some time in Australia but much of his time overseas. “He left it to his father to attend to his financial affairs” (Judgment para.5);
·without the husband’s knowledge, in 1995 the father purchased the land in the names of the husband and the mother; of the purchase price of $552,000.00, $300,000.00 was raised from borrowings by the husband and the mother; the rest was raised, as to half, from the husband’s bank accounts as administered by the father; and, as to the other half, from funds belonging to the father and possibly the mother (Judgment para.6);
·the husband could not recollect signing any contract of sale in respect of the land but “believes his father may have signed it on his behalf as his attorney” (Judgment para.7);
·in 1996 “neither they [the husband and the mother] nor the husband’s father realised the husband and his mother were registered as joint tenants. There is no evidence that the husband or his mother gave any thought to the nature of their ownership” (Judgment para.10);
·“The husband’s father did not discover that the holding had been by way of joint tenancy until after the wife’s [i.e. the mother’s] death” (Judgment para.26);
·not long after 4 June 2005 “his father informed [the husband] that he had discovered the registration of the relevant property [i.e. the land] was in the husband’s name and his mother’s name as joint tenants rather than, as he had thought, tenants in common and that this was a mistake” (Judgment para.25).
Senior Counsel for the father referred to paragraphs 25 and 26 of the trial Judge’s reasons for judgment, in which his Honour recorded:
…there could be no severence [sic] of the jointure if the parties to that agreement had no appreciation that their ownership was by way of joint tenancy because they could have no intention to sever it.
It cannot be said that they gave any thought to the form of their ownership so they could not be regarded as severing the jointure by treating their ownership as a tenancy in common. They simply gave the relevant matters no thought. ...
It was submitted by Senior Counsel for the father that the trial Judge’s reasoning overlooked two matters of critical importance. They were that, although the husband and the mother may not have directed their minds to the title which they were acquiring or had acquired to G property, and may not have appreciated that they held the property as joint tenants, “their agent, the father, did give the relevant matters thought and believed that the ownership was by way of tenancy in common in equal shares”. It was thus submitted that the “agent’s belief should be imputed to the principals”.
The second matter, which the trial Judge’s reasons were submitted to have overlooked, was that, although the husband and the mother had not “turned their minds to the actual concept of severance”, they may nevertheless have “acted in such a manner as to require an inference of severance to be drawn”, without “knowing what a joint tenancy is or what severance is”.
In support of the second contention, there being no authority cited in support of the first contention, Senior Counsel for the father relied upon the following passage of the judgment of Ward J in Scott which recorded:
64.As to severance in equity by agreement, what is necessary is that the joint tenants agree that the property is thenceforth to be held as tenants in common, ie that the joint tenants’ interests are to be treated as distinct. Professor Butt notes that it is not necessary for such an agreement to be specifically enforceable, provided “it serves as an indication of a common intention to sever” (citing, for those propositions, among others Burgess v Rawnsley [1975] 2 Ch 449 and Magill v Magill (1993) NSW Conv R 55-663 at 59-795). (The fact that a binding agreement is not necessary to sever the joint tenancy is relevant in this case, where it is submitted for Mrs Scott that any agreement to divide up assets would not have been enforceable as a “financial agreement” under the Family Law Act 1975 (something I discuss later).) An understanding of the concept of joint tenancy is also not necessary. Professor Butt notes that:
Whether the joint tenants have turned their mind to the actual concept of severance is not important. What is required is that the parties have acted “in such a manner as to require an inference of severance to be drawn”, for co-owners may sever a joint tenancy without knowing what a “joint tenancy” is or what “severance” is. (Land Law para 1478, citing Sprott v Harper [2000] QCA 391).
On behalf of the father, reliance was also placed upon the decision of the Supreme Court of Queensland Court of Appeal in Sprott v Harper [2002] ANZ ConvR 54; (2000) Q ConvR 54-545; [2000] QCA 391 in which it was said:
8.The second contention on behalf of the appellant is that the tenancy cannot have been severed because the parties had not even turned their mind to that question. That again is irrelevant. A severance may occur under the first or third ways described by Page Wood VC independently of any intention to achieve such a specific result. The question is whether one or both of the parties have acted in such a manner as to require an inference of severance to be drawn. Owners may sever a joint tenancy without knowing what a “joint tenancy” or “severance” is. The real question is whether the parties have acted in a way that the law regards as inconsistent with the maintenance of the joint tenancy.
It was thus submitted on behalf of the father that:
7.In the circumstances, the father’s intention that the husband and the wife hold as tenants in common should be imputed to the husband and the wife who would then be seen to share a common intention that the joint tenancy be severed. …
Albeit articulated in somewhat different terms, Counsel for the husband’s Summary of Argument also agitated the substance of the complaints articulated by Senior Counsel for the father. Our failure to specifically refer to Counsel for the husband’s submissions in detail ought not be thought to imply criticism of them, or that we have not considered them.
In his similarly comprehensive and cogent written submissions, Senior Counsel for the wife disputed that the trial Judge erred in rejecting the contentions of the husband and the father that the husband and the mother intended to sever the joint tenancy with respect to G property. It was further submitted that his Honour could not have accepted those contentions in the absence of evidence of “a significant number of essential matters that needed to be proven if the imputed common intention was to be established”.
Having asserted the matters which needed to be proved in order to establish a common intention to sever the joint tenancy (par 8), Senior Counsel for the wife submitted that the evidence before the trial Judge, or its absence, constituted an insurmountable hurdle to acceptance of the contentions of the husband and the father. Those evidentiary matters were:
·The transfer to the husband and mother as joint tenants was executed by each of them personally, not by Power of Attorney or any other means or agency.
·The transfer was lodged by Toth & Company, a firm of solicitors in Victoria. Mr Robert Toth of Wisewould Mahony Lawyers, is or has been the solicitor for the appellants in the present proceedings.
·There is no evidence from any party of any conversations with the Late [Ms E Roda] regarding her execution of the transfer or in respect of her participation in the transaction.
·There is evidence of the husband that he believes the contract for purchase may have been executed by his father under Power of Attorney. He gives no evidence regarding the execution of the transfer or circumstances surrounding the execution of the transfer.
·The assertions of the father of a so-called mistake never rise above that of an assertion.
·No evidence was given by the solicitor from Toth & Company concerning the execution of the transfer, the advice, if any, that was given to the husband and mother at the time of execution of the transfer, or any evidence to suggest that the solicitor was not available as a witness.
·The failure to call the solicitor was commented upon by counsel for the respondent at the hearing but no application was made to re-open and adduce any evidence from the solicitor.
We have earlier referred to the trial Judge’s references (par/s 25 and 26) to the absence of “appreciation” by the husband and the mother that they had acquired and held G property as joint tenants. His Honour had earlier (at par 10) found that “[t]here is no evidence that the husband or his mother gave any thought to the nature of their ownership” at the time they acquired G property or, at any time prior to 2005, when the nominee trust deed was executed by the husband.
The trial Judge’s findings of fact, which have not been challenged in the appeal or cross-appeal, constitutes a significant impediment to acceptance of the contentions of Senior Counsel for the father, and Counsel for the husband. As Senior Counsel for the wife submitted, there was no evidence before the trial Judge establishing that the intentions of his attorney under power reflected the intentions of the husband in relation to the acquisition of title to G property. Nor was there any evidentiary foundation for imputing the intentions of the father acting under power of attorney to the husband. There was no evidence establishing that, assuming that the father had acted as agent for his wife, the mother’s intentions and those of the father coincided. Nor was there any evidence providing a foundation for imputing such intention to the mother.
In circumstances where the registered proprietors gave no thought to the manner in which they would acquire title to G property, and in the absence of any other evidentiary foundation, it is difficult in logic to see how the intentions of their agent could be imputed to them. Doing so becomes even more difficult when regard is had to the matters revealed, or perhaps more significantly, not revealed, by the evidence to which Senior Counsel for the wife referred.
We are not persuaded that the trial Judge erred in failing to find that the common intention of the husband and the mother was to acquire G property as tenants in common in equal shares. As is not in doubt, there was no actual intention to do so on the part of the husband or the mother. We are not persuaded that the evidence established, either as attorney under power in the case of the husband, or as agent in the case of the mother, that the father’s intentions should have been imputed to the husband or the mother.
The trial Judge did not in our view err in rejecting the “common intention” argument advanced before him in relation to the title to G property in reliance upon the father’s intentions.
Partnership argument
The second challenge agitated on behalf of the father, and supported by the husband was that G property, having been “commercial land” acquired by the husband and the mother as a commercial investment, the husband and mother were presumed to hold the property on trust for themselves as tenants in common in equal shares. This challenge is articulated in ground 3 of the Further Amended Notice of Appeal which provided:
Further and alternatively, His Honour erred in failing to find that, by reason of the partnership that existed between the husband and mother, alternatively by reason of a shared intention between the husband and mother to use the land for joint commercial purposes, the parties were presumed in equity to hold the land as tenants in common ab initio.
In support of this contention, Senior Counsel for the father referred the Court to a number of authorities, and to the unchallenged findings of fact made by the trial Judge, which, it was submitted, attracted the application of the principles emerging from the authorities.
The presumption having arisen, and there being no evidence to rebut it, it was thus submitted that the husband and the mother at all material times held G property as tenants in common in equal shares. During the course of oral submissions, it was asserted, without apparent controversy, that the time when G property was acquired was the time at which the presumption relied upon by Senior Counsel for the father arose, or failed to arise. The logic of that proposition is difficult to resist.
Before considering the authorities to which Senior Counsel for the father referred the Court, it is perhaps preferable to refer to the relevant unchallenged findings of fact, made by the trial Judge.
Senior Counsel for the father referred to the trial Judge’s finding that G property was “commercial land” (par 1), and that the original vendors of G property had remained in occupation of the land, running a business there after the property was acquired by the husband and the mother. The trial Judge found:
15.The former owners of the land continued in occupation. Their rent was used to meet the loan repayments and to pay rates and taxes. The rent was received by the husband and his mother in an equal partnership business operated by the husband’s father.
No doubt to eliminate the risk that the absence of challenge to findings of fact might be extended to the trial Judge’s conclusions with respect to partnership, the wife’s Notice of Contention asserted:
2.Further and alternatively, there was no evidence before His Honour to establish that the holding of the property in issue between the respondent husband and his late mother as co-owners was pursuant to a partnership between them.
As was acknowledged by Senior Counsel for the father and the wife, and Counsel for the husband, the reference to “an equal partnership” was necessarily a conclusion based upon the facts as found by the trial Judge. The absence of challenge to findings of fact in the appeal, or the cross-appeal, or in the wife’s Notice of Contention, does not extend to any conclusion reached by the trial Judge in reliance upon such findings with respect to a “partnership” between the husband and the mother.
Senior Counsel for the father also relied upon the undisturbed findings of the trial Judge that:
16.The husband’s share of the rent which remained after the loan repayments had been made, together with the interest the husband was entitled to from the loan he made to his sister, were put into the partnership as the husband’s share of its expenses when needed. At times, the partnership did not have the funds for capital outgoings and the husband’s contribution was lent to him by his father who kept records of the husband’s indebtedness to him.
Reliance was also placed upon the trial Judge’s subsequent reference (par 23) to “partnership”. His Honour there referred to: “the partnership between the husband and his mother” and, later in the same paragraph, to an “assumption” that “the partnership survived the death of one of the partners and that there was land on which it was based which could be operated in partnership because it was owned by the purported partners”.
Largely for reasons submitted by Senior Counsel for the wife, and having regard to the terms of s 6 of the Partnership Act 1958 (Vic), upon which Senior Counsel for the wife also relied, we are not persuaded that the evidence before the trial Judge established that a partnership in the strict sense ever existed between the husband and the mother. Nor are we persuaded that the trial Judge’s use of the term “partnership” implied that his Honour so concluded.
As the submissions of Senior Counsel for the father and the wife clearly acknowledged, the real issue is whether, in the absence of a permissible finding of a partnership in the strict sense between the husband and the mother, the presumption of an intention to acquire as tenants in common in equal shares applied in the circumstances of this case. It is not in doubt that the inability to find a “partnership” in the strict sense did not preclude the operation of the presumption.
Senior Counsel for the father relied upon the decision of the Privy Council in Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549 (“Malayan Credit”) at 560-1, where Lord Brightman observed:
... where premises are held by two persons as joint tenants at law for their several business purposes, it is improbable that they would intend to hold as joint tenants in equity. ...
...
... the lease was clearly taken to serve the separate commercial interests of the defendant and the plaintiff. ...
As did Senior Counsel for the wife, Senior Counsel for the father also relied on the judgment of Mandie J (as his Honour then was) in Xenou v Katsaras (2002) 7 VR 335 at 336 (“Xenou”), in which his Honour said:
Where partners acquired property, they were presumed to hold it as beneficial tenants in common, the right of survivorship having no place among merchants. A joint business venture or undertaking of a more informal kind lacking the system and continuity or pursuit of profit of a business would still give rise to equity favouring a tenancy in common of the beneficial interest.
Senior Counsel for the father also relied upon the judgment of Gibbs CJ in Delehunt v Carmody (1986) 161 CLR 464 (“Delehunt”) at 471 where his Honour said:
... For completeness it should be added that even if the contributions are equal, equity will hold that there is a tenancy in common where two or more persons advance money and a mortgage is made to them jointly, or where the persons to whom the property is conveyed acquire it as partners or as participants in a joint undertaking; these are not rigid categories: Malayan Credit Ltd. v. Jack Chia-MPH Ltd.. The decisions usually cited as authority for the proposition that purchasers who have contributed equally to the purchase price hold the equitable as well as the legal estate as joint tenants were all cases in which the legal estate was conveyed to the purchasers: see Lake v. Gibson; affirmed sub. nom. Lake v. Craddock; Aveling v. Knipe; Robinson v. Preston; Palmer v. Rich. Writers of high authority have explained this result by saying that where the purchasers had contributed equally there was no reason why equity should not follow the law. ... (Footnotes omitted)
It was thus submitted by Senior Counsel for the father that:
12.Whether the relation between the husband and the mother in respect of the land should be characterised as a partnership or as a joint business venture or as one between persons pursuing their several business purposes, the presumption of tenancy in common in equal shares applies.
Senior Counsel for the wife submitted that the “contrast” between the facts of the present case and Xenou were “stark”. In Xenou, Mandie J recorded:
71.In the present case, the evidence shows a pattern of business conduct by Ms Xenou and Pavlidis over a lengthy period of time involving the purchase and sale of real estate, both commercial and residential, for the purpose not only of deriving rental income, but of building up their assets by way of capital gain. I am satisfied that the acquisition of 50 Beverley Street was a continuation of that conduct. Irrespective of their close personal relationship, their property dealings were part of a continuing activity for their mutual commercial interest. In my opinion, the acquisition of 50 Beverley Street, in so serving their commercial interests, falls within the broad “partnership” category which will be treated in equity as giving rise to a tenancy in common. ...
On behalf of the wife it was submitted, correctly there is no doubt, that:
…there is no evidence at all of any statements by the mother as to her purposes or intentions in acquiring an interest in the property. The husband gives evidence regarding the acquisition of the property in his affidavit. Nothing in that evidence suggests that the relationship between the husband and his mother was intended to be a commercial relationship, or that it would have been contrary to the intentions of the mother and the husband that the husband should enjoy the benefit of a right of survivorship.
Ultimately, it was submitted on behalf of the wife that:
…the appellant’s case rests upon nothing more than the fact that the jointly held asset was an income producing asset. If the matters pointed to by the appellant were sufficient to invoke the equitable rule, it would be tantamount to finding that in regard to any jointly held income producing asset, no matter what the relationship of the parties, or the circumstances of acquisition, there is a presumption of an equitable tenancy in common. There is no authority for such a broad proposition.
As Senior Counsel for the wife submitted, although the issue was agitated before him, and the trial Judge, in the passages to which we have referred, used the term “partnership”, his Honour did not “advert to the rules regarding the trust implied by equity” in circumstances involving co-ownership of realty in partnership. Senior Counsel for the wife submitted that: “it was not a partnership in any proper sense of the term, and not one such as to bring into play the equitable rules governing the holding of partnership property” (see Federal Commissioner of Taxation v McDonald (1987) 15 FCR 172; (1987) 78 ALR 588).
As the submissions of Senior Counsel for the father and the wife confirm, the principles emerging from the authorities relevant to this issue are not in doubt. Ultimately, as those submissions also acknowledge, the issue is determined by reference to the trial Judge’s findings of fact. By reference to the evidence in relation to the nature of the G property premises, and the use made of it, for at least four years after its acquisition, and the asserted absence of any evidence establishing that the premises were acquired other than for business purposes, it was submitted on behalf of the father that the presumption applied. Senior Counsel for the wife submitted that the “merest tinge of commerciality” can enliven the presumption surrounding the acquisition of G property, but that the evidence in this case did not constitute such “tinge”.
The facts of the authorities to which we have been referred are instructive for present purposes. We have earlier referred to the facts of Xenou upon which Senior Counsel for the wife placed significant reliance. The facts of Malayan Credit (at 549-50) were that:
The defendant was the tenant of the seventh floor of a building, which it occupied for its business purposes. The defendant and the plaintiff agreed to share the premises and that a lease should be granted to them both. The area to be occupied by each was specifically calculated, and they agreed to the rent and service charge being apportioned in accordance with the areas they occupied. The plaintiff went into occupation of 2,306 square feet leaving the defendant with 3,614 square feet. Prior to a lease being granted to them the defendant invoiced the plaintiff in the same proportion for its share of the deposit payable to the landlord as security for due performance of their obligations under the lease and refundable on termination of the lease. The landlord executed a lease of the seventh floor and car park spaces to the plaintiff and defendant as joint tenants at law, and they took the lease to serve their separate commercial interests. They paid the stamp duty and survey fees in the same unequal shares, and they continued to pay the rent and service charges in the agreed proportions. A dispute arose between them over the areas of occupation, and the plaintiff instituted proceedings in the High Court of Singapore seeking an order for the sale of the leasehold premises and equal division of the net proceeds of sale, or alternatively equal partition. The judge held that the plaintiff and defendant were tenants in common in equity in unequal shares and dismissed the action. The Court of Appeal of Singapore allowed the plaintiff’s appeal and ordered a sale and equal division of the net proceeds, holding that on severance of the joint tenancy the tenants became tenants in common in equity in equal shares.
The Judicial Committee (at 550) concluded that in allowing the appeal: -
... the situations in which in the absence of express agreement equity could presume joint tenants at law to be tenants in common in equity of the beneficial interest were not limited to a purchase in unequal shares, a loan on mortgage advanced unequally or partnership property but included lessees taking a lease of premises for their own separate business purposes; that it could be inferred from all the circumstances that since the commencement of the lease the plaintiff and defendant held the beneficial interest as tenants in common in equity in the unequal shares of 3,614 to the defendant and 2,306 to the plaintiff, and that, therefore, the order for sale would be varied so as to provide that the net proceeds of sale should be divided according to those unequal shares (post, pp. 560E-F, 561A-D, E-F, 562A).Decision of the Court of Appeal of Singapore varied.
The facts of Delehunt (at 465-6) were that:
Francis Patrick Carmody married Heather May Carmody in 1935. They separated in 1939 and did not thereafter live together. From 1949 until his death in 1980 Mr. Carmody lived in a rented property at 49 Trafalgar Street, Enmore, in New South Wales with Ethel Grace Delehunt as man and wife. Mr. Carmody purchased the property in 1956 and it was transferred into his name. The price was paid by Mr. Carmody and Miss Delehunt in equal shares, on the basis of an oral agreement that they would own the property in equal shares and that it would in due course be put in the names of both. Mr. Carmody died intestate, letters of administration of his estate were granted to Mrs. Carmody, and the property was transmitted to her as registered proprietor. On Mrs. Carmody’s demand that Miss Delehunt vacate the property, the latter entered a caveat claiming an estate or interest as beneficial owner of the land pursuant to a trust. Mrs. Carmody commenced proceedings in the Supreme Court of New South Wales to have the caveat removed, and by a cross-claim Miss Delehunt claimed a declaration that Mrs. Carmody held the land upon trust for her absolutely. Wootten J. made that declaration upon the cross-claim. The Court of Appeal (Hutley, Glass and Priestley JJ.A.) allowed Mrs. Carmody’s appeal, and held that before his death Mr. Carmody had held the land on trust for himself and Miss Delehunt as tenants in common in equal shares. The Court so held because s. 26 of the Conveyancing Act 1919 (N.S.W.) had removed the basis for the presumption formerly made in equity that if two people advance the purchase money in equal shares they intend to be joint tenants of the land purchased. Special leave to appeal to the High Court was granted to Miss Delehunt, limited to the ground “that the Court of Appeal erred in holding that s. 26 of the Conveyancing Act displaced the equitable presumption that when two persons advance equally the purchase moneys for a property they hold as equitable joint tenants”.
Senior Counsel for the father also relied upon the decision of the Supreme Court of Victoria in Stassinopoulos v Stassinopoulos [2011] VSC 647 (“Stassinopoulos”), which followed the decision in Xenou. Vickery J discussed the legal principles governing partnership agreements and recorded:
20. Where property is conveyed to two or more persons who are named as transferees without further specification as to whether they are to hold the title as joint tenants or tenants in common, they are deemed by operation of s 33(4) of the Transfer of Land Act 1958 (Vic) to hold the legal estate as joint tenants. However, s 33(4) of the Act does not preclude the operation of equity. It follows that, irrespective of the position on the certificate of title, in certain circumstances, equity may intervene to impose a tenancy in common.
21. Where legal title to property is conveyed to one or more persons an equitable presumption of a tenancy in common arises. The rationale for the presumption against a joint tenancy is described in Snell’s Equity, where the maxim “Equality is equity” is explained:
The maxim [“equality is equity”] has long been illustrated by equity’s dislike of a joint tenancy. On the death of a joint tenant, the whole estate belongs to the survivor, and the representatives of the deceased take nothing. There is here no equality, except, perhaps, an equality of chance. Equity, therefore, leans in favour of a tenancy in common ... the presumption arises in three main classes of case to which however it is not restricted ... Thus a lease to two persons as joint tenants for their several business purposes will be held by them as tenants in common in equity in shares proportional to the benefits each enjoyed. So also where land is vested in two persons jointly the usual entry on the registrar restricting a disposition by one joint proprietor without an order of the court or the Land Registrar is a pointer towards the conclusion that they intended to hold the property in equity as tenants in common. [Footnotes omitted]
22. In equity, even slight circumstances are enough to indicate the parties did not intend to hold property as joint tenants. As stated by Gibbs CJ in Delehunt v Carmody:
... slight circumstances would have been enough to indicate that it was intended that there should not be a joint tenancy. Equity had a dislike for joint tenancies, because their effect was to make the ultimate ownership of the property depend on the chance of survivorship, and, in the words of Snell’s Principles of Equity, 28th ed (1982), at p.37: ‘There is here no equality except, perhaps, an equality of chance.’
23. Reference is also made to the observations of Mandie J in Xenou v Katsaras where his Honour stated:
Due to equity’s dislike of joint tenancy, slight circumstances may be sufficient to give rise to a presumption of a tenancy in common. Even where contributions are equal (in which case, equity will prima facie follow the law), equity will hold that there is a tenancy in common where the persons to whom the property is conveyed acquire it as partners or as participants in a joint undertaking; these are not rigid categories. [Footnotes omitted]
24. Prima facie, the provision of purchase money in equal shares is consistent with an intention to hold property as joint tenants. However, even if the parties provide purchase money in equal shares, equity will presume the parties intended to hold the beneficial interest as tenants in common in circumstances where:
... a mortgage is made to them jointly, or where the persons to whom the property is conveyed acquire it as partners or as participants in a joint undertaking; these are not rigid categories.
25. The application of the equitable presumption is not confined to formal business structures. As observed by Mandie J in Xenou v Katsaras:
... The right of survivorship has no place among merchants. A joint business venture or undertaking ‘of a more informal kind lacking the system and continuity or pursuit of profit of a business would still give rise to equities leaning towards a tenancy in common of the beneficial interest’.
26. Further, as observed by Hargrave J in Sacks v Klein:
The equitable presumption may be rebutted by evidence of a common intention by the co-owners to acquire the property as joint tenants. The common intention must be actual and not presumed. If there is ambiguity as to the existence of a common intention: “ ... the Court very properly leans to the construction which creates a tenancy in common in preference to a joint tenancy. [Footnotes omitted]
27. His Honour further observed in Sacks v Klein:
If the parties describe their interests in words which suggest distinct shares are to be held, their words prevent the creation of a joint tenancy. In “Robertson v Frazer”, Lord Hatherley LC stated that the evidentiary threshold to establish such a division is easily met:
... anything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy and to create a tenancy in common. [Footnotes omitted]
28. Thus, as stated in Megarry, The Law of Real Property: “[t]he mere fact that the legal title to the property is conveyed ‘to A and B jointly’ does not rebut the equitable presumption of a tenancy in common because it is silent as to their beneficial interest”.
29. In relation to the position of property under a partnership is governed by s 24 of the Partnership Act 1958. In particular, s 24(2) provides:
The legal estate or interest in any land which belongs to the partnership shall devolve according to the nature and tenure thereof and the general rules of law thereto applicable but in trust so far as necessary for the persons beneficially interested in the land under this section.
30. The operation of this provision is informed by the observation of Windeyer J in Spence v Federal Commissioner of Taxation where it was said in relation to similar provisions in the Western Australian legislation:
... in equity[;] partners who hold as joint tenants in law hold beneficially as tenants in common. That is an old rule. It is more exactly stated today in terms of the Partnership Acts - the relevant provisions are ss. 30 and 32 in the Western Australian Act: the legal estate devolves according to its nature and tenure but in trust so far as necessary for the persons beneficially interested; and as between partners land which is partnership property is to be treated as personal estate.
31. It is further informed by operation of the maxim of equity – “ius accrescendi inter mercatores locum non habet” (the right of survivorship has no place among merchants). Thus where partners acquire property, they are presumed to hold it as beneficial tenants in common. (Footnotes omitted)
As the extensive references to the judgment of Vickery J in Stassinopoulos recorded above confirm, the findings of fact in this case provide support for the contentions on behalf of each party. The evidence does not begin to establish a relationship between “merchants” to have ever existed between the husband and the mother. Though not expressed in such terms by his learned Senior Counsel, the strongest support for the father’s, and the husband’s, contentions is provided by equity’s “dislike of joint tenancy”, and, as a consequence, the need for only “slight circumstances” to be demonstrated in order to enliven the presumption against joint tenancy. It is tempting to conclude that the “merest tinge of commerciality” suggested by Senior Counsel for the wife would constitute “slight circumstances”, thereby enlivening the presumption.
On balance, and the balance is fine, we are persuaded that the presumption in favour of a tenancy in common arose in this case. Whatever the exact nature of their relationship, which cannot now be conclusively determined, the mother and the husband acquired G property as “participants in a joint undertaking”. No evidence to which we have been referred precludes so finding. Nor does any evidence to which we have been referred establish that the presumption which thus arose, was rebutted. We cannot accept that our conclusion has the ramifications asserted by Senior Counsel for the wife, although we do accept that there would be few instances in which the acquisition of commercial premises in jointure by the parties who are not at the time cohabitating, would not give rise to the presumption. We perceive there to be no inconsistency between such outcomes and the principles which emerge from the authorities.
For the reasons we have articulated, and without suggesting that the issue is without uncertainty, we are persuaded that the facts in this case gave rise to the presumption of an intention to acquire G property as tenants in common in equal shares.
Agreement to sever joint tenancy
The third challenge advanced on behalf of the father and the husband is that the trial Judge erred in failing to find that the deed entered into by the husband and the mother on 10 February 1996 severed their joint tenancy of G property. That challenge was articulated in ground 4 of the Further Amended Notice of Appeal which provided:
Further and alternatively, if the registration of the husband and the mother as joint propitiators resulted in them owning [G property] as joint tenants ab initio, His Honour erred in failing to find that the agreement between the husband and the mother dated 10 February 1996 severed the joint tenancy.
To better appreciate the rival contentions with respect to this topic, it is appropriate to record the operative provisions of the relevant deed. They provided:
This agreement relates to the property known as [G property] in the State of Victoria, owned by the above parties in equal shares.
In the event that either party wishes to sell, transfer, or otherwise dispose of their interest in the aforementioned property, each party undertakes to sell their interest in the said property to the other party for the amount equal to their original investment, namely TWO HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS ($275,000.00).
The crux of the submission of Senior Counsel for the father in support of this challenge was:
14.When the husband and the mother entered into the 1996 deed of agreement, they acknowledged that they owned the land “in equal shares”. But such tenure (i.e. in equal shares) is inconsistent with joint tenancy and consistent only with tenancy in common. Thus, by the 1996 deed of agreement, the husband and the [mother] severed the joint tenancy (insofar as it then existed) by acknowledging a state of affairs that could only have been consistent with a tenancy in common. See Public Trustee v Pfeiffle [1991] 1 VR 19 at pp.23, 31, 35, 42.
Senior Counsel for the father and the wife relied, albeit somewhat differently, upon the decision of the Court of Appeal in the Supreme Court of Victoria in Pfeiffle. In Pfeiffle, the registered proprietors as joint tenants of realty agreed, inter alia that:
1.The parties hereto hereby acknowledge and agree that each of them the husband and the wife are entitled both legally and equitably to a one half interest in each of the Vermont South and St. Kilda properties. [at page 20]
Senior Counsel for the father relied upon the judgment of Kaye J, at page 23 with whom on the point McGarvie J agreed, that:
… by cl.1 they agreed that they were each entitled both legally and equitably to a one half interest in each property. Thus by cl.1 the parties agreed that the title of each of them was one half of the properties, thereby destroying the unity of interest essential for the continuance of their joint tenancy. ...
On behalf of the father, reliance was also placed upon the judgment of Ormiston J, at page 35, in which his Honour said:
I am satisfied that this was their intention [i.e. to hold as tenants in common] not merely by looking at the whole of the terms of the agreement, but essentially because in cl. 1 they expressed those interests to be several interests of a kind consistent only with a tenancy in common. It was sufficient for them to agree that “each” was entitled to a “one half interest” in the two properties. … By so agreeing to deal with half shares, or moieties, of the properties they denied the unities which are essential to the creation or preservation of a joint tenancy in either property.
His Honour, at page 42, added:
The power to dispose of an aliquot share, which inheres in the interest of a joint tenant, cannot be treated as equivalent in effect to the right to a half or equal share in property held by way of a joint tenancy. As Preston stated and Dixon J. confirmed, there is no divided interest, moiety or otherwise, in property so held “for the purpose of tenure or survivorship”. As long as joint tenancy continues, each joint tenant cannot properly be described as holding a moiety or half (or other) share or interest in the property, because the right of survivorship is essentially inconsistent with any division, unless and until one tenant chooses to alienate or suffer a forfeiture of his interest and thereby sever the joint tenancy. Although the logic lying behind the development of such an estate bears many traces of “scholasticism”, as Dixon J. observed, at p.330, not only is it inaccurate to describe the interest of a joint tenant as a moiety or half (or other) share or interest, but it is misleading to do so because, as soon as the right to a half share is asserted by alienation etc., then the former joint tenancy is determined by severance.
It was accordingly submitted on behalf of the father that the “logic” of the Court in Pfeiffle applied in the present circumstances, given the acknowledgement in the 1996 deed that G property was “owned by the above parties in equal shares”.
On behalf of the father, it was further submitted:
17. As indicated in paragraph 6 above, it is not the point that the parties did not turn their minds to severance or did not know about the law of severance of joint tenancies or assumed a tenancy in common. What is critical is that they acknowledged a state of affairs as between themselves which, viewed objectively, was inconsistent with the continuance of a joint tenancy in respect of the land. The learned Judge’s reasoning to the contrary in Judgment para.10 is incorrect.
In oral submissions, Senior Counsel for the father submitted that the parties had, by their 1996 agreement, “defined their own interests”, and “bound their particular interests in certain events and circumstances” and had, by the terms of the agreement, acted inconsistently with the continuance of a joint tenancy.
Senior Counsel for the wife submitted that:
24. … in the construction of any agreement, while particular provisions may be important even pivotal, their meaning is ultimately to be determined from their context in the agreement overall, and the circumstances in which the agreement was made [...].
The facts of Pfeiffle were submitted by Senior Counsel for the wife to differ materially from those in the present circumstances. It was submitted by Senior Counsel for the wife in that regard that:
26. …
·Firstly, many of the cases referred to by Ormiston J, as is apparent from His Honour’s summary, were matters in which the words under question were the dispositive terms by which a gift or disposition took place in which it was necessary to determine as a matter of construction, whether the disposition was to the recipients as joint tenants or tenants in common.
·The present case concerns a somewhat different question, namely, whether on the assumption that there has been the creation of a legal and equitable joint tenancy initially, an agreement between the parties shows a shared intention to sever the joint proprietorship.
·While authorities on the prior use of terms and their legal affect will be of assistance, and this will especially be in so in regard to instruments which have a dispositive affect such as a will, the meaning of any terms in [sic] a inter vivos agreement will always be governed ultimately by their role determined within the context of the agreement as a whole.
Senior Counsel for the wife referred to the judgment of Chesterman J in Saleeba v Wilkie (2007) ANZ ConvR 664 in which his Honour said:
19. There is a discernable trend in Australian authorities that an agreement between joint owners to sell their property and divide the proceeds, whether equally or unequally, gives rise to an inference that there was a further agreement that the joint tenancy be severed immediately on the making of the agreement to sell. The cases, of course, turn upon their own facts and each is concerned with its particular circumstances but there is, I think, a general inclination, demonstrated by the decisions, to reach the result I mentioned. The result may be different if the terms of a particular agreement, or the circumstances in which it was made, demonstrate that the inference should not be drawn.
Reliance was also placed upon Chesterman J’s further observations:
25. What seems to underlie the reasoning in these cases is that the right of survivorship is an essential incident of joint ownership. The sale of their jointly owned property and a division of the proceeds destroys the possibility of survivorship. After the sale none of the co-owners can succeed to the interests of any others who might die. Accordingly an intention to sell has implicit within it an intention to destroy the co-owners’ right to survivorship which is essential to joint ownership. The agreement to sell is a manifestation of the intention to bring the joint tenancy to an end.
In oral submissions, Senior Counsel for the wife submitted that the terms of the 1996 agreement were not inconsistent with the continuance of the parties’ ownership of G property as joint tenants, and that the deed needed to provide more than it did before it could be concluded that the parties intended to sever the jointure.
It was submitted that the agreement did not contemplate any sale of the property:
28. ... except as a possible future contingency. Nothing regarding the circumstances in which the agreement was made suggests that it could not have been in the contemplation of the parties after the agreement that a right of survivorship would have continued to apply.
With respect to Senior Counsel for the wife, we are not comfortable making the series of assumptions referred to in paragraphs 26-30 of the submissions on behalf of the wife. As is not in doubt, the trial Judge’s reasons in relation to the issue raised by this challenge were contained in the following paragraphs of his Honour’s reasons for judgment:
8. In 1996, when the husband was living in Perth, he visited his parents in Melbourne. His father requested him to sign an agreement with his mother that his father had drafted. It is an agreement dated 10 February 1996 between the husband and his mother that if either wishes to sell his or her interest in the land they will sell it to the other party to the agreement for $275,000.
9. The husband argues that this agreement severed the joint tenancy because it is implicit in it that the very essence of a joint tenancy, survivorship, is refuted by the agreement which recognises the rights of each party to it to sell his or her interest separately from the interest of the other party.
10. It is further argued that, by the agreement, the parties stated, as they did, that they owned the land “in equal shares” and that this statement amounts to an implicit severance of the joint tenancy because it is an expression of the fact which they accepted, that they had “equality of interests”. ... the ownership has been registered as a joint tenancy rather than as a tenancy in common. In that situation, I do not regard a reference in the agreement to equal shares in isolation as proving a severence of the joint tenancy. When the parties to the agreement signed it in 1996 neither they nor the husband’s father realised the husband and his mother were registered as joint tenants. There is no evidence that the husband or his mother gave any thought to the nature of their ownership. I do not accept that any intent to sever the jointure could be attributed to them in that situation.
11. Next, it is said that by placing conditions on the manner of disposal of interests, which by the time of such disposal must be separated, implicitly severs the jointure. I do not agree. I cannot accept that the parties to the agreement did not simply contemplate and assume continuance of whatever form of proprietorship then existed until sale which is consistent with the agreement. That would not sever the jointure and is probably what occurred. I am not satisfied the agreement to place terms and conditions on disposal of separate interests in future severed the joint tenancy. Such an agreement is consistent with no intention at the time of the agreement to alter the interest each proprietor held.
Although we acknowledge that the issue is not clear beyond doubt, we are persuaded by the submissions of Senior Counsel for the father that the trial Judge erroneously concluded that the 1996 agreement did not establish that the husband and the mother intended to sever the joint tenancy with respect to G property. The observations of Chesterman J, to which we have earlier referred in paragraphs 85-6, are influential in so concluding. So is the judgment of Ward J in Scott, and the authorities therein cited which we have earlier recorded.
It was confirmed during the hearing before this Court that there was no evidence that, by the date of the deed in 1996 either the husband or the mother was aware of their registered proprietorship of G property as joint tenants, or had ever directed their minds to that issue. That however does not preclude finding the tenancy severed if, as Senior Counsel for the father submitted, the agreement adequately revealed an intention by the registered proprietors to hold as tenants in common in equal shares.
Whilst it is true, as Senior Counsel for the wife submitted, that the words “owned by the above parties in equal shares” in the agreement were more in the nature of a recital than a covenant, we do not understand that the principles of contractual construction (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352) preclude reliance upon those words for the purpose of construing the agreement in the present circumstances.
As is not in doubt, the words, and their implications, differ materially from those arising from a joint tenancy, most obviously by reason of the fact that the interests are defined. It is difficult to suggest an intention to preserve the right of the surviving joint tenant to acquire the whole of the property by survivorship upon the death of the other joint tenant in the face of such a clear defining of the beneficial interests of the registered proprietors of G property.
Whilst it is correct to suggest, as the trial Judge found, and Senior Counsel for the wife submitted, that the agreement to sell would not of itself sufficiently evidence an intention to hold G property as tenants in common in equal shares, that provision was not inconsistent with the recital to which we have referred. The reference in the deed to the parties’ original investments, which were equal, was consistent with such intention.
In the absence of any evidence of the parties to the agreement, one of whom could not have given such evidence, the other giving no such evidence, speculation about the reasons for the agreement is unhelpful, and probably unsafe.
We are satisfied that the 1996 agreement sufficiently evidenced the registered proprietors’ of G property’s intention to sever their joint tenancy. This challenge has been made out.
ancillary issue
Although, given our conclusion with respect to two of the grounds of appeal agitated on behalf of the father and the husband, it is strictly unnecessary to do so, we shall briefly consider the issue concerning the nominee trust deed of 19 August 2005, which was articulated in ground 5 of the Further Amended Notice of Appeal. That ground provided:
His Honour erred in finding (and declaring) that, pursuant to a deed executed by the husband on 19 August 2005 entitled “Nominee Trust Deed in Respect of Land”, the Husband holds [G property] on trust for himself as to a one half interest as tenant in common and the estate of the mother as to the other half interest.
The submissions of Senior Counsel for the father, which were embraced by Counsel for the husband were brief, and respectively recorded:
22.It follows that, if the joint tenancy was severed so that, immediately before the mother’s death, the husband and the mother were tenants in common in equal shares, the Nominee Trust Deed, dated 19 August 2005, does not constitute a declaration of trust of a half-interest in the land in favour of the mother’s estate. An equitable one-half interest in the land passes to the mother’s estate on the death of the mother/tenant in common not by reason of an express trust declared by the husband but by reason of the nature of the co-ownership that existed in the land immediately prior to the mother’s death.
23.The trust set out in clause 2.1(b) of the Deed is in effect only to arise if the estate is not otherwise entitled to a one-half interest in the land. See Judgment para.28. It is so entitled. Accordingly, the express trust does not arise.
24.The learned Judge’s contrary conclusion (see Judgment para.32) should be rejected as it is premised on an incorrect finding that at the time of the Trust Deed “the husband was the beneficial owner of the land due to the joint tenancy and the death of the joint tenant” (Judgment para.32).
The submissions of the behalf of the wife in response recorded:
36.Clearly, if there had been a severance of the joint tenancy during the lifetime of the mother the declaration of trust in clause 2.1 (b) of the Trust Deed would have been ineffective. However, for the reasons given by Cohen J and/or alternatively for the further additional reasons given in these submissions, His Honour’s conclusion that there had been no severance was correct.
37.Given that the husband became the sole beneficial owner of the property upon his mother’s death, there is no impediment to him if he so chooses declaring himself trustee of that property or some portion of it. Such a declaration is in practical terms simply a form of gift which it was clearly within his power to make.
38.Given that on the respondent’s case the husband was the sole beneficial owner of the land on the mother’s death, there was no basis upon which the respondent could contend other than that he had effectively made a gift of a half interest in the property by way of declaration of trust, and His Honour’s declaration in that regard was, therefore, correct.
Having regard to the submissions of Senior Counsel for the father and the husband, and Senior Counsel for the wife, it is sufficient to record that, if we are in error in our conclusion with respect to ground 4 of the Further Amended Notice of Appeal, there would be no basis for disturbing the trial Judge’s conclusions with respect to the nominee trust deed.
So concluding would, however, have the potential to practically impact upon the rights or entitlements of either the husband or the wife in the matrimonial cause. Albeit not pursuant to s 79A of the Act as the trial Judge suggested, but rather pursuant to s 106B of the Act, the nominee trust deed could potentially be set aside if s 106B was enlivened, and it was necessary to set the deed aside in order for the husband to satisfy whatever is held to be the wife’s entitlement by way of settlement of property which could not otherwise be satisfied out of property of the husband.
conclusion
We have found merit in grounds 3 and 4. Thus, the appeal, and the cross-appeal should both be allowed, and orders 1 and 2 of the trial Judge’s orders set aside.
Whilst it might be suggested that order 3 of the trial Judge’s orders, reserving costs of the proceedings determined by him to the “judge who finally decides the s 79 proceedings between the husband and the wife” should be set aside in the light of the only other orders made by his Honour being set aside, we do not propose doing so, for at least two reasons.
First, and most obviously, we have heard no submissions about order 3 made by the trial Judge. Secondly, the judge who ultimately determines the property settlement proceedings between the husband and wife would no doubt be able to determine that issue, whether or not order 3 made by the trial Judge is set aside.
We have heard no specific submissions in relation to what necessarily becomes the re-determination of the preliminary issue determined by the trial Judge. Given our conclusions in relation to the challenges agitated on behalf of the father and the husband, and the basis of them, there would appear to be no impediment to our re-determining the preliminary issue, or any doubt as to how we would do so. There appears no scope for further evidence in relation to that issue (see Allesch v Maunz (2000) 203 CLR 172). Moreover, the only party who could consciously give any further evidence, the husband, would hardly be likely to do so in the light of our conclusion. Although we perceive no basis for doing other than making declarations in terms reflecting our conclusions in the appeal, having not heard Counsel for the wife in relation to our doing so, we will stay the operation of our declarations until 28 days after delivery of our judgment.
costs
It was agreed by Senior Counsel for the father, Senior Counsel for the wife and Counsel for the husband that the issue of costs should abide the outcome of the appeal and cross-appeal and our reasons for such outcomes.
Without pre-empting any decision in relation to costs, we would find it difficult to form the opinion that the circumstances of the case justified the making of a costs order inter-partes, and, in the absence of an order, that it was not appropriate to issue costs certificates to all of the parties.
We will however afford the parties the opportunity to make submissions in relation to costs or, if there is agreement in that regard, to inform us that no order for costs inter-partes is appropriate, and that costs certificates are sought by each party.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, Strickland and Ainslie-Wallace JJ) delivered on 11 March 2013.
Associate:
Date: 11 March 2013
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