Whitty v Talia

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0065

CATHERINE ANNE WHITTY	Applicant
v
NATALIE TALIA (IN HER CAPACITY AS ADMINISTRATOR AD LITEM OF THE ESTATE OF MARIO CARUSO DECEASED, PURSUANT TO ORDER OF THE HONOURABLE JUSTICE MCMILLAN MADE 28 JULY 2021) AND OTHERS ACCORDING TO THE SCHEDULE	Respondents

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JUDGES:	McLEISH, KENNEDY and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	29 August 2023
DATE OF JUDGMENT:	19 October 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 246
JUDGMENT APPEALED FROM:	[2022] VSC 242 (Gorton J)

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REAL PROPERTY – Co-ownership – Joint tenancy at law – Whether joint tenancy severed in equity by course of conduct – Purchase of matrimonial home partly funded by unsecured loan from husband’s siblings to husband – Husband and wife instructed solicitors tenancy to be joint – Husband and wife executed deed at time of settlement – Deed provided for husband or executor to sell property on behalf of owners in event of default in loan or death of husband while loan outstanding – Purpose of deed to provide comfort to siblings for loan – Whether objective intention of husband and wife to destroy right of survivorship – Joint tenancy severed – Leave to appeal granted – Appeal dismissed.

Transfer of Land Act 1958, s 33(4), referred to.

Williams v Hensman (1861) 1 J&H 546; 70 ER 862, applied – Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375; Corin v Patton (1990) 169 CLR 540, discussed.

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Counsel
Applicant:	Mr DG Collins KC with Mr HC McAvaney
First Respondent:	No appearance
Second to Fourth Respondents:	Mr RC Wells with Mr DKR Kinsey
Solicitors
Applicant:	Mills Oakley
First Respondent:	Hicks Oakley Chessell Williams Pty Ltd
Second to Fourth Respondents:	Mazzeo Lawyers

MCLEISH JA
KENNEDY JA
WALKER JA:

On 23 September 2017, Mario Caruso and Catherine Whitty, a married couple, executed a contract to purchase a property in Nicholson Street, Fitzroy. Settlement was due to take place on 23 January 2018.
Settlement was delayed. In anticipation of it taking place, the purchasers signed a transfer of land on 24 February 2018. In that document, they were described as joint proprietors. It is not in dispute that, when the contract was signed and until shortly before settlement, at least, the purchasers intended to acquire the property as joint tenants.
Settlement took place on 6 March 2018 and the property was subsequently registered in the names of the purchasers as ‘joint proprietors’. The purchase price was provided from three principal sources:
(a)a loan from the Commonwealth Bank;
(b)the proceeds of sale of another property which had been owned by Ms Whitty; and
(c)a loan to Mr Caruso from two of his brothers and his sister‑in‑law, to whom it is convenient to refer, albeit somewhat inaccurately, as ‘the siblings’.
The siblings’ loan to Mr Caruso was documented by an agreement dated 6 March 2018. Ms Whitty was not a party to that agreement. On the same day, Mr Caruso and Ms Whitty also executed a deed, making provision for Mr Caruso to be able to sell the property in certain circumstances, subject to a right of first refusal on the part of Ms Whitty. That deed provided that the rights of the parties could be exercised after they died, by their executors.
Unfortunately, Mr Caruso died unexpectedly on 7 October 2019. He did not make a will. Ms Whitty applied for a grant of administration of his estate upon intestacy. In the inventory of assets and liabilities forming part of that application, Mr Caruso was recorded as owning no real estate, evidently on the basis that it was said that Ms Whitty had succeeded to ownership of the Nicholson Street property by survivorship. There was said to be an ‘alleged debt’ of $924,876.34 outstanding to Mr Caruso’s siblings.
One of the siblings lodged a caveat, relevantly alleging that the loan agreement and the deed effected a severance of the joint tenancy in relation to the property and vested a right of sale of the property in Mr Caruso or his estate.
On 28 July 2021, McMillan J determined that an independent administrator ad litem should represent the estate and commence a proceeding to resolve the ownership of the property. She appointed the first respondent, a solicitor, for that purpose.
The proceeding was duly commenced and heard on affidavit evidence in the Trial Division. The judge determined that the joint tenancy had been severed ‘so that the estate of the deceased and Ms Whitty [are] each entitled to an equal undivided share as tenants in common’. Further, the judge declared that a right of sale would vest in Mr Caruso’s legal personal representative upon appointment, and that the estate would be entitled to receive ‘such part of the proceeds of sale as is appropriate for a tenant in common in equal parts’ with Ms Whitty.
Ms Whitty now seeks leave to appeal, on the single ground that the judge erred in drawing the inference that Ms Whitty and Mr Caruso mutually intended that Mr Caruso would retain an interest in the property after his death, and that ‘objectively they mutually intended that they would hold the … property as tenants in common, rather than as joint tenants’. The first respondent has not taken part in the application in this Court. The siblings are the remaining respondents, and they resist the application for leave. They have also filed a notice of contention which asserts that the judge’s decision can also be sustained on the ground that Mr Caruso and Ms Whitty lacked a unity of interest in the property, so that ‘at all times they held the property in equity as tenants in common and not as joint tenants’.
For the reasons that follow, we will grant leave to appeal but dismiss the appeal. It is not necessary to address the notice of contention, but these reasons explain in passing why we would not have upheld it.

Loan agreement

The loan agreement was made between the siblings and Mr Caruso. As noted above, Ms Whitty was not a party to it but, as explained further below, she was fully aware of its contents. Relevantly for present purposes, the agreement provided, by cl 3:
The principal and any interest or other moneys payable to the lender shall become immediately due and payable if the borrower:
3.1 defaults in making any of the payments referred to in this Deed;
3.2 defaults in the performance or observance of any other obligation under this Deed;
3.3 becomes bankrupt; or
3.4 dies or becomes totally and permanently disabled (as defined in any policy of insurance effected on the borrower’s life or, in the absence of such a policy, as specified in the definition for [sic] ‘Total and Permanent Disablement (Own Occupation)’ in the AIA Priority Protection Policy Document, Version 16 (10 December 2016).
The agreement made no provision for security in respect of the loan.

Deed

The deed between Mr Caruso and Ms Whitty recorded the following matters by way of ‘background’:
A.Mario and Catherine (collectively, the ‘Purchasers’) have purchased the real property situated at and known as 68 Nicholson Street, Fitzroy being the land described in Certificate of Title Volume 9503 Folio 123 (‘the Fitzroy property’) for the sum of $2,780,000.00.
B. The Purchasers have obtained approval from the Commonwealth Bank of Australia of a loan of $1,072,300,00 (‘the Commonwealth Bank Loan’) which is to be secured by a mortgage over the Fitzroy Property.
C. Mario has obtained approval from Nick Caruso, John Caruso and Carmen Caruso for a loan of $800,000 (‘the 3rd Party Loan’) to enable the Purchasers to complete the purchase of the Fitzroy property (‘the balance’).
In the operative part of the deed, Ms Whitty gave Mr Caruso power to sell the property, in the following terms:
1In consideration of providing the balance to purchase the Fitzroy property, Catherine covenants with Mario as follows:
a.If a Trigger Event occurs and subject to the terms of this deed, Mario has the right to sell the Fitzroy property on behalf of the Purchasers’ [sic];
b. Subject to clause 5, Catherine irrevocably appoints Mario as Catherine’s attorney to do anything which, in the opinion of the attorney, would give effect to the right to sell the Fitzroy Property in accordance with clause 1 (a) above whether on Catherine’s behalf in the attorney’s name or in Catherine’s name;
c. Catherine will do all acts and things, and provide all necessary documents, to give effect to the right to sell the Fitzroy Property in accordance with clause 1 (a) above.
2. For the purposes of this deed, a ‘Trigger Event’ occurs if:
a.Mario defaults in making any of the payments under the 3rd Party Loan;
b. Mario defaults in the performance or observance of any other obligation under the 3rd Party Loan;
c. Mario becomes bankrupt; or
d. Mario dies or becomes totally and permanently disabled (as defined in any policy of insurance effected on Mario’s life or, in the absence of such a policy, as specified in the definition for [sic] ‘Total and Permanent Disablement (Own Occupation)’ in the AIA Priority Protection Policy Document, Version 16 (10 December 2016).
The deed then provided for the determination of a sale price, and for Ms Whitty’s right of first refusal, as follows:
3.If the Fitzroy Property is to be sold, the sale price shall be that agreed to between the parties to this deed. If the parties fail to agree to the sale price, the sale price shall be the value of the Fitzroy Property determined by the valuer acting as an expert appointed by the President for the time being of the Real Estate Institute of Victoria,
4. Mario will not sell or agree to sell the Fitzroy Property to any person other than Catherine unless it has first been offered in writing to Catherine at a price not greater than the price determined in accordance with clause 3 and Catherine has not accepted such offer within 14 days from the date on which Catherine has received Mario’s offer.
Clause 5 provided that the deed was to terminate upon repayment in full of the loan from the siblings.
By cl 6, a ‘reference to any party’ in the deed included ‘that party’s executors, administrators, substitutes, successors and permitted assigns’.
It will be necessary to describe the background to these transactions, which is relied on by the applicant, in particular, as going to the question of whether the parties manifested a common intention to hold the Nicholson Street property as tenants in common. First, however, it is convenient to refer to the governing legal principles.

Legal principles

Section 33(4) of the Transfer of Land Act 1958 provides:
Any two or more persons named in any instrument as transferees mortgagees lessees or as taking any estate or interest in land shall unless the contrary is expressed be deemed to be entitled jointly and not in shares and every such instrument when registered shall take effect accordingly.
This statutory presumption in favour of joint ownership governs the legal ownership of the land. In the present case, of course, the presumption was consistent with the contract of sale and the land transfer, both of which specified that the purchasers acquired the land as joint tenants. This does not, however, preclude the operation of the principles of equity, which may have the effect of treating the beneficial interest in the relevant land as being held by the owners as tenants in common.[1]
[1]Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375 [61] (Ashley, Priest and Santamaria JJA) (‘Mischel’), citing Sacks v Klein [2011] VSC 451 [25] (Hargrave J).
The intervention of equity may take place either when the property is first acquired or, at a later point, when some intervening conduct or event has the effect in equity of severing the joint tenancy.
There are two principal characteristics of a joint tenancy. The first is that the interests of each joint tenant are the same in respect of possession, interest, title and time: the ‘four unities’. The second is the right of survivorship, by which, if one tenant dies, his or her interest in the land is extinguished and the interest of the surviving joint tenant or tenants is correspondingly enlarged.[2]
[2]Wright v Gibbons (1949) 78 CLR 313, 323 (Latham CJ); Mischel [2013] VSCA 375 [56] (Ashley, Priest and Santamaria JJA).
Unity of possession means that each owner has the same entitlement to possession of the land as each other owner. Unity of interest requires that the owners have interests identical in extent, interest and duration. Unity of title means that each owner derives their title from the same act or instrument. Unity of time, which is not of practical relevance when the issue is one of severance, means that the interests of the owners vested at the same time.[3]
[3]Mischel [2013] VSCA 375 [58] (Ashley, Priest and Santamaria JJA).
The ways in which a joint tenancy may be severed are generally taken to be those described by Page Wood V-C in Williams v Hensman:
A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund — losing, of course, at the same time, his own right of survivorship. Secondly, a joint‑tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested.[4]
[4](1861) 1 J & H 546, 557–8; 70 ER 862, 867.
The present case was argued on the basis that only the third method in Williams v Hensman falls for consideration, and subject only to an issue as to the scope of that third method which we refer to below, we proceed on that footing.
In Corin v Patton,[5] Deane J pointed out that it may be unhelpful and even confusing to start an analysis of a possible severance in equity by deciding whether one of the four unities has been destroyed. That is because the real question is whether overriding equitable doctrine treats the parties as holding their interests as tenants in common, by virtue of the creation of distinct beneficial interests and most likely by the imposition of a trust for tenants in common.[6]
[5](1990) 169 CLR 540 (‘Corin’).
[6]Ibid 573 (Deane J).
Deane J gave, as one example where equity would intervene in this way, express agreement of the joint tenants to relinquish the beneficial interest of a joint tenant, including the right of survivorship, in return for the interest of a tenant in common. This reflects the second method identified in Williams v Hensman. Quoting the language used in describing the third method, Deane J added that such an agreement can also be implied from a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. He went on to say that it was unnecessary to consider whether severance could be effected where joint tenants are parties to mutual conduct of a kind which, while falling short of evidencing an express or implied agreement, indicates a common intention that the joint tenancy should be severed.[7]
[7]Ibid 574.
In approaching the matter in this way, Deane J appeared to treat the third method described in Williams v Hensman as extending to cases of implied agreement but perhaps not further. On our reading of the authorities, the third method has been generally thought not to be confined in that way, cases of implied agreement being instead treated as instances of the second method. Certainly that was the way the case was argued before us. In principle, there is no obvious reason why equity would regard a common intention to sever a joint tenancy as incapable of binding the consciences of the parties unless the course of conduct revealing that intention amounted to an implied agreement.[8]
[8]See Public Trustee v Pfeiffle [1991] 1 VR 19, 29–30 (McGarvie J), 35 (Ormiston J) (‘Pfieffle’); Abela v Public Trustee [1983] 1 NSWLR 308, 315 (Rath J) (‘Abela’); Calabrese v Miuccio (No 2) [1985] 1 Qd R 17, 27 (Derrington J) (‘Calabrese’), citing Burgess v Rawnsley [1975] 1 Ch 429, 446 (Sir John Pennycuick).
On that basis, the question to be asked in respect of the third method in Williams v Hensman is whether there was a course of conduct on the part of the joint tenants inconsistent with a joint tenancy, from which one would infer an objective intention to hold the property as tenants in common.[9]
[9]Mischel [2013] VSCA 375 [64] (Ashley, Priest and Santamaria JJA), citing Saleeba v Wilke [2007] QSC 298 [38] (Chesterman J) (‘Saleeba’).
A particular application of that test concerns a course of conduct which sustains the inference that the joint owners objectively intended to destroy the right of survivorship.[10]
[10]Mischel [2013] VSCA 375 [70] (Ashley, Priest and Santamaria JJA), citing Saleeba [2007] QSC 298 [25] (Chesterman J).
In general, equity ‘leans against’[11] joint tenancies, going so far as to regard them as ‘an odious thing’.[12] This is because of the element of chance they involve, which Deane J described as the ‘gamble of the tontine’.[13] That gamble runs counter to the notion that equity is equality.[14] As Deane J explained, in equity, good conscience and actual or presumed intention may prevail over common law interests. He added that the right of accretion by survivorship was one of the two aspects of joint tenancy most likely to attract the operation of overriding equitable doctrine.[15]
[11]Mischel [2013] VSCA 375 [60] (Ashley, Priest and Santamaria JJA), citing Roderick Meagher, Dyson Heydon and Mark Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (Butterworths Lexis Nexis, 4^th ed, 2002) [3-150].
[12]Mischel [2013] VSCA 375 [59] (Ashley, Priest and Santamaria JJA), citing York v Stone (1709) 1 Salkeld 158 (Lord Cowper LC); 91 ER 146. See also Gould v Kemp (1834) My & K 304, 309 (Lord Brougham LC); 39 ER 959, 961.
[13]Corin (1990) 169 CLR 540, 573. A ‘tontine’ is an annuity shared by subscribers to a common fund, the shares increasing as subscribers die until the last survivor enjoys the whole income.
[14]Delehunt v Carmody (1986) 161 CLR 464, 473 (Gibbs CJ); Mischel [2013] VSCA 375 [60], [65] (Ashley, Priest and Santamaria JJA).
[15]Corin (1990) 169 CLR 540, 573. The other aspect was the equality of the interests of joint tenants, regardless of intention or contribution, in the undivided rights constituting ownership of the subject property. See also The Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278, 299 [60], 303 [72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) (‘Cummins’).
Little is therefore ordinarily required by way of evidence to show an intention that joint tenants hold as tenants in common; anything which to the slightest degree indicates an intention to divide the property will abrogate the joint tenancy and create a tenancy in common.[16] At the same time, however, the evidence must establish a definite intention to retain beneficial title, not a nebulous intention to exercise control over it.[17] It has been said, in this context, that the evidence of intention must be unequivocal.[18]
[16]Mischel [2013] VSCA 375 [66] (Ashley, Priest and Santamaria JJA), citing Robertson v Fraser (1871) LR 6 Ch App 696, 699 (Lord Hatherley LC).
[17]Mischel [2013] VSCA 375 [67] (Ashley, Priest and Santamaria JJA), referring by way of analogy to Damberg v Damberg [2001] NSWCA 87 [44] (Heydon JA).
[18]Mischel [2013] VSCA 375 [63] (Ashley, Priest and Santamaria JJA).

On the other hand, in the context of the present case, it is also relevant that equity presumes that a married couple intend to be joint owners of the matrimonial home, irrespective of their respective contributions.[19] This means, as the trial judge recognised,[20] that the ordinary rule that equity favours a tenancy in common does not apply. That is because, in effect, a married couple is presumed to have committed themselves to an identical shared interest in a matrimonial home for their joint enjoyment, and that of the survivor after one of them dies.
[19]Calverley v Green (1984) 155 CLR 242, 259 (Mason and Brennan JJ); Cummins (2006) 227 CLR 278, 301–2 [68], 303 [72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).
[20]Re Caruso [2022] VSC 242 [4] (Gorton J) (‘Reasons’).

Background to transactions

Mr Caruso and Ms Whitty, on the one hand, and the siblings on the other, were represented by lawyers when arrangements were being made for the purchase of the Nicholson Street property and the associated loan.
On 16 January 2018, the solicitor acting for Mr Caruso and Ms Whitty sent them a draft copy of the transfer of land. He said in a covering email that the transfer had been prepared on the basis that they would be registered as joint owners, and explained that under joint ownership ‘a deceased co-owner’s share of a property automatically passes to the surviving co-owner by operation of law’. He further explained that under a tenancy in common, in contrast, a deceased co-owner’s share forms part of the estate of that person. As mentioned earlier, the transfer of land was signed on 24 February 2018.
On 25 February 2018, the solicitor sent Mr Caruso and Ms Whitty a draft deed between themselves as purchasers and the siblings as lenders. It recited that the purchasers had obtained approval of a loan from the Commonwealth Bank, to be secured by a mortgage over the Nicholson Street property, and that the lenders had arranged a loan to fund the balance of the purchase price. The deed provided that the purchasers would pay all interest due on the latter loan and indemnify the lenders against all claims in relation to it. The purchasers also charged the property to secure their obligations under the deed.
Later that day, Ms Whitty sent an email to Mr Caruso and the siblings saying that she could not and would not sign the draft deed, because it was ‘one-sided, unfair and unreasonable’, did not ‘represent what was agreed’ and would expose her, Mr Caruso and their children to ‘an unacceptable financial risk’. She asked that the recipients of the email (presumably referring in particular to the siblings) ‘not cause the purchase … to default’.
On 27 February 2018, another solicitor from the same firm sent Mr Caruso new draft documents, being a loan agreement, a deed of assignment of agreement, and an undertaking between Mr Caruso and Ms Whitty in relation to a power of sale. The ‘undertaking’ took the form of a draft deed. Relevantly for present purposes, it recited the Commonwealth Bank loan approval and the fact that Mr Caruso had obtained approval from third parties (a reference to the siblings) for a loan of $800,000 to complete the purchase. The deed went on to provide that, in consideration of providing the balance, Ms Whitty covenanted with Mr Caruso that he could ‘require the [purchasers] to sell’ the property if a ‘Trigger Event’ occurred, and she irrevocably appointed him her attorney to give effect to that right. A ‘Trigger Event’ was a default by Mr Caruso in making payments, or other default, under the third party loan, together with insolvency events on the part of Mr Caruso. It did not include Mr Caruso’s death. Ms Whitty further covenanted that Mr Caruso had the right ‘to assign his right title and interest under this deed’ to the third party lenders. Such an assignment was provided for in the draft deed of assignment. Under the draft loan agreement, the principal and interest became immediately due and payable upon the occurrence of the ‘Trigger Events’ listed in the draft deed. The draft loan did not provide for any security, including over the Nicholson Street property.
The next morning, the solicitor sent a further email to Mr Caruso and Ms Whitty. He explained that the draft documents he sent had been ‘based on contractual rights only’. He suggested that an alternative arrangement would involve Ms Whitty guaranteeing the loan, with recourse limited to the Nicholson Street property, which would be subject to a second ranking mortgage. He said this would provide the siblings with ‘better protection’, and protect Ms Whitty because, if Mr Caruso defaulted on the third party loan, the siblings would only have recourse against the Nicholson Street property.
It is clear from the correspondence that there was an oral discussion between the solicitor and Ms Whitty after this email was sent. However, there was no evidence concerning the content of that conversation. The solicitor subsequently prepared revised versions of the loan agreement and the undertaking, and ‘removed’ the deed of assignment on the instructions of Ms Whitty. He sent the revised drafts to Mr Caruso and Ms Whitty.
The revised draft undertaking provided that, in consideration of Mr Caruso providing the balance of the purchase price, Ms Whitty covenanted with Mr Caruso that he had ‘the right to sell’ the property ‘on behalf of the [purchasers]’ if a ‘Trigger Event’ occurred and, as before, she irrevocably appointed him her attorney to give effect to that right, either on her behalf or in her name. A ‘Trigger Event’ was defined slightly differently, as a default by Mr Caruso in making payments, or other default, under the third party loan, or Mr Caruso becoming bankrupt. Again, it did not include Mr Caruso’s death. Under the draft loan agreement, the principal and interest became immediately due and payable upon the occurrence of the ‘Trigger Events’ as amended. As before, the draft loan did not provide for any security in favour of the siblings.
Some time later on the same day, a further email was sent by the solicitor to Mr Caruso and Ms Whitty attaching a revised version of the undertaking. That version provided for Ms Whitty to have a right of first refusal before Mr Caruso could sell or agree to sell the Nicholson Street property to any person other than Ms Whitty.
On 2 March 2018, Mr Caruso and Ms Whitty’s solicitor sent the revised draft documents to a solicitor acting for the siblings. That solicitor duly returned the documents marked with proposed changes that had been discussed on the telephone, attached to a covering email which relevantly stated:
My clients have instructed me that they wish to assist Mario Caruso with the acquisition of his new home with his wife Catherine. …
Your firm is also handling the conveyance and you informed me that it is hoped the funding will be in place to permit settlement Monday 5 March 2018. You also informed me title will be joint.
As I explained on the telephone, I have advised my clients that the proposed deed of undertaking and loan agreement do not give sufficient nexus to my clients to enforce the covenants Catherine gives in the deed of undertaking. I have explained the effect of the new clause 6 and advised my clients that unless Mario makes a new will appointing one or more of my clients as executor(s) and as attorneys separately under a financial and personal power of attorney, Catherine is again most likely to be the party that would have to enforce covenants against herself.
The ‘new clause 6’ to which reference was made was in the draft deed of undertaking. It provided that a reference to ‘any party to this deed’ included that party’s executors, administrators, substitutes, successors and permitted assigns. In addition, a further ‘Trigger Event’ was added, referring to Mr Caruso dying or becoming totally and permanently disabled. A corresponding amendment was proposed to the loan agreement.
Mr Caruso and Ms Whitty’s solicitor forwarded to them the email and amended drafts, noting that the amendments seemed reasonable and explaining that cl 6 allowed each party’s executors (etc) to enforce the undertaking. In response, later on 2 March 2018, Ms Whitty sent an email to the solicitor saying that she did not know what cl 6 meant and asking for an explanation.
There is no evidence as to whether any such explanation was provided or what it might have entailed. All that is known is that the documents were agreed between the parties without further amendment, and they were executed in that form on 6 March 2018.

Judge’s decision

The judge identified the commercial purpose of the deed, read with the loan agreement, as being ‘to provide Mr Caruso’s siblings with comfort with respect to the loan’.[21] He explained:
[A]t the same time that Mr Caruso signed the loan agreement with his siblings, Ms Whitty and Mr Caruso signed a deed by which she appointed him, if a ‘trigger event’ were to occur, her agent for the purpose of selling the Fitzroy property. The deed gave her a right of first refusal. The deed referred to the loan agreement between Mr Caruso and his siblings in several ways. It noted as ‘background’ that Mr Caruso had obtained the loan from his siblings ‘to enable’ the purchase of the Fitzroy property, stated that Ms Whitty’s grant to Mr Caruso of the right to sell the Fitzroy property was in consideration of him providing the borrowed sum towards the purchase of the property, and provided that the deed would ‘terminate’ upon the repayment in full of Mr Caruso’s loan from his siblings. One ‘trigger event’, upon which the right to sell the Fitzroy property arose, was a default by Mr Caruso in making payments owing under the loan agreement with his siblings. It follows that the commercial purpose of the deed, read with the loan agreement, was to provide Mr Caruso’s siblings with comfort with respect to the loan. Were Mr Caruso to fall behind in his payments to his siblings, he would have the ability to sell the Fitzroy property in order to raise funds so that he could, if he wished, use those funds to repay his debt to his siblings. This would be so notwithstanding Ms Whitty’s interest and whether or not she wanted to sell the Fitzroy property.[22]
[21]Ibid [5].
[22]Ibid (citation omitted, emphasis added).
The judge then turned to the operation of the deed in the event of Mr Caruso’s death, and explained why he considered that the arrangement indicated an intention that Mr Caruso and Ms Whitty held the property as tenants in common rather than as joint tenants:
Significantly:
(a)the loan agreement also provided that the principal and any interest would become immediately due and payable if Mr Caruso were to die;
(b)the deed included Mr Caruso’s death as a ‘trigger event’; and
(c) the deed extended the references to the parties to include a reference to their executors or administrators.
Accordingly, under the arrangements between the parties, if Mr Caruso were to die, the amount he had borrowed from his siblings would become immediately payable, and his estate would obtain the right to sell the Fitzroy property with Ms Whitty having a right of first refusal.
In this way, the parties anticipated Mr Caruso’s death and put in place an arrangement that made sense if the parties were tenants in common, but made no or little sense if they were joint tenants. If Ms Whitty and Mr Caruso held as joint tenants, then on his death, by reason of the right of survivorship, Mr Caruso would cease to have any interest in the Fitzroy property and it would be held by Ms Whitty absolutely. There could then be no sensible purpose in Mr Caruso’s estate having the right to sell the Fitzroy property. Any proceeds would be Ms Whitty’s and hers alone. Further, given that Ms Whitty would have a right of first refusal, the deed would be anticipating Mr Caruso’s estate acting as Ms Whitty’s agent offering to sell to her property that she already owned. It could not lead to any sensible contract of sale. On the other hand, the arrangement would make sense if the parties held the Fitzroy property as tenants in common. Mr Caruso’s estate would be entitled to half the proceeds of sale which could be used to repay its liabilities, and the right of first refusal would be a mechanism by which Ms Whitty could in effect purchase Mr Caruso’s half interest in the Fitzroy property from his estate. In that way Ms Whitty, if she had the funds, would be able to remain in the matrimonial home.
These matters indicate, objectively, an intention that the parties would hold as tenants in common, rather than as joint tenants. They indicate that Ms Whitty and Mr Caruso intended that Mr Caruso would retain an interest in the Fitzroy property after his death, and this is consistent only with them owning the property as tenants in common. Accordingly, in equity, the parties are to be treated as tenants in common, notwithstanding their registration as joint tenants.[23]
[23]Ibid [6]–[9] (citation omitted).
In the course of addressing certain arguments to the contrary, the judge stated that ‘the correct question is to ask what the parties’ intentions were looking at the matter as an interconnected whole’.[24] He gave as an example, by way of a footnote, the ‘third method’ of severing a joint tenancy given in Williams v Hensman.[25]
[24]Ibid [12] (citation omitted).
[25](1861) 1 J & H 546, 557 (Page Wood V-C); 70 ER 862, 867. The trial judge also referred to Corin (1990) 169 CLR 540, 547 (Mason CJ and McHugh J), Mischel [2013] VSCA 375 [98] (Ashley, Priest and Santamaria JJA) and Abela [1983] 1 NSWLR 308, 314–15 (Rath J).

Applicant’s submissions

The applicant, Ms Whitty, submitted that the course of conduct leading up to and including the execution of the deed and loan agreement on 6 March 2018 made it plain that the siblings knew that the Nicholson Street property was being acquired by way of joint tenancy and they were not going to have security over the property or its proceeds if sold. The siblings’ solicitor acknowledged that there was to be joint ownership in the email which proposed the amendments now said to evidence an intention to the contrary. The correspondence showed that Ms Whitty’s consistent purpose, including in executing the deed, was to enable Mr Caruso to obtain a loan from his siblings without jeopardising her interest in the property or any proceeds of its sale. The applicant submitted that the judge had failed to have regard to the negotiations.
Senior counsel for the applicant placed emphasis on the evidence of Ms Whitty’s intention, noting that the question raised by the third method of severance in Williams v Hensman concerned the objectively ascertained mutual intention of the parties. It was submitted that the correspondence made it clear that Ms Whitty was not prepared to agree to anything that might impinge on her interest as a joint tenant, going no further than permitting a sale in identified circumstances.
The applicant relied on the presumption in equity that a matrimonial home owned by parties to a marriage is held as a joint tenancy, at least so long as the marriage subsists. The trial judge had rightly accepted this proposition, citing The Trustees of the Property of Cummins v Cummins.[26] The applicant referred also to Abela v Public Trustee in this context.[27] It was submitted that this meant that equity’s general aversion to joint tenancies was inapplicable in this case. Senior counsel submitted that the matter was, in any event, to be resolved by evidence rather than presumptions. It was said that the intention to sever must be ‘unequivocal’ on the evidence.[28]
[26]Reasons [4], citing Cummins (2006) 227 CLR 278, 301–3 [68]–[72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).
[27]Abela [1983] 1 NSWLR 308, 315 (Rath J).
[28]Mischel [2013] VSCA 375 [63] (Ashley, Priest and Santamaria JJA).
The judge was said to have decided the case by reference to the third method in Williams v Hensman.[29] The second method, implied agreement, could not in any event have been satisfied, it was submitted, because on any view the parties had made no agreement as to how to divide the proceeds of any sale.[30] It was said to follow that the judge was wrong to identify severance from a course of conduct that consisted only of entry into the deed, when there was no provision made for, or other conduct addressing, the division of proceeds. It was also said to follow that the case was not to be resolved by construing the deed. The question of mutual intention was different to the meaning of the deed, and depended on all the evidence.
[29](1861) 1 J & H 546, 557–8; 70 ER 862, 867.
[30]Mischel [2013] VSCA 375 [68]–[70] (Ashley, Priest and Santamaria JJA).
The applicant submitted that the deed operated to give Mr Caruso, and then his estate, a power of sale with no interest in the property. There was confirmation when the agreements were finalised that Mr Caruso and Ms Whitty were to acquire the property as joint tenants. It was submitted that this was inconsistent with the judge’s finding that it was Ms Whitty’s intention that they would own as tenants in common. The deed had the effect of giving Ms Whitty’s financial security priority over that of Mr Caruso’s creditors, which was the outcome Ms Whitty objectively intended. The applicant submitted that the fact that exercise of the right of first refusal after the death of Mr Caruso would involve the commercial anomaly of a sale from Ms Whitty to herself, did not show that the parties intended to sever the joint tenancy. At most, it showed that the amendment the siblings sought had a potentially anomalous operation which was not of benefit to them.

Second to fourth respondents’ submissions

The respondents participating in the appeal (the siblings) submitted that by entering into the deed, Mr Caruso and Ms Whitty had objectively manifested an intention that he maintain an interest in the Nicholson Street property after his death. This could only be consistent with them holding the property as tenants in common, because it was at odds with the right of survivorship. It was submitted that the right to sell the property was an incident of ownership, being a core right in the bundle of rights making up ‘property’.[31]
[31]The respondents cited Yanner v Eaton (1999) 201 CLR 351 [25] (Gleeson CJ, Gaudron, Kirby and Hayne JJ).
The rights conferred on Mr Caruso and expressly exercisable after his death were said to make no sense if the property vested in Ms Whitty absolutely upon Mr Caruso’s death. It would, in particular, be absurd for Ms Whitty to have a right of first refusal to purchase the property from herself. It was submitted that making provision for a right of first refusal was objective evidence of an intention that Mr Caruso maintain a separate interest in the property after his death, again at odds with any right of survivorship.
It was further submitted that the objectively discernible purpose of the parties in executing the deed, in circumstances where the loan agreement was also negotiated and executed as part of a package, was to enable Mr Caruso, or his estate, to be put in funds so that the obligations under the loan agreement could be satisfied. The respondents submitted that the involvement of the siblings in negotiations set the case apart from those involving only the parties to a marriage, so that the presumption in favour of joint tenancy within a marriage did not apply. Conversely, the fact that the siblings understood that the purchasers wanted to hold the property as joint tenants was irrelevant to the objectively ascertained intention of the purchasers.
As to the operation of the deed, the respondents submitted that its effect was, relevantly, to give one co-owner, Mr Caruso and his estate, the ability to bind the other (Ms Whitty) to dispose of the co-owned property at the first co-owner’s discretion, subject only to the right of first refusal.

The respondents emphasised that the negotiations showed that Mr Caruso and Ms Whitty had executed the deed after having had it explained to them that the new cl 6 would result in the rights under the deed being enforceable by each of their estates. That was said to imply that the deed would operate effectively in that circumstance.
The respondents took issue with the applicant’s reliance on email communications showing the subjective intentions of Ms Whitty. They submitted that the objective intentions of the parties were revealed instead by the terms of the deed.[32]
[32]Pfeiffle [1991] 1 VR 19, 22 (Kaye J).

Consideration

As indicated earlier, the case has been argued on the basis that severance in equity was effected by the course of conduct in which Mr Caruso and Ms Whitty engaged, the question being whether it may objectively be inferred from that course of conduct that they intended to hold the property as tenants in common.
The critical event in the course of conduct was the entry into the deed, but it is not said that it was an agreement to sever the joint tenancy, express or implied, being the second method of severance identified in Williams v Hensman. The question is therefore not whether the deed, properly construed, achieved severance. As such, it is not necessary to have resort to principles of construction to determine the legal meaning and operation of the deed. The issue is what the deed, seen as part of a course of conduct on the part of those who executed it, reveals about their intention with respect to the joint tenancy.[33]
[33]Calabrese [1985] 1 Qd R 17, 26 (Derrington J); Mischel [2013] VSCA 375 [68] (Ashley, Priest and Santamaria JJA).
On the applicant’s case, Ms Whitty, in particular, manifested a continuing intention to hold the Nicholson Street property as a joint tenant and declined to give the siblings recourse to the property as a means of securing the loan which they were to advance to Mr Caruso to help fund its purchase. Further, while the deed might not therefore have had a practical commercial operation in the event of Mr Caruso’s death while the loan remained outstanding, it was what the siblings had asked for, and was drafted by their solicitor. Accordingly, it was said, Ms Whitty’s execution of the deed involved no change in her consistent position in favour of a joint tenancy.
The parties were in broad agreement with the judge’s characterisation of the commercial purpose of the deed, read with the loan agreement, as being ‘to provide Mr Caruso’s siblings with comfort with respect to the loan’.[34] That finding is supported by the fact that settlement would not be achieved without the siblings’ loan. Ms Whitty had implored them not to cause a default on the purchase, when she rejected their draft document proposing a charge over the property and obliging Mr Caruso and Ms Whitty to meet the siblings’ own repayment obligations. In the circumstances, the parties needed to agree on terms that would give the siblings sufficient comfort for the transaction to proceed.
[34]Reasons [5].
There is no evidence as to what might have been said between the provision of the final draft documents on Friday 2 March 2018 and their execution on Tuesday 6 March 2018. All that is known is that the siblings’ solicitor sent an email which, relevantly, acknowledged that he had been told by the purchasers’ solicitor that ‘title will be joint’ but went on to say that the proposed deed had not given ‘sufficient nexus’ to his clients to enforce Ms Whitty’s covenants. This was the reason for proposing cl 6. The email noted that Mr Caruso’s executor would be able to enforce the covenants, and that was most likely to be Ms Whitty herself.
Mr Caruso and Ms Whitty were in turn advised by their solicitor that the revised wording enabled the undertaking (that is, the right to sell the property) to be enforced if Mr Caruso should die or become totally and permanently disabled. As we know, Ms Whitty sought a further explanation but there is no evidence as to whether that was done, or what might have been said. It is pointless to speculate, and it was not suggested that any inference should be drawn from the fact that Ms Whitty did not give evidence.
In our opinion, these events none the less reveal a clear intention on the part of Mr Caruso and Ms Whitty to enable the executor of Mr Caruso to exercise the power conferred by the deed, to sell the Nicholson Street property subject only to Ms Whitty’s right of first refusal, after the death of Mr Caruso. Their purpose in doing so was to give the siblings sufficient comfort that they were prepared to advance the loan to enable settlement to take place.
That purpose would be achieved as long as Mr Caruso and Ms Whitty signed the deed in its final form, irrespective of its actual effect, because it was the siblings themselves who proposed the final wording through their solicitor. In that sense, it does not matter whether the deed actually had the legal operation the siblings intended. But in another sense, that is critical, as explained below.
Beyond the mere signing of the deed, it is clear, in our view, that Mr Caruso and Ms Whitty intended Mr Caruso’s right to compel a sale to pass to his estate upon his death. They had already agreed that this right would exist during his lifetime, so that he could put himself in a position to repay the siblings’ loan if he wished. The siblings had wanted some comfort as to their position if Mr Caruso were to die with the loan outstanding. The solution was to extend the existing arrangement enabling him to sell the property so that it continued after his death, and to make the loan repayable at that point. Mr Caruso and Ms Whitty had been told by their solicitor that the amendments would enable the right to sell the property to be enforced if Mr Caruso should die or become totally and permanently disabled, and there is no reason to doubt that, in signing the deed, that was their intention.
The right conferred on Mr Caruso by the deed was contractual rather than proprietary in nature. We do not accept, as was argued by the respondents and also formed the basis of their notice of contention, that it constituted part of the ‘bundle’ of rights making up ownership of the Nicholson Street property.[35] In essence, Mr Caruso was simply appointed as attorney to sell the property on behalf of its owners. But that is not decisive. The question is instead what the extension of the arrangement beyond Mr Caruso’s death reveals about the intentions of Mr Caruso and Ms Whitty with respect to the joint tenancy. In this context, ‘intention’ is objectively ascertained. It is not relevant that the parties (or one of them) might, as a matter of fact, have had a different subjective intention, or no intention on the point at all (as to which nothing is known, in any event).
[35]Nor did the fact that Mr Caruso enjoyed a right ‘with regard to’ the Nicholson Street property, which Ms Whitty did not enjoy, mean that they lacked a unity of interest. It meant only that they had made a contractual arrangement by which that interest may be disposed of on their behalf.
There are only two options. Either the joint tenancy was intended to be preserved, so that the power to sell, if exercised after Mr Caruso’s death, would be exercised on behalf of Ms Whitty alone, or the tenancy was intended to be severed so that it would be exercised on behalf of the parties as tenants in common. Only the latter understanding would be of any commercial utility. The former intention would be perverse, because the insertion of cl 6 into the deed (and associated amendments) would have been an exercise in futility. It would have enabled the executor to sell the property but Ms Whitty, not the estate, would receive the proceeds and the siblings would be no better off than if the property remained unsold. The position would be even more absurd if, as was likely, the executor was Ms Whitty herself.
In contrast, the latter intention would be consistent with the preparedness of Mr Caruso and Ms Whitty to accept that during Mr Caruso’s lifetime, he could sell the property in order to repay the loan if he so wished. They would be extending that arrangement so that the same power would be held by his executor (whoever that might be). This was how their solicitor explained the final amendments to them in the emails that were in evidence. Whatever wishes Ms Whitty (and Mr Caruso) had to that point expressed as to the tenancy being joint, their subsequent execution of the deed can safely be inferred to have been intended to achieve the effect explained by their solicitor.
In other words, the circumstances point clearly to Mr Caruso and Ms Whitty having decided, in order to complete the purchase, that they would agree to an arrangement whereby the property could be sold upon the death of Mr Caruso at the behest of his executor. Exercise of the power of sale would put the estate in funds to repay the siblings out of Mr Caruso’s share of the proceeds. That arrangement could only be meaningful if the property did not vest solely in Ms Whitty by virtue of a right of survivorship upon his death. Their intention could not be effected if the property was held on a joint tenancy, and they must therefore be regarded as having intended to hold the property as tenants in common.
For that reason, in our view the conclusion of the trial judge was correct. We are reinforced in that conclusion by the fact that, if the property was held as a joint tenancy, the right of first refusal which the parties intended Ms Whitty to enjoy would operate perversely after Mr Caruso’s death by giving her a right to purchase a property she already owned.
We would grant leave to appeal, but dismiss the appeal.

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SCHEDULE OF PARTIES

CATHERINE ANNE WHITTY	Applicant
v
NATALIE TALIA (IN HER CAPACITY AS ADMINISTRATOR AD LITEM OF THE ESTATE OF MARIO CARUSO DECEASED, PURSUANT TO THE ORDER OF THE HONOURABLE JUSTICE MCMILLAN MADE 28 JULY 2021)	First Respondent
GIOVANNI CARUSO	Second Respondent
NICK CARUSO	Third Respondent
CARMEN CARUSO	Fourth Respondent

[2023] VSCA 246

19 October 2023