Brunker v. Perpetual Trustee Co Ltd
57 CLR 555(Judgment by: Dixon J)
Brunker
v Perpetual Trustee Co Ltd
Judges:
Latham CJ
Rich J
Dixon JMcTiernan J
Subject References:
Real property
Gift
Memorandum of transfer
Death of donor
Authority of third person
Notification of encumbrance
Unauthorized insertion
Materiality
Imperfect gift
Capacity
Undue influence
Legislative References:
Real Property Act 1900 (NSW) No 25 - s 46
Judgment date: 10 June 1937
Sydney
Judgment by:
Dixon J
Robert James Douglas Sellar, a bachelor, died on Wednesday, 2nd May 1934, at the age of seventy-one, from cardiac failure after an attack of bronchitis of some seven days' duration. His medical attendant had thought that he might die on the previous Sunday, but some improvement took place in his condition and the collapse ending in death did not in fact occur until the afternoon of Wednesday. He died between six and seven o'clock. On the same evening, some hours after his death, his medical attendant learned that, on the previous afternoon, the deceased had executed a transfer in favour of the appellant.
The appellant had for many years been in the deceased's service and acted, she says, as housekeeper and as his nurse, that is, presumably, after an operation he underwent in the previous winter.
The land the subject of the transfer is set down at a value of PD4,750. The transfer, which is expressed to be in consideration of ten shillings, purported to transfer to the appellant an estate in fee simple in remainder expectant on the transferor's death.
The medical attendant at once objected to the transaction. Indeed, the strength of his objection was or became so great that, on the part of the appellant, it is said to have impaired the value and accuracy of his evidence.
The transfer was prepared by a law stationer who was on terms of great friendship with the appellant. He frequented the house and appears to have been accepted as a friend or acquaintance by the deceased, whom probably he knew independently of the appellant. Neither his evidence nor that of the appellant proved trustworthy, according to the opinion of Nicholas J., who heard the suit. But an account of the actual execution of the transfer was given by the manager of the local branch of the deceased's bank, and his evidence was fully accepted. From that it appeared that the deceased understood what he was doing. The banker said that on the Tuesday morning the law stationer came to him and said that he was representing the deceased; that he had found at the office of the Registrar-General that the land in question was mortgaged to the bank, and that the deceased wished to know whether the bank would release the security so far as it affected the land, because he wished to transfer it to his housekeeper, the appellant. On learning that the deceased was too ill to come to the bank, the manager agreed to go to see him. He went about five o'clock on that afternoon. He told the deceased, whom he saw alone, that he considered that he could not afford to part with the income of the land, on which the deceased said that he intended to transfer the property and to retain a life interest in it, and asked the witness whether the bank would be prepared to release the land from its security to enable the transfer to go through. The witness replied that he thought the bank would, but that he would submit the question and let the deceased know. As he was leaving the house, the law stationer asked him if he would witness the transfer. The transfer was produced, some additions were made to it and the deceased signed it, sitting up in bed and resting the paper on a suit case. The signature is a bad one and it is evident that it was preceded by one or two abortive attempts to make it. The appellant appears to have been present. The bank manager then witnessed the deceased's signature. The document remained in the custody of the law stationer. At that time it contained in the memorandum of encumbrances no reference to the bank's mortgage.
After the deceased's death, the respondent, the executor, lodged a caveat against dealings with the land. The transfer was handed over to the appellant's solicitors who, for the purpose of obtaining registration, added to the body of the instrument a notification of the bank's mortgage as an encumbrance, informing the respondent of what they were doing. It was lodged for registration, and the respondent, in order to maintain the caveat, brought the suit out of which the present appeal arises, seeking to restrain registration. A decree was made declaring the transfer void and of no effect, restraining its registration, ordering its delivery up and extending the caveat.
The consideration of ten shillings stated in the transfer was, of course, nominal only and the appellant supports the transaction as a gift. Nicholas J. found that the gift was inchoate and incomplete, but he found in the appellant's favour on the issues raised by the respondent of incapacity and undue influence. He held that the burden of proof on both these questions lay upon the respondent. He said that, neither in the period before the deceased's last illness, nor in his last illness, could he find proof of such a degree of confidence reposed in, or such powers of management entrusted to, the defendant, or the law stationer, as were found in the authorities which he mentioned dealing with the relations of influence. His Honour quoted from the judgment of Lindley L.J. in Allcard v Skinner [[56]] the statement that courts of equity have never set aside gifts on the ground of the folly, imprudence, or want of foresight on the part of the donors, and that the doctrine of undue influence is founded on the principle that it is right to save people from being victimized. He said that it was evident that the opinion of the deceased's medical attendant was that, during the last three days of his life, the deceased was in such a condition that anyone could have obtained from him anything he asked. His Honour continued:
"But bearing in mind the extract from the judgment of Lindley L.J., quoted above, and also that I am not entitled to set aside a gift on the ground that I do not trust either of the two people who are fully aware of the circumstances under which it was made and of whom one is the donee, I hold that the plaintiff has not discharged the onus of showing that this transfer was obtained by the undue influence of the defendant or of anyone acting on her behalf."
But the learned judge said that he believed that the appellant and the law stationer acted in co-operation in relation to the gift and that, if the onus of showing that the gift was that of an independent donor had rested on their evidence, he did not think that he would hold that it was discharged. Notwithstanding the evidence of the bank manager, the circumstances of the transaction appear to me to make its propriety very doubtful. Although it is, no doubt, quite true that, up to his last illness, the appellant stood in no relation of influence to the deceased, I see nothing inconsistent with principle in treating the dependence of a dying man on the woman in charge of him as sufficient to place upon her the burden of establishing the righteousness of a large gift made to her within twenty-six hours of death. We have recently discussed the whole question of special relations of influence (Johnson v Buttress [[57]] ) and I do not wish to enter again upon the subject. In the view I take of the appeal it is unnecessary to decide whether there is enough in the circumstances to put the burden of disproving undue influence upon the appellant. For, in my opinion, the deceased did not make any effective gift to her.
If he did authorize the law stationer to register the transfer on his behalf, his death would, I think, revoke the authority, notwithstanding the contention made to the contrary (see, per Fair J., Scoones v Galvin [[58]] ). In any case, his executor's action means a countermand of any subsisting authority to act on its behalf, or exercise any right or power belonging to the deceased. The consideration of ten shillings stated in the transfer was nominal and the appellant cannot, except by registration, obtain a legal estate in the land. A transfer for value may before registration confer upon the transferee an equitable estate or interest. But it does so, not because it is a transfer, but because the transferee has given value for the land, and because, notwithstanding that the instrument is a memorandum of transfer, it may, as a writing, suffice to satisfy the requirements of the Statute of Frauds and so place the transferee in the position of a purchaser who is entitled to specific performance of his contract and has paid his purchase money.
An intended donee cannot stand in such a position. Being a volunteer, an intended donee cannot obtain equitable remedies against the donor compelling him to give legal effect to his intention to give. The deceased manifested no intention to constitute himself a trustee of the land for the appellant, and the memorandum of transfer is not, and cannot produce the effect of, a declaration of trust. The appellant is, therefore, the owner of neither a legal nor an equitable estate in the land. But, under the system of the Real Property Act, a transferee may be in a position by registering an instrument to obtain a legal estate, although prior to registration neither the legal nor any equitable estate was vested in him. If that system allows a volunteer to acquire an indefeasible right to the registration of an instrument in his favour, then, although it would remain true that before registration he had neither a legal nor an equitable estate in the land, yet he would be entitled to a right of a new description arising under the statute, and by its exercise he could vest the legal estate in himself.
The true question in the present case appears to me to be whether the appellant acquired a right of this nature which the deceased or his executor could not intercept or defeat. There is no a priori reason why statutory provisions making title depend upon registration should not confer upon a person in whose favour a registrable instrument has been made, a right to procure its registration, notwithstanding that it is voluntary, and no reason why it should not leave the transferor powerless to countermand his instrument. Such a right would not depend upon the doctrines or remedies of a court of equity, and, pending actual registration, the transferee could not be considered entitled to an equitable interest any more than to a legal interest in the land. It might appear anomalous, but the anomaly would be no obstacle to the existence of the right. Under other Torrens statutes this question has arisen and the weight of judicial opinion appears to concede that under the system a transferee in possession of a voluntary transfer may become entitled to register the transfer, notwithstanding that the transferor seeks to prevent it. Sir John Salmond seems to have been unready to make this concession (Public Trustee v Commissioner of Stamp Duties [[59]] , at pp. 239, 240) and Herdman J. has refused to do so (Scoones v Galvin [[60]] , at p. 1022). But, if such a right can be conferred at all, it seems to be agreed that to impart it more is required than the mere execution of the transfer by the donor.
On the other hand, until the decision of the New Zealand Court of Appeal in Scoones v Galvin [[61]] , to which the court was referred by Rich J. upon the hearing of the present appeal, there does not appear to have been any judicial decision defining the conditions which must be satisfied before the right could arise. Sir John Salmond had assumed that the question was whether the delivery of the certificate of title together with an executed transfer into the hands of the donee would amount to a complete gift [[62]] . Griffith C.J. in Anning v Anning [[63]] had expressed an opinion that it would be enough to execute the transfer and deliver it to the donee. The Supreme Court of Alberta had decided that a donor who first handed to the donee's father for registration a transfer completed and accompanied by the certificate of title, and then, before the transfer could be registered, repossessed himself of the documents and destroyed the transfer, had made no more than an imperfect gift which he had effectually revoked before completion (Smith v Smith [[64]] ). The Privy Council in Macedo v Stroud [[65]] had held that a voluntary transfer which the donor executing it did not present or hand to the donee for registration conferred no estate or interest either at law or in equity and amounted to no more than an imperfect gift which the donee could not enforce against the donor's executors. In Wadsworth v Wadsworth [[66]] Myers C.J. had decided that an intending donor, who had executed a transfer in favour of the intended donee but had not delivered it to her, was entitled against the donee into whose hands it had come without his authority to an order for delivery up of the transfer and for the removal of a caveat lodged by her. In O'Regan v Commissioner of Stamp Duties [[67]] the Supreme Court of Queensland had been called upon to decide for the purposes of succession duty the question as at what precise time a completed transaction by way of gift first amounted to a "disposition of property ... purporting to operate as an immediate gift." The court decided that the transfers of the land before registration amounted to such a "disposition," inasmuch as they had been completed and handed to the solicitors for the donees to whom the certificates of title had already been delivered.
But in Scoones v Galvin [[68]] , after making a valuable examination of these and other authorities, Myers C.J., Blair and Kennedy JJ. did define the conditions which must be fulfilled in order to put it beyond the donor's power to revoke an intended gift of land under the Torrens system. Their Honours reached the conclusion that it is necessary for the donor to execute the transfer and deliver to the donee or his agent not only the transfer but also the certificate of title. They said:
"This, we think, must be so, because, if the donor retains possession of the certificate of title, he has not done all that is necessary for him to do. He still has to produce the certificate of title, and until he has done that he may, as we think, revoke the gift and refuse to do anything more" [[69]] .
The New Zealand Land Transfer Act 1915 contained no express provision requiring production to the registrar of the original certificate, but in practice it had always been insisted on, and, in 1895, in Ex parte Bettle [[70]] it had been held that the registrar was entitled to refuse registration unless the certificate was produced (per Fair J. [[71]] ). The language quoted from the judgment of Myers C.J., Blair and Kennedy JJ. evidently alludes to the test laid down in the well-known statement by Turner L.J. in Milroy v Lord [[72]] , at p. 1189 of what was necessary to make a voluntary settlement valid and effectual:
"The settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him."
But, in applying that test to the present question, care must be taken to keep in mind what that question exactly is. It is not whether the intending donor has divested himself of his estate or interest in the land, or has done all that lies in his legal power to do so. For obviously it was within his legal power himself to cause the immediate registration of the transfer. The question is whether by his acts he has placed the intended donee in such a position that under the statute the latter has a right to have the transfer registered, a right which the donor, or his executors, cannot defeat or impair. That delivery of the transfer to the donee or the donee's agents is a condition which must be fulfilled before such a right will arise appears to me to be clear. It is only by the control or possession of the instrument that the trould effect registration without any liability to interference or restraint on the part of the transferor. Further, I think that the donee must obtain property in the piece of paper itself and property in the paper could pass only by delivery (Cochrane v Moore [[73]] ). If property in the transfer remained in the transferor, his power of recalling it must also remain. For he would be entitled to possession of the paper, he could refuse to present it for registration and he could destroy it. But, if by delivery to the donee or someone as bailee for her, the transferor has given her property in the instrument itself, then unless some further condition is expressly or impliedly prescribed by the statute, it would appear that the instrument, assuming it to be registrable, may be registered by the transferee independently altogether of the donor and in spite of any objection on his part. Under the New Zealand legislation such a further condition appeared to be prescribed; delivery of the certificate of title was considered a necessary condition of the transferee's right to register. It does not, of course, follow that delivery of the certificate of title will also be a condition under the New South Wales Real Property Act. But in fact the provisions of that Act create a position which is not so very different from that which appears to obtain under the New Zealand Act. The effect of ss. 35, 37 and 38 (1) of the Real Property Act 1900 (N.S.W.) is to define registration as the entry of a memorial of a transfer or other dealing on the folium of the register book constituted by the certificate of title and to make it necessary forthwith to enter a like memorial on the duplicate certificate "unless the Registrar-General, as hereinafter provided, dispenses with the production of the same." What is thereinafter provided is that the Registrar-General may dispense with the production of an instrument for the purpose of recording the memorial thereon, but, in that case, he must notify in the register book the fact that no entry has been made in the duplicate certificate. Before exercising this power, he must obtain a statutory declaration that the certificate of title has not been deposited as security for a loan (See s. 38 (2) and (3)). Under s. 12 (a) he may require a proprietor, mortgagee or other person interested in land in respect of which a transfer or other dealing "is about to be transacted" to produce a certificate of title or other instrument in the latter's possession or control affecting the land or the title thereto. It is not clear that, in requiring a statutory declaration that the certificate of title has not been deposited as a security, the provision includes the case of a mortgagee under a registered first mortgage to whom the certificate of title has been handed, in accordance with the common practice. Section 96 of the Conveyancing Act 1919 recognizes the existence of the practice and provides that the mortgagor shall be entitled to have the certificate of title lodged by the mortgagee with the Registrar-General to allow of the registration of any authorized dealing by the mortgagor with the land. But the transferee or other person taking under such a dealing has no statutory right directly to compel a mortgagee in possession of the certificate to produce it at the Land Titles Office. It follows that, when a mortgagee holds the certificate of title, a transferee from the mortgagor cannot obtain registration unless one or other of the following events occurs: either
- (i)
- the mortgagee must voluntarily produce the certificate; or
- (ii)
- the mortgagor transferor must under s. 96 of the Conveyancing Act compel him to lodge it; or
- (iii)
- the Registrar-General must under s. 12 (a) of the Real Property Act require him to produce it; or
- (iv)
- the Registrar-General must dispense with its production. Obviously in such a case the Registrar-General would not dispense with production.
Under a voluntary transfer, the transferee could not insist that the transferor should compel the mortgagee to lodge the certificate. Whether the Registrar-General would require its production would depend upon the mode in which he exercised a very wide discretion. In these circumstances it cannot be said that without the certificate the appellant acquired a right to obtain registration as against the Registrar-General. But, as against the donor, it may be said that, if she obtained a chance of securing the favourable exercise of the discretion of the Registrar-General, neither the donor nor his executor is entitled to any relief against the possibility of her so securing registration. Perhaps the most logical view is that, if an intending donor confers upon the intended donee property in a piece of paper containing a memorandum of transfer in the donee's favour, completed and executed by the donor, he has no legal title to recall it or prevent its use by the donee for any purpose allowed by law including registration and no equity upon which an injunction or any other relief administered by the Court of Chancery would be granted. On this view, the question whether the donee could divest the donor's legal title would depend on her practical success in procuring production of the certificate of title, or obtaining dispensation from its production. But this is not the view adopted by the New Zealand Court of Appeal in Scoones v Galvin [[74]] . The question was not discussed in that case whether the registrar might, if in his discretion he saw fit, register the transfer without production of the duplicate certificate of title, but, in asmuch as he could not be required to do so, it was decided that the donee had no right not defeasible at the instance of the donor.
In the present case, it is, I think, unnecessary to pursue the distinction. For, in my opinion, there are two fatal objections to the appellant's claim that, as against the respondent, she is entitled to register the transfer if she can procure registration. The first objection is that the memorandum of transfer was not a registrable instrument either at the time of the deceased's death, or, if it be material, at the time when by caveating the respondent as executor sought to revoke or recall the inchoate gift. The second objection is that upon the facts the instrument was not given to the appellant or to Fuller, the law stationer, as bailee for her and, therefore, never became her property and was not placed by the deceased in her possession or control. The memorandum was not registrable as the title stood when it was executed, because it contained no notification of the mortgage by which the estate transferred was encumbered. Section 46 of the Real Property Act 1900 provides that a memorandum of transfer shall contain an accurate statement of the estate intended to be transferred, and a memorandum of all leases, mortgages, and other encumbrances to which the same may be subject. The transfer did not contain such a memorandum, because the transferor is said to have intended that the land should be discharged from the mortgage. But, as this was not done, the instrument could not be registered. To overcome the difficulty, after the transferor's death the transferee's advisers altered the instrument by inserting a note of the encumbrance in the place for the memorandum of encumbrances. This, in my opinion, was an unauthorized alteration. In Barker v Weld [[75]] Johnston J. held that an analogous alteration made in a memorandum of mortgage was, in the circumstances of the case, within the implied authority of the mortgagee. The circumstances were peculiar, but the decision, which appears to me to go a long way, cannot, I think, apply to a voluntary transfer definitely intended by the transferor to be subject to no encumbrance. The reason for the decision appears in the following passage from the judgment of Johnston J.:
"I am of opinion that the words inserted had no material effect upon the document or the registration. Whether they were inserted or not the mortgage was a second mortgage, although the mortgagee believed it to be a first mortgage. The words inserted were only such as the law would supply. The mortgagee had the right to have the instrument registered, and both parties must have contemplated that it was to be registered, and the insertion of the words in question was necessary to procure the registration" [[76]] .
Here, although both parties no doubt contemplated registration of the instrument, that registration was intended to follow the discharge of the mortgage.
If the alteration had been authorized, it would have made the instrument registrable. Both on this ground and because its operation would be to transfer an encumbered and not an unencumbered estate, the respondent contends that the alteration was material and that it avoided the instrument. I agree that the alteration was material and I do not say that the contention is not right that the instrument is avoided as against the respondent as executor of the transferor. Difficulties exist in applying the principle upon which the contention depends to instruments the purpose of which is, so to speak, to put the Registrar-General in motion, and it may be that, after registration, the transferor could not avail himself of such an alteration to overcome the effect of registration. But, in any case, I think that it is unnecessary for the respondent to rely upon the alteration as vitiating the instrument. It is enough that without it the instrument is not entitled to registration and that the alteration is unauthorized. At least it must be treated as having no effect in favour of the party making it.
The second objection, no doubt, depends upon the facts disclosed by the evidence. But, in considering whether the transfer was delivered to the law stationer as agent or bailee for the appellant, it must be remembered that his evidence was disbelieved by Nicholas J. and cannot be relied upon. I can see no reason for imputing to the deceased an intention that the law stationer should hold the instrument for and on behalf of the appellant to the exclusion of the deceased himself. He had reserved a life estate to himself. He must be taken to have intended that the transfer should not be registered until the bank discharged the land from their security. Some one, presumably he himself, had to provide stamp duty as on a gift and pay the registration fees. Probably he never thought of the law stationer otherwise than as acting as his solicitor would do. In any case, he did nothing to manifest or communicate an intention to hand over the transfer to him as agent or bailee for the transferee. The fact that the law stationer intended to act throughout in the interests of the appellant and thus probably for his own advantage is beside the point. The question is whether the deceased as donor delivered the paper to the appellant as donee. Nicholas J. found expressly that before the donor's death the memorandum of transfer was not delivered to the appellant or to any one on her behalf; that the law stationer did not become her agent but up to the donor's death remained his agent and that his authority was revoked by the donor's death. I agree in that conclusion.
In my opinion the appellant has failed to establish a gift of any interest in the land or the creation in her favour of any right to obtain one by registration.
A further complaint made on her behalf is against the order for costs contained in the decree. I think that we should not disturb that order. To make it was well within the discretion of the learned judge.
The respondent gave a notice of cross-appeal complaining of the findings against it on the issue of undue influence. The finding was not embodied in the decree and as no variation of the decree itself was required and the respondent meant to do no more than impugn some of the reasons of the learned judge, the notice was in strictness unnecessary. Rule 16 of s. III. relates to variations sought by respondents in judgments, decrees, orders, or sentences.
In my opinion the appeal should be dismissed with costs, other than the costs of the cross-appeal, which should be paid by the respondent.