Wright v. Gibbons

(1949) 78 CLR 313

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(Judgment by: Latham C.J.)

Wright
v Gibbons

Court:

Judges:
Latham C.J.Rich
Dixon JJ

Hearing date: Hobart, 1948, November 8;
Judgment date: 22 February 1949

Melbourne

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Judgment by:
Latham C.J.

1. These are appeals by each of two defendants in an action in which Bessie Melba Gibbons sought a declaration that she was entitled as the survivor of three joint tenants of certain lands to an estate in fee simple therein. The defendant R. C. Wright is the executor of the wills of the other two joint tenants, Olinda Gibbons and Ethel Rose Gibbons. Ethel Rose Gibbons died on 20th January 1946 and Olinda Gibbons died on 30th November 1946. The defendant Leonard Charles Pitfield is the Recorder of Titles of the State of Tasmania. An order was made that the following point of law raised by the pleadings should be heard and disposed of before trial: -

"Whether by reason of the acts deeds and instruments admitted or alleged in the defence the joint tenancy subsisting between the plaintiff and Olinda Gibbons and Ethel Rose Gibbons was severed." (at p319)

2. Olinda Gibbons and Ethel Rose Gibbons were sisters. They, together with their sister-in-law, the plaintiff Bessie Melba Gibbons, were seised of an estate in fee simple as joint tenants in certain lands under the general law and in certain other lands under the Real Property Act 1862-1935 (Tas.). All the lands were subject to a mortgage to the Bank of Australasia. (at p320)

3. On 11th October 1944 Olinda Gibbons and Ethel Rose Gibbons by separate instruments mortgaged their interests as joint tenants in the lands under the general law to R. C. Wright. It was contended for the defendants that these mortgages were effective to sever the joint tenancy theretofore existing in the lands under the general law, and this contention was upheld by the learned trial judge. There is no appeal with respect to this part of the order. (at p320)

4. On 6th December 1945 Ethel Rose Gibbons and Olinda Gibbons executed a document which was registered by the Recorder of Titles as a transfer, No. 109689, under the Real Property Act 1862- 1935 (Tas.) (a Torrens Act). The transfer described each of the two sisters as being registered as the proprietor of an estate in fee simple in one-third share of the lands under the Act as joint tenant with their sister-in-law, Bessie Melba Gibbons. By that document Ethel Rose Gibbons transferred to Olinda Gibbons her one-third share in the said lands and Olinda Gibbons transferred her one-third share to Ethel Rose Gibbons; that is, the two sisters made cross-transfers of their interests to each other. This was done by a single instrument. (at p320)

5. The legal representatives of the two sisters claim that the joint tenancy was severed by the transfer, and that the legal representative of each of them is entitled to a one-third interest in the lands as tenant in common, Bessie Melba Gibbons having the same interest. The plaintiff, on the other hand, claims that there was no severance of the joint tenancy and that she is entitled to the lands by survivorship. The learned judge upheld the contention of the plaintiff in the case of the lands under the Real Property Act. The order made was interlocutory, and leave to appeal to this Court was given. (at p320)

6. The decision of the question which arises depends upon the true effect of the document of transfer of 6th December 1945. That document was in the following form: -

"I, Ethel Rose Gibbons of Hobart in Tasmania spinster and I, Olinda Gibbons of Hobart in Tasmania spinster each being registered as the proprietor of an estate in fee simple in one third share as joint tenant with Bessie Melba Gibbons subject, however, to such encumbrances, liens, and interests as are notified by memorandum underwritten or indorsed hereon, in all that piece of land situated in the City of Hobart containing eighteen perches and two-tenths of a perch be the same a little more or less and being the land compromised and described in certificate of title volume 328 folio 93 subject to memorandum of mortgage No. 75757 to the Bank of Australasia to secure advances not exceeding two thousand three hundred pounds. (at p321)

In consideration of the transfer to the other of us by the transferror of her one third share in the said joint tenancy I the said Ethel Rose Gibbons do hereby transfer to the said Olinda Gibbons all my one third share estate and interest in the said piece of land as tenant in common with the said Bessie Melba Gibbons and myself of land above described and I the said Olinda Gibbons for the consideration aforesaid do hereby transfer to the said Ethel Rose Gibbons all my one third share estate and interest in the said piece of land as tenant in common with the said Bessie Melba Gibbons and myself. And it is hereby declared that the value of the interest of the said transferrors does not exceed the sum of three hundred and fifty pounds." (at p321)

8. It will be observed that there is some confusion in the statement of the consideration. Ethel Rose Gibbons is stated to transfer to Olinda Gibbons "all my one third share" "as tenant in common" with Bessie and herself (Ethel Rose) in consideration of the transfer "to the other of us" by the "transferror" of "her one third share," i.e. the share of Olinda Gibbons. "To the other of us" plainly ought to be "to me Ethel Rose Gibbons." So also the consideration for the transfer by Olinda Gibbons is misdescribed. But whatever confusion there may be in this respect, the transfer operates, if it operates at all, as a deed (Real Property Act 1862, s. 35 (4)) and is not prevented from being operative by the imperfect statement with respect to the consideration. (at p321)

9. Further, the transfer recites the existence of interests as joint tenants, but it may be read as purporting to transfer interests as tenants in common with the sister-in-law - though no such interests could exist unless and until the joint tenancy had been severed. Clark J. read the document as if the words "to be held by her" were interpolated immediately before the words "as tenant in common with Bessie Melba Gibbons." Such an interpretation is in accord with the evident intention of the parties. (at p321)

10. It was suggested for the defendants that the cross-transfers constituted an exchange of interests between the two sister joint-tenants. To meet this suggestion reference was made to Sheppard's Touchstone, 8th ed. (1826), vol. 2, p. 291, where it is said: "But joint-tenants, tenants in common, and coparceners, cannot exchange the lands they do so hold one with another, before they have made partition." The reference to partition shows that the author is contemplating a transaction whereby the interest of a co-owner would become an interest in a part only of the lands which were the subject of co-ownership. As Clark J. pointed out, no question as to the creation of separate interests in parts of the lands held arises in the present case. (at p322)

11. I do not think that the defendant's case can be supported upon the basis that the sisters simply exchanged their interests. When an exchange of interests in land takes place the result is that what was previously the interest of B becomes the interest of A and vice versa. But in the present case the essence of the defendant's contention is that the transferees each got an interest, namely as tenant in common, which was different from the interest which the transferors had - namely an interest as joint tenant. (at p322)

12. It has always been the law that a joint tenancy may be severed and converted into a tenancy in common by an agreement. This doctrine, however, does not help the defendants in the present case because the third joint tenant, Bessie Melba Gibbons, was not a party to the transaction between her co-tenants. There is no authority that some only of a number of joint tenants can bring about a severance of a joint tenancy inter se, though it is clear that all the joint tenants can bring about that result by an agreement to which they are all parties. But, further, the document upon which the defendants rely is a transfer and not an agreement. It is effective as a transfer or as nothing. (at p322)

13. All the authorities concur in stating that alienation of his interest by a joint tenant to a stranger severs the joint tenancy so as to produce the result stated: see, for example, Lyttleton, Treatise of Tenures, (1841), ss. 292, 304; Williams on The Law of Real Property, 1st ed., pp. 132, 133, repeated in subsequent editions; Halsbury's Laws of England, 1st ed. (before the Law of Property Act 1925), vol. 24, p. 204. But in the present case two of the three joint tenants have attempted to alienate their interests to one another. The learned trial judge held that there was no true alienation, but that the cross-transfers left the two parties to that transaction just as they were. His Honour said: "It seems to me that such a transfer could operate nothing. Each party would be at once giving and receiving the same thing. It would be a futility." But this statement, with all respect to the learned judge, assumes rather than proves the proposition which is in question. If the transfer leaves A and B as they were, that is as joint tenants, with the same interests, then there is obviously no creation of a tenancy in common. But the question whether the transfer does so leave them, or whether it operates so as to make the joint tenants tenants in common is just the question to be decided. It is true that if one joint tenant A successfully transferred to another joint tenant B his interest as a joint tenant and B successfully transferred to A his interest as a joint tenant, the parties would be left just where they were, because the interest of each joint tenant is absolutely identical.

But no transfer of an interest as a joint tenant so as to make the transferee a joint tenant with other joint tenants is possible when the transferee is a stranger to the joint tenancy. The transfer, if it could be effective, would destroy unity of time and unity of title so far as the interest of the transferee was concerned. Therefore he could not be a joint tenant with the other original joint tenants. No joint tenant can alienate to a stranger so as to make that person joint tenant with his co-tenants, but he can alienate so as to make that person a tenant in common with his co-tenants. In the present case the question is whether such an alienation to another joint tenant is possible. (at p323)

14. The interests of each joint tenant in the land held are always the same in respect of possession, interest, title and time. No distinction can be drawn between the interest of any one tenant and that of any other tenant. If one joint tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint tenant or joint tenants is correspondingly enlarged. (at p323)

15. Where a joint tenant alienates his interest to a stranger the joint tenancy is severed and the alienee becomes a tenant in common as to an undivided share of the land. If there were only one other joint tenant, then the alienee and the continuing joint tenant hold as tenants in common. If, however, there were three joint tenants A, B and C, and A transferred his interest to a stranger, D, then D would own a one-third interest as tenant in common with B and C, and B and C would hold a two-thirds interest as between themselves as joint tenants. The survivor of B and C would take the whole of the two-thirds interest, but D would not either gain or lose by the survivorship of any person. (at p323)

16. When one joint tenant transfers his interest to another joint tenant the transfer (which at common law was effected by release because each joint tenant is conceived as holding every part and the whole of the land - "per my et per tout") does not operate by way of extinguishment of the estate. A mere extinguishment would enure in favour of B and C, and not only in favour of B in accordance with the intention of the parties. Accordingly such a transfer is said to pass (mitter) the estate. See Coke's note upon Littleton, 18th ed. (1823), vol. 2, p. 193a., s. 304. Section 304 is as follows: -

"And, if three joyntenants be, and the one release by his deed to one of his companions all the right which he hath in the land, then hath he to whom the release is made, the third part of the lands by force of the said release, and he and his companion shall hold the other two parts in joynture (et il et son companion teigneront les auters deux parts en joynture). And as to the third part, which he hath by force of the release, he holdeth that third part with himselfe and his companion in common."

Coke's note is: -

"Upon this case these two things are to be observed. First, that in this case this release doth enure by way of mitter l'estate, and not by way of extinguishment, for then the release should enure to his companion also, and he is in the per by him that maketh the release." (at p324)

17. But although such a transaction should be carried out by release, a grant is interpreted as being a release: see Eustace v. Scawen (1624) Cro Jac 696 (79 ER 604) ; Chester v. Willan (1670) 2 Wms Saund 96 (85 ER 768) . (at p324)

18. The Real Property Act does not alter the law with respect to joint tenancy. It leaves the incidents of joint tenancy standing as they are determined by the common law and any other relevant statute. But it requires that documents transferring interests in land under the Act should be in a particular form and should be registered: ss. 42, 39. (at p324)

19. If there are three joint tenants, A, B and C, and one joint tenant A transfers his interest to another joint tenant B, the result is that A then has no interest in the land, B becomes a tenant in common as to one-third interest in the land, and remains a joint tenant with C as to a two-thirds interest. If subsequently B transfers to A the interest which he still has a joint tenant (A then having become a stranger to the title, his interest having passed to B), there is a further and complete severance. A becomes a tenant in common as to one-third interest with B and C, the transfer working a severance of the joint tenancy between B and C in the two-thirds interest in the land. The final result is that A, B and C become tenants in common, each having a one-third interest. (at p324)

20. If the transfer by B to A were made on a day subsequent to the transfer by A to B, as I have assumed in what has just been said, there would be no doubt as to the result. The difficulty in the present case arises from the fact that there was only one document which came into operation at a particular moment of time, namely upon registration: see Real Property Act 1862, ss. 35 (2), 39 (1). But if the document is construed in accordance with the principle ut res magis valeat quam pereat, the transaction can be upheld by regarding the words of transfer by A to B as equivalent to a release and by regarding the words of transfer by B to A as constituting a grant. The transfer by A to B made B a tenant in common with C as to a one-third interest, leaving B and C as joint tenants in respect of a two-thirds interest. That joint tenancy of B and C was severed when B transferred his interest as joint tenant to A. If the document is so interpreted effect is given to the plain intention of the parties so that A, B and C became tenants in common of the land, each owning a one-third interest. (at p325)

21. In my opinion the appeals should be allowed and the point of law determined by declaring that the joint tenancy in the land under the Real Property Act was severed by the registration of the transfer dated 6th December 1945. (at p325)