Supreme Court New South Wales Medium Neutral Citation: Morgan v Morgan [2017] NSWSC 725 Hearing dates: 1 June 2017 Date of orders: 01 June 2017 Decision date: 01 June 2017 Jurisdiction: Equity Before: Darke J Decision: Plaintiff's claims that property jointly owned with first defendant is held subject to a certain trust, and that the first defendant is estopped from severing the joint tenancy, dismissed. Catchwords: REAL PROPERTY – joint tenancy and tenancy in common – first defendant lodged transfer severing joint tenancy – plaintiff claims that land is held on trust precluding severance of joint tenancy – plaintiff claims that first defendant is estopped from severing joint tenancy – inadequate evidence of agreement or representation – no evidence of detrimental reliance – claims dismissed Legislation Cited: Conveyancing Act 1919 (NSW), s 66G Cases Cited: Burton v Prior [2015] NSWSC 295 Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Williams v Legg (1993) 29 NSWLR 687 Category: Principal judgment Parties: Catherine Ann Morgan (Plaintiff) Geoffrey Edwin Morgan (First Defendant) Registrar-General of NSW (Second Defendant) Representation: Counsel: Mr D Ash (Plaintiff) Solicitors: Joe Weller & Associates (Plaintiff) Office of the Registrar-General (Second Defendant) File Number(s): 2016/350320 Publication restriction: None Judgment – EX TEMPORE 1. These proceedings concern a property in Lavington, being the land contained in Folio Identifier 432/1006699 ("the property"). The property is owned by the plaintiff, Catherine Morgan, and the first defendant, her father Geoffrey Morgan, as joint tenants. 2. The proceedings were commenced by a Statement of Claim filed on 23 November 2016. They were prompted by an attempt by the first defendant to have registered a transfer severing joint tenancy. The plaintiff has obtained orders restraining the second defendant, the Registrar-General, from registering the dealing. The Registrar-General has filed a submitting appearance save as to costs. 3. The first defendant has been served with the Statement of Claim and the plaintiff's affidavit in support but has not appeared. Notice of today's hearing was sent by post to the first defendant's home but he made no appearance today. 4. The plaintiff seeks a declaration that she and the first defendant hold the property on trust for the first defendant for life "and in remainder for the plaintiff and the first defendant jointly". The plaintiff also seeks a final order restraining the second defendant from registering the transfer severing joint tenancy. 5. The plaintiff, for whom Mr Ash of counsel appears, contends that in the circumstances in which the property was acquired, in particular a discussion she had with her father in 1999, gave rise to an expectation on her part that she would acquire by survivorship her father's interest in the property. She further contends that she has relied upon that expectation to her detriment such that it would be unconscionable for her father to effect a severance of the joint tenancy. Reference was made to the decision of Brereton J in Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239 at [29]. 6. The property was acquired by the plaintiff and the first defendant in early 2000 following the entry into a contract of purchase in late 1999. The property was purchased from the Albury-Wodonga (NSW) Corporation for $45,000. The purchase money and all associated costs were paid by the first defendant. He has since paid for the erection of the improvements on the property. 7. The evidence discloses that the first defendant and the plaintiff's mother separated in the 1970s when the plaintiff was only three. The plaintiff was the only child of the marriage. The first defendant later commenced a relationship with Ms Julie Prichard and they married sometime in the 1990s. There were no children of that marriage. Ms Prichard had two sons from an earlier relationship, Andrew and Sean. Andrew died in 2015. 8. The plaintiff says that it has been her longstanding belief that Ms Prichard is jealous of her and if her father left her something in his will she would "make things difficult for me". The plaintiff says that her belief was shared by her father. The plaintiff deposes in paragraph 13 of her affidavit that she and her father had a discussion in 1999 prior to the acquisition of the property. She deposes as follows: In 1999, Dad and I had a discussion. Dad said words to the effect that he wanted to buy the land and build two commercial units on it for income, that he wanted to put it in our names jointly so that when he passed away Julie couldn't contest it and Andrew couldn't contest it, and also that he could reduce the tax on the income. I understood that he would be receiving the rent for life. I recall him saying words to the effect that I would get something out of everything, which I understood to mean that I would get the property while the estate would presumably go to Julie. 1. The form of the evidence is problematic. Moreover, even though the first defendant has not sought to contradict it, it is appropriate to treat with caution the evidence of a conversation that occurred almost 17 years before the plaintiff affirmed her affidavit. There are no contemporaneous records of the discussion in evidence although there is in evidence a draft of a solicitor's letter written for the plaintiff about four years later which is consistent with the notion that a joint tenancy was chosen to stop Ms Prichard's son Andrew making a claim against the first defendant's estate. 2. The evidence does suggest that the first defendant said words to the effect that acquisition of the property as joint tenants was favoured because it was a means of passing his share of the property upon his death to the plaintiff in such a way that Ms Prichard and her son Andrew could not contest it. It also suggests that the first defendant said words to the effect that the plaintiff would get "something" out of her father's property. 3. The plaintiff submitted that the words "something out of everything" should be interpreted consistently with the plaintiff's understanding; that is, that she would get the whole of the property upon her father's death. It was further submitted that what the first defendant said in the conversation amounted to an implied representation or assurance that he would not later sever the joint tenancy. It was not suggested that there was an explicit agreement to that effect. 4. It is my opinion that the evidence does not establish either that any agreement was made, or any promise or representation made to the effect, that the first defendant would not, come what may, sever the joint tenancy in the future. I note that according to a company search in evidence, the first defendant was only fifty two years old when the conversation occurred. 5. The right to sever is, of course, inherent in a joint tenancy. As stated by White J in Burton v Prior [2015] NSWSC 295 at [7]: The right of a joint tenant includes a right of survivorship only in the event of no severance having taken place. A joint tenant is at liberty to dispose of his or her interest in a manner that severs the joint tenancy. On doing so the joint tenant will lose his or her own right of survivorship. 1. There is no evidence that severance was mentioned in the discussion relied upon by the plaintiff. The words spoken about joint ownership are apt to describe the legal consequences of a joint tenancy in the event of the death of the first defendant as a joint tenant. However, I do not think that a promise or representation to maintain the joint tenancy until his death can be implied from the words. The words spoken indicate a reason why co-ownership by means of a joint tenancy rather than a tenancy in common was chosen (a reason consistent with what later appeared in the draft solicitor's letter referred to earlier), but that falls short of words which necessarily convey that regardless of future circumstances a joint tenant's right to sever will not be exercised. 2. The principle invoked by the plaintiff is a species of equitable estoppel. However, in my opinion, no sufficiently clear promise or representation was made upon which an estoppel precluding severance of the joint tenancy might be based. It would not be reasonable to assume or expect, based on the terms of the discussion and the circumstances in which the acquisition of the property occurred, that the first defendant would not in any circumstances in the future exercise the right to sever the joint tenancy. The understanding deposed to by the plaintiff (that she would "get the property") might not go so far, but even if it does it is not a reasonable understanding to hold based on what the first defendant said. 3. The plaintiff alleges in her verified Statement of Claim that in reliance upon the words spoken by the first defendant she acted in a particular manner including in the conduct of business dealings with the first defendant. However, the plaintiff's affidavit fails to show that anything she did was based upon any understanding she had about ownership of the property. The matters alleged in paragraph 3 of the Statement of Claim do not take the matter much further. The paragraph refers in general terms to reliance upon "the words of the first defendant". "The words of the first defendant" must mean in their context words to the effect of that which is set forth in paragraph 2 of the Statement of Claim. That is, that the plaintiff and the first defendant would hold the land in a life interest for him and in remainder "for the two of them jointly". Mr Ash was not able to explain what was meant by these words. 4. In any event, the content of paragraph 3 of the Statement of Claim, read with the plaintiff's affidavit, does not seem to me to establish that the plaintiff so conducted herself that she would suffer detriment if the first defendant was permitted to sever the joint tenancy. The evidence establishes that it was part of the arrangement that the first defendant would receive the rent from the property, and it is not shown that the business dealings referred to caused any loss to the plaintiff who, after all, became an owner of the property without contributing any money. Further, notwithstanding the family context, I do not accept the submission that this is a case where the plaintiff made "life changing decisions" of the type referred to in Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [84]. 5. For the above reasons, no equitable estoppel is made out against the first defendant that would preclude him from exercising the right to sever the joint tenancy. The first defendant would not be acting unconscionably if he exercised that right. 6. Further, I do not consider that the words attributed to the first defendant in the conversation were to the effect pleaded in paragraph 2 of the Statement of Claim, namely, that he and the plaintiff would hold the property "in a life interest for him and in remainder for the two of them jointly". There may have been an agreement that the first defendant was to have the benefit of the rental income (possibly taking advantage of income splitting for taxation purposes), but the evidence falls short of that which is required to establish that a trust was created on the terms alleged. The evidence does not, in my opinion, show a sufficiently clear intention to create such a trust and no estoppel arises in the circumstances which would preclude the first defendant from denying the existence of a trust on the terms alleged. Moreover, the notion of the remainder being held by the plaintiff and the first defendant jointly when the first defendant is the holder of the life estate is problematic. Mr Ash seemed to accept as much. I note further that the draft solicitor's letter referred to earlier contains a statement that the plaintiff made no contributions to the acquisition or improvement of the property and "merely holds her interest on trust for her father". That statement was apparently based on a statement made by the solicitor who acted for the parties at the time the property was acquired. 7. It therefore seems to me that the plaintiff has not made out her case for either the declaration concerning the alleged trust or the order restraining the Registrar-General from registering the transfer severing joint tenancy. The order made by the court on 3 February 2017 restraining the Registrar-General until further order from registering the dealing will be discharged. 8. That leaves the plaintiff's alternative claims for relief, namely, the appointment of trustees for sale under s 66G of the Conveyancing Act 1919 (NSW) and an order that the first defendant give an account of the rent and other income derived from the property. 9. Grounds for the order for an account have not been established. Indeed, it is not at all clear that the plaintiff ultimately maintained such a claim. The evidence, so far as it goes, suggests that it may have been agreed that the first defendant would be entitled to the benefit of the rental income throughout his life. Further, it appears that the plaintiff and the first defendant have since conducted themselves in a manner consistent with such an entitlement. 10. The plaintiff does not press today for the appointment of trustees for sale. Rather, an adjournment is sought so that an attempt can be made to obtain the first defendant's views about a private sale not involving court appointed trustees. There may be some doubt about whether the plaintiff would be entitled to an order under s 66G having regard to the evidence which suggests that she holds her interest in the property on trust for her father (see Williams v Legg (1993) 29 NSWLR 687 at 693). However, I express no view on that matter. I am prepared to stand this aspect of the proceedings over for a period to allow the parties to consider their positions. 11. The Court will order that the order made on 3 February 2017 restraining the second defendant from registering dealing AK858604C in respect of the land in Folio Identifier 432/1006699 be discharged. I direct that the plaintiff notify the second defendant of the above order within seven days. 12. I will stand the balance of the proceedings over for directions on a date suitable to the plaintiff. 13. There will be no order as to costs. ********** Amendments 07 June 2017 - Amendment to the Coversheet - legilsation added DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2017