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Supreme Court of New South Wales |
COURT
IN THE SUPREME COURT OF NEW SOUTH WALES
EQUITY DIVISION
SANTOW J
HRNG
SYDNEY, 31 July 1995
#DATE 5:9:1995
#ADD 16:10:1995
Counsel for the Cross-Claimant: V B Davoren
Solicitors for the Cross-Claimant: Bruce R Miles
Aboriginal Legal Service
Counsel for the Second Cross-Defendant: R G Forster SC
Solicitors for the Second Cross-Defendant: Shaw McDonald
ORDER
Orders made
JUDGE1
ESSENTIAL ISSUES
SANTOW J The claims between
the various parties have now reduced to a
cross-claim, essentially in conversion, against the Third Defendant, St George
Commercial
Credit Corporation Ltd ("St George"). It is brought by Anthony
Alwyn Spies ("Anthony Spies") as Cross-Claimant.
2. Anthony Spies
alleges that, in the circumstances, St George wrongfully
took possession of certain furniture and chattels. These were originally
itemised for a bill of sale entered into in 1986 in favour of the Trustees of
the Roman Catholic Church for the Archdiocese of Sydney.
They were included
amongst the contents of the residence he then occupied with his parents and
brother, Carl, owned by a Spies' family
company and known as "The Swifts" at
Darling Point.
3. Anthony Spies claims that he had a half share in such furniture and
chattels
at the time of their seizure. Anthony Spies' cross-claim necessarily
depends on his establishing the following:
(a) that he
had the requisite title to the furniture and
chattels so as to maintain proceedings in conversion (or in
the alternative,
detinue);
(b) that St George converted the furniture and chattels, and
(c) that he suffered quantified loss and damage by
reason of
St George converting the furniture and chattels.
4. St George contends that Anthony Spies has failed to establish
any of the
foregoing three essential elements and has provided no quantification of
damage.
5. In denial of the first essential
element of title, St George also contends
that, even if Anthony Spies originally had the requisite title to the
furniture and chattels,
which it denies, Anthony Spies with his brother, Carl
Spies gifted their respective half interests to their late mother, Joan
Phyllis
Spies ("Mrs Spies"), in 1987, prior to their seizure in 1992. The
efficacy of any such gift is disputed by Anthony Spies. He denies
that the
delivery necessary to effectuate an oral gift ever took place.
6. St George appears to depend for its right to seize,
on an assignment to it
in 1990 of a second bill of sale granted by Carl Spies alone to the assignor
(the Roman Catholic Church).
That 1990 Bill of Sale included the relevant
furniture and chattels. But if an earlier gift had been effectively made by
both brothers
to their mother of the relevant furniture and chattels, then
prima facie St George could derive no rights under the 1990 Bill of
Sale and
its assignment. This is because since Carl Spies would have had no title to
the furniture and chattels at the time he purported
to grant the 1990 Bill of
Sale.
7. However the implications of that were not argued before me and no evidence
was given by Carl
Spies. Furthermore, the estate of the late Mrs Spies was not
a party to these proceedings, nor anyone claiming as a beneficiary of
that
estate. Nor was any claim made by Anthony Spies based on any interest in such
estate.
ELABORATION OF FACTUAL BACKGROUND
8.
On 13 March 1986 Lawsons, the valuers, prepared what the parties agreed
should be referred to as an inventory of certain furniture
and chattels
located at "The Swifts". It was not conceded that the inventory represented
the current value of the relevant items.
There was no evidence before me as to
that, beyond that the proceeds of sale they eventually fetched was in excess
of $500,000. "The
Swifts" is a large property in Darling Point of considerable
value, owned for many years by the Trustees of the Roman Catholic Church
for
the Archdiocese of Sydney. It is a mansion of some forty-odd rooms and
standing on over three acres of land.
9. By transfer
registered 9 April 1986, a company, Minjar Holdings Pty
Limited ("Minjar"), acquired "The Swifts" from the Roman Catholic Church.
It
executed a mortgage back in favour of the Roman Catholic Church over The
Swifts (described as a Third Real Property Act Memorandum of Mortgage). Minjar
is a company associated with the Spies family and in particular the now
deceased father of Anthony
Spies as well as the two sons, Carl and Anthony
Spies. Anthony Spies, the adopted son of those parents, was secretary to that
company
at the relevant time. Evidence was given by Anthony Spies that the
directors were the father and Carl Spies (transcript at 12).
10. After the acquisition of The Swifts, Anthony Spies and Carl Spies, along
with their parents, took up residence there, accommodated
as I describe in
more detail later.
11. On 14 April 1986 Carl Spies and Anthony Spies executed a Bill of Sale
("the 1986 Bill
of Sale") over such of the chattels listed in the Lawson
inventory as had not been deleted by hand. It will be apparent from the
inventory that these chattels included antiques which it may be inferred were
of considerable value, since they were later to be
sold by St George so as to
yield proceeds in excess of $500,000.
12. The 1986 Bill of Sale was an ordinary bill of sale, in which
"the
mortgagor" is described as "Carl Douglas Spies and Anthony Alwyn Spies" and
"the mortgagee" as "The Trustees of the Roman Catholic
Church for the
Archdiocese of Sydney". "Mortgagor" is defined in clause 24 as follows:
"24........
... The expression "the
Mortgagor" used herein includes if this
Bill is given by one person that person his executors
administrators and transferees
and if this Bill is given by
more persons than one those persons jointly and every two or
more of them jointly and each of
them severally and their
respective executors administrators and transferees and if a
Company is a Mortgagor includes that
company its successors and
transferees: If this Bill is given by more than one Mortgagor
the covenants and agreements on
the part of the Mortgagor herein
contained or implied shall bind the Mortgagors jointly and every
two or more of them jointly
and each of them severally;"
13. The 1986 Bill of Sale is expressed as being to secure what is described
as an advance to the
mortgagor of the sum of $200,000 (as well as money
comprised in "the Principal Sum" secured under The Third Real Property Act
Memorandum of Mortgage, described below). I infer, for reasons elaborated
below, that the $200,000 represented the purchase price
of the relevant
furniture and chattels acquired by Anthony and Carl Spies from the Church. It
is a fair inference that the $200,000
secured by the 1986 Bill of Sale in fact
represented an amount equivalent to the amounts totalled by Lawsons in their
inventory,
namely $277,641, less deductions for the amounts referred to in the
Lawsons' inventory as deletions. I infer these deductions were
for items which
can be taken to have been retained by the Church
14. The property the subject of the 1986 Bill of Sale is described
in
Annexure "B" to the 1986 Bill of Sale as follows:
"All those items as contained in the property "The Swifts" 68
Darling
Point Road, Darling Point as listed and described in
the inventory and valuation dated 13th March, 1986 by Lawsons
of James
R. Lawson Pty. Limited, less all deletions thereto as
acknowledged by both parties prior to the date hereof."
15. Repayment
of the principal sum was required as to $50,000 on 14 October
1986 and as to the balance of $150,000 on 14 April 1987; see clause
28. No
interest is charged unless default is made (clause 29).
16. Clause 32 provides that the 1986 Bill of Sale is collateral
to a "Third
Real Property Act Memorandum of Mortgage of even date between Minjar Holdings
Pty Limited ... as mortgagor and The Trustees of the Roman Catholic Church
of
the Archdiocese of Sydney, as mortgagee ... over the property known as 68
Darling Point Road, Darling Point" ("The Swifts"). Clause
32 then provides
that:
"... The Parties hereto further acknowledge that the Principal
Sum secured by this ordinary Bill
of Sale is the same Principal
Sum as is secured by the said Third Real Property Act Memorandum
of Mortgage and the Parties hereto agree that any default by
the Mortgagor in the deemed performance and/or observance
of
any one or more of the covenants, conditions, provisions and
stipulations of the said Third Real Property Act Memorandum of
Mortgage shall be deemed to be a default under the terms and
conditions of this Security."
17. This Third
Real Property Act Memorandum of Mortgage was not in evidence
before me.
18. Finally, clause 30 prohibits assignment by the mortgagor of the mortgaged
premises without the previous consent in writing by the mortgagee.
19. According to Anthony Spies, some time in 1987 the 1986
Bill of Sale was
discharged, though this is disputed by St George. There is no documentary
evidence of such discharge. Section 13(1)
and (2) of the Bills of Sale Act
1988 (NSW) provides, relevantly, as follows:
"13. (1) A bill of sale may be discharged, or
partly discharged,
by a receipt indorsed on the bill of sale, or copy thereof, held
by the grantee or person claiming through
him, in the form set
out in Part 1 of the Third Schedule, or to the like effect.
(2) If the Registrar-General is satisfied
that a bill of sale,
or copy, held by the grantee or person claiming through him, for
some good reason cannot be produced,
such bill of sale may be
discharged or partly discharged by a receipt in the form set out
in Part 2 of the Third Schedule."
20. There is no receipt indorsed on the Bill of Sale or any copy thereof
produced to the Court. Nor is any receipt in evidence
of the kind referred to
in s13(2) quoted above.
21. It appears that discovery was not sought from St George nor any Notice to
Produce such as might have elicited such a receipt if it existed. It was said
by Counsel for St George that based on instructions,
St George was not aware
of any such receipt being in existence. Nor, it appears, was there any
subpoena upon the Trustees of the
Roman Catholic Church for the Archdiocese of
Sydney and no evidence was otherwise sought from that source.
22. Anthony Spies'
did not come across as a witness of great commercial
sophistication. I am satisfied his responses showed him seeking to answer
conscientiously
and as best he could recall. His recollection of repayment was
not precise. He did claim recollection of having made payment of certain
amounts in "the middle of the next year" (transcript at 14). He could not
recall the particular payments. He added in cross-examination
that as he
recalled it, nothing had been paid to the Roman Catholic Church when he moved
into "The Swifts" in April 1986 but that
between then, and some time in 1987
some money was paid over to the Church (transcript at 23). He acknowledged in
cross-examination
that he could not recall how much was paid. He confirmed
that he was not involved in the payments but said, "I think it was my brother
or my father" (transcript at 23). No evidence was given by the brother and the
father is now deceased.
23. There is, however,
some evidence supporting the inference that the 1986
Bill of Sale was discharged. Thus, on 19 June 1990, the same mortgagee, namely
Trustees of the Roman Catholic Church for the Archdiocese of Sydney, was the
grantee of a new bill of sale ("the 1990 Bill of Sale").
This time it was
granted by Carl Spies alone. That 1990 Bill of Sale was for the lesser amount
of $93,500. It was not disputed that
this amount represented unpaid interest
owing to the Church which I infer was attributable to the original purchase of
"The Swifts"
and still outstanding on 19 June 1990. The 1990 Bill of Sale
makes no mention of any ownership interest on the part of Anthony Spies.
It is
expressed to be over "all furniture and furnishings now and hereafter situated
in the premises known as "The Swifts", 68 Darling
Point Road, Darling Point".
The Cross-Claimant contended that the 1990 Bill of Sale could be only over
Carl Spies' half interest
in the chattels, as Anthony was not a party to it.
24. When the second Bill of Sale was granted on 19 June 1990, I am satisfied
this coincided with the principal mortgage to the Church being discharged over
"The Swifts" and its re-financing by Minjar granting
a fresh mortgage in
favour of St George (there being also a second mortgage granted over the
property to Custom Credit), Thus this
fresh mortgage was granted on the same
day as the 1990 Bill of Sale.
25. It was not disputed that the furniture and furnishings
previously the
subject of the 1986 Bill of Sale remained at that address in "The Swifts".
There is evidence that there would have
been other furniture and furnishings
added, being the personal belongings of at least Anthony Spies, as well as
property contributed
from the previous Spies' residence in Point Piper or
subsequently bought by Carl Spies or his mother. Evidence was undisputed that
the Spies family bought antiques.
26. In both the 1986 and 1990 Bills of Sale there is a similar printed
Statutory Declaration,
clause 4 of which stating:
"that the personal chattels comprised in such bill of sale are
at the time of my/our giving the
said bill of sale this day,
my/our absolute property (except as stated in clause 7 of this
Declaration)".
27. In the 1986
Bill of Sale both Carl Spies and Anthony Spies signed that
Statutory Declaration. Whereas, in the 1990 Bill of Sale only Carl Spies
signed it alone as he alone signed the 1990 Bill of Sale.
28. Anthony Spies gave evidence, which was not contradicted, that he
did not
know of the 1990 Bill of Sale at the time it was granted.
29. Clause 7 of the above Statutory Declaration was deleted
in the 1990 Bill
of Sale but not in the 1986 Bill of Sale. Clause 7, in both cases, read as
follows:
"That at the time of the
giving of the said Bill of Sale money
owing to ... on the security of the said personal chattels."
30. Had there been money
still owing to the knowledge of the Trustees of the
Roman Catholic Church for the Archdiocese of Sydney on the 1986 Bill of Sale
one would have expected that clause 7 in the 1990 Bill of Sale would not have
been deleted, but rather completed instead so as to
refer to money still owing
under the 1986 Bill of Sale.
31. While the 1986 Bill of Sale is expressed as securing monies owing
under
the Third Real Property Act Memorandum of Mortgage, it can be inferred this
latter related to securing the purchase price for purchase of "The Swifts".
The Certificate
of Title shows that mortgage to have been discharged.
32. In all the circumstances, though the state of the evidence is less
complete
than it should have been, I am satisfied that it is more probable
than not, that the 1986 Bill of Sale was paid out, though it may
well have
been the case that no receipt of the kind required by s13 of the Bills of Sale
Act 1988 (NSW) was ever executed. Those
circumstances include the fact of a
fresh bill of sale being executed to the same mortgagee for a different
amount, referable to
interest most likely attributable to the original
purchase of "The Swifts" and the complete absence of any reference in it to
the
earlier 1986 Bill of Sale, including the deletion of clause 7.
33. Returning to earlier events, Anthony Spies gave evidence that
he and his
brother Carl
"transferred the ownership of the furniture, paintings, art
work, china and other items in the home
at "Swifts", (shortly
after the the payment out of the Bill of Sale, according to my
beliefs and) I recall being present
with my parents and Carl
Spies when we celebrated the transfer of the items of furniture
to my mother, by sharing a bottle
Dom Perignon champagne. From
that date I have considered that I have never had any further
interest in the items referred
to above and that they were the
property of my late mother."
34. See Anthony Spies' affidavit of 10 July 1992, paragraph 5.
(The words in
square brackets represent how that part of his affidavit evidence was to be
read, by consent.)
35. At that time
in 1987 the parents of Anthony and Carl, together with
Anthony and Carl, were still living in "The Swifts". The mother, Mrs Spies,
died on 5 July 1991 and the father had also died before 1992. Anthony and Carl
continued to live in "The Swifts" until 22 April 1992
when St George took
possession.
36. It is clear enough that in 1987 the furniture and other items had been
augmented from those
the subject of the 1986 Bill of Sale, though I am
satisfied that "The Swifts" would still have housed those items originally
comprised
in the 1986 Bill of Sale.
37. The family were all interested in antiques. "The Swifts" was a very large
property comprising some
20 bedrooms and other formal rooms all requiring to
be furnished. At the time, Anthony Spies resided in separate accommodation in
a separate adjoining cottage with his own bedroom and living room. His
parents' bedroom was on the second floor, with Carl Spies
two doors down from
them in his own separate accommodation comprising a bedroom and another living
room. It appears that the principal
formal rooms - drawing room, study, games
room - were on the ground floor. They were occupied by the parents where most
of the items
left in "The Swifts" were to be found. Other items were to be
found in every bedroom.
38. Significantly, uncontradicted evidence
given by Anthony Spies concurred
in the conclusion that "the rooms where most of the items from the Roman
Catholic Church had been
left were under the control of the parents or with
your mother and father" (transcript at 19). It was also uncontradicted that
each
brother's accommodation was indeed separate. To the extent the two
brothers used those rooms (drawing room, study, games room), I
infer that they
were not done as co-possessors, with their parents, but by leave of their
parents; though no doubt their access was
in practise untrammelled.
39. The background to the intended gift was that Anthony and Carl first
discussed it with each other.
They decided that they wanted to gift the
furniture left in the house by the Roman Catholic Church to their mother as
she had been
a good mother to them. They told their mother that they wanted to
give these items to her (transcript at 20).
40. In cross-examination,
Anthony Spies concurred in the suggestion from St
George's Counsel that Carl had said in front of him, something like this:
"Mother, Anthony and I would like to show you our appreciation
for being such a good mother, by giving you the items covered
in
the Bill of Sale which we have now discharged." (transcript
at 21)
41. Anthony Spies recalls them all celebrating with
the champagne. Thereafter
his recollection was not precise, though he thought he recalled that they
"might have" walked around the
rooms admiring the various items. But he did
not recall whether he put his hand on any of the items or whether he or his
brother
handed any to his mother. Indeed his recollection was that he would
not pick up any of the items "because she would tell me to put
it down
straight away" (transcript at 22). He had no recollection of statements being
made to the effect that "these are the items
we would like you to have"
(transcript at 22).
42. I conclude, on the balance of probabilities, that Carl and Anthony did
unequivocally
state to their mother that they were gifting the furniture to
her and had the celebratory drink. I also conclude that it is more
probable
than not that following the celebratory drink, at least Anthony would have
walked around the various items of furniture.
However, it is not possible to
conclude whether or not he was accompanied by his mother or indeed by Carl
and, if his mother did
accompany him, whether or not he put his hand on any of
the items, though it is clear enough he did not pick any up to hand to his
mother.
43. I should add that no evidence was given by Carl Spies, there having been
a family falling out between the brothers.
44. Following St George taking possession of "The Swifts" on 27 April 1992,
the brothers ceased to occupy the property and the
furniture was put in
storage. On 5 May 1992 the Trustees of the Roman Catholic Church for the
Archdiocese of Sydney transferred to
St George the 1990 Bill of Sale and the
debt secured thereby. Though no document of assignment was produced, that
transfer was not
in dispute, according to the agreed chronology submitted by
the parties.
LEGAL QUESTIONS
45. Question 1 Did Anthony Spies have
and retail? the requisite title to the
relevant furniture and chattels so as to maintain proceedings in converstation
against St
George?
46. Question 2 If the answer lo question 1 is "Yes", did St George convert
the relevant furniture and chattels, so far
as Anthony Spies was concerned?
47. Question 3 Depending on the answers to questions 1 and 2, did Anthony
Spies suffer loss and
damage by reason of St George converting the relevant
furniture and chattels and, if so, has that loss and damage been quantified?
Question 1 Did Anthony Spies haw and retain the requisite title to the
relevant furniture and chattels so as to maintain proceedings
in conversion
against St George?
Elements of Conversion and Detinue
48. A useful explanation of the tort of conversion is found
in the judgment
of Dixon J in Penfolds Wines Pty Ltd v. Elliot [1946] HCA 46; (1946) 74 CLR 204 at 229:
"The essence of conversion is a dealing with a chattel in a
manner repugnant to the immediate right of possession
of the
person who has the property or special property in the chattel".
49. Thus in this context, the wrongful sale and delivery
of goods belonging
to another person amounts to a conversion; that is to say, a physical dealing
with the goods in a manner inconsistent
with the owner's title: Claxton v.
Everingham (1884) 6 ALT 132; Motor Dealers Credit Corporation Ltd v. Overland
(Sydney) Ltd [1931] NSWStRp 20; (1931) 31 SR(NSW) 516.
50. Accordingly, in order to maintain an action in conversion, the claimant
must prove his or her right to immediate possession
of the chattel at the time
of the alleged conversion: Abbott v. NSW Monte de Piete Co [1904] NSWStRp 38; (1904) 4 SR(NSW)
336; Beale v. Gough (1882) 1 WN(NSW) 110; Wertheim v. Cheel (1885) 11 VR 107.
Such title to sue in conversion may be established through the claimant's
proprietary or possessory interest in the chattel; but
a mere contractual
right to possession is not sufficient: Jarvis v. Williams (1955) 1 All ER 108.
51. The same considerations would apply in relation to the action framed in
detinue. The essence of detinue is wrongful detention
of a chattel to which
the plaintiff has the right of immediate possession. This right must derive
from some proprietary or possessory
interest in the chattel: Russell v Wilson
[1923] HCA 60; (1923) 33 CLR 538.
Were the chattels gifted by the brothers to their mother, so precluding a
right to possession on the part of Anthony Spies?
52.
The question thus arises whether Anthony Spies retained the requisite
right to immediate possession of the relevant furniture at
the time of their
seizure by St. George. This depends upon whether, accepting he earlier had
such a right to the chattels by way
of his claimed half interest, that right
nonetheless continued to the time of seizure, notwithstanding the earlier
steps said to
constitute a gift to his mother. If such a gift were earlier
effectively completed, then Anthony Spies would not have retained the
requisite proprietary or possessory title to maintain an action in conversion
or detinue.
Effective gift - delivery
53. A gift
of chattels may be effectuated in one of three ways; by oral words
of gift with delivery, by deed, or, in equity, by declaration
of trust, The
first method of oral words and delivery, and that of gift by deed are the only
ones available infer vivos at common
law. The history of delivery in the
context of oral gifts is set out in detail in the joint judgment of Bowen and
Fry, L.JJ., in
Cochrane v Moore (1890) 25 QBD 57. That decision reviews the
authorities from the time of Edward I, including Bracton in his book de
acquirendo verum dominio, in affirming
the then rule in Irons v Smallpiece 2 B
and Ald, 551. It affirmed that an effective gift of chattels requires either a
deed or testamentary
document, or an actual delivery to the donee. The
writings of Bracton invoke the mediaeval emphasis on the importance of seisin,
whether applied to a pig's ham or a manor or field. It was said, at 66, that
Bracton was not copying Roman Law since "at least since
the time of Justinian,
gift has been a purely consensual transaction, and did not require delivery to
make it perfect (Inst. ii,
vii)". However, that last conclusion in unqualified
form is open to question. It is true Justinian treated informal agreements to
make a gift as enforceable (Inst. II. 7.2). But actual delivery of the thing,
where a gift of that kind was in issue, remained necessary
to effect a
transfer of dominium (ownership) to the donee (though relaxed to the extent
that delivery of the relevant instrument
or document came to suffice); J A C
Thomas, Text book of Roman Law North Holland Publishing Company 1976 at 192
citing Justinian's
Code .8.53.6 and .3.29.2.
54. The later softening of the requirements of delivery in Roman law supports
the observation of Buckland
and McNair Roman Law and Common Law Cambridge 1974
at 112:
"There is a curious difference in the evolution of conveyance in
Roman law as compared with ours. Our law requires in principle
either delivery or deed; Roman law requires delivery, or for
some things only mancipation. But in our law the actual transfer
is not required on a sale of goods, and, apart from this,
all
incomplete transfer will be helped out in equity in favour of
any one but a mere 'volunteer', a donee. In Roman law,
on the
other hand, sale always required a delivery to transfer the
ownership and it was especially in favour of gifts that
the
rules were relaxed; whereas in our law it is precisely in the
matter of gifts that we are strict and insist as a general
rule
upon delivery if there is no deed (2)." ((2) See for example Re Cole
(1963) 3 WLR 621 where the Court of Appeal reaffirmed this rule.
The delivery of the title deeds of land will not transfer the
legal estate,
though an equitable mortgage may be created by
a deposit of title deeds; but with personal property the handing
over of a
document of title to chattels may in certain cases
be tantamount to delivery of the chattels themselves, as in
the case of
delivery of a bill of lading to the purchaser of
goods under a c.i.f. contract.)
55. Thus unless made by deed, a gift of chattels,
though evinced orally or in
writing, is not completed without delivery: Thomas v Times Book Co Ltd (1966)
2 All ER 241; Re Swinburne, Sutton v Featherley (1926) Ch 38. Delivery in this
circumstance means the voluntary transfer of possession of the goods to
another, whether by means of the physical
transfer of the property itself or
by some constructive delivery. Constructive delivery will be appropriate
where, as is the case
here, the chattels are bulky or consist of a collection
of pieces or articles not readily susceptible of manual delivery: Lock v.
Heath (1892) 8 TLR 295; Rawlinson v. Mort (1905) 21 TLR 774.
Delivery prior to words of gift - retained possession and custody
56. Importantly though, the delivery need not be made at the
time of the
gift. Delivery may occur prior to or contemporaneous with or subsequent to the
words of gift: In re Stoneham; Stoneham
v. Stoneham (1919) 1 Ch 149 (in this
respect not following Shower v Pilck [1849] EngR 956; 1849 4 Ex 478 though affirmed in Cochrane
v Moore (supra) at 61-2).
57. This proposition as it relates to prior delivery, implicit in
pre-existing
possession or custody, requires some elaboration. Its
implications depend on where pre-existing possession (or custody) resides -
with a third party, with the putative donor or with the putative donee. (I
leave to one side cases of shared possession.) As Buckland
and McNair point
out (at 113) Roman law allowed a similar result: "if the thing is already in
the intended owner's hands, an actual
delivery is dispensed with (traditio
brevi manu)". Thus where the goods are already in the possession of a third
party bailee, then
the donor must in some way effect a change in the character
of the bailee's possession so that henceforth the third party looks to
the
donee as his bailor. Likewise, where possession has remained in the donor,
words of present gift may not suffice without delivery
and in the absence of a
deed or declaration of trust; Crossley Vaines' Personal Property E.L.B. Tyler
and N.E. Palmer, Fifth Edition,
Butterworths 1973 at 308-9. But if the goods
are already in the possession (or custody) of the donee, an effective oral
gift of those
goods may be made without the need for any further delivery,
because delivery has occurred prior to the words of gift: In re Stoneham;
Stoneham v. Stoneham (1919) 1 Ch 149, Elder's Trustees and Executor Co Ltd v.
Gibbs (1922) NZLR 21; Pascoe v. Turner [1978] EWCA Civ 2; (1979) 2 All ER 945. As Herron J stated
in See v. See (1946) 63 WN (NSW) 181 at 183:
"Manual delivery is not necessary to complete a verbal gift of
furniture, for the facts may disclose that there
has been such
a change in possession consequent on the gift as is sufficient
to effectuate it: Kiplin v. Ratley (1892) 1 QB 582. More
especially in cases where the chattels are at the time of the
parol gift in the possession of the intended donee, no
further
act of delivery or change of possession is needed to pass the
property: In re Stoneham (1919) 1 CH 149 ... Winter v. Winter
(1890) 25 QBD 57 supports this view."
58. And as Thornley stated in his article "Transfer of Choses in Possession
between Members of a Common Household"
(1953) 11 Cambridge Law Journal 355 at
358:
"Where no chattel is itself physically transferred there may
nevertheless be a constructive delivery sufficient
to pass
ownership to the grantee. Thus words of gift uttered by the
owner, and words of acceptance by the donee who is already
holding the chattels concerned as bailee for him, change the
character of the donee's possession so as to constitute a
constructive delivery which will pass the title : Alderson v.
Peel (1891) 7 TLR 418; Re Stoneham (1919) 1 Ch 149. The same
is true where the donee merely had custody of the chattels as
the donor's servant; the custody becomes possession,
and the
title passes."
59. But as the case of Flinn v. White [1950] SAStRp 25; (1950) SASR 195 demonstrates, in order
for a gift to be held to be effectual in such circumstances, that is to say,
where there is no further act
of delivery or change of possession, it must
first be established that the donee already had possession, or, at the least,
custody
of the chattels at the time of the words of gift.
60. In Flinn v White (supra), a piano was purchased by the father of three
daughters,
two of whom played the piano, and placed in the family home. Some
years before his death, the father said that as A., one of the
daughters, was
the pianist of the family, the piano was hers. The piano remained in the home
and A continued to use it. After the
father's death, the question arose as to
whether there had been a valid gift of the piano by the father to A. Abbot J,
at p 202,
approved the proposition that if the donee already has possession of
the chattel prior to the words of the gift, it is unnecessary
to go through
the form of delivery as a change in possession has already taken place, which
is equivalent to contemporaneous delivery.
In addition, Abbot J referred to
the principle enunciated in Knapp v. Knapp [1945] SAStRp 4; (1944) SASR 257 that the custody of
a chattel by a donee may be changed into possession as owner. At 202, Abbott J
cited the words of Mayo J in Knapp
v. Knapp (at 263):
"A donee may acquire possession of the chattel by delivery, or,
if he already has it in his custody,
such as in the character
of bailee for some particular duty or service, that custody may
be changed into possession as owner."
61. These words of Mayo J echo the reasoning of Thornley. That is to say,
where a donee merely has custody of chattels, such as
is the case where a
donor temporarily gives his servant control of a chattel, then upon words of
gift and their subsequent acceptance,
the custody becomes possession and the
title passes. The authority for this point is Wittier v. Wittier (1861) 4 LT
639. In that case Mr Winter senior owned a barge which was worked by one of
his sons as the father's employee. At 640 in that case Wightman
J found that
before the gift the son had used the barge as servant to his father (and
therefore had custody but not possession of
the barge) and afterwards he
possessed it and worked it as owner. Although aspects of Wittier v. Winter
have been criticised in later
cases, the above passage from Wightman J still
remains good law. The proposition to be gleaned from these cases then, is that
where
there is no further act of delivery or change of possession, it must
first be established that the donee already had possession,
or, at the least,
custody of the chattels at the time of the words of gift, in order for such a
purported gift to be effectual.
62. In Flinn v White, Abbot J found that in the case before him there was no
evidence of either prior possession or custody of
the piano by A. His
reasoning proceeded therefore on the basis that there would have to have been
a transfer of possession of the
piano for the requirement of constructive
delivery to be satisfied. His Honour concluded that there was no evidence on
which he could
be satisfied that there had been such a transfer of possession
from the father to the daughter, He considered that the daughter had
no more
than a licence, revocable by the father at will, to use the piano in common
with such other members of the family that desired
to use it.
63. His Honour reasoned that as the father was the occupier of the house, the
piano was his, and was in his possession.
He had done nothing to indicate a
transfer in possession, and she had done nothing to indicate that she had
become the owner. Because
the daughter bore the onus of establishing that the
gift was effectual, if the facts were equally consistent, as he concluded they
were, with the possibility that the father intended to make a present, or that
he intended to make a future gift, or that he intended
to retain the ownership
himself, then the daughter had failed to establish that there had been an
effectual gift.
64. The purported
gift In Flinn v White therefore failed because the daughter
could not satisfy the court that she had pre-existing possession or custody
of
the piano, and therefore a further act of delivery was needed to make the gift
effectual. Such farther act of delivery had not
occurred. It is perhaps open
to question whether the daughter in fact failed to achieve custody of the
piano in the circumstances.
Status as a licensee, as such, need not be fatal;
a licensee can have the degree of physical control required for custody.
However
the decision can be more readily justified in terms of onus. This
required the daughter to dispel the implication of her having only
limited
access, by reason of the right to use the piano being at the father's pleasure
and being evidently a shared right with at
least one other daughter.
65. Some mention should made of two twentieth century English decisions in
which the Court of Appeal
examined the validity of gifts of furniture which
bad purportedly been made by a husband to his wife, where both the husband and
wife resided in the matrimonial home: Hislop v. Hislop (1950) WN (Eng) 125 and
In re Cole (1964) Ch 175. In both instances, the Court was not prepared to
hold as efficacious, words of gift spoken in the presence of a wife, who was
in
joint occupation of the matrimonial home, to the effect that she could have
the furniture, in the absence of some manual act of delivery.
However, neither
case involved a wife who was a co-owner with a right to possession. Thus
neither case puts in doubt the proposition
that where a donee has pre-existing
possession, no further act of delivery is necessary to transfer title in the
chattels. Rather,
in these cases it was thought that the mere fact that the
wife was in joint de facto control of the furniture at the relevant time
with
the alleged donor was not sufficient of itself to show that she had
pre-existing possession of the furniture, as opposed to
merely being permitted
to use and enjoy the furniture.
66. In these cases the Court adhered to the proposition laid down in Ramsay
v. Margrett (1894) 2 QB 18. This is to the effect that in the case of a
husband and wife living together, or other persons having a common
establishment, possession,
as it would otherwise be doubtful, is necessarily
attached by law to the title and thus dependent on it. The husband had the
title
to the goods in these two cases and therefore was held to have
possession of them. There was no discussion of the alternative possible
characterisation, as involving prior custody in the wife, albeit shared with
the putative donor husband.
67. In the present case,
as I elaborate below, the living arrangements at
"The Swifts" were quite different to the two English cases. Mr and Mrs Spies
effectively
lived in separate accommodation from their two sons Carl and
Anthony. They therefore cannot be considered to have shared a "common
establishment" with their sons, as that term is used in the English cases. The
fact that the parents gave their sons ready access
to the relevant rooms in
which most of the goods were kept did not make the establishment a common one.
In any event, those two cases
did not explicitly deal with custody as a
separate basis from possession. They appear to have proceeded on an implicit
and I suggest,
questionable, assumption. That is, that where goods are in the
shared use of putative donor and donee, but where the putative donor
has the
superior right to those goods through ownership of the home in which kept,
that necessarily precludes a finding of custody
on the part of the claimant
donee.
68. These English cases and the case of Flinn v. White can in any event be
distinguished from
the present situation. Here Mrs Spies had, clearly enough,
physical control and therefore custody of the chattels, for reasons which
I
will elaborate. Less clearly, and again for reasons which I will elaborate,
she would have had possession as well. I say less clearly,
because ownership
of the house, and therefore the rooms, was, according to the evidence, in the
family company Minjar Pty Limited,
not in the parents. It can, however, be
inferred from the parents' permitted occupation of "The Swifts" and the
parents' acknowledged
control of the relevant rooms, that the parents so
occupied the Swifts by permission of Minjar Pty Limited and probably on a
basis
that their right so to occupy was exclusive as against the rest of the
world, except Minjar. There is no evidence before me as to
how that permission
was formalised, if at all. It is reasonable to infer that Minjar Pty Limited
was owned by the Spies family (though
there is no evidence before me as to
their precise shareholding). The evidence does include that the father and
Carl Spies were directors
and Anthony Spies secretary. The reasoning for this
conclusion depends on the legal meaning in this context of "possession" and
"custody",
to which I now turn.
Meaning of "possession" and "custody"
69. As recognised by the third edition of Words and Phrases Legally
Defined,
Butterworths, 1989, at 398 the word "possession" is of ambiguous meaning. Its
legal senses do not always coincide with its
popular sense.
70. Thus at 398 it is said:
"The word 'possession' may mean effective, physical or manual
control, or
occupation, evidenced by some outward act, sometimes
called de facto possession or detention as distinct from a legal
right
to possession. This is as a question of fact rather than
as of law.
'Possession' may mean legal possession that possession
which is
recognised and protected as such by law. The elements normally
characteristic of legal possession are an intention
of
possessing together with that amount of occupation or control
of the entire subject matter of which it is practically
capable
and which is sufficient for practical purposes to exclude
strangely from interfering. Thus, legal possession is ordinarily
associated with de facto possession but legal possession may
exist without de facto possession, and de facto possession is
not always regarded as possession in law.
71. In Pollock and Wright, Possession in the Common Law, Clarendon Press,
1898,
at 2 it is recognised that "possession, again, whether in the popular or
in the legal sense, does not necessarily concur with title".
Then it is said
(at 16) that possession at law need not be possession as against "all men
without exception, though it be against
the world at large". It is recognised
that "a perfectly exclusive fight to the control of anything can belong only
to the owner,
or to someone invested with such right by the will of the owner
or some authority ultimately derived therefrom, or, exceptionally,
by an act
of the law superseding the owner's will and his normal rights". Thus at 19
they conclude:
"possession in law is a
substantive right or interest which
exists and has legal incidents and advantages apart from the
true owner's title."
72.
I turn now to the meaning of custody in comparison to possession.
73. Pollock and Wright (supra) at 26, differentiate between
possession and
custody, with the following example:
"A tailor sends to J.S.'s house a coat which J.S. has ordered
J.S. puts
on the coat, and then has both physical control and
rightful possession in law.
J.S. takes off the coat and gives it to
a servant to take back
to the tailor for some alterations. Now the servant has physical
control (in this connexion generally
called 'custody' by our
authorities) and J.S. still has the possession in law."
74. The High Court in Federal Commissioner
of Taxation v Australia and New
Zealand Banking Group Limited [1979] HCA 67; (1979) 143 CLR 499 considered the Commissioner
of Taxation's power to have the taxpayer's documents held by a third party
made available for production
to him. This required an analysis of the ability
of the person concerned so to produce them, such ability being defined by
reference
to "custody or control" in s264(1) of the Income Tax Assessment Act
1936 (Cth). At 504-5 Stephen J confirmed that "possession", like "custody",
depends for its meaning upon the context in which used, citing
Towers and Co.
Ltd v Gray (1961) 2 QB 351 at 361 and Reg. v Warner (1969) 2 AC 256 at 299.
Then at 505 Stephen J refers to the earlier cited example from Pollock and
Wright, concluding that the primary meaning of
the word "custody" is that of
physical control:
"In looking to that ability and in describing what a person may
be required
to produce, the section first selects the most
obvious instance of such all ability, the simple case of actual
custody, using
the word 'custody', as did the learned authors
of Pollock and Wright, Possession in the Common Law, at p. 26,
as meaning
physical control."
75. Further explication of the relative differences of "possession" and
"custody" does not need to deal separately
with bailment. There is here no
contract of custody for reward and gratuitous bailment is merely a subset of
the right to possession.
However, a useful summary is to be found in Crossley
Vaines (supra) at 49.
"(2) Legal possession. - Here we have a definite
legal relation
(Pollock and Wright, Possession in the Common Law, 27) but one
which may exist without physical control or
without lawful
origin. The person who has both title to and physical control
of a chattel has, of course, legal possession,
but so also has
he who has physical control of and a manifest intention to
exercise dominion over a chattel. Thus a thief
may haw legal
possession of that which he steals. Again, legal possession may
exist in the absence of physical control, as
where a man's
goods are in the hands of his servant. Unless, in special
circumstances, the servant has been constituted a
bailee of his
master 's property (See R. v. Cooke (1871) LR 1 CCR 295,
The instances are generally to be found in criminal
law.), he
has not possession but a mere physical control; a de facto
possession, called, conveniently, custody. Similarly
the guest
has custody only and not possession of the glass he drinks
out of at his host's table ...
'Custody' in this
sense must not be confused with the contract
of custody for reward, e.g., with respect to the warehousing of
goods, which,
of course, is a proper bailment under which legal
and actual possession passes to the custodier; and even in the
case of
a gratuitous deposit for safe custody the 'depositary'
is a bailee (See Chapter 6, p. 85) and has possession."
Did Mrs Spies
have pre-existing possession or custody of the relevant goods?
76. In the present case, the evidence is that most of the goods the
subject
of the gift were located in the main part of the house - in the drawing room,
the study and the games room - where Mrs Spies
and her husband resided
(transcript at 19). The evidence is that these rooms where most of these items
had been left were "under
the control of, or with", the mother and father.
While no explication of the word "with" occurred in cross-examination, I am
satisfied
it was intended in the context to be synonymous with "control". The
fact that the control was thus joint, between both parents, should
not matter.
So too in Kilpin v. Ratley (1892) 1 QB 582 possession was originally with the
claimant's husband. But the claimant wife effectively shared that possession,
by residing with
him. The gift to her by a third party was still held to be
effective.
77. Nor do I consider that untrammelled access to the relevant
rooms allowed
by the parents to their sons meant that the latter shared with their parents
control of the rooms or what was in them.
Access was still by leave of the
parents.
78. In addition, as earlier pointed out, the evidence indicates that Mrs
Spies and her
husband could not be considered to be living in a 'common
establishment' with their sons Anthony and Carl. The Cross-Claimant, Mr
Anthony Spies resided in a separate area behind the house, whilst his brother,
Carl Spies, had his own bedroom and living room separate
from the area where
Mrs Spies and her husband resided. Although Anthony Spies indicated that he
did not have cooking facilities in
his separate accommodation, I am satisfied
that any use by him of those facilities in the main part of the house would
have been
by permission of his parents.
79. Given these circumstances and were it necessary for me so to decide, I
would be satisfied on
balance that before the words of gift, most of the goods
were, by virtue of their parents' control of the rooms in which most were
placed, in the possession of Mrs Spies, though that possession was joint with
her husband. In my judgment this conclusion is not
precluded by the fact that
ownership of the house was in the family company Minjar Pty Limited, having
regard to what I have earlier
inferred to be the nature of the parents'
occupation rights ceded by Minjar to the parents, to the exclusion of all
except Minjar.
80. I thus take the meaning of "possession" and "custody" from the context
here, in accordance with the principles earlier enunciated.
It is a context
where the entity with legal ownership, Minjar, is not itself the putative
donor. It is furthermore a context concerned
with the effect of clear words of
gift on the ownership of goods then housed in rooms under the control of the
putative donee. In
this context, the notion of delivery, implicit in prior
possession, performs an evidentiary function. That function is to justify
characterisation of what has occurred as amounting to an effective gift
notwithstanding the absence of a deed, in circumstances where
the law has
concluded that oral words of gift alone are not sufficient for this purpose.
It thus presupposes that there is sufficient
in the way of an overt act of
delivery or in the extrinsic circumstance of prior possession or custody, for
the law to do so with
reasonable assurance. Given that words of gift must in
any event have been sufficiently proven, not much more should be needed to
evidence such a donative intention. Thus possession in the de facto sense
should suffice, just as custody suffices, without the necessity
for full legal
possession good against even the owner. To decide otherwise, by insisting upon
a meaning of possession (or custody)
tantamount to the absolute possession
enjoyed by the full owner, would frustrate the intentions of the intended
donor and for no
sensible purpose. This is especially where there is no
suggestion of shared control between putative donor and donee. I do not need
to decide whether indeed that latter feature, absent here, should be fatal to
an effectual gift, though am inclined to think it should
not be fatal.
81. However, even if it could be considered that Mrs Spies did not have legal
possession of the chattels, she quite
clearly had custody of the chattels in
the sense of physical control over them. On the authority of Winter v. Winter
and Knapp v.
Knapp, this prior custody is enough to establish the effectuality
of the gift to Mrs Spies. This situation, where Mrs Spies had,
at the time of
the words of gift, possession or at the least, custody and therefore control
of the chattels is to be contrasted with
the situation in Flinn v. White.
There the daughter did not satisfy the onus of demonstrating effective or
physical control of the
subject matter of the deemed gift.
82. It should be noted that while the evidence of Anthony Spies indicates
that perhaps not
all of the furniture the subject of the gift was located in
the main area of the house where Mrs Spies and her husband resided, and
that
therefore conceivably not all of such furniture was in the possession or
effective control of Mrs Spies at the time of the words
of gift, certainly the
majority was. This factor in my opinion does not alter the effectiveness of
the gift. I am satisfied that
the intended gift to Mrs Spies was of the entire
conglomerate of furniture that was set out in the bill of sale. In these
circumstances
I am satisfied that the fact that Mrs Spies had possession (and
certainly custody) of the majority of the pieces of furniture at
the time of
the words of gift intended to apply to the whole is enough to make the gift of
that majority a proxy for the whole, just
as delivery of a part may be a
delivery of the whole, if it is so intended- Dixon v Yates (1833) 5 B and D
313 at 339, Kemp v Falk
(1882) 7 App Cas 573 at 586, HL per Lord Blackburn.
83. Carl and Anthony Spies clearly evinced their intention to make such a
gift, when they unequivocally
stated that they were giving the furniture to
their mother. Mrs Spies accepted this gift, demonstrating this by partaking in
the
'champagne celebration' at the time of the words of gift. This acceptance
occurred at a time when most of the furniture was, as earlier
concluded in the
joint possession of the mother and husband.
Further act of delivery?
84. Given my conclusion earlier that there
was at least such pre-existing
custody in Mrs Spies (and, though less clearly, possession), I do not need to
consider the nature
of the further act of delivery that would have been
necessary to make the gift effectual, had the evidence not established such
pre-existing
custody or possession. However, I will make some brief
observations on the nature of the further act of delivery, whether
constructive
or not, that would then have been necessary in order to complete
such a gift of chattels.
85. What such delivery requires is to
be determined by reference to the
nature of the chattels claimed to be gifted and to the kind of delivery to
which amenable. For
example, if the chattel were a simple pearl ring, then
delivery would typically be its physical handing over. If, on the other hand,
the chattels were, as here, a conglomerate of furniture scattered throughout a
house, or otherwise bulky, it would be unreasonable
to expect that the
intending donor would pick up and hand to the donee each individual item
included in the gift. Rather, one might
typically find the necessary delivery
to consist of picking up, say, one piece as proxy for the whole, with an
accompanying indication
to the donee that it was so intended. Such a method of
delivery is not of course to be taken as exhaustive of the kinds of delivery
to which such property might be amenable.
86. If it had been necessary for me to decide this question in the absence of
prior
possession or custody in Mrs Spies, I would have been inclined to
conclude that there was in the present circumstances insufficient
evidence to
satisfy the onus of establishing later delivery. While the evidence shows that
Anthony Spies, his brother and their mother
shared some champagne at the time
of the words of gift and even if, as is less clear, it were the case that
after the champagne the
three of them walked around the house having a look at
some of the items, it appears unlikely that any items were picked up by Mr
Spies or his brother, or that Mr Spies or his brother laid hands on any of the
items or handed any to their mother. The celebratory
drinking of the
champagne, which took place at the time of, or just subsequent to, the words
of gift, could not in my opinion suffice
in themselves as an act of delivery.
87. However, based on my earlier conclusion that the furniture was already at
least in the
mother's custody and, on balance, in her possession, no further
act of delivery was necessary. The earlier gift from Anthony Spies
and his
brother to their mother was therefore effectual. Accordingly Anthony Spies has
not established that he any longer had property
in the furniture at the time
of the claimed act of conversion, thus precluding his action at the threshold.
Remaining Questions
88. In light of my answer to this question 1, questions 2 and 3 do not arise.
Based on the way this matter has been argued and pleaded,
any implication of
my earlier finding of an effective gift to the late Mrs Spies on the capacity
of St. George to seize and sell
the chattels under its 1990 Bill of Sale does
not presently arise.
89. Even if it did, that aspect would be further complicated
by the judgment
of 17 December 1992 of Waddell CJ in Eq. Ms Horsley there brought an action as
representative of the late Mrs Spies's
estate, seeking damages for detention
and conversion of "the Swifts" furniture. His Honour gave judgment for summary
dismissal of
the statement of claim. This was on the ground that no reasonable
cause of action was disclosed on the evidence. In particular there
was
apparently then no evidence given to base Ms Horsley's claim that the goods
had been transferred or gifted to Mrs Spies. Whether
this finding would now
give rise to any issue estoppel has not been raised in the present
proceedings. Indeed Anthony Spies placed
no reliance in the present
proceedings on any claim to title based on the will of the late Mrs Spies, nor
otherwise did he seek to
claim through her.
ORDERS
90. Accordingly, I conclude that on the evidence before me the
Cross-Claimant's claim must fail. I direct
the parties to submit orders giving
effect to this judgment within fourteen days and to address me on costs; prima
facie costs should
follow the event.
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