Resulting Trusts
Cases
Owens v. Greene and Freeley v. Same
[1932] IR 225
225
Supreme Court
KENNEDY C.J. :
18 March
These two actions, which are concerned with the affairs of one, Austin Freeley, deceased, were tried together as one action, and the appeals, which have been taken by the defendant from the respective judgments, have also been heard together as one appeal. The defendant and appellant is the executor of the will of Austin Freeley, who died on the 29th day of December, 1930, having made his will on the preceding day. He had reached the age of 92 years. At the time of his death the old man, who had never married, was living in the residence on his farm at Ballyhaunis in the County Mayo. He had residing with him an aged sister, Mrs. Cunningham, a young cousin called Thomas Greene who had assisted in looking after him, and a nephew named Richard Owens (brother of the plaintiffFather Michael J. Owens). He had at an earlier period of his life spent some time in the United States, and after a number of short visits he ultimately came home and settled down for the remainder of his life. Whatever may have been his occupation during his active years, as to which we have no information, he succeeded in building up a very substantial fortune before he returned to settle down at home. The largest part of his wealth consisted of cash, which for many years he kept on a number of deposit receipts in the Ballyhaunis Branch of the Ulster Bank. His active mind engaged itself in disputes with the Revenue authorities, and it would appear that he cherished a grievancelike so many of his fellow-citizens convinced that he had been compelled to contribute more than his share to the State.
This thought was constantly before his mind when dealing with his monies, which, as I have said, he had placed to a deposit account at the Ballyhaunis branch of the Ulster Bank and for which he had a number of receipts. These he kept in the Bank itself, in the custody of the Manager. He paid frequent, I think weekly, visits to inspect his receipts and to deal with them in various ways, but more particularly cashing the receipts for the purpose of drawing the interest and replacing the principal monies on fresh receipts. He seems to have had before his mind for many years a problem which has exercised many minds in the past and will, presumably, exercise many more in the future, namely, the problem of passing on his fortune to his intended beneficiaries in such a way as to defeat any claim by the State for a share by way of death duties, or otherwise. These actions are concerned with two sums which he had placed on deposit receipt, one a sum of £5,000, standing in his own name and that of the plaintiff, Patrick Freeley, and the other a sum of £10,826 6s. 3d., standing in the names of himself and of his nephew, the Revd. Michael J. Owens, C.C., plaintiff in the second action. The issue in each action is whether the monies were so placed by way of gift to the persons whose names are joined in the deposit account, and, if so, whether such gift has been effective.
The old man was very secretive, and practically the only evidence which is available to determine the matters in question is the evidence of Mr. Frank McNelis who had been the Manager of the Ballyhaunis Branch of the Ulster Bank for a number of years, and who was called as a witness in support of the claim of the two plaintiffs, that is to say, for the purpose of rebutting the resulting trust which would otherwise be presumed in favour of the deceased man and his personal representatives.
The evidence of the Bank Manager is not at all as full, and I think I may say, not at all as convincing as could be desired. Three dates emerge from his story as of importance. The first is the 2nd of March, 1927. Prior to that date Austin Freeley had kept large sums of money on deposit account with the Bank in his own name alone. On the date mentioned he began a new course of proceeding. He transferred large sums of money to a deposit account in the joint names of himself and Mr. Patrick Freeleythe plaintiff in one of these actions. Mr. Patrick Freeley carried on business in the town of Ballyhaunis and the old man used to visit him frequently. They were related in blood but not immediately. The relationship was somewhat indefiniteit was said to be that of cousins of the third or fourth degree. Now, on the 2nd of March, 1927, according to the Bank Manager’s evidence, Austin Freeley called to the Bank and asked for his receipts. He said that he wished to settle his money, and that he was not able to do so till he saw Father Owens, but that he thought Patrick Freeley was a decent man and he would like to do something for him, and he then gave the Manager a number of receipts which he asked him to put in the names of Patrick Freeley and himself. The Manager stated that the old man asked him to put the money in such a way that he could draw the interest without going to Mr. Freeley and the Manager added, “the only way he could do that was by putting it payable to them or either of them.” This, it appears, is a peculiar form of deposit receipt familiar to Banks in Northern Ireland, but not familiar in other Banks. The total amount dealt with on this occasion was £16,917, represented by ten deposit receipts in the joint names of Austin Freeley and Patrick Freeley. Austin Freeley left the actual receipts in the custody of the Manager. Two days later he called again at the Bank and said that he wanted to take £700 out of the joint account and put it in his own name, which he accordingly did, leaving £16,217 standing in the joint names on nine receipts. (See questions and answers Nos. 30-40.)
The form of deposit receipts used for these transactions was the Bank’s printed form which acknowledges the receipt of the sum deposited as from Austin Freeley and Patrick Freeley, and the printed form runs”for which we promise to be accountable”to which there was added, by a rubber stamp kept for the purpose in the Bank, the words: “To them or either of them.” So that the receipt reads: “For which we promise to be accountable to them or either of them.”
On the back of the receipt there is a printed endorsement to which is prefixed the word “Note” in which it is stated amongst other things that the receipt must be produced at the time of payment and that ten days’ notice must be given when payment is required.
The money so placed remained on that account until the 8th of March, 1928, when Austin Freeley cashed all the deposit receipts with interest and, having taken the interest, relodged them to the same account where they remained until the 2nd of May, 1929, when he again cashed the receipts and re-lodged the principal.
On the 17th of October, 1929, he again cashed all the money standing to this deposit account in the joint names of Patrick Freeley and himself, but he only restored to that account the sum of £11,265, and placed the balance in his own name alone.
On the 29th of May, 1930, he again drew the money standing to the joint account and of this, only restored £6,000 to the joint account and put the balance in his own name alone.
Patrick Freeley, whose name he had joined in the account, was no party to any of these dealings, and appears to have known nothing whatever about the account or the dealings with it nor as to the fact of his name being associated in the account.
Now we come to the second date of importance, the crucial date, namely, the 8th of September, 1930, on which date there were standing in the names of Austin Freeley and Patrick Freely the sum of £6,000, represented by one deposit receipt, and in the name of Austin Freeley alone, sums amounting in the whole to £13,450 17s. 5d., represented by nine deposit receipts. The first-mentioned receipt was in the form by which the Bank promised to be accountable for the £6,000 “to them (i.e., Austin Freeley and Patrick Freeley) or either of them.” (Questions 64-68.)
The books of the Bank show the dealings with the deposit account on the 8th of September, 1930, as follows Austin Freeley cashed the ten deposit receipts, receiving into his own hands the £6,000 which he had placed in his own name and that of Patrick Freeley, and the £13,450 17s. 5d. which then stood to the account of his own name alone, making £19,450 17s. 5d. in all. He disposed of this sum as follows: He put back to the account of himself and Patrick Freeley the sum of £5,000 only, taking a deposit receipt in the form by which the Bank promised to be “accountable to them or either of them.”He put a sum of £3,506 to a deposit account in his own name alone. Finally he opened a new deposit account in the names of himself and the Rev. Michael J. Owens to which account he lodged the sum of £10,826 6s. 3d. for which he took four deposit receipts in unequal amounts, all in the form by which the Bank promised “to be accountable to them or either of them.” (A small balance £118 11s. 2d. is not accounted for.) That is the naked money transaction of that date. I turn now to the evidence of Mr. McNelis, the Bank Manager, who, at questions Nos. 69 and following, gives us the only account we have of the circumstances of the transaction. He was asked to tell what occurred on the 8th of September, 1930, and answered as follows:
“He called about 11.30 or 12 o’clock and asked for his receipts, and he said that he was going to settle the money finally. And he told me to put £5,000 in the names of Patrick Freeley and himself, and he gave me a number of receipts totalling £14,000 to put in the names of Father Owens and himself. He told me that he wished that no person would know anything of these monies, and that the monies were to be the property of Patrick Freeley and Father Owens if anything happened to him and that the receipts were to be handed to the survivors. And when the receipts came in done up. . . .”
70. Q. “You filled in the requisitions as directed and the receipts came back?
A. Yes. And when they came back, he said that he had made a mistake in Father Owens’ receipt and he wanted to change it. He wanted £3,500 kept in his own name he wanted it for a certain purpose. Which I did.
71. Q. Was that what he said? A. Yes, those were his very words.
72. Q. He did not tell you what the purpose was? A. No. So I got the receipts as he asked me and changed them as directed and handed them to him and he looked them over and handed them back again to me. And he told me that the joint receipts, if anything happened to him, were to be handed to the survivors, but that no one was to know anything of the money and the money was to be their property. So he told me to keep the receipts in my possession and I did so,
73. Q. And the result then was that there were four receipts in the names of Austin Freeley and Father Owens totalling £10,846 8s. 3d. (sic in stenographer’s transcript of evidence)? A. Yes.”
Mr. McNelis then went on to tell of another deposit which Austin Freely made on the same occasion of a sum of £200 in the joint names of the Rev. Michael Owens and one, Richard Owens, the receipt in this case was in favour of them (Richard Owens and Father Owens) “or the survivor of them.” Richard Owens, a brother of Father Owens, had worked for Austin Freeley for a number of years. Austin Freeley instructed Mr. McNelis to get from Richard Owens a receipt acknowledging payment of all his claims up to date, and on getting such a release to deliver the deposit receipt to Richard Owens. The Manager carried out these instructions on the same day.
I come now to the third of the important dates, the 15th of December, 1930. If we look first at the record of the deposit accounts in the books of the Bank, we find the following entries. Austin Freeley cashed the deposit receipt for £3,506 standing in his own name alone and immediately relodged that sum on a new deposit receipt in his own name alone. He likewise drew the sum of £5,000 standing on deposit account in his name and that of Patrick Freeley and immediately relodged the same sum on a new deposit receipt in the same names, and again to be accounted for “to them or either of them.” He likewise drew the sums amounting to £10,826 6s. 3d. standing on deposit account in his own name with that of the Rev. M. J. Owens, represented by four deposit receipts of unequal amounts, and immediately relodged the same sums of money on four new deposit receipts of the same amounts in the same names and again to be accounted for”to them or either of them.” The Bank Manager’s story of these transactions is contained in his answer at question No. 87 as follows:
87. Q. “Do you recollect any further dealing with the deposit receipts by Austin Freeley?
A. Yes. On the 15th December he called and said that he had some bills to pay, and he would like to get the interest on those receipts. And I gave him the interest on the receipts, and he told me to keep the receipts as they were, which I did.
88. Q. And that is what appears by the entries on the 15th? A. Yes.”
From the 8th September, 1930, he never again operated on any of these deposit accounts except for the purpose of drawing interest on the one occasion just mentioned of the 15th of December, 1930. (Evidence of Mr. McNelis, questions Nos. 363 to 367.)
Austin Freeley died on the afternoon of Monday the 29th of December, 1930, after a very short illness. According to the evidence given by the Bank Manager at the trial, on the day of Austin Freeley’s death, the son of Patrick Freeley called at the Bank and asked for the deposit receipt in the names of Austin Freeley and Patrick Freeley, and Mr. McNelis says that he handed it to him in an envelope to give to his father. Father Owens came to the Bank in the evening of the same day and Mr. McNelis handed him the four receipts in which he was named. (Evidence of Mr. McNelis at questions Nos. 102, 103, 184, 322.)
The prompt application of Father Owens and Patrick Freeley for delivery to them of the deposit receipts brings us to the very important questions as to when and by whom each of them had been informed of his name having been introduced into the deposit account by this very secretive old man, Austin Freeley. The Bank Manager’s evidence on this point is certainly lacking in precision. The effect of it, as I understand it, as a whole (it is not free from contradictions and confusion) is this. Austin Freeley on the 8th of September, 1930, told him that no person was to know anything about this money except the people who were joined on the receipts with him and that if Mr. McNelis liked he could tell them any time about it. (He corrected a previous answer indicating that he might give any information necessary to the survivors.) (Questions Nos. 106 a, 103 b, to 105 b.) Patrick Freeley visited the Bank in the course of his business and told Mr. McNelis that Austin Freely had told him that he had left him well off in the Bank and asked what the amount was, when Mr. McNelis informed him of the £5,000 in the joint names. He says that, some days later, Father Owens asked him the same question and he told him. (Question 105 a.) He placed the time of giving this information as after the 8th of September, 1930. (Question No. 156.) About six weeks after that date. (Question No. 182.)
Father Owens’ evidence was very unhelpful. He used to see his uncle from time to time and discuss the old man’s affairs with him. But Father Owens’ health is poor, his memory is bad, and he had no notes or memoranda. On one occasion he advised the old man that when money is left on joint deposit receipts, the survivor takes the money without having to pay any duty whatever. Though he appears to have gleaned hints from his uncle of an intention to leave him something, the nearest to a definite statement which I can find in Father Owens’ evidence is that about July, 1930 (i.e., months before the joint deposit account), the old man gave him to understand that he had left him “a certain amount of money.” (Questions Nos. 444-449, 452, 502-505, 509.) It was Mr. McNelis who, a couple of months before the death of Austin Freeley, informed Father Owens that there was money in his name, about £10,000. (Questions Nos. 538-546.) Father Owens according to his own evidence does not appear to have been told anything definite by Austin Freeley nor authorised by him to go to the Bank to inquire about it. On the contrary he says that he never discussed with his uncle the question whether he had left him any money nor tried to ascertain the fact from him. (Question No. 529.)
Patrick Freeley was also kept in the dark by the old man. He does say that in May or June, 1930, Austin Freeley told him he need not worry about business being bad because he (Austin Freeley) had money in the Bank in their two names. (Questions Nos. 749, 751.) But as we know, that joint account was brought to an end and was not intended to be a “final settlement.” On cross-examination, Patrick Freeley stated quite definitely that Austin Freeley never told him that he was leaving money in the Bank for him. (Question No. 763.) He does not give any explanation of the circumstances in which the Bank Manager came to tell him of the deposit in joint names and the amount of it, but he admitted that that was his only definite information.
It is not necessary for the purpose of this judgment to refer to any other parts of the evidence, as for instance to a deposit receipt for £500 in the joint names of Austin Freeley and Thomas Greene “or survivor of them,” which was a provision made for Thomas Greene in recognition of personal services. It was effected through a third person, and we have not Austin Freeley’s instructions as to the form of receipt (if he gave any, which I doubt).
Before leaving the evidence, however, I should refer to the will of Austin Freeley made on his deathbed, the night before he died, but while still in possession of his faculties of mind. Amongst a number of pecuniary legacies he gave a legacy of £150 to Father Owens and a legacy of £150 to Patrick Freeley. He disposed of his house and farm and gave all the residue of his property to all his nephews and nieces, his sister Mrs. Cunningham, John and Thomas Greene in equal shares absolutely. He appointed John Greene and Patrick Freeley to be his executors. Probate was taken out by John Greene only.
The actions were tried by Mr. Justice Meredith who held that the plaintiffs had established their title to the respective sums in question and made declarations accordingly. The present appeals are taken by the defendant, the executor of Austin Freeley, against the judgment of Mr. Justice Meredith.
If, at the death of Austin Freeley, there were nothing more of information as to the several transactions than the records of the deposit accounts in the books of the Bank, a resulting trust would clearly arise by equitable presumption in favour of Austin Freeley and his legal personal representatives as to all the monies which were, on the 8th of September and the 15th of December, 1930, lodged to the deposit accounts in the names of Austin Freeley and Patrick Freeley and in the names of Austin Freeley and the Rev. M. J. Owens. There was no such relationship between Austin Freeley and Patrick Freeley or between Austin Freeley and the Rev. M. J. Owens as would raise a presumption of advancement to rebut the implication of a resulting trust. The onus of rebutting the implication of such a resulting trust by evidence rests upon the plaintiffs, Patrick Freeley and the Rev. M. J. Owens, who instituted these actions claiming to be beneficially entitled by survivorship to the monies standing to the accounts in which they were respectively named as joint creditors with Austin Freeley. They may discharge the onus which they have undertaken and rebut the presumption of a resulting trust by proving that it was the intention of Austin Freeley, when putting the monies to the deposit accounts in the Bank, to give to the plaintiffs respectively, then and there and by that act, a right, that is to say an immediate present right to take the monies with which he associated their respective names by survivorship (should they survive him), for their own respective use and benefit as surviving joint beneficial owners with him. It will not suffice to prove a merely testamentary intention on his part, for a testamentary disposition can be made only by will. It will not suffice to show an incomplete, or a conditional, or a postponed gift, nor can such an attempted gift be made good by means of a fictitious trust. But a gift completed by immediate transfer of legal ownership or by declaration of trust taking immediate effect will, if proved, support an intention to give a voluntary benefit and rebut the presumption of resulting trust. These principles (neatly summarised by FitzGibbon L.J. in O’Flaherty v. Browne (1)are well established, and we have only to consider their application to the facts before us.
I should, however, say a word as to the form of the deposit receipts which is stated to be peculiar to Banks in Northern Ireland. The form of these receipts does not, in my opinion, determine the question under consideration. The intention of the depositor must still be ascertained. The use of the particular form may be part of a scheme of convenience in transacting the depositor’s business, the other name in the receipt being that of an agent for the actual depositor, such an arrangement, for instance, as existed in the case of Marshall v. Crutwell (2). Again, it may be an attempt to give whatever may remain undrawn to credit of the account at the depositor’s death as Gibson J. appears to have held in the Circuit case of Diver v. McCrea (3). In such a case, however, the intention is not to make a joint deposit operating as a present gift. It is an attempt to make an ambulatory and postponed gift of such (if any) monies as shall remain undrawn from the account at the depositor’s death, which, in my opinion, is contrary to the established principles inasmuch as it is really testamentary in character and intention, and for that reason I am unable to accept the decision in Diver v. McCrea (3) which is, I think, erroneous. It was a Circuit case and the report shows that some of the authorities were not cited to the learned Judge (who, however, gave judgment in Dublin after consideration). Again, this form of deposit receipt may be used for the purpose of creating a machinery of revocation of the trusts of a gift on trust, continuing until revoked, as the late Master of the Rolls held in the case of McDowell v.McNeilly (1), which, however, could not, in the nature of things, apply to the case of a gift immediately complete and absolute, but only to the case of a gift on a continuing trust.
Now, in the present case, we have it on the evidence of Mr. McNelis that it was on his advice that the particular form of deposit receipt was adopted by Austin Freeley as a form which would allow him personally, without the concurrence of the other persons named in the account, to get the interest on the deposits paid to him from time to time while leaving the capital untouched. When Austin Freeley made the lodgments to the joint account in March, 1927, he had not yet formed an intention of making a final settlement and there would have been a resulting trust in his favour. But if he had finally made up his mind, on the 8th of September, 1930, as to how he would dispose of his monies, it was, in my opinion, competent for him to have placed his monies on joint deposit accounts as he did, with the intention of making then and there immediate complete gifts in trust for himself and Patrick Freeley in the one case and in trust for himself and Father Owens in the other case, as joint tenants with right of survivorship as regards the capital sums only, the interest to be paid to him (Austin Freeley) during his life, such intention as regards the capital not to be capable of alteration. For effectuating such purpose, he might well have adopted the form of deposit receipt in question with the intention and for the purpose only of drawing the interest payable on the deposits and his use of the deposit receipts would be limited by that intention, notwithstanding their form (“accountable to them or either of them”), for it would follow from the complete gift of capital made that the other parties would have the right to intervene by proper proceedings to prevent him drawing, or at least appropriating to his own use, any part of the capital. Such, in my opinion, would be the only tenable basis upon which the plaintiffs could rest their claims in these actions. I suggested it to their counsel during the argument but, probably because of the concealment of the transactions by the old man from the plaintiffs, his close retention of the deposit receipts under his own sole dominion, certain weaknesses and uncertainties in the evidence of the Bank Manager and of the plaintiffs themselves and no doubt for other good reasons in the case as they have it upon their instructions, the suggestion was not pursued, and the case of an immediate gift such as I have indicated as perhaps open to argument on the evidence was not put forward. On the contrary, counsel for the plaintiffs, who also definitely disclaimed any question of trust in the case, took their stand rather on the line of the judgment in Diver v. McCrea (1), and pressed the matter as one of a gift in each case of whatever, if anything, would remain to credit of the deposit accounts at the death of Austin Freeley, admitting that, in the meantime, by reason of the form of the deposit receipts, he might at any time withdraw all or any part of the capital monies for his own use or benefit. In my opinion, such a gift is an invalid gift as an attempt to make a testamentary disposition otherwise than by will.
Mr. Leonard relied on possession of the deposit receipts obtained after Austin Freeley’s death, as making a complete legal title to the money. Even if the plaintiffs got the receipts properly (I question whether in the circumstances the receipts should not have been delivered to the executor of Austin Freeley at whose disposition they were held by the Bank Manager and whose voice directing that they be handed to the plaintiffs was silenced by death), the legal title cannot defeat the resulting trust in equity.
I am, therefore, of opinion that the plaintiffs have failed to rebut the resulting trusts and that the appeals must be allowed with costs to be paid by the plaintiffs. The declarations and judgments of Meredith J. in favour of the plaintiffs respectively must be set aside, and the actions dismissed and the defendant must have judgment on his counterclaim in each case with a declaration and consequential relief as prayed.
The defendant will have his costs of action as executor’s costs out of the assets of Austin Freeley deceased. No order as to plaintiffs’ costs of action.
FITZGIBBON J. :
These two actions, though the plaintiffs are different, and though they relate to different sums of money, depend upon the same evidence and were heard together, and the considerations which apply to each are applicable to the other, and I shall therefore treat them, as they were treated in the Court below and in the argument here, as if they were one action. The common defendant is the personal representative of Austin Freeley, who died on the 29th of December, 1930, and the claim in each action is that certain monies placed by the deceased in his lifetime upondeposit receipt in the names of himself and the plaintiff are not assets of the deceased, and belong to the plaintiff as beneficial owner by right of survivorship. In each case the defendant has counterclaimed for a declaration that the plaintiff holds the deposit receipt as trustee for the defendant as personal representative of Austin Freeley, and that the sum deposited forms part of Austin Freeley’s estate, and for consequential relief.
There is not much controversy about the facts, but the inferences to be drawn from the acts and declarations of the deceased as to his intention in his dealings with his property, and the legal effect to be given to that intention, require careful consideration, and are by no means free from doubt.
The deceased man, Austin Freeley, who is stated to have been over 92 when he died, had spent a large part of his life in America, whence he returned over twenty years ago to take up his residence at Carrowreagh, about a mile and a half from Ballyhaunis. He was possessed of considerable means, as, in addition to the sum of nearly £16,000 involved in these actions, he had £3,506 on deposit receipt in his own sole name in the Ulster Bank, fee simple property in Ballyhaunis valued at £1,000, the farm on which he resided, which was valued for probate purposes at £800, shares in Coats, English Sewing Cotton, and Guinness, and 5 per cent. War Loan and Free State National Loan, valued in all at £3,700, and real estate in America of unascertained value. Against that he kept an overdraft on his current account of £1,614.
The transactions with which these actions are concerned appear to have commenced in the year 1927, when, on March 2nd, he called at the Ballyhaunis Branch of the Ulster Bank, and asked for his deposit receipts, which, to the total amount of £16,601, were handed to him by the Manager. The account given by the latter of what then occurred is as follows:”He said that he wished to settle his money, and that he was not able to do so till he saw Father Owens, but that Pat Freeley was a decent man and he would like to do something for him. And then he gave me a number of receipts, which he asked me to put in the names of Pat Freeley and himself. He asked me to put the money in such a way that he could draw the interest without going to Pat Freeley. And the only way I could do that was by putting it payable to them or either of them, which I did.” The amount so lodged amounted to £16,917, £700 more than the sum withdrawn. The
deceased came back two days later, withdrew this £700, and relodged it in his own name. Twelve months later, on March 8th, 1928, he called again at the Bank, withdrew the £16,217 from the account in the name of himself and Patrick Freeley and the £700 from his own account, and relodged £16,917 in the names of himself and Patrick Freeley, on the same form of deposit receipt as before. On May 2nd, 1929, he again withdrew the £16,917, and on the same day relodged it as before. On October 17th, in the same year, he withdrew the £16,917, lodged £5,652 in his own sole name, and replaced £11,265 in the names of himself and Patrick Freeley. On May 29th, 1930, he withdrew the £11,265, relodged £6,000, and transferred £5,265 to his own sole account, to which there was then standing £13,450 17s. 5d. He operated on this account by additions and withdrawals in May, June and July, 1930.
It has not been contended on behalf of Patrick Freeley, and Meredith J. has expressly negatived the conclusion, that if Austin Freeley had died during the period between March 2nd, 1927, and September 8th, 1930, Patrick Freeley would have had, by survivorship or otherwise, any beneficial interest in any monies for the time being so standing on deposit in the names of the deceased and himself, but it is alleged that the transactions deposed to by the Bank Manager as having taken place upon September 8th, 1930, so altered the relationship between the deceased and Patrick Freeley in respect of the monies deposited in their names and payable to them or either of them, and created between the deceased and the plaintiff, Father Owens, a relationship in respect of the monies deposited by the deceased on that day in their names, and payable to them or either of them, as to entitle Patrick Freeley in the former case, and Father Owens in the latter, to succeed by survivorship upon the death of Austin Freeley.
The plaintiff’s counsel have resolutely refused to state in any intelligible legal terms what this relationship is. They repudiate the suggestion that there was either a gift or a declaration by the deceased man of a trust affecting the monies on deposit in the two names. They admit, or at least they do not deny, that Austin Freeley could at any time during his life have withdrawn all monies standing in his own name and that of either of the plaintiffs, and have appropriated it to his own use, and that neither plaintiff would, in such an event, have had any claim upon Austin Freeley or his estate.
The Bank Manager’s account of the transaction of September 8th is as follows:”There was one deposit receipt for £6,000 in the Joint names of Austin Freeley
and Patrick Freeley and accountable to them or either of them, and there were nine in the sole name of Austin Freeley, and the aggregate of these nine was £13,450 17s. 5d.””He called in about 11.30 or 12 o’clock and asked for his receipts, and he said that he was going to settle the money finally. And he told me to put £5,000 in the names of Patrick Freeley and himself, and he gave me a number of receipts totalling £14,000 to put into the names of Father Owens and himself. He told me that he wished that no person would know anything of these monies, and that the monies were to be the property of Patrick Freeley and Father Owens if anything happened to him, and that the receipts were to be handed to the survivors. I filled in the requisitions as directed, and when they came back he said that he had made a mistake in Father Owens’ receipt and he wanted to change it. He wanted £3,500 kept in his own name, he wanted it for a certain purpose, which I did. He did not tell me what the purpose was. So I got the receipts as he asked me, and changed them as directed, and handed them to him, and he looked them over and handed them back again to me. And he told me that the joint receipts, if anything happened to him, were to be handed to the survivors, but that no one was to know anything of the money, and the money was to be their property. So he told me to keep the receipts in my possession and I did so.”
At a later stage in his evidence the Bank Manager, after a little judicious leading, says that “The deceased told me that I could give any information that was necessaryto the survivorsat least to the joint depositors.” As he had previously said “survivors” three times and had specifically stated “that the receipts if anything happened to him were to be handed to the survivors, but that no one was to know anything of the money,” this belated correction is not very convincing. In any case, it would only be material if the question was one of the communication of a declaration of trust to the cestui que trust, and the plaintiffs have expressly disclaimed any suggestion that there was any declaration or creation of a trust in their favour.
Now, if Austin Freeley had been dangerously ill and in contemplation of death when this conversation took place, there is material to support a claim that there was a validdonatio mortis causa of these deposit receipts, the very expression, “if anything happened to him,” reminds us of the condition in Justinian, (1) “si quid humanitus ei contigisset,” but there is no suggestion that Austin Freeley was not in excellent health on the 8th of September, 1930, though he did in fact die on the following 29th of December. Anyhow, donatio mortis causa is out of the case.
Stress is laid by the plaintiffs upon the alleged statement by the deceased man “that he was going to settle the money finally.” If he had insisted upon a change in the form of the deposit receipt, and had provided that the money deposited should really be placed in the joint names of himself and another, or that it should be payable “to them jointly,” or “to them or the survivor of them,” or should be so lodged as to be no longer under his own sole control, there would be ground for holding that he had an intention to alter the dominion over the deposited money, and to confer an immediate interest upon the co-depositor. Instead, he lodged the monies upon a receipt in the old form, under which the Bank acknowledged the receipt “from Austin Freeley, Esq., Carrowreagh, and Patrick Freeley, Esq., Ballyhaunis, of £——-. For which we promise to be accountable to them or either of them,”directed the Manager to keep the receipt for him, not to hand it to the co-depositor until after his death, and did in fact demand it back, endorse it and draw all the money deposited with interest, and redeposit the principal, on December 15th, 1930. The plaintiffs do not deny that if Austin Freeley had on December 15th lodged the money he had drawn upon a deposit receipt in his own sole name or appropriated part or all of it to his own use, he would have been within his rights in doing so, and neither of them would have had any claim. If that be, as I believe it is, the true state of affairs in relation to this money, I am unable to follow the contention that the monies became on re-lodgment any more the property of Patrick Freeley or Father Owens than they had been before they were withdrawn, or while they were in the actual possession of Austin Freeley.
In considering the question whether there was ever a gift to either of the individuals whose names appeared with that of the deceased upon the deposit receipts, the form of those documents appears to me to be of great importance. In the ordinary case of money invested or deposited in two names it cannot be withdrawn by either without the concurrence of the other. In the words of Lindley L.J. in Standing v. Bowring (1), “the donor has put the thing given out of his own power, and has placed it in such a position that he can only get the thing back with the concurrence of the donee.” Even where there is such a
transfer of the dominion, the law presumes, in the absence of additional evidence of intention, a resulting trust in favour of the donor, except where the joint owner is the wife or child of the donor, or a person to whom the donor stoodin loco parentis. With the exception of Diver v. McCrea (1),to which I shall refer later, I am not aware of any case in which the alleged donor retained throughout his life the complete power of disposition over the property in dispute, and it was held that there had been a complete gift by him in his life time. Austin Freeley was well acquainted with the various methods of depositing money in the names of two or more persons, and the effect which the form of the deposit had upon the powers of the depositors to deal with the sum deposited. It is expressly proved that he adopted the special form of deposit in the case of the sums in dispute here in order that he might have power to withdraw the principal money from time to time without the concurrence of any other person. It is also proved that he took the most careful precaution to prevent any person but himself from having any opportunity of dealing with the monies in any way; and it is proved that he did exercise his dominion over the money when he had occasion to do so.
Meredith J. appears to attribute some weight to the circumstance that there was only one dealing by Austin Freeley with the money after September 8th, 1930, viz., on December 15th. It is remarkable that he drew and relodged the sum which it is alleged he had given away, only three months after the date of the alleged gift, while his custom theretofore had been to leave it untouched for twelve months together. The money in the names of himself and Patrick Freeley remained untouched from March 2nd, 1927, to March 8th, 1928, and again from March 8th, 1928, to May 2nd, 1929, from May 2nd, 1929, to October 17th, 1929, from October 17th, 1929, to May 29th, 1930, and from May 29th, 1930, to September 8th, 1930, in each case a far longer period than that from September 8th to December 15th. When he did intend to make a gift, he knew well how to give effect to his intention. At the request of Father Crowe, the Prior of the Augustinian Abbey at Ballyhaunis, he decided to give £500 to a young man named Thomas Greene, and on the 13th of June, 1929, he deposited £500 in the joint names of himself and Thomas Greene, upon a deposit receipt which expressed that the money was to be payable “to them or the survivor of them,” thus putting it out of his own power to deal with the fund without the concurrence of his co-owner. And it appears that Austin Freeley knew that money deposited on a receipt in that form could not be withdrawn except upon the request of both depositors. Upon the 8th of September, 1930, the very day upon which he first deposited the sums in dispute here, he made a deposit of £200 in the joint names of Richard Owens and the Rev. Father Owens, expressed to be payable to them or the survivor of them. To my mind the inference is almost irresistible that when he made the other deposits in two names payable to himself and another or either of them, and kept absolute control of the receipt, without production of which the money could not be withdrawn; he had no present intention of parting with the property, but was endeavouring to make a disposition of it which would take effect upon his death on so much of the money as then remained upon deposit, but retaining all power of disposition over it during his life.
Mr. Leonard’s statement of his contention is “that Austin Freeley did an act, the consequence of which was that on his death each of the co-depositors became legally entitled to the money. It was not a gift of £10,000, it was only a gift of what was left when he died.” That statement appears to me to bring this case directly within such authorities as Gason v. Rich (1), and O’Flaherty v.Browne (2). In the former case a son held some bank shares in trust for his father, the trust being evidenced by a written acknowledgment. The father endorsed on the acknowledgment a transfer of the shares to his daughter, for her sole use and benefit. The father also held two I.O.U.’s, and upon each of these he wrote: “I transfer the debt of £—– to my daughter for her sole use and benefit.” He handed the documents to his daughter. The Master of the Rolls, Sir Andrew Porter, after holding that there was nothing which could amount to a declaration of trust (which is admitted in the present case) went on (3):”But beyond these considerations there is another, applying to them all, which I look upon as quite decisive against the claim of Miss Rich. From the sworn evidence, and the letters and other documents in the case . . . I am satisfied of two things:First, that those attempted transfers were intended by Captain Rich to defeat pro tanto the covenants contained in the settlements of his several married daughters, which covenants would only become operative at his death; and, secondly, that notwithstanding the words of present transfer employed by him, he never meant to deprive himself of any property whatever by virtue of them during his lifetime. As a matter of fact, he continued for years after, and down to his death, in receipt of the dividends and interests, not a penny of which was paid to or intended to be the property of, or ever claimed by, Miss Rich. In fact those so-called transfers were meant in substance to be testamentary, while clothed with the appearance of gifts inter vivos,designed only to mislead. The principle upon which Courts of Equity have sometimes aided imperfect transfers, is in order to give effect to the real intention of the parties. But to hold these transactions to have been in equity complete and binding according to their appearance, would be to do what the parties did not intend.” “According to the appearance” of the deposit receipts in the present case, Father Owens and Patrick Freeley could on September 9th, the day after the deposit, have withdrawn every penny from the Bank, and appropriated it to their own uses. Anything more directly contrary to the intention of Austin Freeley, it is impossible to conceive. Sir Michael Morris L.C.J., speaking of the I.O.U.’s, says (1): “In my opinion, he never intended to deprive himself of the property in them during his lifetime, and trust (sic) reserved a locus penitentiae.Under such circumstances the property in them did not pass.” Barry L.J. says (2): “I am of opinion that the alleged donee here is defeated on the ground stated by the Master of the Rolls, namely, that the transaction was not intended at the time to be a complete and final divesting by the donor of all interest in the property purported to be assigned. I think the evidence shows that the transaction was intended to be revocable or ambulatory or testamentary in its nature, and that till the death of J. S. Rich the arrangement with his daughter was that he was to be master of the property.” Austin Freeley took care that he did not even have to make “an arrangement,” he ensured by his retention of the deposit receipt in the hands of his agent that he “was the master of the property.” O’Flaherty v. Browne (3) is even more closely analogous. In that case, the Rev. Maurice O’Flaherty, parish priest of Barraduff, having withdrawn some £880 which he had on deposit receipt, stated on June 15th, 1905, to the Bank Manager that he did not want to make a will, that he wished to leave all his money to his two nieces, and to leave to his successor as parish priest of Barraduff £60 for Masses and £50 for repair of Barraduff Chapel, but that he was in a difficulty, as he did not know who was to be his successor as parish priest. He then lodged on deposit receipt in the name of “the Parish Priest of Glenflesk and Barraduff the sum of £60 for Masses,” and the sum of £50 “for repairs and building to church,” and two sums of £385 each, one in the name of the Rev. Maurice O’Flaherty and Mary Griffin, and the other in the name of the Rev. Maurice O’Flaherty and Hannah Griffin. Shortly afterwards he withdrew the £50, and applied it to his own use. On September 20th he again called at the Bank with one, Father Costelloe, and Mary Griffin. He said he desired to leave £50 to his successor for the repair of Barraduff Chapel, but on the suggestion of Father Costelloe he decided to increase it to £100. He then withdrew £50 from each of the deposits in the names of himself and his two nieces, relodged £335 in place of £385 in the same names, and deposited £100 in favour of the Parish Priest of Barraduff for repairs and rebuilding of the church. He died on November 15th, having made a will. His successor as Parish Priest of Barraduff claimed the two sums of £100 and £60. The executor claimed that these two sums were assets of the testator. The King’s Bench Divisional Court (O’Brien L.C.J., Johnson, Boyd and Wright JJ.) held that the deposits were good charitable gifts, and that Father Browne as successor of the Rev. M. O’Flaherty as Parish Priest of Barraduff was entitled to the two sums claimed by him. This decision was reversed by the Court of Appeal (Walker L.C., FitzGibbon and Holmes LL.JJ.) upon the ground “that as the money on deposit receipt remained in the possession and under the control of the Rev. M. O’Flaherty during his life, the relationship of the bank and Father O’Flaherty was that of debtor and creditor, and that a valid trust had not been created.” Walker L.C., after stating the facts, says (1): “Under these circumstances what other conclusion can we draw from the facts than that this money remained the property of the Rev. M. O’Flaherty? First, on the form of the deposit receipts, these sums were lodged in his name, as Parish Priest of Barraduff, which he then was. At that date, on the face of the deposit receipt, the money belonged to him and no one else. He exercised proprietary rights over it, by taking up the money lodged on one of the deposit receipts, showing that he wished to retain control over it. . . . In my opinion, the entire facts of the case show at most an intention on the part of the reverend gentleman to effect a disposition to become operative only at his death, and the principle laid down by the Court of Appeal in Gason v. Rich (1) governs this case, that once there is a testamentary intention, and not an immediate gift, there is not a trust enforceable in equity.” FitzGibbon L.J., after discussing the facts, which he decides to indicate an intention and understanding that “the depositor was the owner of the money, and retained in his own hands the power of dealing with it as long as he lived,” says (2):”The inevitable conclusion is that of the Lord Chancellor, viz., that this transaction was, in effect, an attempt to make a nuncupative testamentary disposition. Father O’Flaherty remained the owner during his life of money which, on his death, he wished to pass to his successor, just as he intended, in the case of his nieces, that the money which he intended for them should go by survivorship.””There are two principles applicable to the subject matter, of which one or other appears to be fatal to the respondent’s contention. The first is that a testamentary disposition can only be made by will, and that any attempt to make it by parol inter vivos must fail. The other is exemplified in Richards v. Delbridge (3). A voluntary trust may be created by a declaration of trust, or by a complete assignment of the legal ownership to a trustee; but it is impossible to turn an incomplete, conditional or postponed gift into a trust, where there is no intention to create the relationship of trustee and cestui que trust. It was not intended that this money should be left derelict, or that any trust should take effect upon it, during the life of Father O’Flaherty. So long as he lived he was owner and nothing less.” (So was Austin Freeley.) “This is one of the many cases in which a man has tried to pass his property to another when he dies, but not until then, otherwise than as the law allows. In my opinion these dealings did not create a trust, and could hot operate as a testamentary disposition.” Holmes L.J., who agreed, says (4): “The natural inference seems to me to be that he desired to substitute for a will some plan which, like a will, would give him full control over his property during his life.”
The case of McDowell v. McNeilly (5) decided by O’Connor M.R. was the same in result, though the Master of the Rolls put his decision upon a somewhat different ground. A husband deposited money in the names of himself and his wifepayable to either of them or the survivor. Shortly before his death he endorsed the receipt and handed it to a clergyman for charitable purposes, who cashed it. The wife brought an action for return of the money on the ground that there was a gift to her by way of advancement in the event of her surviving her husband, and that having made the gift he could not revoke it.
O’Connor M.R. held that there was a gift, with a power of revocation, which had been exercised, Neither Gasonv. Rich (1) nor O’Flaherty v. Browne (2) was cited. In view of those authorities I should have thought it more in accordance with the evidence to hold that there was no present gift at all, but that, in the words of Barry L.J.,”the transaction was intended to be ambulatory or testamentary,” having regard to the finding of the Master of the Rolls, “that the deceased was careful that he should have dominion over it, because the evidence is that he kept the custody of the deposit receipts, so that he alone during the joint lives should exercise the power of with-drawal.”That case differs from the present in favour of the claimant in two respects. It was a case of husband and wife, where there is a presumption of advancement, and the deposit receipt was payable to husband or wifeor the survivor. The latter words are omitted from the receipts in the present case, yet the Master of the Rolls inferred an absence of intention to make a gift to the wife from the retention by the husband of a power of disposition during his own life, although “the survivor” was named in the receipt.
There is, however, one case which bears in its facts a close resemblance to the present one, and the plaintiffs have pressed it strongly upon us.
In Diver v. McCrea (3) the deceased man had placed a sum of £65 upon deposit receipt in the names of himself and a nephew, with whom he resided until his death. The deposit was payable to either of the two parties named in the receipt, and it was proved that the deceased when depositing the money had expressed it to be his intention that any portion of the sum which might not be drawn during his lifetime should belong to his nephew. Gibson J. in a civil bill appeal from the County Court Judge of Donegal, held that there had been an effectual gift to the nephew, that there was no resulting trust, and that the sum of £65 did not form portion of the assets of the deceased. He based his decision upon the analogy of the cases of husband and wife, prior to the Married Women’s Property Acts, where it had been held that the marital right of disposition possessed by a husband during his life over his wife’s property did not rebut the presumption of advancement. No authority had been cited to him during argument upon the point of the retention by the deceased of the power of disposition, and Gibson J. refers to this, as leaving him to decide the point as best he could. The case, very much in point, of O’Flaherty v.Browne (1) had only just been reported, and his attention was not called either to it or to Gason v. Rich (2). It is remarkable that Gibson J. seems to treat the deceased man’s disposition as in substance testamentary. “Kilpatrick’s object was to avoid making a will, and he desired that the deposit receipt, if uncashed, should, on his death, belong to his nephew.” “The substantial question argued was whether the circumstance that Kilpatrick was to possess power during his lifetime to draw the money defeated his intention that the deposit receipt should go to his nephew.”Gibson J. had evidently much doubt about the case, and says that but for husband and wife casesin which there is a presumption of advancementhe would have felt much difficulty in deciding as he did. It does not appear from the report that the deceased kept absolute control over the receipt, which Gibson J. says was drawn in an unusual form, and was clearly not intended to divest Kilpatrick’s ownership absolutely, but was for the purpose of enabling the nephew, as his uncle’s agent, to draw the money for him should he require it.
In my opinion this decision is inconsistent with the reasoning of the Court of Appeal in O’Flaherty v. Browne (1)and Gason v. Rich (2), which were not cited to Gibson J. and which were binding on him. We are, of course, not bound by them, but I agree with them, and consider that Diver v. McCrea (3) if, and in so far as, it is in conflict with them, is not good law. It appears to me to have been, and to have been upon the findings of Gibson J. himself, “an attempt to make a nuncupative testamentary disposition” (4), “a disposition to become operative only at his death” (5), and that accordingly the decree of the County Court should have been reversed, and the £65 should have been held to be part of the assets of the deceased.
In my opinion the plaintiffs have failed to establish any present intention on the part of Austin Freeley to part with his property in, and absolute dominion over, the deposited money during his lifetime, and a disposition, to take effect only upon his death, if he should not have previously disposed of the money, cannot be effected except by a declaration of trust, which is admitted not to have been made by him.
In my opinion the actions should be dismissed, and judgment should be given for the defendant upon his counterclaim for the declarations and consequential relief sought by him.
MURNAGHAN J. :
I am also of opinion that the appeals in these two actions should be allowed.
We have been asked to take a view of the evidence given on behalf of the plaintiffs different from that taken by Mr. Justice Meredith, who tried the action. No sufficient ground has, however, been shown for departing from the general principle that the credibility and accuracy of the witnesses is particularly a matter for the Judge who heard the witnesses at the trial of the action. Accepting, then, the evidence given on behalf of the plaintiffs, the question remains as to what is the legal effect of that evidence and of the inferences which can properly be drawn from it.
The contention put forward on behalf of the plaintiffs depends upon refinement of legal subtlety rather than upon any broad view of the facts. They say that as Austin Freeley, on the 8th September, 1930, and again on the 15th December, 1930, placed the large sums of money in question on deposit receipt in his own name and in that of the respective plaintiffs, and as he died while the monies remained on deposit receipt the legal title remained in the survivor. And they further say that the beneficial interest in the monies, which would prima facie under equitable doctrines belong to Austin Freeley as owner, does not form part of his estate, passing under his will, inasmuch as Austin Freeley desired that the beneficial interest should pass at his death to the plaintiffs.
When we seek to ascertain the intention of Austin Freeley on the critical dates, viz., the 8th September, 1930, and the 15th December, 1930, it is to my mind very material to know whether Austin Freeley intended to deprive himself of the power of dealing with the corpus during his lifetime. On this important matter the attitude which the plaintiffs take is extremely perplexing. They will not actually admit that Austin Freeley could have disposed of the corpus after the dates mentioned, but they do not argue that he was unable to do so. They state that they are willing to assume that he could have dealt with the money as he pleased, but, arguing the case on that basis, they say they are entitled to the money because he did not in fact remove it from the Bank and appropriate it to his own use.
My view of the evidence is that Austin Freeley never intended to part with his complete dominion over the corpus in his lifetime. He was familiar with another form of deposit in two names where it was necessary that both parties should concur to draw out the money. He chose a form of receipt under which he could draw out the money himself. He arranged that the deposit receipt would be available to himself at all times; he arranged that during his lifetime the receipts would not be available to the plaintiffs. Again, according to the practice of the Bank, interest on the deposit receipt can only be drawn by retiring the money lodged with accumulated interest, and the evidence is express that Austin Freeley required to be in a position to enable him to draw the interest.
If the plaintiffs could establish that on the 8th September, 1930, the deceased made a definite declaration of trust in relation to the money deposited, apart from its mode of investment on deposit receipt in the bank, effect might be given to such declaration of trust. For example, if the evidence supported a declaration of trust of the money under which Austin Freeley was to draw the interest during his lifetime and under which the principal sum should go to the survivor, there would be no impediment in the way of effecting the purpose so declared. Such a trust would put it out of the power of Austin Freeley to dispose of the corpus unless he survived the plaintiffs. But the plaintiffs will not state what precise trusts were declared in respect of the money: in fact they say that there was no declaration of trust at all. I agree that it is not possible to specify any precise trusts as having been declared on the 8th September, 1930, in respect of the money in question.
If, then, the money belonged beneficially to Austin Freeley during his lifetime, if he had not bound himself by any trust in reference to it, and if he retained full dominion over it, the contrivance to make the money pass on death was an attempt to make a nuncupative will which the law does not give effect to.
Quoting sect. 3 of the Wills Act, 1837, so far as material, it reads:”It shall be lawful for every person to . . . bequeath or dispose of by his will executed in manner hereinafter required, . . . all personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which if not so . . . bequeathed or disposed of would devolve upon . . . his executor or administrator.”Austin Freeley was during his life and at the time of his death entitled in equity to the money on deposit receipt in the bank, and his interest could only legally pass at his death by a will made in accordance with the Wills Act. The ingenious suggestion that on the death of Austin Freeley the property passed at law to the plaintiffs, and that this property, which was his up to the moment of his death, was not bound by a resulting trust, has to my mind neither principle nor established authority to support it. It would be a direct method of circumventing the Wills Act. I agree with the full statement of the law made by Mr. Justice FitzGibbon on this point, and am of opinion that the attempt of the deceased to circumvent the Wills Act must fail in law.
Murray v. Murray.
[1939] IR 321
JOHNSTON J.:
13. July
This case is concerned with the difficulty that arises so often in this country through the lodgment of money on deposit receipt in local banks by the farmers in joint names. Sometimes the money is lodged in the names of the owner and a child, and sometimes in the names of the owner and a stranger, or of a person who, though a relative, is not a son or daughter. The effect of a lodgment in these two different classes of cases, in the eye of the law, is widely different. This form of investment is favoured by the Irish banks, who find it useful and profitable to be entrusted with the small sums that the farmers in large numbers are able to place in their hands, whilst the latter find it convenient to be able to get their money back without any delay and with the addition of a trifle of interest; but, after the experience of a quarter of a century in the Irish Courts, I am able to say that the system leads to a great amount of litigation.
In the present case, the deposit was made in the joint names of the owner of the money and of a nephew and a niecea brother and sisterwith whom he was living. James Murray came back to County Donegal in 1926 with a sum of £300 which he had saved up for his declining years. He was taken in by his nephew, Richard Murray, and his niece, Margaret Scanlon, and there is no suggestion that this arrangement was dictated by anything other than the strong family feeling that is so characteristic of this country. When he came home James lodged his money on deposit receipt in the National Bank in his own name, and he kept the receipt in a box in his own room in his relatives’ house. This case, therefore, differs in a most important detail from that of Nicholson v.Mulligan (1), in which the supposed donor was the person with whom the supposed doneea sisterwas living, and by whom she was maintained. The very reverse is the case here.
When James Murray had been living with his nephew and niece for five years, and he was beginning to feel old and feeble, he decidedand the evidence is quite clear as to this pointthat it was time to reward them for their kindness to him, and he sent for the bank Manager. After a long conversation (to which I must refer in detail in a moment), Murray agreed with the Manager that the money should be withdrawn, and that the deposit receipt in his own name should be cancelled, and that the money should be relodged upon a new deposit receipt in the names of all three, and “to be payable on the receipt or endorsement of them, or of any one or more of them.”
The situation that arises when property is bought or deposited in the joint names of the owner and another is conveniently summarised in the following, passage from”Halsbury,” Vol. 28, p. 54, par. 103: “Where a person purchases property in the name of another or in the name of himself and another jointly, or gratuitously transfers property to another or himself and another jointly, then, unless there is some further intimation or indication of an intention at the time to benefit the other person, the property is, as a rule, deemed in equity to be hold on a resulting trust for the purchaser or transferor.”
Now, James Murray transferred his all into the names of himself and his nephew and niece, and the question then arises whether there is any indication on his part of an intention to benefit these persons. In my opinion, there is an overwhelming case pointing to that result. We have, first of all, the cancellation of the deposit receipt in his own name, coupled with the fact that the persons whose names were to be inserted in the new receipt wore near relatives for whom he had already shown a preference and to whom he was under a very groat obligation. These facts were, to my mind, almost conclusive. But there is also the clear indication of his intention as expressed “at the time” to Mr. Kelly, the bank Manager. This gentleman was summoned to the house of the defendants by wire, and when he went there he found the deceased ill and in bed. The first thing that James Murray told Mr. Kelly was that he “wanted to hand over the money to Richard and Margaretthat he wanted to put the money into their names instead of his.” What could be clearer or more conclusive than that? If Mr. Kelly had carried out this instruction this litigation would never have taken place; but he proceeded to remonstrate with Murray and to point out that if this arrangement were carried out the money”would be theirs,” and Murray replied that that was all right. Then a discussion took place as to whether Murray’s own name was to go into the new receipt with the names of Richard and Margaret, Mr. Kelly (wellmeaningly, no doubt,) insisting that that should be done and Murray resisting such a plan. Then Margaret was called into the room and when the difficulty was explained to her, she said that “it would be better to leave her uncle’s name in it as well.” And, accordingly, that was done.
No doubt, the deceased could in his lifetime have drawn out the money and appropriated it for himself if he had desired to do so. But he never desired to do so, and he died three years later without having touched the money, or even (so far as the evidence goes) the interest. There is no direct evidence as to the custody of the deposit receipt after it had been signed; but the old man had shown such eagerness that his benefactors should have complete control that I have no doubt that the deposit receipt was left with them. He seems to have had the most complete confidence in them, and he was the best judge. We know positively that Richard had control of the deposit receipt on two occasions, namely, on March 28th, 1933, and March 7th, 1934. On both occasions he cashed the receipt in the bank in his own name, acquired control of the whole amount (together with the interest), re-lodged the capital sum in the bank and took out a new receipt in the names of the same three persons, having made the usual written application in his own name for such a receipt.
Even if the presumption of a resulting trust arises at all in this case in view of the very special cirumstances, it seems to me that there is a very strong body of evidence of a rebutting character, and that seems to have been the view of Judge Moonan; but counsel for the plaintiff, with fatal ingenuity, referred the Court to the case of Owens v. Greene (1), and persuaded the learned Judge that it bore some applicability to the case of the Murrays. In this connection I am reminded of those pathetic words of Barry L.J. in the case of Gason v.Rich (1): “It is impossible not to feel that legal ingenuity is far oftener exercised in defeating the intention of parties than in supporting them.”
The Court in Owers v. Greene (2) was called upon to take into consideration a principle of the law which does not arise in the present casethe principle that a Court of Equity will give no assistance whatever to a person who desires to enforce an imperfect gift.
In Ownes’s Case (2) the owner of the money had, no doubt, lodged certain moneys in a bank in the joint names of himself and certain other people; but knowledge of that fact was withheld from those other people. The supposed donor retained the deposit receipts in his own control by leaving them with the bank manager, who was directed to make no disclosure of the matter to the parties concerned, but that “if anything happened” to the depositor, the receipts were to be handed to them. Kennedy C.J. at p. 240 said: “In my opinion such a gift is an invalid gift as an attempt to make a testamentary disposition otherwise than by will.” FitzGibbon J. at pp. 251, 252, said: “The plaintiffs have failed to establish any present intention on the part of Austin Freeley to part with his property in, and absolute dominion over, the deposited money during his lifetime, and a disposition, to take effect only upon his death, if he should not have previously disposed of the money, cannot be effected except by a declaration of trust, which is admitted not to have been made by him.”
In the present case James Murray had done everything that was necessary to be done to enable the sister and brother to get the money without the assistance of a Court of law, and, as a matter of fact, they did withdraw the fund from the bank and it is now in their possession.
In the application form which Murray signed in 1931, he asked for a deposit receipt for the lodgment of £300 by himself and his nephew and niece “to be payable on the receipt or endorsement of them or of any one or more of them, which receipt or indorsement shall be a sufficient discharge to the bank without the concurrence of the others or their representatives.” Those were the terms upon which the bank held the money and upon which the money might be withdrawn by any of the parties, even after the death of the others. There is no evidence before me (as there was in the case of McDowell v.McNeilly (1)) that James Murray retained any control over the deposit receipt, and we know that he showed the utmost reluctance to have his name go into it at all In McDowell’s Case (1), O’Connor M.R. set out the rights of the parties in this way: “Here the depositor, who was the absolute owner, deposited the moneys in the joint names, giving himself or his wife the power to withdraw them. I think that this was a reservation to himself of a power to revoke the gift, a reservation which he was entitled to make. The exercise of the power was a destruction of the joint tenancy on which the wife’s title depended, and her right by survivorship disappeared. No doubt, the wife had also the power of withdrawal; and if she had exercised the power, she might claim an exclusive property in the money, but the deceased was careful that he also should have dominion over it, because the evidence is that he kept the custody of the deposit receipts, so that he alone during the joint lives should exercise the power of withdrawal.” I have already pointed out that the deposit receipt was in the possession of Richard in 1933 and again in 1934, and that he withdrew the money, received the interest and redeposited the capital sum in the same three names on both occasions; and there is no doubt that it was in the house of Richard and Margaret when their uncle died.
I am satisfied that when James Murray died, this money belonged absolutely, both in law and on the merits, to Richard and Margaret Murray as the survivors of the three depositors.
GAVAN DUFFY J. :
The late James Murray died intestate on 1st November, 1934, a man of 60, or perhaps 70, years of age. In April, 1931, he had caused a deposit receipt for £300, standing in his own name with the National Bank at Ballaghaderreen, to be changed into a deposit receipt for the same amount with the same bank in the names of the defendants, Richard Murray, a nephew, and Margaret Scanlon, a niece, and of himself; he had been residing with the defendants since 1926 and continued to live with them until he died. The plaintiff, Luke Murray, his brother and administrator, brings this action to recover the money as assets of James Murray’s estate, and the defence filed was that the money was made over by James Murray in trust for James Murray himself and his nephew and niece as joint tenants, with benefit of survivorship, but the questions argued on this appeal include the existence of a resulting trust for the donor, the possibility of construing the transaction as a declaration of trust for the defendants, the character of the co-ownership as joint tenancy or tenancy in common, and the adequacy of the evidence to support a fully completed gift; a further alternative would be to interpret James Murray’s disposition as a mere measure of convenience for an invalid, compelled to depend upon the services of others, acting as his agents with the bank.
The assets of James Murray were sworn at £300, but we do not know whether that figure was meant to represent the money on deposit with the bank or some other assets; it is at least clear that the £300 on deposit, if assets at the death of James Murray, represented a large part of his estate. The evidence of the local bank Manager, as I understand it, was, in effect, that he was sent for, and went to see James Murray, who was ill and confined to his bed, in April, 1931, that the bank’s deposit receipt in James Murray’s name for £300 was produced out of a box in his room, that he said he wanted to hand over the money to the defendants, and to put it into their names instead of his own; that he demurred to the suggestion that both the defendants would have to go to the bank together to draw interest on the money (perhaps because he did not wish to be left alone in the house); that the bank Manager suggested that James Murray’s own name should be included in the new deposit receipt; and that James Murray agreed to this suggestion; and that the bank Manager pointed out that James Murray himself could then draw the money and that either of the defendants, if he or she had the deposit receipt, could likewise do so; the bank Manager was evidently then contemplating a deposit receipt payable on the signature of any one or more of the holders named in it. The bank Manager also obtained the assent of each of the defendants to this arrangement. James Murray, presumably before consenting, asked the bank Manager if he was sure now that”there will be no trouble when I am gone,” and the bank Manager says that he replied that he thought there would not. The upshot of the conversation was that James Murray signed a requisition in the following form for a deposit receipt to replace the then existing one for £300 in his own name:
“The National Bank, Limited,
Ballaghaderreen Branch. 18th April, 1931.
Wanted a Deposit Receipt in favour of James Murray and Richard Murray his nephew and Mrs. Margaret Scanlon, Guilmore, Gurteen.
To be payable on the receipt or endorsement of them, or of any one, or more of them, which receipt or endorsement shall be a sufficient discharge to the Bank without the concurrence of the others or their representatives.
Applicant: James Murray. X His mark.”
The deposit receipt made out by the bank on this requisition reads: “for which we (the Bank) promise to be accountable to them or any one or more of them.”
A singular feature of this case is the fact that there is no evidence to show who received the deposit receipt from the bank, nor to show in whose custody it was kept, and one is left to hazard the conjecture that it found its way into the same box that had housed its predecessor.
But there is this solely documentary evidence:On the 28th of March, 1933, and on the 7th of March, 1934, and nearly four weeks after James Murray’s deathon the 27th of November, 1934, first the original and then two successive deposit receipts in the same form, for the same amount and in the same three names received the signature of Richard Murray alone upon payment by the bank to him alone of the sum of £300 and interest; on each occasion he signed a requisition for, and obtained from the bank, a new deposit receipt for £300 in the same form and in the same three names; and the extraordinary and unexplained fact has to be added that the deposit receipt of 27th November, 1934, bears a note recording the death of James Murray untruly as having occurred on 29th November, 1934. On the 17th of January, 1935, Richard Murray’s signature was appended to the deposit receipt of 27th November, 1934, as payee and a new requisition was signed by him for a new deposit receipt for £300 in the names of himself and Margaret Scanlon.
It is essential to make careful distinctions as to the legal admissibility of the evidence for the very different and distinct purposes for which it may be used:
(a) Parol evidence (not contradicting the written documents of title) is admissible to establish the collateral facts in order to rebut a resulting trust, but such evidence is only received with great caution and it is useless unless it is clear; the evidence admissible to rebut a resulting trust includes direct evidence as to the donor’s intentions: Taylor’s Evidence, par. 1018.
(b) I think a declaration of trust, Where land is not concerned, may be proved by any relevant documents or conversations; Lindley L.J. in In re Williams, Williams v.Williams (1), declares that “equitable obligations . . . can be imposed by any language which is clear enough to show an intention to impose an obligation, and is definite enough to enable the Court to ascertain what the precise obligation is and in whose favour it is to be performed”;here the difficulty is not in receiving the evidence, but rather in the quality of the testimony often adduced in an effort to prove a trust where no ascertainable fiduciary obligation has been undertaken.
(c) On the other hand, parol evidence of statements of intention is not admissible to cut down an apparent joint tenancy to a tenancy in common, nor, I apprehend, to determine whether a joint tenancy was in fact intended by the words used in a document of title, but evidence of surrounding circumstances and of the conduct of the parties, even though not contemporaneous with the creation of the right is admissible as an aid in the construction of a document showing co-ownership, where the issue is joint tenancy or tenancy in common: Harrison v. Barton (2); O’Connell v. Harrison (3).
I am satisfied that the evidence disposes of any suggestion that the transaction was merely intended, as in Marshal v. Crutwell (4), as an arrangement for the personal convenience of James Murray, without effecting any change in ownership.
As a resulting trust, James Murray was not, upon the rather meagre evidence, in loco parentis to the defendants or either of them, and the £300 may well have been substantially all that he possessed, but the evidence of his original intention to give the money outright to the defendants is too clear to be resisted, and the result of his conversation with the bank Manager was, in my opinion, not to change that intention into something totally different, but merely to modify it into something which the deceased probably thought would be more convenient in practice; I am satisfied that the evidence effectively rebuts the presumption of a resulting trust.
The defendants sought in this Court to establish a declaration of trust by James Murray, either in favour of the defendants or, in the alternative, as pleaded in the defence, in favour of himself and the defendants. The transcript of evidence and the documents of title will, however, be scanned in vain for any trace of an expression of intention by James Murray to become a trustee, and, in the absence of any such expression of intention, I question the right of the Court to draw the desired inference from such evidence as that, equivocal and unexplained, of the drawings by Richard Murray; I can detect no evidence of any fiduciary obligation undertaken by James Murray, nor of any intention by him to become a trustee, and there is nothing that will satisfy Lord Lindley’s test of clear and definite language. But the sufficient answer to the claim for a declaration of trust seems to me to be the fact that the transaction was, and was intended to be, a transfer of a chose in action and not a declaration of trust of it. Sir Andrew Marshall Porter M.R. in Gason v. Rich (1), at p. 394, says:”Nothing is more clearly settled than that a document which is intended to be a transfer cannot operate as a declaration of trust. A transfer consists in the making over of the subject of it to another, and that is plainly inconsistent with a declaration of trust, which implies that the property remains in the hands of the trustee.”Otherwise, as Turner L.J. points out in Milroy v. Lord (2),”every imperfect instrument would be made effectual by being converted into a perfect trust.” “For a man to make himself a trustee,” says Jessel M.R. in Richards v.Delbridge (3), “there must be an expression of intention to become a trustee, whereas words of present gift show an intention to give over property to another, and not to retain it in the donor’s hands for any purpose, fiduciary or otherwise.” See also Lee v. Magrath (4). The fact that all this is not obsolete but modern law emerges clearly from the examination of the authorities by the Court of Appeal in Northern Ireland in Allan v. Inland Revenue Commissioners (5), a judgment affirmed in the House of Lords as recently as the year 1925. In my opinion, therefore, the defendants’ claim for a declaration of trust of all or any part of the property in dispute is unsustainable.
If there is no declaration of trust, the defendants cannot, on the documents of title, claim that they owned the whole of the £300, represented by the deposit receipts, during James Murray’s lifetime, but they may claim instead that the chose in action was completely assigned to themselves and James Murray as joint tenants, so that they now have the benefit of survivorship. It, therefore, becomes necessary to consider first, the legal character of the co-ownership of the chose in action, represented by the deposit receipts, and secondly, the alleged assignment. The deceased probably meant the money to go in equal shares to the defendants at his death, whatever may have been the intervening ownership as a matter of law, not adverting to the legal distinction between a joint tenancy and a tenancy in common, and he probably did not consider what was to happen in case his nephew or his niece should die before him, he seems to have assented to the money being placed in the three names on the understanding that there would be “no trouble,” in consequence of this arrangement, if, as was probable, he should be the first to die; but, if this can be regarded as evidence of intention to create a joint tenancy, it is inadmissible evidence for that purpose, since its admission involves the acceptance of a statement of intention to construe the written requisition and deposit receipt of 1931. We are, therefore, thrown back on the documents and acts of the parties to ascertain if there was a joint tenancy in James Murray’s lifetime, and upon them I observe that there are no words of survivorship, though the omission is inconclusive, and that the documents must be approached from the standpoint that there is no admissible evidence by which James Murray’s own ostensible interest in the investment can be eliminated.
The defendants must succeed in maintaining the unities of title, time, interest and possession until James Murray’s death, if they are to claim by survivorship. I am entitled, in determining as between joint tenancy and tenancy in common, to look at James Murray’s requisition, dated 18th April, 1931, and at Richard Murray’s requisitions of 28th March, 1933, and 7th March, 1934, and at the deposit receipts issued upon those requisitions; I am inclined to think that I am entitled also to have regard to so much of the bank Manager’s evidence as dealt with the practice, of the bank in making payment on joint signatures or on the signature of any single holder as distinct from James Murray’s statements of his intentions; and I think I am justified in finding that, whatever may have been the private arrangement between the parties as to beneficial ownership, there was a continuing agreement by the co-owners up to the time of James Murray’s death that any one of them alone might draw the money for the time being represented by the deposit receipt; the separate right of any one of the co-owners to draw the money is, of course, apparent on the documents themselves, without reference to the bank Manager’s evidence of his visit to James Murray, showing that this arrangement was made by agreement. This right seems to me to require examination, as it may have an important bearing on the claim to a joint tenancy, for it means that any single holder, without the consent or knowledge of the others, was at liberty, in the absence of a contrary agreement between the parties, to put an end at any time to the joint chose in action, consisting of the bank’s debt to the co-owners. The defendants must claim that there was a joint tenancy (1), in the sum of £300 drawn by James Murray on 18th April, 1931; (2), in the debt evidenced by the deposit receipt thereupon issued in the three names; (3), in the principal money and interest drawn by Richard Murray on 28th March, 1933; (4), in the debt evidenced by the deposit receipt issued on the same day in the three names; (5), in the principal money and interest drawn by Richard Murray on 7th March, 1934; and (6), in the debt evidenced by the deposit receipt issued in the three names on that day, which was an existing security at the date of James Murray’s death. In my view the reasonable inference from the facts is that the property was intended throughout, from April, 1931, until James Murray’s death, to remain in the same co-ownership, and Richard Murray’s drawings of principal and interest were made by himin the absence of any evidence from the defendants themselvesas agent and not on his own account; whether that was an agency for James Murray or for all the co-owners, we cannot tell on the evidence adduced; but, if the co-owners were made joint tenants by James Murray in 1931, they so remained until he died. Still, the fact remains that Richard could (apart from any private agreement) lawfully have removed the whole sum from deposit at any time, retaining his own share and handing over the balance to James and Margaret, or re-depositing it on their direction. A joint tenant may sever whenever he pleases: Williams v. Hensman (1), but, to amount to a severance, his act must be such as to preclude him from claiming by survivorship: In re Wilks, Child v. Bulmer (2), and I find nothing in the evidence to suggest that, when Richard drew the money in March, 1933, or when he drew it in March, 1934, he meant to effect any severance of his own interest. Nor is there anywhere in this case evidence of any severance by conduct of the parties. But the difficult question is the effect of the mere legal right of each holder to withdraw the whole sum; does this imply an intention to divide? Is the effect of such a withdrawal, where one holder pockets his own share, to put an end to the joint tenancy as between the others in what is left of the money? In the ordinary case of severance by one of three joint tenants the co-ownership between the others continues unaffected, but in the present case, if Richard had severed, he would, in order to draw his own money, have had to destroy the chose in action, substituting for it a sum of money.
The case law on the subject shows that alienation by all the joint tenants effects a severance: Palmer v. Rich (1),and that even a parole agreement for sale by all of them: Wilson v. Bell (2), or a covenant to settle the property: Hewett v. Hewett (3) has the same effect, and that an agreement to settle it in future has the force of an actual severance: Gould v. Kemp (4). On the other hand, Sullivan M.R. has declared (in favour of the present defendants) that there is nothing inconsistent with the law in a joint tenancy until the happening of a contingency: Jury v. Jury (5), and it is noteworthy that, though marriage did sever a lady’s joint tenancy in property which vested in her husband by the very fact of marriage, marriage had no effect on a joint tenancy in property, the wife’s interest in which the husband had the right at any time to reduce into possession, until the husband by a novus actus interveniens actually appropriated his wife’s interest and thus severed the joint tenancy: In re Butler’s Trusts, Hughes v. Anderson (6). If Richard, when he did draw the money, did so as trustee, the decision in Flynn v. Flynn (7) tends to show that the joint tenancy was not destroyed by his action, for a joint tenancy is not severed even by the registration as owner in fee simple, subject to equities, of one joint owner of land held on a yearly tenancy, since his registration in such a case is fiduciary, and the joint tenancy attaches to the property in its new form of registered land; and the late Court of Appeal held that an agreement for sale under the Land Purchase Acts by all the joint tenants does not, of itself and in the absence of evidence of intention, sever the joint tenancy, which attaches to the resultant purchase money: Hayes’s Estate (8). This decision goes a long way to temper the rigour of Lord Hatherley’s dictum in Robertson v. Fraser (9) that “anything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy, and to create a tenancy in common.” And I find that in In re Young, Trye v. Sullivan (1), Pearson J. found no difficulty in holding that a husband and wife owned as joint tenants a banking account, on which each of them had power to draw. A similar conclusion was reached by Russell J. in In re Harrison, Day v. Harrison (2) in 1921, though the effect on the character of the co-ownership of a power in each co-owner to draw on the bank seems not to have been argued. Cp. the judgment of Kennedy C.J. in Owens v.Greene (3). On the whole, I feel that the balance of authority on this point is in favour of the defendants and against treating the several power to withdraw as indicating an intention to divide, and I am the more inclined to this view when I recollect that the provision under consideration is equally consistent with a desire to simplify the periodical collection of interest as it is with an intention to share out the money, though I must confess that the bias of my own mind, apart from the authorities that I have cited, would have lent rather towards finding a tenancy in common by reason of the provision in the deposit receipt of 7th March, 1934 (the most material of the deposit receipts in the events which have happened), for payment on the signature of “any one or more” of the co-owners. I think that I may, on those authorities, go so far as to hold that, if Richard had severed, so far as he was concerned, the balance of the money would have remained the property of James and Margaret in joint tenancy until they, too, determined to sever. Accordingly, I hold that the three co-owners took in joint tenancy, subject to the very important question as to whether they took anything at all, or, in other words, whether James Murray succeeded in making a complete gift, for, in the absence of a declaration of trust, if he failed to do that, the gift must fail.
In this connection it is important to notice that this case bears a superficial resemblance only to Gason v. Rich (4), O’Flaherty v. Browne (5), and Owens v. Greene (6),to which I may add Diver v. McCrea (7), as explained by FitzGibbon J. in Owens v. Greene (8), for in each of those cases the dominant factor was a disposition, non-testamentary, intended to take effect only upon the death of the donor; that was not the position in the present case, as I understand it. Sect. 28, sub-s. 6, of the Judicature Act (Ireland), 1877, is applicable to an assignment without consideration of such a legal chose in action as the bank’s debt to James Murray in April, 1931: In re Westerton, Public Trustee v. Gray (1), and, if James Murray at that time effected a legal assignment, it appears to me that his assignment was complete without any delivery of the new deposit receipt to the defendants. In Lee v.Magrath (2) the Chief Baron shows that an indorsement on a promissory note, assigning it to a third party without consideration, coupled with notice in writing to the debtor, would constitute an effectual transfer of the legal right from the date of the notice, by virtue of the Judicature Act. If the transfer is effectual in law, it seems to me quite impossible to treat it as incomplete on the ground that the assignor retained dominion. In my opinion, James Murray did effect a legal assignment (communicated to the defendants verbally) of the bank’s debt to him, provided (a) that a man may make an assignment within the meaning of the Judicature Act to himself and two othersand I see no reason why he should not, whatever technical difficulty there may be afterwards in a man being sued by himself and others to enforce the assignment and (b) that it is permissible under that Act to combine in one document the assignment itself and the notice of it; it would, in my opinion, be pedantry to require that the written notice of the written assignment under the Act should be a separate document from the actual assignment, and James Murray’s requisition of 18th April, 1931, amounted both to an absolute assignment in writing and to express notice thereof in writing to the bank; the case of Denney, Gasquet and Metcalfe v. Conklin (3) supports the view that a notice under the Act should not be condemned on formalistic grounds. Accordingly, the right to the bank’s debt passed as a matter of law from James Murray to James Murray and the defendants, and the defendants are entitled to the debt as the surviving joint tenants.
One other matter I shall mention, lest it should seem to have been overlooked. But for the Judicature Act, the defendants would have to rely on a voluntary, equitable assignment of a legal chose in action, without delivery, on the analogy of such a case as In re Patrick; Bills v.Tatham (4), where the assignment was made before the English Judicature Act, 1873, and they would find themselves confronted with the decision of the Court of Appeal in Lee v. Magrath (1), which must have been otherwise decided, if a voluntary, equitable assignment of a debt (coupled in that particular case with delivery of the document of title), is effective since the Judicature Act; see also the close examination of the question by Isaacs J. in Anning v. Anning (2). And, if delivery of the deposit receipt by James Murray, to show change of dominion, was necessary for a perfect, equitable assignment, the defendants, with the onus of proof upon them, took a serious risk in abstaining from the witness box; even in this Court they did not ask to be allowed to give evidence; I should have been very slow indeed to assume, in favour of the silent defendants, that Richard Murray had dominion from the fact that he twice cashed the deposit receipt in James Murray’s lifetime, for it is equally probable that James Murray was treated by his nephew and niece as their venerable benefactor, that he continued to be an invalid and to keep the deposit receipt in his box, and that he sent Richard Murray to the bank, as and when he, James Murray, saw fit, to collect the bank interest for the use of him, James Murray. However, I need not examine this aspect of the matter, since the defendants’ success upon the Judicature Act makes such considerations as these irrelevant.
Lynch v Burke
[1995] IR 15
Hamilton CJ: I have read the judgment which O’Flaherty J is about to deliver and I agree with it.
O’Flaherty J: This is an appeal brought by Moira Burke from the judgment and order of the High Court (O’Hanlon J) of the 16th January 1990 ([1990] 1 IR 1), granting the plaintiff declarations in her favour in respect of monies held on a deposit account with AIB Bank plc in the joint names of Frances McFadden, deceased, and her niece, the first named defendant Moira Burke. Frances McFadden, a widow, died on the 10th January 1986. She had made her last will on 20th July 1983, whereby she gave all the property of which she died possessed of or entitled to to her sister, Mary Lynch, the plaintiff; she also appointed her sole executrix.
Moira Burke had a sad life. She lost her father when young. Her mother re-married. She migrated to Glasgow in 1971 when she was 17 and stayed for about two years with her aunt, Frances McFadden. She married in 1975 but the marriage broke up in 1976. After the marriage break-up, the husband ceased to make maintenance payments after some short time and, during these hard times, it appears that Frances McFadden had been generous to her.
In September 1983 Frances McFadden (who at that time had returned to live in County Donegal) visited Moira Burke in Glasgow and told her that she wanted to put her name into a joint account with a bank in Falcarragh, Co Donegal. On the 28th September 1993, a deposit account was opened with the Falcarragh branch of the AIB Bank in the joint names of Frances McFadden and Moira Burke. A sum of £29,401.72 was lodged to the credit of the account by Frances McFadden and, thereafter, there were further lodgments made from time to time by Frances McFadden. At the date of trial the amount standing to the credit of the account was £53,364. At the hearing of the appeal we were told that the amount had now risen to about £65,000, including accumulated interest.
The deposit book was endorsed by the bank official as follows: “Payable to Frances McFadden only or survivor”. The word “only” was underlined. Moira Burke’s address in Glasgow was inserted beneath Frances McFadden’s name though, as already stated, Mrs McFadden lived in Co Donegal at this time.
The learned trial judge said that he was satisfied that Frances McFadden, when opening the account in the joint names, intended that her niece, Moira Burke, should be entitled to the beneficial interest in any monies standing to the credit of the account on Frances McFadden’s death, should she pre-decease her niece. He was further satisfied that Frances McFadden intended to retain control over the account during her lifetime to the extent that no withdrawals could be made from it save only on her application.
The judge also attached some significance to the fact that Frances McFadden, two months before she opened the joint deposit account, had made her last will and he was of the opinion that the opening of the joint deposit account was intended to exclude any claim by the plaintiff to those monies remaining on deposit in the account at the time of her death.
Notwithstanding these findings, the judge felt constrained on the authority of the decision of the then Supreme Court in Owens v Greene and Freeley v Greene [1932] IR 225 to hold that Moira Burke was not entitled by survivorship to these monies.
The question for resolution on this appeal is whether that result can be upheld as one that is justified in law or equity?
The first inquiry to make is to find out the legal effect of the opening of the deposit account in the joint names. Thereby, the bank undoubtedly became a debtor to Frances McFadden in the amount lodged. The bank and Frances McFadden contracted that only Frances McFadden could make withdrawals from the account but that on her death Moira Burke would be entitled to the monies standing to the credit of the account on that date. By her presence (she had journeyed especially from Glasgow to Falcarragh for the occasion, at Mrs McFadden’s request) and signature it is manifest that Moira Burke was a party to this contract from the outset. It is agreed on all sides that if the bank had paid over the monies then in the account to Moira Burke on Frances McFadden’s death it could incur no liability to the estate of the deceased. However, it is contended for the plaintiff that in that situation Moira Burke would have to account to the estate for the monies so received. The monies on deposit with the bank represent a debt or chose in action. Since Frances McFadden and Moira Burke contracted jointly with the bank it would seem right that the bank should be liable to both – in accordance with the terms of the contract. There was sufficient mutuality of interest between Frances McFadden and Moira Burke to justify this assessment of the legal situation.
Mr McCann’s essential submission before us is to leave aside any question of contract and instead submit that what we are concerned with is that this chose in action or debt could not be gifted to Moira Burke except by a declaration of trust, a completed gift or by will.
He says that there has been no declaration of trust and he says that what we have here is an imperfect or incomplete transaction. Equity, it has been said, will not come to the aid of a volunteer to perfect an imperfect gift.
In this regard, we do well to recall something that Barry LJ said in the case of Gason v Rich (1887)19 LR Ir 391 at p 402, a case relied upon as one which, together with O’Flaherty v Browne [1907] 2 IR 416, is said to provide a basis for the decision in Owens v Greene and Freeley v Greene [1932] IR 225:
“This question as to what does, or does not, constitute a complete voluntary gift of property so as to be supported in a court of equity has been the subject of discussion over and over again almost for a century, and the decisions upon it are very numerous, and not very easy to reconcile with each other, and it is difficult to extract any principle from them. It is impossible not to feel that legal ingenuity is far oftener exercised in defeating the intention of parties than in supporting them.”
Leaving aside for the moment the concept of gift, I think that it is best to consider, in the first instance, the contractual aspects of the case to find whether that provides a solution. In my judgment, it does. I have outlined what I think was agreed between the parties and it amounts to this: Moira Burke must be regarded as entitled to claim as a party to the contract under the actual terms of the contract.
In McEvoy v Belfast Banking Co [1935] AC 24 the House of Lords was concerned with a case which had many similarities to the instant case. The ultimate decision turned on whether the donee could claim money that he had, after the donor’s death, assisted in appropriating to a business that failed – that aspect of the case need not detain us. However, Lord Atkin had the following of interest to say in the course of his speech relating to the form of contract that emerges when a deposit account is opened in joint names. He said, at p 43:
“The suggestion is that where A deposits a sum of money with his bank in the names of A and B, payable to A or B, if B comes to the bank with the deposit receipt he has no right to demand the money from the bank or to sue them if his demand is refused. The bank is entitled to demand proof that the money was in fact partly B’s, or possibly that A had acted with B’s actual authority. For the contract, it is said is between the bank and A alone. My Lords, to say this is to ignore the vital difference between a contract purporting to be made by A with the bank to pay A or B and a contract purporting to be made by A and B with the bank to pay A or B. In both cases of course payment to B would discharge the bank whether the bank contracted with A alone or with A and B. But the question is whether in the case put B has any rights against the bank if payment to him is refused. I have myself no doubt that in such a case B can sue the bank. The contract on the face of it purports to be made with A and B, and I think with them jointly and severally. A purports to make the contract on behalf of B as well as himself and the consideration supports such a contract. If A has actual authority from B to make such a contract, B is a party to the contract ab initio. If he has not actual authority then subject to the ordinary principles of ratification B can ratify the contract purporting to have been made on his behalf and his ratification relates back to the original formation of the contract. If no events had happened to preclude B from ratifying, then on compliance with the contract conditions, including notice and production of the deposit receipt, B would have the right to demand from the bank so much of the money as was due on the deposit account.”
In this case, as I have pointed out, Moira Burke was a party to the contract from the outset.
In Russell v Scott (1936) 55 CLR 440, the High Court of Australia was called upon to deal with a problem that I think is almost identical to the one presented to us. The question posed in that case was as follows:
“… whether the survivor of two persons opening a joint bank account is beneficially entitled to the balance standing at credit when the other dies, if all the moneys paid in have been provided by the deceased acting with the intention of conferring a beneficial interest upon the survivor in the balance left at his or her death but not otherwise, and of retaining in the meantime the right to use in any manner the moneys deposited.”
Dixon and Evatt JJ in the course of a joint judgment said the following by way of answer at pp 450-451:
“The contract between the bank and the customers constituted them joint creditors. They had, of course, no right of property in any of the moneys deposited with the bank. The relation between the bank and its customers is that of debtor and creditor. The aunt and the nephew upon opening the joint account became jointly entitled at common law to a chose in action. The chose in action consisted in the contractual right against the bank, ie, in a debt, but a debt fluctuating in amount as moneys might be deposited and withdrawn. At common law this chose in action passed or accrued to the survivor …
The right at law to the balance standing at the credit of the account on the death of the aunt was thus vested in the nephew. The claim that it forms part of her estate must depend upon equity. It must depend upon the existence of an equitable obligation making him a trustee for the estate. What makes him a trustee of the legal right which survives to him? It is true a presumption that he is a trustee is raised by the fact of his aunt’s supplying the money that gave the legal right a value. As the relationship between them was not such as to raise a presumption of advancement, prima facie there is a resulting trust. But that is a mere question of onus of proof. The presumption of resulting trust does no more than call for proof of an intention to confer beneficial ownership; and in the present case satisfactory proof is forthcoming that one purpose of the transaction was to confer upon the nephew the beneficial ownership of the sum standing at the credit of the account when the aunt died. As a legal right exists in him to this sum of money, what equity is there defeating her intention that he should enjoy the legal right beneficially?”
The answer the court gave was that there was none and distinguished Owens v Greene and Freeley v Greene [1932] IR 225 and certain Canadian cases in reaching this conclusion.
The case as pleaded and apparently presented in the High Court on the plaintiff’s behalf was to say that the monies on deposit were held on an implied or resulting trust by Moira Burke for the benefit of the estate of the deceased. As already pointed out, the learned trial judge felt that he was constrained by the decision in Owens v Greene and Freeley v Greene [1932] IR 225 to uphold this submission.
Since historically the concept of an implied or resulting trust was an invention of equity to defeat the misappropriation of property as a consequence of potentially fraudulent or improvident transactions, it would surely be paradoxical, if the doctrine is allowed to be invoked to defeat the clear intention of the donor as found by the trial judge, an intention so clear, as the Chief Justice observed in the course of the debate before us, that he could not possibly have made any other finding as regards the donor’s intention than the one that he did make. In this regard it is apposite to recall what Lindley LJ said in Standing v Bowring (1885) 31 Ch D 282 at p 289:
“Trusts are neither created nor implied by law to defeat the intentions of donors or settlors; they are created or implied or are held to result in favour of donors or settlors in order to carry out and give effect to their true intentions, expressed or implied. It appears to me there are no equitable as distinguished from legal grounds on which the plaintiff can obtain relief.”
As to Owens v Greene and Freeley v Greene [1932] IR 225 the requirement that that case seems to lay down for a donee to benefit is that the deposit receipt is a joint one and that it is payable to the parties or the survivor thus putting it out of the depositor’s power to deal with the fund without the concurrence of his co-owner during his lifetime. This certainly appears from the judgment of Fitzgibbon J at pp 245-246 of the report. This concept appears to be implicit, also, in the judgment of Kennedy CJ (the relevant passage is quoted at length by the learned trial judge); or, at the least, that the donee should be entitled equally with the donor to resort to the funds during the joint lives. The judgments were also concerned to emphasise the importance in the legal scheme of things that testamentary dispositions should be required to comply with the relevant statutory requirements. Of course, if one were dealing with a testamentary disposition there would have to be compliance with the relevant requirements of the legislation in question. But that is to beg the question; if the arrangement made was not testamentary (which in my judgment it was not) then the legislative provisions (see Part VIII of the Succession Act 1965) have no application.
Towards the end of his submissions, Mr McCann no doubt in the light of the trial judge’s finding about the donor’s intentions, came to submit that his client’s claim rested in law and to say that the case was not concerned with a trust, express or implied. He says the situation is simply that the monies on deposit belonged to the estate of the deceased. However, I believe that at law the niece had a legal interest in the monies on deposit either by reason of the contractual relationship of the parties or, in the alternative, as a gift which admittedly was not a completed gift in the conventional sense but is nonetheless one that should be upheld as being a gift subject to a contingency viz that of the death of the donor which contingency does not disqualify it as being a proper gift.
It seems to me that Owens v Greene and Freeley v Greene [1932] IR 225 gives cause for unease on a number of grounds. In the first place, the judgments contain a number of severe criticisms of witnesses in the case which sound strange to us since we are accustomed to holding that matters of primary fact are exclusively for the trial judge and even in regard to inferences of fact respect must always be afforded to the trial judge’s finding. (cf Hay v O’Grady [1992] 1 IR 210; [1992] ILRM 689). But since no report of the judgment of the trial judge (Meredith J) is extant we do not know what findings of fact he made. Further, criticisms are made in the course of the judgments concerning counsel’s submissions which it is difficult to square with the manner in which the case was pleaded and, indeed, the account of the argument put forward for the donees as it appears in the report. The case pleaded was that the deceased declared that the monies on deposit were to belong beneficially to the plaintiff in the event of the death of the deceased and would not in that event form any part of his estate. The argument apparently presented to the court was that the sole question was whether the trial judge was justified in finding as a fact, as he did find, that the donor intended and expressed the intention that each (donee) should be entitled beneficially to the property of which he became the legal owner on the death of the donor, so rebutting the presumption of a resulting trust.
As his last stand, Mr McCann, has urged that if it is thought that the concept of trust must be considered (and in my view because of the course that the case took in the High Court it is clear that we must deal with the relevance of the trust concept) that we should not overrule Owens v Greene since it has stood for so long and, therefore, has been relied upon over the years by practitioners in advising clients. In the circumstances, since I believe – a view shared by all members of the court that the decision was wrongly decided it should be overruled. (cf Ryan’s Car Hire Ltd v Attorney General [1965] IR 642; Mogul of Ireland v Tipperary (North Riding) County Council [1976] IR 260 and Finucane v McMahon [1990] 1 IR 165; [1990] ILRM 505).
Further, this will introduce a measure of consistency in our jurisprudence: it restores equity to the high ground which it should properly occupy to ameliorate the harshness of common law rules on occasion rather than itself be an instrument of injustice. Further, it brings us into line with other common law jurisdictions.
I would allow the appeal.
Egan J: I agree.
Blayney J: I agree.
Denham J: I agree.
W v W
Finlay P. in W. v. W. [1981] I.L.R.M. 202
This is an issue arising in certain proceedings brought by the plaintiff, who is the wife, against the defendant, who is the husband, pursuant to the provisions of the Guardianship of Infants Act, 1964, the Family Law (Maintenance of Spouses and Children) Act, 1976, and by order, the Married Womens Status Act, 1957.
The issue with which this judgment is concerned is solely confined to a claim made by the wife to be entitled to a beneficial interest in a farm of land registered on a folio in the name of the husband.
Upon this issue evidence was given by the wife and by an agricultural expert on her behalf but no evidence was given by or on behalf of the husband. [At this point the Judge recited the facts of the case and then continued] … I am solely concerned with the claim of the wife for an interest in the main holdings of land.
This claim was presented to me by counsel on behalf of the wife in two alternative and in a sense concurrent forms. It is firstly submitted that insofar as the transfer of the lands originally made to the husband was subject to encumbrances that on the evidence I should hold that the wife had contributed over the years both by her industry, by the bringing into the farm of her own personal savings on marriage and her share in the monies received by way of gift on the wedding; by bringing in her original bloodstock and working with them thus making income for the farm and by her actual work at the ordinary dairy portion of the farm to the general farm income out of which I should assume on the evidence those encumbrances were discharged and that that those facts gave her an interest arising from that transaction in the farm. A similar submission was made in regard to the evidence adduced by the wife that upon the building of the modern milk-parlour a further mortgage was raised on the farm and subsequently discharged and the sums of money brought in by her.
In addition and as I have said not only as an alternative but as a concurrent submission it is claimed on behalf of the wife that since she consistently worked on the farm both in relation to the dairying end of it and in relation to the bloodstock end of it that that work added to the general fund or income from the farm in each year and that insofar as that was used for the purpose of making improvements to the farm in particular represented by improvements in the buildings and yards etc., that that was a contribution by her towards the acquisition of the entity which now constitutes the farm as improved and that as such would give her a claim to an equitable interest in the farm.
In considering this claim on the facts as I have found them I have in particular been referred to and carefully considered the following decisions.
C v C [1976] IR 254
Heavey v Heavey (1977) ILTR 1
McGill v S. [1979] IR 238
From these three decisions, the two former of which are decisions of Kenny J whilst a High Court judge and the third of which is a decision of Gannon J and from the judicial decisions quoted with approval in them, I am satisfied that the following broad propositions of law arise which are applicable to the facts of this case.
1. Where a wife contributes by money to the purchase of a property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court will decide that the wife is entitled to an equitable interest in that property approximately proportionate to the extent of her contribution as against the total value of the property at the time the contribution was made.
2. Where a husband makes a contribution to the purchase of property in his wife’s sole name he will be presumed by a rebuttable presumption to have intended to advance his wife and will have no claim to an equitable estate in the property unless that presumption is rebutted. If it is, he would have a claim similar to that indicated in respect of the wife with which I have already dealt.
3. Where a wife contributes either directly towards the repayment of mortgage instalments or contributes to a general family fund thus releasing her husband from an obligation which he otherwise would have discharge liabilities out of that fund and permitting him to repay mortgage instalments she will in the absence of proof of an inconsistent agreement or arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayments: to the value of the mortgage thus redeemed and to the total value of the property at the relevant time. It is not expressly stated in the decisions to which I have referred but I assume that the fundamental principle underlying this rule of law is that the redemption of any form of charge or mortgage on property in truth consists of the acquisition by the owner or mortgagor of an estate in the property with which he had parted at the time of the creating of the mortgage or charge and that there can be no distinction in principle between a contribution made to the acquisition of that interest and a *205 contribution made to the acquisition of an interest in property by an original purchase.
4. Where a husband contributes either directly or indirectly in the manner which I have already outlined to the repayment of mortgage charges on property which is in the legal ownership of his wife subject to the presumption of advancement and in the event of a rebuttal of that presumption he would have a like claim to an equitable estate in the property.
5. Where a wife expends monies or carries out work in the improvement of a property which has been originally acquired by and the legal ownership in which is soley vested in ther husband she will have no claim in respect of such contribution unless she established by evidence that from the circumstances surrounding the making of it she was lead to believe (or of course that it was specifically agreed) that she would be recompensed for it. Even where such a right to recompense is established either by an expressed agreement or by circumstance in which the wife making the contribution was lead to such belief it is a right to recompense in monies only and cannot and does not constitute a right to claim equitable share in the estate of the property concerned.
6. A husband making contributions in like manner to property originally acquired by and solely owned as to the legal estate by his wife may again subject to a rebuttal of a presumption of advancement which would arise have a like claim to compensation in similar circumstances but would not have a claim to any equitable estate in the property. Applying these principles of law which I believe to be the relevant principles to be derived from the decisions to which I have referred to the facts as so far found by me in this case I am satisfied that the following conclusions and consequences arise.
Whilst the evidence of the wife concerning the encumbrances effecting the property when it was first transferred to her husband, was explicably without detail, it has not been contradicted by any evidence adduced on behalf of her husband nor was she in fact cross-examined about it. I must therefore conclude that such encumbrances did exist and were discharged after the transfer of the farm to the husband. A precisely similar conclusion arises with regard to her evidence as to the raising of a charge and its subsequent redemption at the time of the construction of the modern milking-parlour.
I will therefore direct that a further issue be tried before me as to: (1) the extent of the encumbrances subject to which the lands were transferred to the husband and the time at which they were finally redeemed together with the value of the lands at the date of transfer and at the date of the eventual redemption of these charges; (2) the amount of the charges raised by way of mortgage on the lands at the time of the construction of the milking parlour the value of the lands at the time that mortgage was created; the date on which they were eventually redeemed and the method by which they were redeemed and the value of the lands at the date at which they were redeemed.
In this context I intend of course to deal not only with legal mortgages but with any form of charge raised on the land whether secured by the equitable deposit of title deeds or othrewise.
Since the husband did not give evidence before me on the issues so far tried *206 and since he did not produce, at this or any other stage in the proceedings, any documentary evidence other than certain farm accounts which are irrelevant to this question I will direct that he make discovery of all documents relevant to the issue now still to be tried and I will give liberty to the wife if she is so advised to serve interrogatories on the husband concerning the transactions to which I have referred.
I am needless to say, concerned with the cost of the proceedings which have already been maintained between the husband and wife in this case and with the thought of imposing upon the parties further expense and costs. It seems to me that both discovery and interrogatories should be capable of being properly achieved without formality and that it might be possible for the parties upon full examination of the documentary proofs available to reach agreement on the extent of the share to which as a consequence the wife is entitled in these lands. If such an agreement cannot be reached I will, of course, re-enter the matter for further hearing at a suitable time.
To assist the parties in reaching an agreement which might avoid expense I feel I should indicate that it would be my intention from the evidence I have already heard to hold that the contribution of the wife during the two relevant periods in which prima facie charges on these lands were being redeemed would be approximately 50% which takes into account both her work, the monies brought in by her and in particular the results of her dealing in bloodstock. The proportion or share to which she should be entitled to be declared an equitable owner in these lands would therefore be half of the proportion represented by the amount of the charge redeemed and the value of the lands at the relevant time which would in effect be a combination of the value of the lands at the time of the raising of a mortgage and the value of the lands at the time when it was finally redeemed. This statement of my intention on the evidence already heard by me may assist the parties to reach an agreement as to a share in respect of which the wife is entitled to claim in these lands. Insofar as the wife has claimed an equitable estate in these lands solely derived from her contribution to improvements I must on the authorities hold that it is not sustainable in law.
Stanley v Kieran
[2011] IESC 19,
Judgment delivered on the 7th day of June, 2011 by Denham J.
1. This case raises the query as to whether in all the circumstances there was a resulting trust, whether a presumption arose as to such a trust and, if so, whether the presumption was rebutted.
2. This is an appeal by James Stanley, the plaintiff/appellant, referred to as “the appellant” in this judgment, against an order of the High Court (Laffoy J.) made on the 30th July, 2007, in which the appellant’s claim was dismissed.
3. Mary Kieran, the first named defendant/respondent, is referred to as “the respondent”. River Properties Limited, the second named defendant/respondent, is referred to as “the company”.
4. The appellant brought proceedings claiming, inter alia, that he is the beneficial owner of lands and premises, referred to in these proceedings as “Brownsbarn House”. In the alternative, he sought a declaration that the respondent holds the issued share capital in the company on trust for him.
5. In the statement of claim it was stated that the appellant is a businessman and that he resides in Moscow. It was stated that the respondent is a nurse who resides or “formally” resided at Brownsbarn House. The company was described as a limited liability company registered under the laws of the British Virgin Islands.
6. Between the years 1983 and 1994 approximately the appellant and the respondent cohabited.
7. The High Court (Laffoy J.) delivered judgment in this matter on the 19th July, 2007.
8. The learned High Court judge explained that this was the second of three connected proceedings. The other two were the O’Connor proceedings: John O’Connor v. Mary Kieran and River Properties Limited (Record No. 2004/19479p); and the 2007 proceedings: James Stanley v. John O’Connor (record no. 2007/2451p). The common feature of the three actions was that they concern the ownership of issued shares in the company and of residential property in County Kilkenny. The residential property, Brownsbarn House, is registered on Folio 4444F of the Register of Freeholders, County Kilkenny. The company was registered as full owner on Folio 4444F on 8th August, 2000, but the High Court found that the evidence established that the transfer under which the company acquired the lands from the previous registered owner was dated 12th January, 1990. These proceedings were registered as a lis pendens on Folio 4444F on 30th January, 2001. The O’Connor proceedings were also registered as a lis pendens on Folio 4444F on 22nd December, 2004. These proceedings were further registered as a lis pendens on the lands registered in Folio 18341F, County Kilkenny. The respondent was registered as owner of the lands the subject of that folio on 15th April, 1999.
9. The O’Connor proceedings were heard on 1st May, 2007. The respondent appeared in person, there was no appearance by or on behalf of the company. The High Court gave an ex tempore judgment, making the following orders:-
“(i) a declaration that the plaintiff, John O’Connor, had exercised the option, which the [respondent] granted to him on 17th September 2004, for the purchase of the shares held by [her in the company.] at the price of €1,600,000; and
(ii) an injunction until further order restraining the [respondent] by herself, her servants or agents, from disposing of, charging or otherwise dealing in the shares held by her in the [company.]”
10. The 2007 proceedings, as they were described by the learned High Court judge, in broad terms address issues of priority as between John O’Connor and the appellant. The learned High Court judge stated, on 19th July, 2007, that they remained to be heard.
11. In these proceedings, while the statement of claim was more broadly drawn, at the hearing in the High Court the reliefs pursued by the appellant were:-
(a) a declaration that the appellant is the beneficial owner of the lands registered on Folio 4444F and Folio 18341F, County Kilkenny;
(b) further, or in the alternative, a declaration that the respondent holds the issued share capital in the company in trust for the appellant;
(c) a mandatory injunction directing the respondent and the company, their servants or agents to transfer the lands registered in Folio 4444F and Folio 18341F of the Register of Freeholders, Co. Kilkenny, to the appellant and to execute all documents necessary to effect such transfer; and
(d) further, or in the alternative, a mandatory injunction directing the respondent to transfer all the shares held by her in the company to the appellant.
As regards the relief claimed at (a) above, counsel for the appellant submitted to the High Court that the basis of the claim was that the company has at all times held the lands on a resulting trust for the appellant personally. As regards the relief claimed at (b) above, the basis of the claim was that the respondent held the shares in the company in trust for the appellant.
12. The High Court (Laffoy J.), in a reserved judgment delivered on the 19th July, 2007, set out details of the background to the case. This judgment may be seen in full on www.courts.ie.
13. Very briefly, the appellant claimed that he purchased Brownsbarn House in late 1989. The property was conveyed to the company, the share capital of which is registered in the respondent’s name, and held in trust for him. There were subsequent improvements to the property, all financed by him. In December, 2000 the appellant requested the respondent to join with him in steps to mortgage Brownsbarn House. She refused. It appears she intended to dispose of the property without reference to him. Until May, 2006 there was a solicitor on record for the respondent and the company in the proceedings. The respondent discharged the solicitor in May, 2006. Later, on 6th November, 2006, the solicitor was declared by the High Court to be no longer acting for the company and was allowed to come off record. There were a series of matters pleaded in the defence, including that it was denied that the appellant purchased any of the properties referred to in the statement of claim in the name of the respondent and/or the company in trust for him. It was pleaded that the appellant was estopped by reason of his conduct and representations from asserting or claiming any ownership or beneficial interest in Brownsbarn House; specifically that the appellant was estopped by reason of the express agreement between him and the respondent that, in consideration of the respondent living with him as his common law wife and personal assistant in his business affairs, she would be entitled to the sole and exclusive beneficial interest in the said house and lands. It was also denied, inter alia, that the house and lands were purchased by monies provided by the appellant.
14. The learned High Court judge detailed the course of the hearing in the High Court; how it advanced initially in the absence of the respondent due to her refusal to attend, how the respondent returned to the courtroom and testified; and how she left during her cross-examination by counsel for the appellant and before it was concluded. She did not return at any time thereafter. The learned High Court judge pointed out that in reality the company was not represented at the hearing.
15. The High Court held that the appellant had provided the entire consideration for the acquisition of Brownsbarn House and lands, and that he had also provided the money to purchase the lands in Folio 18341F. The High Court held that these facts, in the absence of a contest as to what the appellant intended in purchasing the properties in the names of the respondent and the company, give rise to the presumption of a resulting trust in favour of the appellant. Further, the High Court held that, in the case of a contest, the onus of rebutting that presumption would normally lie with the person asserting that the presumption did not apply, in this case the respondent and the company. The High Court held that they did not discharge that onus, that there was no appearance for the company, and that the respondent did not participate properly in the proceedings.
16. The learned High Court judge went on to hold:-
“However, the evidence of the [appellant] goes beyond merely establishing that he provided the purchase money. The issue the court has to address is whether the evidence raises questions about the [appellant]’s intentions as to the beneficial ownership of Brownsbarn House when it was acquired in 1989 and the beneficial ownership of the shares in the [company]. In my view, it does.
First, there is the evidence as to the acquisition of the Lower Mount Street apartment in the name of the [respondent]. The [appellant’s] case is that the entire purchase money was indirectly provided by him out of the proceeds of the sale of the Dalkey apartment. On the [appellant’s] own evidence, a resulting trust in his favour would have arisen in relation to that property, subject to the life interest he testified he intended to confer on the [respondent]. Nonetheless, after they separated, he allowed the [respondent] to sell the apartment and retain the entire proceeds of sale. It may be that the [appellant] took a pragmatic view and decided that there was no point in pursuing the [respondent] for his share of the proceeds of sale. Alternatively, it may be that the [appellant] desisted from pursuing the [respondent] out of generosity towards her. The history of the Dalkey apartment and the Lower Mount Street apartment was introduced to give the full context of the [appellant’s] relationship and dealings with the [respondent]. However, it does raise a question mark about the intentions of the [appellant] in vesting property, which he had paid for, in the sole name of the [respondent].
Secondly, the ten year delay in registering the lands registered on Folio 4444 F in the name of the [company] raises questions. On his own evidence, the [appellant] appeared to be unaware of the delay. He claims to be the beneficial owner of the issued share capital in the [company], yet he appears to have had no involvement whatsoever, either directly or indirectly through solicitors acting on his behalf, in the perfection of the title of the [company]. He apparently has not investigated the delay in registration and he cannot explain it.
Thirdly, the element of control which the [appellant] gave the [respondent] over the property and the title deeds is not consistent with the [appellant’s] claim to be the beneficial owner, through the medium of the [company], of Brownsbarn House. According to the folio, the land certificate in relation to the folio issued to the solicitor formerly on record for the [respondent] in these proceedings in 2006. On the basis of the [appellant’s] evidence and the public record, the [appellant] allowed the [respondent], as the sole registered proprietor of the shares in the [company], free rein to dispose of and encumber the lands registered on Folio 4444 F until the lis pendens was registered on 30th January, 2001.
Fourthly, and most significantly, the [appellant] adduced no documentary evidence of the legal or beneficial ownership of the issued shares in the [company] and the only evidence led as to the beneficial ownership was what he testified he told Susan Neill in 1989 and what he told Susan Neill and the [respondent] in 1995. In the O’Connor proceedings a share certificate in relation to what I understand to be the only two issued shares in the [company] was put in evidence. That share certificate showed the [respondent] as the owner of the two issued shares on 8th March, 1999. It was sealed in the presence of Susan Neill, as a director of the [company]. Presumably, the company law code of the British Virgin Islands requires the maintenance of registers of members of the company and the making of returns. It must be assumed that the [appellant] could have adduced documentary evidence to corroborate his contention in relation to the ownership of the shares, for example, a change in the registered ownership from Susan Neill to the [respondent] in 1995. Additionally, his agent in Jersey, presumably, could have given comprehensive evidence about the incorporation of the company, its membership and officers at material times and so forth. The fact that the court has only the [appellant’s] word as to the ownership of shares in a limited company incorporated in a foreign jurisdiction is wholly unsatisfactory.
Fifthly, there is the curious fact that the lands registered on Folio 18341 F, which were acquired in 1999, some four years after the relationship of the [appellant] and the [respondent] had terminated, and which the [appellant] testified were of strategic importance in terms of the development of the lands registered on Folio 4444 F, were acquired in the name of the [respondent], and not in the name of the [company]. That is not consistent with the [appellant’s] explanation for the acquisition of the lands registered on Folio 4444 F in the name of the [company], which was that he was treating the acquisition as an investment because of the development potential of the lands. One would have assumed that the acquisition of contiguous land of strategic importance would also have been taken in the name of the [company].
Finally, there is the proposed settlement in 2003. The [appellant] did give an explanation as to why he was prepared to forgo his claim to Brownsbarn House and lands for a fraction of its value: because he wanted funds to participate in the Russian venture. However, as with the evidence that the [respondent] was allowed to retain the entirety of the proceeds of the sale of the Lower Mount Street apartment, the fact that he wanted to settle on that basis raises questions about what his intentions were in relation to the beneficial ownership of Brownsbarn House when it was purchased.
Leaving aside the question of the conduct of the [respondent] in relation to these proceedings and the absence of the [company], the question for the court is whether the foregoing factors, all of which arise from evidence adduced by the [appellant], separately or in aggregate, raise doubts as to whether the intention of the [appellant] in 1989 was to secure the beneficial ownership of Brownsbarn House to himself by holding it in the name of the [company] and through the beneficial ownership of the shares in the [company]. The combination of those factors suggests to me that, as a matter of probability, the [appellant] intended to benefit the [respondent]. The conduct of the [respondent] rendered these proceedings unsatisfactory. Counsel for the [appellant] acknowledged that, but submitted that it was a factor which was not to be held against the [appellant]. While that is so, it is the [appellant’s] evidence which has raised the questions as to his intentions as to the beneficial ownership of Brownsbarn House.
At the insistence of the [appellant] this case proceeded in the absence of the [company]. The failure of the [appellant], to adduce any evidence of the current incorporated status of the [company], its membership and directors and officers, whether its assets are charged and so forth is difficult to comprehend. If the [appellant] is the beneficial owner of the [company], as he contends, he must surely be in a position to adduce satisfactory evidence of that fact.”
The appellant’s claim was dismissed.
17. The appellant filed a notice of appeal submitting that the learned High Court judge had erred in law or in fact or in a mixed question of law and fact. While there were seven grounds in the notice of appeal, in the written submissions it was stated that they could be reduced to two submissions. These were:-
(i) It was not open to the learned High Court judge to make the inferences and findings against the appellant in circumstances where his evidence was not challenged at the hearing and he had no opportunity to meet the case found against him; and
(ii) That there was insufficient evidence to rebut the presumption that Brownsbarn House (on both folios) was held by the respondents by way of resulting trust in favour of the appellant (as were the two shares in the company, held by the respondent.)
Submissions
18. Written submissions were received from the appellant and the respondent.
19. In the written submissions on behalf of the appellant it was submitted that, in the absence of any challenge by way of cross-examination of the appellant’s evidence, it was not open to the High Court to make any finding adverse to the evidence given by the appellant. Two reasons were given: (a) in the absence of any challenge to his evidence, the appellant’s evidence stood at the conclusion of the hearing as the only direct evidence and that, not having been put in doubt, it could not then be displaced by mere inferences; and, (b) as a matter of fundamental fair procedures, the learned High Court judge was not entitled to take into account any doubts or make adverse inferences where the matters in question had not been put to the witness. It was submitted that it was not open to the High Court to reject the appellant’s evidence. Alternatively, if this Court found it was open to the High Court to enter into a consideration as to whether there was any reason to question the appellant’s evidence, it was submitted that the conclusion reached by the High Court should be reversed. The submissions also considered the inferences drawn by the learned trial judge.
20. Written submissions of the respondent were received. The first set of submissions referred to the appellant, Bula Resources and oil fields and other matters which are not relevant to the issues in this appeal. A second set of submissions was received in court at the opening of the hearing. The Court adjourned for a period so that counsel for the appellant could read the submissions and decide if he wished to make any application. On his return counsel for the appellant informed the Court that he had read the submissions; that they raised new issues; and that the High Court had heard and determined the case on the issue of a resulting trust. He asked the court to proceed with the appeal as there had been many delays in the case.
21. This case was heard and determined in the High Court on the basis that the issue to be determined was whether there was a resulting trust in favour of the appellant. In the new submissions filed on behalf of the respondent at the hearing of the appeal it was stated that the case raised the question as to what principles of law determine the rights of cohabiting partners to property purchased during their relationship. The submissions considered the correct approach to determine the property rights of cohabitants and the issue of proof of a witness. It was submitted that the presumption of a resulting trust was the incorrect starting point for an analysis of the respective interest of property purchased by the cohabitants. Reliance was sought to be placed on the House of Lords decision Stack v. Dowden [2007] 2 AC 432. Also, the submissions addressed the issue of proof of a witness, and it was stated that regardless of whatever presumptions the law might apply in a particular case, the onus is on a party to prove his case. In this instance the respondent contended that the appellant had failed to prove his case. In particular, the appellant’s reliance on oral testimony in light of the lack of documentary evidence put forward in support of his case was, it was claimed, fatal to the contentions he made.
Pleadings
22. The plenary summons is drafted as a claim that the appellant is the beneficial owner of property. The defence filed is in the form of generally denying the claim of the appellant and asserting that the respondent owns the stated properties. It was denied that the appellant provided the monies for the purchase of Brownsbarn House, or provided funds for its improvements. It was claimed that the appellant was estopped from claiming beneficial ownership in Brownsbarn House. In paragraph 14 of the defence it was pleaded:-
“The [appellant] is further estopped from asserting or claiming the alleged or any ownership or beneficial interest in the aforesaid Brownsbarn House and lands by reason of the express agreement between the [appellant] and the [respondent] that in consideration of the [respondent] living with the [appellant] as his common-law wife and personal assistant in his business affairs, the [respondent] would thereafter and irrevocably be entitled to the sole and exclusive beneficial interest in the said house and lands. The said agreement was affirmed and fully implemented by the [appellant] when he terminated the relationship between the [respondent] and himself in or about the year of 1989.”
Absent from Court
23. However, as referred to in the judgment of the High Court, the respondent knew the case was proceeding but absented herself from the first day of the proceedings, returned to court on the second day, but left before her cross-examination had concluded. She stated that Brownsbarn House was her house. She repeatedly said these proceedings were about other matters. As the respondent left during her cross-examination the learned High Court judge disregarded her evidence.
24. While the learned High Court judge was entitled in law to disregard the evidence of the respondent, it is notable that the respondent merely asserted that she owned Brownsbarn House but gave no evidence of any express or other agreement with the appellant, that, in consideration of her living with him as his common law wife and personal assistant, she would be entitled to be the sole beneficial owner of the said house and lands, or that any such agreement was affirmed or implemented.
25. Thus issues on the status of cohabitee were not determined by the High Court. This is an appellate court which is hearing an appeal from the decision of the High Court. A new case cannot be pleaded and submitted at this stage in this Court. Consequently, the issues for determination arise out of those matters heard and determined by the trial court.
26. The fundamental issue before the Court is whether the respondent and the company hold Brownsbarn House in a resulting trust for the appellant. This question requires to be determined on the evidence given in the High Court.
Law
27. The law as to the nature of a resulting trust is stated clearly in Delaney, Equity and the Law of Trusts in Ireland: 4th Ed., (Dublin, 2007), starting at p.135. It is described as:-
“Resulting trusts can be said to arise by implication and are founded on the unexpressed but presumed intention of the settlor.”
The traditional approach has been to find the real intention of the settlor. However, as Delaney points out at p.136, there has been some modern analysis. Dr. Chambers, Resulting Trusts (1997), at p.2, reached a conclusion that:-
“All resulting trusts come into being because the provider of property did not intend to benefit the recipient.”
Following that analysis in Twinsectra Ltd v. Yardley [2002] 2 AC 164, at 190, Lord Millett stated:-
“The central thesis of Dr Chambers’s book is that a resulting trust arises whenever there is a transfer of property in circumstances in which the transferor (or more accurately the person at whose expense the property was provided) did not intend to benefit the recipient. It responds to the absence of an intention on the part of the transferor to pass the entire beneficial interest, not to a positive intention to retain it.”
However, it is not necessary to consider any complex academic analysis in this case. The claim was fought in the High Court and in this Court on the basis that there was a resulting trust, in that the property belonged to the appellant and that he did not intend to benefit the recipient. There was an absence of intent by the appellant to pass the beneficial interest.
Presumption
28. There is a presumption that the provider of funds for the purchase of the property is the beneficial owner. As stated in Delaney at p.161:-
“… where a person provides the purchase money for property, whether real or personal, which is conveyed or transferred to another person or to himself and the other person jointly, it is presumed that the latter holds the property on a resulting trust for the person who provided the purchase money.”
Rebutted
29. The presumption may be rebutted. This may be done by evidence that the provider of funds intended to benefit the other party. Or, the presumption may be rebutted by the presumption of advancement; that, however, does not arise in this case. The parties in this case were not husband and wife. The issue of their relationship as cohabitees was not an issue decided by the High Court.
30. Thus it is necessary to consider the evidence given in the High Court and to apply the applicable law on resulting trusts.
31. In the High Court the appellant was represented by solicitor and counsel. The respondent absented herself from the first day of the proceedings, and then left the court on the second day, during her cross-examination by counsel for the appellant. There was no appearance by or on behalf of the company.
32. The evidence before the High Court was essentially that of the appellant. On 1st May, 2007, the respondent left court when the High Court was giving judgment in the O’Connor proceedings. After she left, the hearing of this case was adjourned until 2nd May, 2007. The solicitors for the appellant were instructed to contact the respondent and inform her that the matter was proceeding on the following day. The respondent did not appear in court on 2nd May, 2007. The solicitors for the appellant had been unable to contact her. However, the appellant, who notwithstanding these proceedings is still in communication with the respondent, had travelled by train to Dublin and met her at Heuston Station shortly after 10.00 am, and told her the action was proceeding and encouraged her to attend, but she made it clear she did not intend to do so. The case proceeded in her absence, and in the absence of representatives of the company. On 2nd May, 2007, the High Court heard the evidence of the appellant and submissions on the law by counsel for the appellant, and a subpoena duces tecum was served on the Property Registration Authority to produce the instrument on foot of which the company was registered as owner on Folio 4444F. When the matter resumed on 3rd May, 2007, the respondent was in court. She was allowed to testify. However, during the course of her cross-examination by counsel for the appellant she refused to participate and she left the court. The witness from the Land Registry attended at 2.00 p.m. on 3rd May, 2007, and produced the relevant instrument.
33. The High Court reviewed the evidence received in oral testimony from the appellant, in the absence of the respondent, and which was not the subject of cross-examination. It was wide ranging evidence as to the relationship between the appellant and the respondent, the acquisition and sale of properties, the appellant’s work and travel.
33(i) In relation to Brownsbarn House, the appellant said he was looking for a summer place or country house in 1989. He purchased Brownsbarn House in 1989 because he thought it had development potential. He saw potential for resale. He paid IR£220,000 for it out of his own money. There was no borrowing in relation to the purchase. The respondent did not provide any part of the purchase money. Brownsbarn House was vested in the company as the appellant decided it would be more convenient to hold in it an offshore company. He asked his agent in Jersey to form an offshore company for him. Initially the two issued shares in the company were held by his agent in Jersey in trust for the appellant. The appellant gave evidence of improvements he carried out on the property.
33(ii) After the relationship between the appellant and the respondent ended in 1995, the respondent continued to live in Brownsbarn House; the appellant maintained personal items and clothing there.
33(iii) The appellant said that the lands in Folio 18341F County Kilkenny were acquired with his money. He gave evidence of the purchase of the additional property, Folio 18341F, County Kilkenny, in 1999; it was land originally acquired by Kilkenny County Council for road widening; the acquisition of this land was of strategic importance to the appellant as regards access to Brownsbarn House. The folio is in the name of the respondent.
33(iv) The appellant gave evidence that in 1995 he varied his instructions to his agent in Jersey, Sue Neill, in relation to the issued shares in the company. He told her that she was to hold the two shares for the respondent. He stated that he told the respondent that she was holding the shares on his behalf. This was done before the relationship ended. His explanation for this was that he feared litigation at that time from a Russian businessman, with whom he had provision dealings, and who knew of Brownsbarn House.
33(v) In 1998 proceedings were instituted by Bula Resources (Holdings) Plc against the appellant and Mir Oil Development Limited. In August, 1998 a Mareva type injunction was granted to Bula Resources (Holdings) Plc restraining the appellant from removing any of his assets within the jurisdiction out of the jurisdiction or from disposing of, transferring, charging, diminishing or in any way dealing with certain specific assets; including Brownsbarn House. The court gave liberty to the appellant’s solicitors to inform various persons, including the respondent. In December, 2000 the orders were discharged and the action against the appellant struck out. The appellant stated that the respondent was aware of the freezing order but did nothing to challenge it.
33(vi) The appellant gave evidence that he had tried to settle these proceedings with the respondent. A business opportunity arose with the Russian businessman previously referred to. The appellant stated that in 2003 he met the respondent and agreed to forego his claim on Brownsbarn House, he gave her a paper setting out his understanding of their agreement, it was a fax transmission signed by the appellant and dated 26th November, 2003; and transmitted to the respondent on 27th November, 2007. It provided that the appellant would give up his claim to Brownsbarn House in return for €450,000 to be paid by 1st December, 2004; if the sum was not paid by then the respondent would sell the property and the appellant would be entitled to €500,000 out of the proceeds of sale; the litigation was to cease; the lis pendens was to be lifted; and the agreement was to be “registered in court”. The appellant’s evidence was that the respondent did not reply to his fax of the agreement. Further, he stated that he met the respondent in August, 2004. He needed €1million for a deal. He struck a deal with the respondent; he said that their agreement was that she would give him €500,000 by the 1st November, 2004, and she would invest €500,000 in the venture, which she said she would borrow. However, the respondent did nothing.
34. The only other evidence given was the evidence of the official of the Land Registry who produced the instrument on foot of which the company was registered on Folio 4444F, County Kilkenny. The transfer to the company was dated 12th January, 1990. There was a delay of ten years in registering the transfer. The High Court held that “on the basis of the evidence, it is not possible to come to any conclusion as to the reason for the delay in registering the transfer”.
35. The High Court referred to the evidence of the respondent. As to why the property was put in the name of the company, the respondent’s evidence was that as the appellant had not obtained a divorce at the time and as she did not have a legal separation, the property needed to be purchased in the name of a company. She asserted that the property was always intended to be for her benefit and that the shares in the company are hers, as is Brownsbarn House and lands. The High Court pointed out that the appellant was not in a position to challenge the respondent on that assertion because she left the courtroom before he had an opportunity to cross-examine her on it. Of course, it should be noted also that the appellant was not cross-examined on his evidence.
Decision
36. This case turns on the question as to whether, on the evidence, the respondent holds Brownsbarn House in trust for the appellant.
Presumption arises
37. The evidence of the appellant was that he provided the money to purchase Brownsbarn House and the lands. There was no evidence contradicting that fact. Indeed the respondent agreed that this was so. The High Court held:-
“I am satisfied on the evidence that the [appellant] provided the entire consideration of IR£235,000 for the acquisition of Brownsbarn House and lands now registered on Folio 4444 F. In the absence of evidence to contradict the [appellant’s] evidence on this point, I also accept that he provided the purchase money to acquire the lands registered on Folio 18341 F. Those facts alone, in the absence of a contest as to what the [appellant] intended in purchasing the properties in the names of the [company] and the [respondent], would give rise to the presumption of a resulting trust in favour of the [appellant] in relation to the lands registered on both folios.”
I would affirm this finding. On the facts the presumption of a resulting trust in favour of the appellant arose.
Rebuttal
38. The next question is whether the respondent and/or the company rebutted that presumption. The company was not represented at the hearing and the sporadic attendance at the hearing of the respondent has been described. The High Court held:-
“In the case of a contest, the onus of rebutting that presumption would normally lie with the person asserting that the presumption did not apply, namely, the [respondents]. The [respondents] did not discharge that onus. There was no appearance for, or representation of, the [company] and the [respondent] did not properly participate in the proceedings.”
I would affirm the finding of the learned trial judge that the respondent and the company did not discharge the burden of rebutting the presumption. Thus the presumption of a resulting trust would stand, and so the appellant would be entitled to succeed on his claim.
39. However, the learned High Court judge took a further step and went on to consider the evidence of the appellant in detail. Counsel for the appellant submitted that it was not open to the learned High Court judge to draw inferences and make findings against the appellant in circumstances where his evidence was not challenged and he had no opportunity to meet the case found against him. Counsel initially submitted that where there was uncontested sworn evidence which was not the subject of cross-examination or conflicting evidence that then it must be accepted by the Court. Reference was made to Antoni & Anor v. Antoni & Ors [2007] UKPC 10 (26 February, 2007).
40. However, I am satisfied that the learned trial judge had a duty to act judicially, to hear and consider any evidence, to make determinations as to issues arising, including as to the credibility of witnesses, and to render a judgment on the case. The decision should be based on the evidence before the Court, and so would be limited by that evidence. I am satisfied that it was within the jurisdiction of the learned High Court judge to consider all the evidence given (which was essentially that of the appellant) and to make a determination thereon.
41. It was open to the learned trial judge to make a decision on the credibility of witnesses appearing before her. As the respondent did not stay for her cross-examination, the learned trial judge made no finding based on her evidence, quite correctly. The appellant gave oral evidence, but was not cross-examined on it as at the relevant time the respondent had absented herself from court. It was open to the learned trial judge to make a finding on the credibility of the appellant and of the evidence of the appellant. However, the learned High Court judge made no express finding as to whether or not she believed him.
42. The learned trial judge drew inferences from the evidence of the appellant. As the High Court made no express finding that the evidence of the appellant was not credible, it must be presumed to have been credible. In those circumstances this Court is in the same position as the learned High Court judge in the drawing of inferences from the evidence.
43. Thus the evidence of the appellant is the foundation for any decision. I will consider seriatim the six matters listed by the High Court, as quoted earlier in this judgment, and the inferences drawn from the evidence.
44. (i) First, there was the evidence as to the acquisition of the Lower Mount Street apartment, which was funded by the appellant, was in the respondent’s name, and of which the appellant gave evidence that he intended the respondent to have a life interest. However, after the separation he allowed the respondent sell the apartment and retain the entire proceeds of sale. The learned trial judge said that this raised a question mark about the intentions of the appellant in vesting property, which he paid for, in the sole name of the respondent.
On this property the appellant had agreed that the respondent could have the apartment for life but that if she predeceased him it would revert to the appellant. It was a specific agreement between them. I would differentiate the two situations – the apartment and Brownsbarn House. There was the express agreement that the respondent would have a life interest in the apartment. There was no such agreement as to Brownsbarn House. I would draw no inference from the agreement as to the apartment and the appellant’s intent in 1989 when he bought Brownsbarn House and stated that the shares of the company were held on trust for him. It seems to me that the learned trial judge erred in drawing any adverse inference from the matter of the apartment. It was a specific separate agreement and irrelevant to the issue of Brownsbarn House. Further, any adverse inference on this basis was contrary to the evidence of the appellant and without any express basis given for rejecting that evidence.
44 (ii) The second matter raised by the learned High Court judge was that the appellant was unaware of the ten year delay in registering the land in Folio 4444F in the name of the company. However, the appellant was out of the county for most of this time, no discovery was made by the respondent, and it transpired that the delay was due to getting s.45 consent. I am satisfied that there is no basis to draw an adverse inference on this matter.
44. (iii) Thirdly, the learned trial judge stated that the element of control which the appellant gave to the respondent over the property and the title deeds was not consistent with the appellant’s claim to be the beneficial owner, through the company, of Brownsbarn House. However, the element of control is consistent with property being transferred to another person in trust. The learned trial judge failed to give sufficient weight to the nature of the personal and business relationship between the parties, and to the fact that the shares were put in the respondent’s name in 1995. Also, there was a failure to give weight to the substantial amount of personal property belonging to the appellant that was kept by him at Brownsbarn House, even after the relationship with the respondent ceased.
44. (iv) The learned trial judge stated that fourthly, and most significantly, the appellant adduced no documentary evidence of the legal or beneficial ownership of the issued shares in the company, and stated that the only evidence led as to the beneficial ownership was what he testified he had told his agent, Susan Neill, in 1989 and what he told Susan Neill and the respondent in 1995. It was stated that his agent in Jersey could have given evidence about the incorporation of the company, its membership and officers. The learned trial judge stated further:-
” The fact that the court has only the plaintiff’s word as to the ownership of shares in a limited company incorporated in a foreign jurisdiction is wholly unsatisfactory.”
However, the respondent had taken control of the company (she had the shares registered in her name in 1999) and she failed to make discovery to the High Court. One wonders whether a person with no registered interest in a company could obtain information from the British Virgin Islands as to the ownership of the shares. The appellant did arrange the calling of a witness from the Land Registry when the learned trial judge expressed concern at the delay in registration. That evidence corroborated the evidence of the appellant. As the respondent held the two shares in the company, and did not cooperate with the Court, it does not seem that any weight could be put on this factor to draw an inference negative to the appellant.
44 (v) The fifth factor referred to by the learned trial judge was that the lands registered on Folio 18341F, which were acquired in 1999, some four years after the relationship of the appellant and respondent ended, were acquired in the name of the respondent. The High Court considered that this was not consistent with the appellant’s explanation for his purchase of Folio 4444F, in the name of the respondent, as an investment for development potential. The High Court stated that one would have assumed the acquisition of contiguous land of strategic importance would also have been taken in the name of the company. There was no direct evidence on this issue. It is true that irrespective of whether the appellant or the respondent was the beneficial owner of Brownsbarn House, it is an anomaly that the additional folio was in the name of the respondent. But the matter was not raised during the hearing. The appellant gave evidence that he purchased Brownsbarn House originally as a holiday home and for development, and that he purchased it in the name of the company. He gave evidence that when he purchased the additional folio he gave the respondent the money to acquire the lands, and that she acquired the lands in her name. This was after their relationship had ended. There is no doubt it could be a factor indicating that the entire property was hers, but a relevant factor also is the continuing good relationship between the parties and in this relationship the appellant has left the respondent to sort out this type of deal. It is a factor which has to be seen in the overall nature of the unusual ongoing relationship between the parties. I do not consider that it has any determinative weight.
44. (vi) The final matter relied on by the learned High Court judge was the proposed settlement in 2003. The appellant had given evidence that he was prepared to forego his claim to Brownsbarn House and lands for a percentage of its value because he wanted funds to participate in a Russian business venture. The learned trial judge stated that the fact that the appellant wanted to settle on that basis raised questions as to what his intentions were in relation to the beneficial ownership of Brownsbarn House when it was purchased.
On this matter the appellant gave evidence as to why he would settle, he wanted €500,000 for a Russian business venture and he needed the money urgently for that purpose. I find that explanation consistent with his evidence of his ownership of Brownsbarn House and with his wish for fast cash for a deal. After all, if the respondent was in fact the beneficial owner why would she have countenanced giving him €500,000? There was no reason why she should give him anything. In fact she did not respond to his suggestion as to a settlement. It is true that the respondent entered into an option agreement with Mr. O’Connor. However, that was evidence in another case to which the appellant was not a party. In this Court the respondent said that she would continue to help the appellant, and that she would have entered into the Russian deal also. However, all of that went sour.
I am satisfied that the evidence of the appellant that he would have taken €500,000 was plausible and consistent with his work and with his relationship with the respondent. He needed the money for a deal. I would not regard it as conduct undermining his claim that the respondent was not the beneficial owner. Indeed it is more consistent with the appellant being the beneficial owner.
I do not consider that the foregoing factors arising from the evidence of the appellant are such as to undermine his evidence that he paid for Brownsbarn House and lands, and intended it to be a holiday home and for development, and for good reason he had the property held by the company in a resulting trust for himself. While originally his agent in Jersey held the two shares in the company, in time these were transferred to the respondent, but he continued to be the beneficial owner.
45. There was no adverse finding as to the credibility of the appellant by the High Court. Yet there were inferences drawn by the High Court that in 1989 the appellant intended to benefit the respondent. It is equally open to this Court to draw or not to draw inferences from the evidence. Such inferences drawn by the High Court were contrary to the evidence, as the result of such inferences meant that the High Court reached a view contrary to the evidence of the appellant. The sworn evidence of a person, which was not subject to cross-examination, even in a situation where there is a lay litigant who has acted to frustrate the court proceedings, where the credibility of the person was not expressed to be in any doubt by the High Court either in court or in the reserved judgment, should not be discounted without reasons to the contrary and should not lightly be set aside by inferences. In this case the learned trial judge erred in setting aside the express evidence of the appellant, without stating that it was not credible, by inferences which do not carry any or any significant weight.
46. The appellant gave unchallenged evidence, not stated to be disbelieved, that he bought Brownsbarn House in 1989 with his money as a holiday home or for development, to be held by the company. This raised the presumption of a resulting trust. The onus was then on the respondent and the company to displace this presumption. This they did not do. While the learned trial judge was entitled to consider all the evidence, for the reasons given, I would not accord weight to the inferences drawn by the High Court. The inferences drawn by the High Court on the evidence of the appellant have little or no weight. They may indicate an unusual relationship between the parties. But the inferences do not discharge the onus or displace the presumption. Thus I am satisfied that Brownsbarn House is held by the company on a resulting trust for the appellant; that the respondent holds the shares of the company in trust for the appellant; and that the respondent holds the property in Folio 18341F in trust for the appellant.
47. For the reasons given, I would allow the appeal.
BM v AM
, High Court, April 3, 2003
Judgment of Mr Justice Michael Peart delivered the 3rd day of April, 2003:
By Equity Civil Bill dated 4th April 2001, the plaintiff commenced proceedings in which she seeks the following reliefs:
1. An order for the sale of premises (hereafter referred to as “the premises”), pursuant to the Sections 3 and 4 of the Partition Act, 1868 as amended by the Partition Act 1876;
2. An order directing that all necessary accounts and enquiries be taken as to the rents and profits received by the defendant arising out of his occupation of the premises and leasing of same up to the date of judgment herein;
3. an Order assessing the amount of interest due to the plaintiff in respect of her share of the rents and profits from the premises;
4. An order for the division of the net proceeds of sale between the parties hereto in such proportion as to this Court may seem just and proper;
5. An order giving directions concerning carriage of sale and all ancillary directions;
6. Such further and other relief as to this Honourable Court shall seem fit;
7. The costs of these proceedings.
This matter came before the Circuit Court on 26th June 2002, and the learned Circuit Court Judge made an order that the premises be sold by public auction, and that the net proceeds be divided as to 40% thereof to the defendant, and as to 60% thereof to the plaintiff, and he made certain ancillary orders in relation to the sale. The learned Circuit Court Judge divided the net proceeds of sale in the way he did in order to take into account the rent received by the defendant for a number of years and also the costs of the proceedings. This appears from the Circuit Court Order dated 26th June 2002.
It is against this Order that the matter comes before this Court on appeal by way of re-hearing.
The background to the dispute between the parties arises against the following background facts.
The premises were built by Dublin Corporation in the 1940s, and thereupon the plaintiff’s parents went into occupation of the premises as tenants of the Dublin Corporation. They resided there until they each went to England in 1966 and 1968 respectively. Having moved into occupation of the premises, they raised their six children in the premises, including the plaintiff.
The plaintiff and the defendant were married in 1966. For the first couple of months after their marriage, they lived in other rented accommodation, but in 1966 they moved into the premises the subject of these proceedings, and lived there as husband and wife. It was upon her father’s leaving to seek work in England, that the plaintiff and her husband moved back into the premises. Her mother was living there on her own, and it seemed a sensible arrangement that the plaintiff and the defendant should cease renting separate accommodation and that they should move into the premises with the plaintiff’s mother.
The rent payable to Dublin Corporation was in the order of about £2 per week. The plaintiff did not work outside the home after her marriage, so that the defendant was the sole breadwinner. The arrangement apparently arrived at was that after they moved into the premises, the plaintiff and defendant would pay the rent to Dublin Corporation. It is a fact that being the sole breadwinner at all material times, the rent was paid from the defendant’s wages. The plaintiff gave evidence that it was she who actually paid the rent, but from her husband’s wages.
The plaintiff’s mother moved to England to join her husband in 1968.
The plaintiff and defendant had five children while living in the premises. Their first child was born in 1967, and the others were born respectively in 1968, 1970, 1978 and 1980.
In the early 1970s, perhaps around 1970/71, Dublin Corporation introduced a tenant purchase scheme, so that tenants could purchase the premises from Dublin Corporation. The plaintiff and defendant wanted to avail of this scheme, but the fact is that they were not the tenants themselves, and would not therefore be in a position to avail of the 30% discount on the purchase price which was available to tenants who had been in occupation as tenants for more than 10 years. It was therefore arranged that the premises would in fact be purchased by the plaintiff’s parents, but that the plaintiff and defendant would actually discharge the repayments under the Transfer Order. The plaintiff says that this way of proceeding was in fact suggested by an official of Dublin Corporation. At any rate, this arrangement was put in place, and the plaintiff’s parents were then recorded on the Land Certificate, City of Dublin, as full owners, subject to the charge on the folio in respect of the outstanding purchase monies.
It is of relevance to note at this stage that while in England, the plaintiff’s father, in 1977, made a Will with an English solicitor, in which he left the premises to the plaintiff and the defendant jointly. It is contended by the defendant that it was in fact the plaintiff’s father’s intention originally to leave the premises only to him, and not to the parties jointly. The plaintiff said in her evidence that her father was by nature rather patriarchal in his attitudes and would have automatically thought that the house should be in the husband’s name only, but that when she asked him to leave it to them jointly, he did so. It was put to the plaintiff in cross-examination that it was clear that her father had wanted to leave the house only to the defendant. The plaintiff did not agree and said it was just that her father thought in terms of property being in the husband’s name, because he was an old-fashioned type who thought like that. Indeed some corroboration for this can be gleaned from the terms of her father’s Will, which seems to be worded on an assumption that her father considered himself to be the sole owner of the premises, rather than merely a joint owner thereof with his wife.
The plaintiff said that when she asked him to leave it to both of them he did so willingly. She denied that her father had not wanted her to have any share in the house. This is of some relevance and I shall return to it in due course.
According to evidence given by Mr Seamus Foley, an official from Dublin Corporation (now called Dublin City Council), the purchase price at the time of this purchase was £2275. Allowing the discount of 30% (£682.50), this left a net purchase price of £1592.50. This sum was to be discharged over a period at the rate of £3.61 per week. These payments were discharged from the defendant’s wages, and the purchase price was finally discharged in the month of October 1996.
The next significant event occurred in 1981. In that year the plaintiff’s parents wished to return to Ireland and returned to live out the remainder of their lives at the premises. At that time the plaintiff and defendant were living in the premises with their five children, the eldest being at that time about 14 years old, and the youngest being about one year old. The available accommodation at the premises was inadequate to accommodate the plaintiff’s parents, and accordingly it was decided by all concerned that the best solution was to build on an extension to the premises for her parents. The cost of the proposed extension was between ten and eleven thousand pounds. This sum was raised by availing of a Grant from Dublin Corporation of about £3600, together with an additional loan from Dublin Corporation of £4000, the balance being contributed in equal amounts of about £800 (sterling) from each of four of the plaintiff’s siblings. The additional repayments resulting from the additional loan were discharged out of the defendant’s wages. This additional loan was in turn discharged on 28th February 1996.
The extension was duly completed in or about the month of March 1981, and the plaintiff’s parents moved back into the premises.
The plaintiff’s mother died in 1985.
The next significant event is that due to unhappy differences between herself and her husband, she left the family home in August 1989, and went to stay with one of her sisters in the Isle of Man. She left alone, leaving three of her children in the family home with the defendant. One of other two children was living with one of her sisters in England, and another with her sister in the Isle of Man. The plaintiff was not prepared to return to the family home unless the defendant vacated the family home.
The plaintiff says that during the first year after she left, she returned to Ireland on about six occasions, solely for the purpose of seeing her children. During the second year following her departure, it was more difficult to see her children for reasons which were not given in detail, but she instituted custody proceedings which resulted in her gaining custody of the children concerned. Following November 1992, her children lived with her in England. Since that time she has not returned to Ireland, and neither asked for nor received any maintenance from her husband. It appears that in 1995, the plaintiff obtained a Divorce in England from her husband.
She has been unaware of her husband’s domestic circumstances since 1995, but believes that he has been in a relationship with another lady since some time before her children left Ireland to live with her.
The plaintiff’s father died on the 27th July 1991. She came back for the funeral. In a document stated to be an affidavit answering the plaintiff’s Notice for Particulars (arising out of the defendant’s defence in these proceedings), the Defendant says that on the occasion of her father’s funeral, he and the plaintiff had a conversation described as follows by the defendant:
“I asked her what she intended doing about our family home as there was roughly another three years mortgage outstanding. In reply she said angrily that she was in love with the priest and was about to get divorsed (sic) and had no further interest in me or the mortgage and would prefer if I did not get in touch with her again. Therefore I had no contact with her until I heard from her solicitors in this matter.”
This conversation was put to the plaintiff in cross-examination, but she said simply that it did not take place.
In due course a Grant of Probate issued in respect of her father’s Will on the 28th November 1995 to Mr N. T., solicitor, as the lawfully appointed attorney of her brother, D.R.O’B. who resides in Spain. He is the executor named in her father’s Will. It appears that originally, her said brother had appointed the defendant to be the attorney for the purpose of extracting the Grant, but later Mr T. was appointed and proceeded to extract the Grant.
There was some delay in having the title to the premises altered to reflect the terms of the Will, but on the 11th May 2001, Mr T. wrote to the defendant sending him the necessary forms to be signed by him in order to have him and the plaintiff registered as joint owners of the premises under the terms of the Will. It is a fact that some weeks prior to this letter, the plaintiff had commenced these proceedings since she had not been able to obtain the defendant’s co-operation in the sale of the house. She was seeking the sale of the premises and an equal distribution of the net proceeds of such sale.
Correspondence with the defendant to this end had commenced as far back as 16th January 1996. This correspondence went on for some years without resolution, and these proceedings were then pursued in order to have the matter of the sale of the house resolved.
The plaintiff also called Mr P.M., a Private Investigator, who gave evidence of having been instructed by the plaintiff’s solicitor, to call to the premises in order to ascertain if in fact the defendant was living at the premises. Mr M. said that he had been a member of An Garda Siochana, but now operated a private investigation firm, M.I. Limited. He gave evidence of having called to the premises firatly on 22nd January 2000 and again on the 1st April 2001. He said he had called on another occasion, but had not made any note or record of that third call and could not therefore give any evidence other than in respect of the two dates mentioned. He said that on the 22nd January 2000, he called to the premises, and his report of that visit states that when he called there appeared to be three people living at the house, one male and two female, all appearing to be of oriental origin. Some short time later another man who appeared to be Irish emerged from a room off the kitchen. Mr M. said the foreign persons were very pleasant, and when he asked to speak to the defendant, he was told that he was not there, but one of them gave him the defendant’s mobile phone number. Mr M. also asked to speak to a R.T. but they did not know her, and appeared genuine about this. Mr M. says that a check of the premises revealed that a M. and J.T. were living there. Mr M. also says that he rang the house on several occasions in order to speak with the defendant but on no occasion was he there. He also could see no car at the premises that was registered in the defendant’s name.
In his report dated 26th January 2000, Mr M. says that the average rent in the area for a house of this kind would be in the order of about £850 per month. He says that he cannot say for how long the house had been rented out but that certainly it has been rented out to oriental people for the three years preceding his report.
Mr M. was cross-examined, and it was put to him that the fact that there did not appear to be a car outside the premises did not mean that the defendant’s car might not have been parked on the road, but not immediately outside the house. It was put to him that in fact this house does not have its own driveway in which a car could park, but Mr M. thought it had, but could not be adamant about that. He recalled seeing a motorbike in the driveway, but was sure that there did not appear to be a car outside or near the house, and he therefore was fairly sure that there was no car at or near the house which would belong to the defendant.
Mr M. confirmed in cross-examination that the electricity account with ESB was in the defendant’s name. In relation to M. and J.T. referred to in his report, Mr M. said it appeared from the Register of Electors that these names were shown as being of the address of the premises. He had not checked the Register himself, but someone had checked this for him.
In relation to his further visit to the premises on the 1st April 2001, Mr M. provided a report dated the same day, in which he states that when he called to the premises on that date, he spoke to a young woman who said that she had rented the house from the defendant. He asked to speak to the defendant, but the lady said that he did not live there. She said that he called regularly and would be there in fact on the following day. The lady asked for Mr M.’s mobile phone number so that she could get the defendant to call him. Mr M. says that he asked for the defendant’s mobile number, but the lady declined to give it to him, but said she would ask the defendant to phone him. Mr Mullin said that it did not appear that there was any other person living at the house, and that there was no car in the driveway.
This report also states that on the same date he called to a premises in Dublin city, which I understand to be a house owned at the time by Ms. R.T., the defendant’s current partner. His intention was to see if the defendant was residing at that address. However, he established only that there was a lady named W., and that there was no record of the defendant ever having lived there. He also states that neighbours from whom he had made enquiries did not know the defendant.
The defendant delivered a Defence to these proceedings on the 14th May 2001, and an Amended Defence on the 24th March 2002. In these documents the defendants accepts that D.A.O’B. and L.O’B. are the registered owners of the premises, but he denies that they are what is described in the Defence as “the official owners”, on the basis that it is the defendant who has at all times discharged the mortgages on the premises. The defendant claims that he is the official owner. The defendant also denies that on the death of L.O’B., the said D.A.O’B. became the sole legal owner. The defendant also denies Probate has been extracted to the estate of D.A.O’B. as he the defendant is challenging the contents of the Will. The Defendant in his amended defence denies that the plaintiff has or is entitled to any interest in the premises, either legal or beneficial. He also denies having let the premises, and asserts that at all times the premises have been his family home and sole residence. He claims to have an entitlement to the entire beneficial interest in the premises, or such proportion thereof as the Court shall determine. He asserts this on the basis that it has been he alone who discharged the rent and the mortgages on the premises, including the additional mortgage of £4000 obtained to construct the extension to the premises in or about 1981.
In his amended defence, the defendant also claims that the Partition Acts are unconstitutional and fail to protect the defendant’s rights pursuant to the Family Home Protection Act, 1976. At the commencement I ruled that this latter point was not one appropriate to be dealt with on the hearing of this appeal, being raised for the first time in the amended defence delivered on the morning of the commencement of this appeal. The Attorney General had been served with the required Notice under the Rules in relation to the constitutional issue, but having so ruled, I excused the Attorney General from further participation in this appeal.
Evidence on behalf of the defendant:
Ms. R.T. gave evidence that she has been the partner of the defendant for about 9 years. It would appear that her sister is married to the defendant’s brother, and that at some point after the plaintiff went to England, Ms. T. was asked to help the defendant in relation to minding the children who were then living with him, looking after the house. A relationship developed between her and the defendant in or around late 1992. At that stage it appears that she went to live in the premises along with her two children. Up to that time, however, she says she resided in her house in Finglas, and she says that the defendant resided at all times at the premises. She stated that the defendant had never moved into her house. She also said that the premises had never been rented out by the defendant.
In relation to the evidence that was given by Mr M. about finding tenants in the house, and the defendant not being there on the occasions he called, Ms. T. said that on those occasions they must simply have been out at the time. She said that the M. and J. T. who were in the premises were in fact brothers of hers who had come back for a short while from Canada after the funeral in Canada of a family member. They were not tenants. In relation to Mr M. saying that he found tenants of oriental origin in the premises, she said that she had never seen them there and that the house had never been rented out to anybody. In cross-examination, she also said she could not explain Mr M.’s evidence about tenants being on the premises.
The defendant’s brother, A.M. also gave evidence. He stated that he had resided in the United Kingdom since about 1983, but that he used to return to Ireland about twice a year and would stay with the defendant at the premises on those occasions. During the last five years or so, he has been returning more often, perhaps three or four times. On some of these occasions he would stay with the defendant, on others he would stay with another of his brothers. He said he had never seen anybody else living in the house, except the defendant, Ms. T. and her two children. He was not aware if the house had ever been let to tenants, but as far as he was concerned there had never been tenants there.
In cross-examination, the defendant said that while the plaintiff was still living in the premises, he had not stayed there when he came back to Ireland. He also said he had never visited Ms. T.’s house in Dublin, or stayed there.
The defendant gave evidence also. There is no need to set out all of the defendant’s evidence, as much of it simply conforms to the plaintiff’s evidence as to the history of them both coming to live with the plaintiff’s parents, and the arrangement whereby the premises were purchased from the Dublin Corporation, by the mechanism by which it would be done in the names of her parents, since they were the tenants ( and thereby also gain the benefit of the 30% discount on the purchase price), but that he would discharge the repayments to Dublin Corporation. There is not any relevant disagreement as to that transaction, except that the defendant says that he had a discussion with the plaintiff’s father and that her father told him that the house would be his (i.e the defendant’s). He also said that he was never aware that the plaintiff’s father had made a Will leaving the house to the plaintiff and defendant in their joint names.
The defendant also agreed that when it came to building the extension in 1981/82, an additional mortgage had been obtained in the sum of £4000, and that there was also a Grant given on the basis of the plaintiff’s mother’s illness. He disagrees however with the plaintiff’s evidence that four of her siblings each contributed £800 sterling towards the cost of the extension. He thinks it was more like about £800 or £1000 between the four of them.
The defendant also said in evidence that if he had been aware that the plaintiff’s father had made a Will leaving the premises to he and his wife jointly, he would have taken steps to try and change that situation. He said he would not have stayed there paying the mortgage, only to have nothing at the end of it. He said that it was not until he received a letter in 2001 from the plaintiff’s solicitors that he first became aware that the house was left to them jointly. He said that in the divorce proceedings which the plaintiff had commenced in England, there had been no mention of the premises. He was not aware that the plaintiff had a house of her own in England.
He stated categorically in his evidence that he had never rented out the house to anybody. In relation to Mr M.’s evidence about not seeing any car belonging to the defendant on the occasions when he called to the premises in January 2000 and April 2001, the defendant said that in fact he drives a van, and that it may have been parked elsewhere in the vicinity of the house, and that it was a small cul-de-sac and that there were often quite a number of cars parked along the road.
He also said that he had never resided anywhere other than in the premises.
Under cross-examination, the defendant agreed that the premises was the family home of his family and the plaintiff’s parents. He agreed that following the arrangements for purchase in 1971/72, it was the intention that they would reside there, and that on his death, the plaintiff would continue to reside there as her home. He reiterated that he had had a conversation with the plaintiff’s father to the effect that he would make the repayments and that the house would be his, and that the plaintiff’s father had not stipulated that anybody else would own the house. There was, he says, never any suggestion or agreement that the house would be jointly owned. He said that the house would be primarily his but his wife would reside with him, and that she would get it when he died.
The defendant says that by leaving the house to him and his wife jointly, the plaintiff’s father in effect reneged on his agreement with him that the house would be his alone. The defendant was referred to his Reply to Particulars (which is in the form of an affidavit for some reason), wherein he refers to having had a conversation with his wife at the time of her father’s funeral (a conversation which the plaintiff denies took place) in July 1991. The exact quotation from this document is set out earlier in this judgment. He was asked why, if as he contends, the house was his and that he was not aware of anything to the contrary until he received a solicitor’s letter in 2001, he was asking the plaintiff in July 1991 what she intended doing about the family home. He was in some difficulty in reconciling these matters.
He said that he may have stayed at his partner’s house in Dublin on a few occasions, prior to her moving in with him, but never moved into that house.
Legal Submissions:
Mr Roughan B.L made submissions first of all on behalf of the plaintiff. He said that there was not much dispute between the parties as to the relevant facts upon which this case fell to be decided. He said that it was the defendant’s case that there was a resulting trust in favour of the defendant resulting from the fact that it was he who had paid the rent and discharged the mortgage repayments on the premises. However, he said, this was not the case in fact, because the purchase price for the premises took account of a 30% discount on the price arising because of the fact that the plaintiff’s parents had been tenants for more than ten years. While he accepted that the defendant had paid the rent and the repayments, the fact was also that when the extension was built in 1981/82, a Grant had been received on account of the illness of the plaintiff’s mother, and there had been contributions from some of the plaintiff’s siblings. Even if there was a presumption of a resulting trust (which he submitted there was not), that presumption could be rebutted by evidence of the intention of the parties at the time, and he submitted that it was clear from the evidence, including the terms of the plaintiff’s father’s Will that he intended that the premises would be there for the benefit of both the plaintiff and the defendant. This he submitted was also evidence of advancement, and the Court was referred to the decision of Keane J. (as he then was) in the case of J.C.v. J.H.C. (unreported), 4th August 1982. In that case, the parties to the transaction were husband and wife, whereas in this case the parties relevant to the transaction are the plaintiff’s parents, and their daughter and son in law. In relation to the case Keane J. (as he then was) was dealing with, the defendant husband had put up all the money to purchase a house, and the property had been put into the joint names of the husband and his wife. At page 3 of the unreported judgment, Keane J. (as he then was) states:
“Where property is taken in the joint names of two or more persons, but the purchase money is advanced by one of them alone, the law presumes a resulting trust in favour of the person who advanced the money. This presumption may however be rebutted; in particular the circumstance of the person into whose name the property is conveyed being the wife of the person advancing the money may be sufficient to rebut the presumption under the doctrine of advancement.”
Shortly thereafter on page 4 of the unreported judgment, the learned judge continues:
“It is clear that the defendant intended the property to be jointly occupied by the plaintiff and himself during their lifetimes but also intended the legal ownership to devolve upon her if he predeceased her. It is quite plain that he intended to give it to her; and that accordingly the property has been held from the beginning and is now held by the plaintiff and the defendant on a joint beneficial tenancy.”
As I have said, this case is not on all fours with the instant case. It might be if the plaintiffs in the present case were Mr and Mrs M., and Mr and Mrs O’B. were defendants, in a claim by the former that the latter in whose name the premises were held, in fact held the premises on a resulting trust for former, since they had made all the payments to Dublin Corporation. However, that is not the case. Nevertheless, the case is of some assistance in relation to intention, but I will deal with that matter at the conclusion of this judgment.
Martin Hayden S.C. on behalf of the defendant submitted that questions about whether there was an advancement as a rebuttal to a presumption of a resulting trust did not arise in this case, since the property was in the names of the plaintiff’s parents.
In contending that there was a resulting trust in favour of the defendant arising out of the transaction in 1972 when he says the defendant alone in effect bought the premises, but in the names of the plaintiff’s parents, by discharging all the repayments to Dublin Corporation until their final discharge in 1996, Mr Hayden is relying firstly on a number of very old cases, namely Dyer v. Dyer (1788) 2 Cox Eq 92; In re A Policy No. 6402 of the Scottish Equitable Life Assurance Society (1902) 1 Ch. 282; and In the Matter of John Slattery (1917) 2 IR 278. It is unnecessary for me to deal individually with these cases, save to say that they endorse the accepted principle, referred to by Keane J. (as he then was) in J.C. v. J.H.C. to which I have already referred, wherein the learned judge stated that where property is taken in the joint names of two or more parties, but the purchase money is advanced by one of them alone, the law presumes a resulting trust in favour of the person who advanced the purchase money, a presumption which is capable of rebuttal under certain circumstances, such as, inter alia, advancement or gift. This principle is also set out clearly in Hilary Delaney’s work, Equity and the Law of Trusts, 2nd Ed. at pages 156-157.
Mr Hayden also submits that the alleged contribution to the cost of the extension should be seen by the Court as a buying out by those siblings of their obligation to provide for and assist their parents when they were in England, and not as a gift to the plaintiff to assist in the cost of the extension. He also points to the fact that it was the defendant who continued to look after the plaintiff’s parents until their deaths, after the plaintiff left to live in England. This is a factor, he submits, that ought to be taken into account in the defendant’s favour.
Mr Hayden also submitted that the plaintiff is now seeking to derive a benefit from delay on her part in bringing this claim for partition and sale. In this context he referred to R.F. v. M.F. (1995) 2 ILRM 572 wherein it was held by Henchy J. in the Supreme Court that the fact that the wife in that case had allowed eight years to pass before making any complaint that the transfer of the farm was oppressive or unfair was so tainted with delay as to be inconsistent with her claim that she had acted under undue influence when she executed a transfer of the property in question. That case is a case of undue influence, unlike this case, but Mr Hayden refers to it in relation to the delay on the part of the plaintiff in bringing these proceedings. I shall return to this question of delay in my conclusions.
He submits that in the event that the property is sold and the proceeds divided as the court may decide, the defendant is faced with current house market conditions, compared with those prevailing at and shortly after the death of her father in 1995. Again this is a factor, he submits, to which the court must have regard in exercising its discretion under the Partition Acts. He submits that at the very most, assuming the court decides that the plaintiff has any entitlement to any share in the premises, the plaintiff should be limited to the extent of 30%, being the portion represented by the discount in the purchase price when the premises were purchased from Dublin Corporation in 1972.
Mr Hayden submits that the Court must have regard to the fact that if the premises were to be sold and the plaintiff were to be found entitlement to a joint share in the premises, the effect is that the defendant would not be able to purchase an alternative premises from his share, given his age and present market conditions.
James Dwyer S.C. on behalf of the plaintiff, responded to Mr Hayden’s submissions. He summarised the facts, and submitted that it was clear that the plaintiff’s parents were the tenants of the premises prior to 1972, and that in 1971/1972 it was agreed among the family generally that the premises would be purchased from Dublin Corporation by the plaintiff and the defendant, but that for the reason given in evidence, the house would be bought in the names of the plaintiff’s parents. The fact was that the defendant was the only breadwinner in the marriage of the plaintiff and the defendant, and that it was obvious to all that it would be his wages which would be used to make the repayments. But that cannot be used to exclude the plaintiff from any beneficial interest in the premises, since to do so would be to go against the clear intention of all concerned that the house was being bought so that the plaintiff and defendant could live there with their children, and that on the death of either the plaintiff or defendant, the survivor would have sole ownership. He says that this clear intention is also corroborated by the provisions of the Will executed by the plaintiff’s father in 1977, and which remained unchanged until his death in 1995.
In this regard, Mr Dwyer referred to R.F. v. M.F. (supra) wherein it was held that the equitable doctrine of advancement, as applied to transactions between husband and wife, has the effect that when the husband, at least where the circumstances show that he is expected to provide for the wife, buys property and has it conveyed to his wife and himself jointly, there is a presumption that the wife’s paper title gives her a beneficial estate or interest in the property. Unless the presumption is rebutted by evidence showing a contrary intention on the part of the husband at the time of the transaction, he will be deemed to have entered into the transaction for the purpose of conferring an estate or interest on the wife.
Mr Dwyer submits that the Will speaks from the death of the plaintiff’s father and that from that time the plaintiff was entitled to be registered as joint owner with the defendant. Any delay from that date until 2001 cannot prejudice the plaintiff in his submission. In any event he submits that the defendant has not suffered any prejudice from any such delay, since he was well aware from 1995 that his wife and he had both been left the house under the terms of the Will, and that it was the defendant who had frustrated an earlier resolution of this matter due to his failure to cooperate in the registration by failing to execute the necessary documents when asked to do so by solicitors acting for the plaintiff.
Conclusions:
The first matter I am satisfied on based on the evidence I have heard is that in 1971 it was agreed between Mr and Mrs M., and her parents, Mr and Mrs O’B., that the tenant purchase scheme introduced by Dublin Corporation around that time, should be availed of and that the premises should be purchased at the price stipulated which took into account the discount to which Mr and Mrs O’B. were entitled due to the fact they had been tenants for the required period, which I believe to be not less than ten years. I am also satisfied that, be it correct or not, they were of the belief that this could be done only by the purchase being achieved in the names of Mr and Mrs O’B.
I am further satisfied that the purchase would be on the basis that the repayments should be made by Mr M., but on the basis that he and not Mrs M. was working, but that the intention of Mr and Mrs O’B. was that the house would be bought in this way so that Mr and Mrs M. would be the owners from the O’B.s’ point of view, even if Mr O’B. may have been of the opinion, being that sort of man, that Mr M. would be the owner. I have no doubt that even though he may have been of that view, it was not with a view to his daughter, the plaintiff, being excluded as an owner in any way that would deprive her of any beneficial interest in the premises. It is clear from the evidence that the intention was beyond any doubt that the premises would be the M.s’ family home and that on the death of Mr M., should that occur prior to Mrs M., that she would be the owner of the premises in due course.
Eventually, as we now know, Mr and Mrs M. separated. The reasons do not concern me, except to say that while the prima facie desertion by Mrs M. would, subject to any claim by her that such desertion resulted from any unreasonable behaviour on Mr M.’s part disentitle her from claiming maintenance, it could not, even on the version of events most favourable to Mr M., disentitle her to any pre-existing property rights, and in particular, to any interest she may have had in the premises.
As we know, Mr and Mrs O’B. passed away in the 1980s, Mr O’B. having executed a Will in England in which he left the premises to Mr and Mrs M. jointly. This is consistent with the fact that it was the O’B.s’ intention that the house was in effect being bought from Dublin Corporation, though in the names of the O’B.s, for the benefit of Mr and Mrs M.
It is the defendant’s contention now that since it was he who was discharging the repayments, and did so until all monies had been repaid, including those due on foot of the second mortgage obtained in 1981/82, the premises are in fact his on the basis that his wife provided no consideration. In effect he is saying now that if the purchase had been effected at the time into the joint names of he and his wife, rather than the O’B.s, his wife would be holding her share of the premises on a resulting trust for his benefit, and that therefore she should not be entitled to a beneficial interest therein, even though the premises were left to them both by Mr O’B. Implicit in such a submission is a contention that Mr O’B. was not entitled to leave the premises by his Will either to Mr M. alone or to Mr and Mrs M. jointly, as the O’B.s were holding the premises on a resulting trust for him alone, they having provided no consideration. Leaving aside completely for the moment the fact that the O’B.s had in fact contributed 30% of the consideration by reference to the discount in the price already referred to, and leaving the further matter of the Grant and the contributions from Mrs M.’s siblings in 1982, there is in my view no reality in Mr M.’s contention.
It follows also from Mr M.’s submissions, that if, which he denies, Mrs M. has an entitlement to a joint interest arising from her father’s Will, that there is a presumption of a resulting trust in his favour in respect of her interest. That would imply that the income from which Mr M. paid the repayments was never the family income. The fact is that Mrs M. did not work during the marriage, her job being to be at home to look after the children, and look after the needs of the home.
I conclude from this rather convoluted and difficult set of facts that the O’B.s certainly held the premises in their name on a resulting trust for both Mr and Mrs M. Had Mr O’B. left the premises in his Will to some other party, and had the M.s’ marriage not broken down resulting in a separation and divorce, both Mr and Mrs M. would have been entitled to bring an action to have themselves declared the beneficial owners on the basis of a presumed resulting trust. There is no possible evidence by which the O’B.s’ personal representatives could have rebutted that presumption on the basis either of advancement from the M.s to the O’B.s, or by any evidence of a contrary intention on the part of the O’B.s.
I am also satisfied that Mr O’B. made his Will in the way he did because he knew that the house was in reality belonging to the M.s and that the Will was the easiest way of dealing with the situation that would arise on his death. I do not have to deal with the fact that in his Will at the time he executed it, he ignored the fact that his wife, Mrs O’B., was in fact a joint owner with him of the premises, but it confirms, I suppose, that he was the sort of man who believed the normal thing was for the husband to own the property, but to go any further , as I have said, and conclude that he would not have wanted his daughter to have an interest in the premises, is too far-fetched to be real.
It is not necessary to consider any further the legal authorities to which I was referred in connection with resulting trusts, advancement and so forth. Those concepts are not really relevantly in dispute. I am satisfied that by whatever route one travels in order to unravel the facts of what happened over the years, the result is the same, namely that the plaintiff and the defendant are entitled now to be registered as joint owners of the premises, and that there is no resulting trust arising between the plaintiff and the defendant. Both have a joint interest in the premises, and I will deal later with the respective proportions in which that joint interest ought to held by them.
Having so found, I must then consider the questions which arise under the Partition Acts, since the plaintiff is seeking relief under those Acts so that the premises can be sold, with the proceeds being divided in proportions which the Court would consider just in all the circumstances.
The first thing to be said is that the relief sought by the plaintiff is a discretionary relief.
The Court’s power to order a sale is contained in Section 3 of the Partition Act 1868, which states as follows:
“In a suit for partition, where, if this Act had not been passed, a decree of partition might have been made, then if it appears to the Court that, by reason of the nature of the property to which the suit relates, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstances, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the Court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions.”
It is clear from the wording of the section that the Court has a wide discretion in whether it orders a sale of the premises. All relevant circumstances can be taken into account. In addition, when the section states “if it appears to the Court that……… a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them”, it is not just the applicant who must be considered but all those interested in the property. If authority is needed for this, it is found in Drinkwater v. Ratcliffe (1875) LR 20 Eq 533, and Fleming v. Crouch (1884) WN 111.
Section 4 of the same Act gives the Court similar powers as follows:
“In a suit for Partition, where, if this Act had not been passed, a Decree for Partition might have been made, then if the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the property to which the suit relates, request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and give all necessary or proper consequential directions.”
In the latter section the Court also has a wide discretion, except that a sale is mandated by the words “the Court shall, unless it sees good reason to the contrary, direct a sale of the property” (my emphasis). The onus of establishing a good reason to the contrary rests on the party opposing the application. In this regard see Pemberton v. Barnes (1871) LR 6 Ch App 685.
It would appear that Section 4 is the section most appropriate to the present application, since the Court is being requested to make an order by a “party or parties interested, individually or collectively to the extent of one moiety or upwards.”
It follows therefore that the defendant in opposing the application has the onus of establishing that there is a good reason to the contrary. In this regard Mr Hayden has submitted to the Court that if a sale were to be ordered and a division of the proceeds made, the defendant, bearing in mind the current property market and his age (in the context of his ability to obtain a loan) and the circumstances generally which include the fact that the plaintiff has a house in England, would effectively be left without a home. It is also a factor that the premises were, prior to the separation of the parties, the family’s family home.
I am satisfied that the defendant has discharged that onus in the present case and that there is a good reason why the court should not order the sale of the premises. Even if Section 3 were the appropriate section for this application, I am satisfied that the Court, in the exercise of its discretion, ought not to direct a sale of the premises in all the circumstances.
In my view it is also necessary to address the matters in issue in this case in the light of the provisions of the Family Home Protection Act, 1976 (hereinafter referred to as “the 1976 Act”), although Counsel has not addressed me specifically in relation to the implications of the 1976 Act on the question of relief being claimed under the Partition Acts.
It has been decided that any rights a party may have to seek relief under the Partition Acts must be tempered by the effect of the1976 Act, Section 4 of which provides that the court may dispense with the consent of a spouse if it is unreasonably withheld. In the present case, if this court was being asked to dispense with the defendant’s consent to a sale, as being unreasonably withheld, it would not be prepared to do so in the circumstances of this case, as it would not have any sufficient evidence from which to conclude that any withholding of consent is unreasonable.
Section 2(1) of the 1976 Act defines a family home as “primarily meaning a dwelling in which a married couple ordinarily reside. The expression comprises in addition, a dwelling in which a spouse whose protection is in issue ordinarily resides or, if that spouse has left the other spouse, ordinarily resided before leaving”. It is clear that the premises in this suit come within this meaning.
In the case of AL v. JL dated 27th February 1984, (unreported), Finlay P. (as he then was) was dealing with a very similar set of facts as this case. In that case, it was intended that a family home be purchased in joint names, but in fact the house was put into the name of the husband only, the wife being at the date of purchase under the age of majority. Unhappy differences arose and the wife left the family home to live with another man. During the marriage they had both contributed to a joint pool out of which repayments were made on the mortgage, but following the wife’s departure the husband alone continued the repayments. The husband maintained that the resulting trust upon which the husband in that case held the wife’s interest was a conditional one, namely conditional upon the maintenance of the marriage relationship, and that by leaving her husband, the trust was thereby avoided. The learned President did not agree. At page 4 of the unreported judgment, the learned President (as he then was) states as follows:
“It was the clear intention of these parties that this house should be purchased jointly by them and in my view the events which happened and the circumstances under which it was purchased in the sole name of the husband when viewed through equitable principles must be given the same force and effect as if their intention had been carried out in the first instance, as if they were both grantees under the Deed of Conveyance of an equal share in the house………There is not, in my opinion, in the general principles of equity room for a voidable or conditional trust depending upon the maintenance of the marriage nor can the courts investigate the true reasons for the unfortunate break-up of the marriage in order to ascertain the reality of the beneficial ownership of two people who agree jointly to purchase a house and make each of them contributions towards the redemption of mortgages standing upon it. I am satisfied that the wife is entitled to a 50% share or one half share in the equity of redemption of these premises.”
The facts are sufficiently similar to the present case to make this decision relevant in this case. I have already concluded that Mrs Murphy made an indirect contribution to the household by her involvement at home in the rearing of the children and her running the house, as it were, and this replaces the reference in the above case to both the husband and the wife contributing to a joint pool from which the mortgage repayments were made. I note also that in AL v. JL, there were no children in the marriage.
Finlay P. went on in that case to find that while in the period before the wife left there was a clear entitlement to a 50% joint interest, the husband was entitled to some credit in respect of the period after which the wife left, as he continued to make the repayments on the mortgage from his sole funds. The parties in that case had married in 1975 and the wife had left in 1980. Dealing with the question of what relevantly comprised the equity of redemption in which the wife had a 50% interest, the learned President (as he then was) stated as follows:
“In my view the equity of redemption in these premises as of February 1980 consisted of the then gross market value of the premises, less the amount still outstanding to Irish Nationwide Building Society………Having determined the relationship in terms of percentage between the total amount outstanding on the mortgage as of February 1980 and the gross market value of the premises, it seems to me that the precise form of declaration which I must then make is to declare the wife entitled to one half of the percentage constituting the equity of redemption at that time. To take as a simple example, if the amount outstanding on the mortgage at that time constituted 10% of the gross value of the premises, the wife would be entitled to a 45% share in the ownership of the house.”
Interestingly, the learned then President went on:
“With regard to the claim for a sale of the premises pursuant to the Partition Acts, the position appears to me to be as follows. Having regard to the provisions of the Family Home Protection Act, 1976 in the absence of an agreement between the parties, an order for sale cannot in my view be made under the Partition Acts unless the court is also satisfied that it should dispense with the consent of the non-agreeing spouse under Section 4 of the 1976 Act”.
On the facts of that case, he was not so satisfied. In O’D v. O’D, 18th November 1983 (unreported), Murphy J. had adopted a similar attitude to the impact of the 1976 Act on the question of relief being sought under the Partition Acts in respect of a family home. I respectfully adopt that reasoning for the purpose of the present case.
In the present case, I have already found for the reasons stated that the parties are entitled to be registered as joint owners of the premises. For the purpose of deciding the respective proportions of that interest, the methodology adopted by Finlay P. (as he then was) in AL v. JL seems entirely appropriate for the purpose of doing justice between the parties in this case, given that Mrs M. left the family home in August 1989, after which time Mr M. continued to make the repayments, and Mrs M. was of course no longer at the premises to continue her indirect contribution to the household budget.
It is my view that a valuation of the premises as of August 1989 should be obtained from an independent valuer, and that the amounts outstanding to Dublin Corporation on both mortgages be ascertained as of that date. The court can then calculate what percentage proportion of the market value is represented by the equity of redemption, and will declare the ownership of the premises to be divided on a 50-50 basis of that percentage proportion. I have already found that the O’B.s were entitled to the 30% discount off the purchase price in 1972, and that I am satisfied the plaintiff’s siblings made a contribution of £3200 Sterling to the extension, and that a Grant of £4000 was also obtained derived from the illness of the plaintiff’s mother. Without being necessarily mathematically accurate to the last pound, I am satisfied that all of these matters mean that a 50-50 split between the parties is a fair one, but based on the value of the equity of redemption as at August 1989. As I have said already, this conclusion amounts to the same conclusion I reached when finding that the parties were entitled to be registered as joint owners, there being no resulting trust existing for the benefit of the defendant in respect of the plaintiff’s share, save with the slight modification arising from the methodology emanating from AL v. JL as to the value of the equity of redemption of the premises.
I should just add that I am not satisfied that the evidence is sufficiently clear in respect of the letting of the premises by the defendant after the plaintiff left, in order to make any finding in relation that issue.
Finally, the defendant has said that the plaintiff has delayed in bringing this application and that she ought not to benefit from her delay. I am satisfied that the appropriate way to look at any delay is to see whether the defendant has suffered any prejudice from the delay, even if I were to find the plaintiff to have been guilty of such. I am not so satisfied in the light of my findings and the decision I have come to as to the method of resolving the issues in this case.
I therefore refuse the relief sought by the plaintiff under the Partition Acts, and I also refuse the declaration sought by the defendant that he be entitled to be declared the owner of the entire beneficial interest in the premises. I therefore set aside the order of the learned Circuit Court judge made on the 26th June 2002, and I will adjourn this matter for a period to be agreed with Counsel, at which time I will finalise the order I propose making, when I have received the information I have mentioned, and after I have heard submissions from Counsel as to whether the parties should be registered as either as joint tenants or as tenants in common, in the absence of any agreement being reached between the parties in that regard.
Hickey v O’Dwyer
[2006] 2 I.L.R.M. 81
Judgment of Miss Justice Laffoy delivered on 9th November, 2005.
Background
Two separate and distinct issues are raised on the special summons in these proceedings.
The facts common to both issues are that they arise in relation to the estate of John Hickey (the testator) who died on 30th January, 1999. The testator was the husband of the plaintiff and the father of the fourth defendant, who was born on 5th December, 1990. The third defendant is the mother and, in effect, the next friend of the fourth defendant. The testator and the third defendant were not married. The testator made his last will and testament on 26th May, 1998, wherein he appointed the plaintiff to be his sole executrix and residuary legatee and devisee. She having renounced her right to probate, Letters of Administration with the testator’s will annexed were granted to the first and second defendants on 15th July, 2003. The first and second defendants are party to these proceedings in their capacity as personal representatives of the testator.
The first issue
There were only two dispositive provisions in the will of the testator. The provision which gives rise to the first issue in these proceedings is Clause 4 wherein the testator devised and bequeathed the sum of IR£100,000 to the first, second and third defendants to be held by them in trust as thereinafter set out for his daughter, the fourth defendant, until she should reach the age of 25 years and then to his said daughter absolutely. The first, second and third defendants were appointed as trustees of that bequest and the trusts upon which they were to hold the sum of IR£100,000 were set out. The other dispositive provision was the devise and bequest of the residue to the plaintiff for her own use and benefit absolutely.
In 1993 the testator had taken out a policy of assurance on his life with Prudential Life of Ireland. On 21st June, 1993 he executed a document (the 1993 Trust) which, in effect, was a declaration of trust in a standard form, apparently, produced by the insurer. It was a special condition of the policy that it was issued pursuant to the 1993 Trust. In the 1993 Trust the testator declared that the trustee or trustees for the time being thereof should hold the policy and the full benefit thereof and all monies which might become payable thereunder (the trust fund) upon trust, if the benefit under the policy should become payable in consequence of the death of the testator, which happened, for the benefit of all or one or more of the class of persons named by relationship to the testator (which included the spouse and children of the testator) as the testator in his absolute discretion should “be (sic) deed or deeds revocable or irrevocable appoint”. It is quite clear that the word “be” is a misprint for “by”. It was expressly provided that no appointment should be made nor any power of revocation exercised after the death of the testator. It was provided that, in default of and subject to any such appointment, the trust fund should be held for the absolute benefit of the fourth defendant as to 100% of the trust fund.
The testator did not exercise the power of appointment over the trust fund conferred on him in the 1993 Trust during his lifetime by deed. Following his death, the proceeds of the policy, IR£223,350 (€283,595.99), were paid out by Prudential Life of Ireland to two trustees appointed by the court of the trust fund on behalf of the fourth defendant.
The first issue raised on the special summons concerns the entitlement to the fourth defendant to the proceeds of the policy and under the will of the testator and requires the court to answer the following questions:
(a)(i) Did the testator by the bequest in his will in favour of the fourth defendant, exercise the power of appointment in relation to the proceeds of the policy?
(a)(ii) What is the interest of the fourth defendant in the proceeds of the policy?
(a)(iii) What is the interest of the plaintiff in the proceeds of the policy?
(a)(iv) If the answer to question (i) is in the negative, was the bequest in the testator’s will to set up a trust in favour of the fourth defendant in the amount of IR£100,000 intended to be in whole or in part satisfaction of the monies held upon trust for her pursuant to the terms of the trust funds?
(a)(v) In the light of the answers to the above questions, in what manner are the proceeds of the policy to be distributed?
There is inherent in the first issue an acceptance by the plaintiff that the testator by his will gave a bequest of IR£100,000 in trust for the fourth defendant. No question as to the proper construction of the will arises. The case made is that by operation of the equitable doctrine of satisfaction the fourth defendant is not entitled to both the provision made in the 1993 Trust in relation to the trust fund and also the bequest.
In Williams on Wills, 8th Ed., 2002, the various situations in which the doctrine of satisfaction comes into play are identified as follows in para. 44.1.
“Satisfaction is the donation of a thing with the intention that it shall be taken either wholly or partly in extinguishment of some prior claim of the donee. It may occur (i) when a covenant to settle property is followed by a gift by will or settlement in favour of the person entitled beneficially under the covenant, (ii) when a testamentary disposition is followed during the testator’s lifetime by a legacy or settlement in favour of the devisee or legatee, and (iii) when a legacy is given to a creditor. In all these cases the question of satisfaction is one of the intention of the settlor or testator; and, if he expressly declares that the latter disposition is to be in satisfaction of the earlier obligation or disposition the matter will be governed by this expression of his intention and effect is given to the later disposition accordingly. In the absence of such expression, certain presumptions as to his intention are raised in equity, and evidence, intrinsic and, in certain cases, extrinsic, may be used to rebut or support such presumptions. … The three cases above are shortly described as (i) satisfaction of portions by legacies or subsequent portions; (ii) ademption of legacies by portions; and (iii) satisfaction of debts by legacies. In the first two cases the court leans in favour of satisfaction; in the third case it leans against it.”
Counsel for the plaintiff submitted that circumstances which have arisen in this case fall within the first classification of the doctrine – satisfaction of a portion by a legacy. He acknowledged that the sequence here was that there was a portion followed by a legacy and, accordingly, when the portion was created there was no legacy to adeem. The species of the doctrine of satisfaction on which the plaintiff relies is an aspect of the so called “rule against double portions”.
Counsel for the third and fourth defendants submitted that, as traditionally applied, the rule against double portions is discriminatory and is inconsistent with both the Constitution and the European Convention on Human Rights. The criticisms which may be made of the rule are outlined in Delaney on Equity and the Law of Trusts in Ireland, 3rd Ed., at p. 703, where it is pointed out that it has been expressly preserved by s. 63(9) of the Succession Act, 1965, which provides that nothing in s. 63 shall affect any rule of law as to the satisfaction of portion debts. Accordingly, there is express recognition of the rule in a post 1937 statute. Aside from that, neither the question whether the rule was carried over in 1937 on the coming into force of the Constitution nor whether it is compatible with the European Convention on Human Rights was raised in the pleadings, either generally or by reference to the facts of the case. In the circumstances I consider it inappropriate to express any view on those questions in these proceedings.
The presumption of satisfaction of a portion by a legacy has traditionally been applied in this jurisdiction where the settlor or testator is the father of, or in loco parentis, to the donee, the first gift is a portion and both gifts are substantially of the same nature and in favour of the same person. In this case, I am satisfied that the provision made in 1993 was a portion in the sense of being a gift of a substantial nature relative to the means of the testator and intended to set up the fourth defendant in life. Moreover, I am satisfied that the provision made in the 1993 Trust and the provision made by the testator in his will for the fourth defendant were substantially of the same nature. They were both, essentially, dispositions of money to which the fourth defendant was to be absolutely entitled, albeit in the case of the bequest in the will the trustees would have control until she attained 25 years of age. Although the provision in the will was substantially smaller than what the policy yielded, the doctrine of satisfaction admits of a lesser provision in a will being satisfaction pro tanto of an earlier portion.
There is a helpful commentary on the strength of the presumption of satisfaction in relation to the different classes of satisfaction in para. 44.9 of Williams. It is pointed out that the strength of the presumption against double portions, and what it takes to rebut the presumption, varies according to the nature of the instruments and the order in which they are executed. Presumption is strongest in the case where a testamentary provision for a child is followed by a settlement, which does not arise in this case. The rationale for that proposition is that both provisions are still under the testator’s control when he executes the later instrument. The presumption is less strong where a settlement, which creates an obligation remaining unperformed, is followed by a testamentary provision. I would surmise that the editors of Williams are referring there to an irrevocable settlement. The rationale of the weaker presumption in that situation is that the testator is not free from the obligation of the settlement when he makes the will, and it is not so readily presumed that he meant the latter to take the place of the former. The strength of the presumption is further reduced when the double provision is contained in consecutive settlements, since, in the case of a will, the testator is supposed to be disposing of the whole of his property and distributing it among the different objects of his bounty, but not so in the case of a settlement. Further, if the first settlement contains a power of revocation which is not exercised, this will be an indication that the provisions are intended to be cumulative.
In this case the testator did not expressly declare his intention. Accordingly, it is necessary to consider whether the presumption applies. In relation to the two instruments at issue in this case, and considering the evidence they afford intrinsically without the aid of extrinsic evidence other than evidence of what the personal circumstances of the testator, his age and marital status, were when they were executed, the following seem to be the relevant factors:
(1) When he was a single man aged 28, in the 1993 Trust, the testator put in place an arrangement to provide for the fourth defendant in default of him exercising the power of appointment in relation to the trust funds. The exercise of the power of appointment would have overridden the default provision, so that the trust fund was still under the testator’s control.
(2) In 1998, after he had married, and when he was aged 33, the testator made a will in which he disposed of his entire estate and made provision for the fourth defendant. A will is ambulatory, so that the testator’s estate was still under his control after he made his will.
(3) After he made his will the testator neither revoked the will nor did he exercise the power of appointment under the 1993 Trust. The fourth defendant was his only child.
(4) On his death the entitlement of the fourth defendant to the trust fund under the default provision in the 1993 Trust took effect. At the same time, the testator’s will took effect and the entitlement of the fourth defendant to the provision made for her in it took effect.
In my view, the foregoing circumstances give rise to a presumption that the testator did not intend the fourth defendant to take both provisions. The issue which remains is whether extrinsic evidence is admissible to either support or rebut that presumption and, if it is, what is the effect of the evidence.
Section 90 of the Succession Act, 1965 provides that extrinsic evidence shall be admissible to show the intention of the testator and to assist in the construction of, or to explain any contradiction in, a will. It is well settled that extrinsic evidence may only be adduced pursuant to s. 90 if it assists in the construction of a will or resolves a contradiction in the will and, in either case, the purpose of its admission is to show what the intention of the testator was in the particular context (O’Connell v. Bank of Ireland [1998] 2 IR 596). As I said at the outset, it is accepted by the plaintiff that the bequest in favour of the fourth defendant contained in the testator’s will is a valid bequest. No question arises as to the admission of extrinsic evidence to construe the will. In any event, the will is unquestionably clear and unambiguous.
What the plaintiff asserts is that extrinsic evidence is admissible in support of the presumption that the testator did not intend to make double provision for the fourth defendant. In this connection, counsel for the plaintiff relied on the following passage from Williams at 14.14:
“Parol Evidence cannot be admitted to add to or vary a written instrument; but where from two written instruments, taken in conjunction with the surrounding circumstances, the court raises a presumption of satisfaction, then parol evidence is admissible to rebut the presumption, and therefore also to support it. In the case of a will and a settlement the rule is the same whether the will precedes or follows the settlement.”
The evidence adduced by the plaintiff which it is contended supports a presumption of satisfaction is as follows:
(a) In her grounding affidavit, having earlier averred that prior to and after her marriage she discussed with the testator the provision he had made for the fourth defendant, the plaintiff averred that it was always her clear understanding from the testator that it was his understanding that he had settled his affairs in such a manner that IR£100,000 from the life assurance policy would be held for the benefit of the fourth defendant but that thereafter the balance of the estate would devolve to herself, the plaintiff. In relation to that averment, the factual position is that the proceeds of the policy were not part of the estate of the testator.
(b) Apropos of the averment at (a), the first defendant, in his affidavit filed in response to the summons, averred that he admitted that it was the deceased’s understanding that he had settled his affairs in such a manner that IR£100,000 from the policy would be held for the benefit of the fourth defendant and that thereafter the balance of the estate would devolve to the plaintiff. The first defendant did not identify his means of knowledge as to the testator’s understanding. In relation to the general approach adopted by the first and second defendants on this application, in the same affidavit the first defendant averred that he and the second defendant were willing to abide by any decision of the court in respect of the plaintiff’s application.
(c) The solicitor who acted for the testator in the drawing and execution of his will gave oral testimony to prove the notes of his attendance on the testator on 6th March, 1998 when he took instructions from the testator for the drawing of the will. The attendance notes record the following in relation to provision for the fourth defendant:
“100K to Nicole in trust.
This is available through life policy on J.H.’s life – approx. 280K.
Trust [?] 25 yrs.”
The third and fourth defendants did not seek to cross-examine the plaintiff or the first defendant on their respective affidavits.
In my view, neither the averment of the plaintiff nor the averment of the first defendant is of a probative quality to either support or rebut the presumption. In relation to the evidence of the solicitor, that goes no further than to prove the instructions recorded by the solicitor when he took instructions for the drafting of the testator’s will almost three months before it was executed.
The position adopted by the third defendant in her affidavit was that the attendance notes of the solicitor were not admissible. Further, she averred that she visited the testator in hospital on the Friday afternoon prior to his death, when he assured her that the fourth defendant would be well looked after. She further averred that at all material times she understood that the policy was in place and also that the fourth defendant had been provided for under the terms of the testator’s will. The source of her understanding is not identified. In my view, those averments are not of a probative quality to rebut the presumption.
The only other evidence which might be relevant to rebutting or supporting the presumption is the evidence of the testator’s assets when he made his will. There is no direct evidence of this, but, as he died just eight months after making his will, this can be inferred. The only asset of any substance which the testator had was his dwelling house, which was valued at €114,176.43 (IR£90,000) as of the date of his death on the Inland Revenue affidavit filed with the Revenue Commissioners. The dwelling house was mortgaged but there was a mortgage protection policy in place which would, if it was kept up, and in fact did, clear off the mortgage on the death of the testator. The testator was a member of his employer’s pension plan. Following his death the plaintiff, as the nominated beneficiary, received €69,537.19 on foot of the pension plan, but this did not form part of his estate.
The totality of the relevant evidence in relation to the testator’s age, marital status and personal circumstances and the state of his assets when he made his will, in my view, support the presumption that the testator did not intend that the fourth defendant should receive both the entirety of the proceeds of the policy and the bequest contained in his will. In other words, the presumption stands.
Before answering the questions raised on the special summons in relation to the first issue, it is necessary to explain the consequence of the conclusion that the doctrine of satisfaction applies. It is that an election must be made on behalf of the fourth defendant, who is still a minor, between the provision contained in the 1993 Trust and the provision under the will. On the facts of this case, it must be assumed that the election would be to take the provision under the 1993 Trust the trust fund represented by the proceeds of the policy.
Finally, by way of clarification, it is stated in Delaney at p. 703 that, if the father has actually advanced the portion to the child, a subsequent legacy will not be regarded as satisfaction, the reasoning being that, if the father has already given the child the gift in the nature of a portion, he would undoubtedly intend that child to benefit in addition from any provision made for him under a subsequent will. There is authority for that proposition in Smyth v. Gleeson [1911] 1 I.R. 113 at p. 119. On the facts of this case, the prior portion had not been actually transferred or paid to or on behalf of the fourth defendant when the will was made. The provision in the 1993 Trust was liable to be displaced by the exercise of the power of appointment.
Answers to questions in relation to the first issue
The answers in relation to the first issue are as follows:
(a)(i) The testator did not by his will execute the power of appointment in relation to the proceeds of the policy. By virtue of the terms of the 1993 Trust the power of appointment was exercisable by deed only.
(a)(ii) The fourth defendant is entitled to elect to take the proceeds of the policy or the bequest contained in the will.
(a)(iii) The interest of the plaintiff in the proceeds of the policy depends on the election made by the fourth defendant. On the assumption that she will elect to take the proceeds of the policy and, indeed, the proceeds have already been paid to trustees on her behalf, the plaintiff has no interest in the proceeds.
(a)(iv) The provision in the testator’s will in favour of the fourth defendant was intended to be in part satisfaction of the proceeds of the policy the subject of the 1993 trust.
(a)(v) The distribution of the proceeds of the policy depends on the election to be made on behalf of the fourth defendant. On the assumption that the election is to take the proceeds of the policy, the distribution of the proceeds to trustees on behalf of the fourth defendant will stand.
The second issue
At the date of his death the testator was the sole legal owner of the dwelling house, 9 The Dell, Huntsfield, Dooradoyle, Limerick, which has a current value of €265,000. The testator purchased the dwelling house, as a newly constructed house, around 1994. He financed the purchase price, which was in excess of IR£60,000, by a loan of IR£4,000 from his then employer to pay the deposit, the State grant of IR£3,000 and a mortgage for the balance. On completion of the purchase the testator and the plaintiff moved into the dwelling house and they resided there until the date of his death.
The questions raised on the special summons in relation to the dwelling house are as follows:
(b)(i) At the date of the death of the testator did the testator and the plaintiff own it in all the circumstances in equity as joint tenants?
(b)(ii) Is the plaintiff entitled to a beneficial interest in the dwelling house?
(b)(iii) If the answer to (ii) above is in the affirmative, what is the extent of the plaintiff’s beneficial entitlement?
The basis of the plaintiff’s claim to a beneficial interest is that she made financial contributions to the cost of the acquisition of the dwelling house. It is not in issue that the principles of law to be applied in determining whether the plaintiff’s claim is well-founded are those set out in the judgment of Finlay P., as he then was, in W v. W [1981] I.L.R.M. 202.
The factual basis of the plaintiff’s claim is as follows. The testator purchased the dwelling house “from the plans”. When it was completed the testator and the plaintiff decided to live together there. They considered that they were moving into their “home”. It was decided to leave the house in the testator’s name, the intention being that the plaintiff could buy a house as well. Some time after they moved in, the testator changed his employer, whereupon the loan he had obtained for the deposit became repayable. The plaintiff borrowed a sum of IR£4,000 on a term loan and gave that sum to the testator so that the testator could repay his employer. The testator and the plaintiff had a joint account before they were married. Their respective salaries were paid into the joint account and the mortgage and mortgage protection policy instalments were paid out of the joint account. The mortgage debt was discharged out of the proceeds of the mortgage protection policy.
The basis on which a court will decide that a wife is entitled to an equitable interest in a property in the sole name of her husband on the basis of a contribution of money to the purchase or on the basis of a contribution, either directly or indirectly, towards repayment of the mortgage instalments is subject to the overriding requirement that such a decision will be made only “in the absence of evidence of some inconsistent agreement or arrangement” per Finlay J. in W v. W at p. 204. In this case, the evidence is not consistent with an understanding by the testator and the plaintiff that the plaintiff would have a beneficial interest in the house. First, the assistance the plaintiff gave the testator in relation to repayment of the loan he had borrowed to pay the deposit cannot be construed as a contribution to the purchase price of the dwelling house. Secondly, on the plaintiff’s own evidence, the understanding between them was that each would own and have title to a house, the house in issue here being the testator’s. In fact, the plaintiff did acquire a house in her own name later, which she rented out.
Apart from that the court has been furnished with very little concrete evidence to support the plaintiff’s claim. Copies of the bank statements on the joint account of the testator and the plaintiff dating from 30th October, 1997 to 4th February, 1999 have been put in evidence. From the pagination of the statements I would surmise that the joint account was opened very shortly before 30th October, 1997. Over the period for which statements have been furnished there are gaps. Even if I was satisfied that the plaintiff’s claim for a beneficial interest based on the principles set out in W v. W. had been made out, I would find it impossible to calculate the contribution on the basis of the evidence before the court.
Answers to questions in relation to the second issue:
My answers in relation to the second issue are as follows:
(b)(i) The testator and the plaintiff did not own the dwelling house in equity as joint tenants at the date of the death of the testator.
(b)(ii) The plaintiff was not entitled to a beneficial interest in the dwelling house at the date of the testator’s death.
(b)(iii) This does not arise.
O’Meara v Bank of Scotland Plc
[2011] IEHC 402
Judgment of Miss Justice Laffoy delivered on 28th day of October, 2011.
1. The factual background
1.1 The defendant in these proceedings was incorporated as Bank of Scotland (Ireland) Limited when the events the subject of these proceedings took place and when the proceedings were initiated. Since then, Bank of Scotland (Ireland) Limited has merged by absorption into Bank of Scotland Plc subsequent to a cross-border merger. Throughout this judgment I will refer to Bank of Scotland (Ireland) Ltd. and Bank of Scotland Plc as the defendant.
1.2 These proceedings relate to the monies in two deposit accounts in the joint names of John O’Meara (Mr. O’Meara), the plaintiff’s late husband, and the plaintiff, which were opened in November and December 2008 with the defendant, the earliest bearing account No. 929260/101, to which I will refer as joint deposit account No. 101, and the later bearing account No. 929260/102, to which I will refer as joint deposit account No. 102. The primary relief sought by the plaintiff is a declaration that all monies standing in both accounts on 28th November, 2009, the day following the death of Mr. O’Meara, are the property of the plaintiff. The defendant’s primary answer to that claim is that the set-off by the defendant of the monies standing to the credit of those accounts against the monies due by Mr. O’Meara on foot of a loan account in his sole name bearing No. 471216/128, to which I will refer as the loan account No. 128, which was effected on 5th January, 2010 by the transfer of monies aggregating €1.6m from the joint deposit accounts to loan account No. 128, was valid. The defendant seeks a declaration on its counterclaim to that effect.
1.3 Mr. O’Meara had been a respected and a valued customer of the defendant for many years prior to October 2008, when the events which have given rise to these proceedings commenced. Indeed, he had become a customer of the defendant’s predecessor, ICC Bank Plc, as far back as 1994. Mr. O’Meara was involved in farming and in the beef industry. He reared, and purchased and fattened, livestock, and exported livestock to the Middle East. From the year 2000 onwards he had become involved in property investment, in respect of which he borrowed from various lending institutions, including the defendant. By the end of 2008 he had eleven loan accounts with the defendant.
1.4 Sometime before 26th November, 2008, probably during the previous week, Mr. O’Meara got in touch by telephone with Mr. Dave Savage (Mr. Savage), who was the divisional director of lending at the defendant and asked to meet him. The meeting took place at the defendant’s office at St. Stephen’s Green, Dublin, 2. It was attended by Mr. Savage, who was accompanied by Ms. Ruth Corrigan (Ms. Corrigan), a lending executive with the defendant, and by Mr. O’Meara. Mr. O’Meara indicated that he wanted a loan facility in the sum of €1.6m for working capital for his business. Mr. Savage’s evidence was that he explained to Mr. O’Meara that the matter was not as straightforward as other loans which had been advanced in the past because the defendant’s credit committee was getting “much tighter”. Mr. Savage’s evidence was that Mr. O’Meara indicated that he could “cash back” the loan facility and that he would put in place a deposit with the defendant. The defendant’s officials understood that the monies for the deposit were monies that were coming to Mr. O’Meara from Anglo Irish Bank Corporation Plc (Anglo). The meeting was told that the purpose of the loan was to buy cattle for Mr. O’Meara’s business. The joint deposit accounts Nos. 101 and 102 and the loan account No. 128 were put in place as a consequence of that meeting in the circumstances which I will outline below.
1.5 Joint deposit account No. 101 was set up first. It was the understanding of Mr. Savage and Ms. Corrigan at their meeting with Mr. O’Meara that the funds he had available to set up the deposit account were the sole property of Mr. O’Meara. However, when Mr. O’Meara arrived at the defendant’s office on 26th November, 2008 to open the account he had a cheque drawn on Anglo in the sum of €1,534,126.60 on which the payees were named as “John and Claire O’Meara” and which was crossed “Account Payee only”. The plaintiff’s signature appeared on the back of the cheque. Although the procedures were gone through to do so and Mr. O’Meara signed an application form to open an account in his sole name and the account, which I understand to be deposit account No. 471216/126 referred to in the defence, was set up, it was decided by the officials of the defendant that the cheque could not be used to open a deposit account in the sole name of Mr. O’Meara. A decision was made to open a joint account in the joint names of Mr. O’Meara and the plaintiff.
1.6 Mr. O’Meara was given an application form to open a six month fixed deposit account to take away to be completed by both himself and the plaintiff, while the Anglo cheque was retained by the defendant. Some of the details on that form were completed by Ms. Susan Dwyer (Ms. Dwyer), an official in the deposits section of the defendant. Both Mr. O’Meara and the plaintiff signed the form at the appropriate place on the third page. Towards the end of the form on the fourth page, the mandate provisions under the heading “Withdrawal Instructions” appeared. It was stated on the form that instructions were to be given to the defendant by such persons and in such manner as was set out in the “Deposit Account Mandate” attached. As I understand it, what followed was the “Deposit Account Mandate”. A number of options were then set out as follows:
“* any one Account Holder // All Account Holders // Others (Please specify)”.
As regards the asterisk before “any one Account Holder”, the following explanation was then set out:
“The Bank is permitted to act on the instructions of either one of you without the need for the consent of the other connected with the Account. For example, either one of you may withdraw all funds in the Account without requiring the consent or signature of the other.”
The first option – any one Account Holder – was ticked and on the same line after three options the name “John O’Meara” in block capitals appears. Ms. Dwyer’s evidence was that the application form/mandate was interpreted by the defendant on the basis that Mr. O’Meara was the only person who could give the defendant withdrawal instructions.
1.7 The Account which was opened, joint deposit account No. 101, was a six month fixed deposit account on which the rate of interest payable was 5.5% per annum. The defendant’s general conditions governing that type of account contained special provisions in relation to joint accounts. Paragraph (a) of clause 3 provided:
“Where an Account is held by two or more persons, the Account shall only be operated in accordance with the written instructions received from the Account Holders from time to time. The Bank shall not be concerned about the division of ownership of the monies lodged in the Account between individuals.”
Clause 3(d) provided:
“On the death of any joint Account Holder, the balance of the Account plus accrued interest may on the production of the appropriate Revenue and testamentary documentation be withdrawn in total or retained in the name of the surviving Account Holder(s).”
1.8 On the evidence it would appear that on 26th November, 2008 no enquiries were made by the defendant’s officials as to the source of the funds represented by the Anglo cheque. Prima facie, as they were joint payees on the Anglo cheque, those funds were the property of Mr. O’Meara and the plaintiff jointly, although the beneficial ownership is an issue which will be addressed later. After joint deposit account No. 101 was opened on 28th November, 2008, value having been obtained for the Anglo cheque on the previous day, Mr. O’Meara made two withdrawals from it, one in the amount of €300,000 on 4th December, 2008 and the other in the amount of €300,000 on 15th December, 2008, which were effected by transfers to an account in the Naas branch of Bank of Ireland in the name of “John O’Meara Farms” and were obviously in connection with his business, so that the balance remaining therein when loan account No. 128 was subsequently set up was €934,126.60.
1.9 There were a number of steps in the process whereby the loan of €1.6m to Mr. O’Meara solely was sanctioned. The officials in the lending department submitted an application to the defendant’s credit committee. The credit committee sanctioned the loan, whereupon a letter of offer issued to Mr. O’Meara, which was dated 17th December, 2008. The original of the letter of offer with acceptance signed by Mr. O’Meara was not available to be put in evidence. However, I am satisfied that, despite thorough searches, the original cannot be located and that the photocopy which was put in evidence is a true copy of the original. The document comprised twelve pages, which were stapled together. The first five pages set out the terms of the offer. The next two pages related to acceptance. The next four pages comprised attachments designated (1), (3) and (4). The latter attachment contained two pages. The final page was designated “Attachment (5)” and it is of very considerable significance in the resolution of the issues which arise in these proceedings.
1.10 As regards the offer of the loan, the purpose of which was expressed to be for working capital and no other purpose, and its terms, the advance was to be in the sum of €1.6m and the term was to be three years. Interest on the loan at the rate stipulated, was to be paid by monthly direct debit and the principal was to be repaid by one repayment at the end of the three year term. The loan was to be secured. It was provided that the security for the loan, which would extend to cover Mr. O’Meara’s general liabilities to the defendant, would include five securities, two being extensions of two existing first specific charges over specified land held by the defendant, one being a continuing lien over a certain Portfolio Investment of Mr. O’Meara, and one being a continuing equitable deposit over Mr. O’Meara’s share certificates in a certain development. As I understand the evidence, Dillon Eustace, Solicitors, were retained by the defendant in relation to the foregoing elements of the security. The final element of the security, which was dealt with “in-house”, was described as follows:
“A Lien incorporating a Right of Set-off over a Deposit Account with the Bank in the name of John O’Meara and Claire O’Meara in the Bank’s standard form for an amount of €1,600,000 plus accrued interest thereon.”
The acceptance of the offer on page 7 of the letter of offer was signed by Mr. O’Meara. Underneath his signature his name appears printed and in manuscript block capitals. The date is then given as 22nd December, 2008. His signature was witnessed by Muhammad Abdullah, whose address in Dublin is given, and whose occupation is given as “Security”. I will set out the circumstances in which Mr. O’Meara executed the acceptance later.
1.11 Attachment (5), which is the twelfth page of the letter of offer, is headed “RIGHT OF SET-OFF”. It is addressed to the defendant. Its text is in the following terms:
“In consideration of your offering loan facilities as set out in your Facility Letter dated 17th December, 2008, I hereby agree that while any monies are due and owing by the Borrower John O’Meara to Bank of Scotland (Ireland) Ltd. (the “Bank”), the Bank may at any time and without notice to me debit any credit balance on any account in my name with any sums which are or may become owing to the Bank by myself. I undertake not to reduce below €1,600,000 the total credit balance of those accounts in which I have a credit balance.”
Below that text there is space for the “Borrower/Account Holder” to sign. Mr. O’Meara signed at that point. Below that, the date of 20th December, 2008 was inserted. Below the date, there is facility for a witness to sign. The plaintiff signed her name opposite the word “Witness”. At the hearing she acknowledged that the signature which appears on attachment (5) is her signature. Thereafter the address of the plaintiff and her late husband is set out and the date which appears below that is 22nd December, 2008. I think it is probable that the address and the date 22nd December, 2008 were inserted on attachment (5) by Ms. Corrigan, when Mr. O’Meara brought the completed form to the defendant’s office on 22nd December, 2008. The signature details as they appear on attachment (5) are replicated at para. 15.2 below.
1.12 When Mr. O’Meara attended at the defendant’s office on 22nd December, 2008 he had not completed the acceptance on page 7. Ms Corrigan got him to sign the acceptance and, as she felt she could not witness his signature, she asked Mr. Abdullah, who was a security man in the defendant’s premises at the time to witness Mr. O’Meara’s signature and he did so.
1.13 To recapitulate in relation to the joint deposit account No. 101, the position as at 22nd December, 2008 was that the balance on the account was €934,126.60, following the withdrawal by Mr. O’Meara of the two amounts of €300,000 each in December 2008. Accordingly, there were not sufficient funds in that account to satisfy the lien/set-off requirement in the letter of offer of 17th December, 2008. What the defendant did in order to bring the monies on deposit with it in the joint names of Mr. O’Meara and the plaintiff up to €1,600,000 was to open a second joint deposit account, that is to say, joint deposit account No. 102, in the joint names of Mr. O’Meara and the plaintiff and to transfer €665,873.40 from loan account No. 128 to that account. This was done on 23rd December, 2008. The sum of €665,873.40 represented the two withdrawals of €300,000 each which Mr. O’Meara had made in December together with the difference between the amount of the Anglo cheque and the sum of €1,600,000. The reason a new account was opened, rather than transferring those monies to joint deposit account No. 101, was that in the interim since the opening of that account the rate of interest payable by the defendant on six months fixed deposit accounts had been reduced from 5.5% to 5%. Although, on the evidence, Mr. O’Meara did not sign any documentation in connection with the opening of the new account nor have any involvement in it, it is reasonable to infer that he tacitly consented to the approach adopted by the defendant. On the expiry of the fixed terms of the two joint deposit accounts during 2009 the accounts were rolled over for further fixed terms, albeit at lower interest rates. In my view, nothing turns on this.
1.14 As regards loan account No. 128 which had been opened on 23rd December, 2008, in addition to the transfer of the sum of €665,873.40 to joint deposit account No. 102, Mr. O’Meara drew down the sum of €250,000 on 23rd December, 2008. In the first four months of 2009 Mr. O’Meara drew down further amounts aggregating €680,000. Some of the withdrawals were effected by transfer by the defendant to the account of Mr. O’Meara at the Naas branch of Bank of Ireland, that is to say, the account named “John O’Meara Farms” and others by cheques in favour of Mr. O’Meara, which were collected by him. The interest due on the loan account was paid monthly up to and including the month of September 2009. The debit balance on loan account No. 128 at that stage was €1,597,057.40, which factored in some small amounts debited for bank fees. The next direct debit for interest was due on 23rd October, 2009.
1.15 On 8th July, 2008 Mr. O’Meara had informed the plaintiff that he had been diagnosed with cancer and that he had between a year and eighteen months to live. Despite that and a serious setback in the summer of 2008, Mr. O’Meara continued to run his business. The evidence of the officials of the defendant who met him between October and December 2008 was that they were unaware that he was unwell, although, when his accounts were reviewed in July 2009, the fact that he had lost a considerable amount of weight was remarked on. In any event, on the evidence, I am satisfied that the officials of the defendant were not told by the defendant that he was terminally ill and that they were not aware of that fact during 2008 or during the first three quarters of 2009. On 16th October, 2009 Mr. O’Meara’s accountant, John P. Greely, wrote to Mr. Savage referring to the fact that Mr. O’Meara had been in hospital and would, hopefully, be released the following weekend. Mr. Greely stated that Mr. O’Meara had been advised by his doctor, in order to assist with a speedy recuperation, not to take any act or part in the business for at least six weeks. The purpose of the letter was to inform the defendant that Mr. O’Meara had no option but to cancel the direct debit payments for October and November 2009.
1.16 The response of the defendant, in a letter from Mr. Savage to Mr. Greely dated 20th October, 2009, was that in order to avoid “these facilities” falling into repayment arrears, the defendant proposed to utilise “the funds currently on liened deposit in a/c 929260 to fund these repayments”. An application form to be signed by Mr. O’Meara and the plaintiff, requesting that the defendant make transfers from the joint deposit accounts “to meet loan repayments on loan facilities attaching to reference 471216” was enclosed for signature. While it is not of any particular relevance to the issues the Court has to decide, I understand that the proposal did not relate solely to the interest payments on loan account No. 128. Mr. Greely’s response on behalf of Mr. O’Meara on 6th November, 2009 was that Mr. O’Meara was unable to accede to the request in relation to the “liened deposit account”.
1.17 Mr. O’Meara died on 27th November, 2009. His will, which was not put in evidence, has not been proved. As I understand the evidence, the plaintiff is the principal beneficiary under his will. However, that, unfortunately, is of no benefit to the plaintiff because the Court was informed that his estate is “very insolvent”.
1.18 The officials of the defendant had become aware of the death of Mr. O’Meara by 1st December, 2009. At a meeting held on 18th December, 2009 with Mr. Greely, the defendant’s officials, Mr. Savage and Michael Corcoran of the defendant’s BRU (Business Restructuring Unit), who had “taken over the file” in relation to Mr. O’Meara, Mr. Greely was informed that the defendant intended setting off the sum of €1.6m in joint deposit accounts Nos. 101 and 102 against the loan facility. Although, as the documentation discovered by the defendant illustrates, in late December 2009 internally some of the defendant’s officials had concerns as to whether the defendant was entitled to exercise a right of set-off against the funds in the joint deposit accounts, on 5th January, 2010, as I have recorded earlier, sums aggregating €1,600,000 were transferred from the two joint deposit accounts to loan account No. 128. As I understand the position, the effect of those transactions was to close joint deposit account No. 102, but a balance remained in joint deposit account No. 101, which by late March 2010 had grown to €46,209.51.
1.19 No contact was made by the defendant with the plaintiff following the death of Mr. O’Meara and prior to the transfers from joint deposit account Nos. 101 and 102 on 5th January, 2010. While no issue arose on this point in the course of the evidence, it is clear on the documentation before the Court that Mr. Greely’s client was Mr. O’Meara, not the plaintiff. The plaintiff attended at the defendant’s office at St. Stephen’s Green in Dublin on 22nd March, 2010. She met with Ms. Dwyer. The plaintiff’s evidence was that she wished to withdraw €20,000 from the joint deposit account with her late husband. Ms. Dwyer’s understanding was that she wished to withdraw all of the funds lodged to that account. In any event, Ms. Dwyer informed the plaintiff she could not withdraw the funds because there was a right of set-off on the account. The plaintiff requested that the balance on the account be transferred electronically to her personal current account at the Kilcock branch of Allied Irish Banks Plc and signed a withdrawal form on 22nd March, 2010. By letter dated 22nd March, 2010 Ms. Dwyer, on behalf of the defendant, and referring to the withdrawal request, required the plaintiff to furnish the following documentation: an original or a certified copy of the death certificate of Mr. O’Meara; an affidavit by Mrs. O’Meara confirming her marriage; and a copy of the marriage certificate. Subsequently, in April 2010 the plaintiff furnished the required documentation. However, the balance in joint deposit account No. 101 was not transferred to her personal account as she had requested.
1.20 These proceedings were initiated by a plenary summons which issued on 18th June, 2010.
2. The plaintiff’s case and the defendant’s defence and counterclaim as pleaded
2.1 There are some subtle differences between the case made on behalf of the plaintiff in the pleadings and the submissions made at the hearing. For that reason I consider it necessary to consider the pleadings in some depth.
2.2 To a large extent, the narrative contained in the statement of claim delivered on 12th July, 2010 is consistent with what I have outlined above. However, it is recited in the statement of claim that on or about 22nd December, 2008 the plaintiff and Mr. O’Meara opened joint deposit account No. 102 and authorised the transfer into the said account of monies in the sum of €600,000. The figure mentioned in incorrect, but, more importantly, it was contended on behalf of the defendant that the plaintiff had no involvement in the opening of that account. I will return to the issue to which that contention, which I am satisfied is factually correct, gives rise later.
2.3 In paragraph 6 of the statement of claim it is pleaded that the sums lodged to both deposit accounts were lodged by the plaintiff and Mr. O’Meara for the benefit and future welfare and security of the plaintiff and their sons, that the lodgement by Mr. O’Meara was intended to be “an advance” to the plaintiff and that Mr. O’Meara and the plaintiff intended that, in the event of the death of Mr. O’Meara, the plaintiff should have sole legal and beneficial ownership of the monies standing to the credit of the two joint deposit accounts. The defendant in its defence denies each of those assertions and further asserts that the purpose asserted by the plaintiff, namely, to provide for the future welfare and security of the plaintiff and her two sons was never disclosed to the defendant. On the contrary, it is contended that at the time of the creation of the deposit accounts and at all material times thereafter it was represented to the defendant that the monies would provide “cash-backing” for the loan advanced to Mr. O’Meara.
2.4 It is pleaded in the statement of claim that it was an express or an implied term of the contract between the plaintiff and Mr. O’Meara, on the one hand, and the defendant, on the other hand, that no monies would be withdrawn from the joint deposit accounts “without the express authority in writing of one of the Account Holders namely the Plaintiff and/or the said John O’Meara”. While the defendant does not admit the plea as to the express or implied contractual term, the defendant does admit that the defendant would be entitled “to set-off monies standing to the credit of” the joint deposit accounts or any of them “with the authority (express or implied) of any one of the account holders, namely, the Plaintiff and/or the late John O’Meara” (emphasis in original). Further, it is pleaded by the defendant that it was entitled “to set-off monies standing to the credit of” the joint deposit accounts or either of them on the instructions, authority or consent (in each case express or implied) of Mr. O’Meara. In other words, as I understand it, the position of the defendant, as pleaded, assuming it assimilates withdrawal instructions with “set-off” instructions, is not wholly in line with Ms. Dwyer’s interpretation of the withdrawal instructions on the mandate – that one account holder, Mr. O’Meara, was the only person who could give the defendant withdrawal instructions on the account.
2.5 The plaintiff pleads that the document entitled “Right of Set-Off” attached to the facility letter of 17th December, 2008, on its true construction, as regards the granting of a right of set-off, applied only to such accounts as were maintained in the sole name of Mr. O’Meara. In response, the defendant pleads that the plaintiff signed the “Right of Set-Off” document and that, although it appears from the face of the document that she signed as a witness to the signature of Mr. O’Meara, in signing the document –
(a) she expressly or impliedly gave her authority to the defendant setting off sums standing to the credit of the account(s) to which the right of set-off document related in reduction of the personal liabilities of Mr. O’Meara; and/or
(b) she became estopped from denying that she gave such authority.
Further, it is denied that the effect of the right of set-off document was to give the defendant a right of set-off only in relation to accounts maintained in the sole name of Mr. O’Meara.
2.6 The plaintiff pleads that the defendant acted wrongfully, unlawfully and in breach of contract and/or negligently and in breach of duty and of fiduciary duty on 5th January, 2010 in exercising a purported right of lien and set-off against the two joint deposit accounts. It is pleaded that the defendant did not have authority or the consent of the plaintiff or of Mr. O’Meara to transfer the funds as it did. The defendant denies all the allegations of wrongdoing and, additionally, denies that any duty of care was owed by the defendant to the plaintiff or that at any material time the defendant stood in a fiduciary capacity to the plaintiff.
2.7 In addition to claiming a declaration in the terms set out at para. 1.2 above, the plaintiff also seeks an order directing the defendant to pay the monies standing on 28th November, 2009 to the credit of joint deposit accounts Nos. 101 and 102 to the plaintiff together with interest thereon at the rate applicable by the defendant to six month term deposits up to the date of such payment. The plaintiff also claims various ancillary reliefs including damages for negligence, breach of duty, statutory and fiduciary duty and breach of contract and interest pursuant to the Courts Act 1981 or contractual interest. The position of the defendant is that the plaintiff is not entitled to any of those reliefs.
2.8 In its counterclaim, the defendant pleads that the common intention as between the defendant, the plaintiff and Mr. O’Meara was that the plaintiff would be a party to the right of set-off document, not only as a witness but also as a signatory to the joint deposit accounts to which the document related, but through inadvertence or mistake, the defendant, Mr. O’Meara and the plaintiff omitted to make sure that it was made clear in the text that the plaintiff signed not only as a witness but also as a party to such arrangement. Accordingly, the defendant seeks to have the document rectified so as to reflect the true intentions of the parties and seeks an order to that effect.
2.9 In its counterclaim, the defendant pleads that it has at common law a right to exercise the right of set-off in respect of the two joint deposit accounts. Finally, in its counterclaim the defendants pleads that, if the defendant has no entitlement to exercise the right of set-off in question, any sums which were unlawfully set-off enure for the benefit of the estate of Mr. O’Meara, subject to grant of probate and the taking out of letters of administration.
2.10 In general, in her reply and defence to the defendant’s counterclaim the plaintiff joins issues on the various matters which are pleaded in the defence and counterclaim, specifically denying any contract between her and the defendant other than the contract in relation to the joint deposit accounts. She denies that she agreed that the monies in the joint deposit accounts or any part thereof would provide “cash backing” or any security for the loan to Mr. O’Meara. She denies that there was a common intention that she should be a party to the right of set-off document and any intention to become bound thereby in her capacity as a co-signatory or in any contractual capacity. Finally, the plaintiff pleads that, in seeking the equitable relief of rectification, the defendant has failed to do equity and is guilty of equitable fraud and by its actions and omissions had disentitled itself to claim equitable relief. That plea is particularised by various alleged failings and actions on the part of the defendant, for example –
(i) failing to explain to or advise the plaintiff of the nature of the obligation which the defendant alleges it intended her to undertake by signing the right of set-off document,
(ii) failing to advise her that she should seek legal advice before executing that document,
(iii) attempting to exploit the weakness of the plaintiff’s position, particularly in the absence of legal advice, and
(iv) failing to inspect the signed document and draw to the plaintiff’s attention that it showed her signature as merely that of a witness rather than a party.
On the basis of the conduct particularised, which is considerably more extensive that I have recorded here, it is pleaded that the plaintiff is entitled to rescind the contract contended for by the defendant, if it came into effect.
2.11 It is noteworthy that it is not alleged by the plaintiff that either the execution of the mandate to open joint deposit account No. 101, or the execution of the right of set-off document, was procured by pressure, undue influence or any unconscionable conduct on the part of Mr. O’Meara. Moreover, there was nothing in the evidence of the plaintiff which would suggest that Mr. O’Meara exercised duress or undue influence over her. She was the only witness who could testify as to what transpired between her and Mr. O’Meara. I now propose to consider her evidence in relation to the transactions with the defendant.
3. The plaintiff’s evidence
3.1 To put the plaintiff’s evidence in relation to the transactions with the defendant into context, it is necessary to outline the personal circumstances of the plaintiff and her late husband to some extent. In 2008 the plaintiff was 45 years of age and her husband was approximately two years older than her. They had lived together since 1992 and had married in 2005. They had two children, a boy born in March 2004 and a boy born in May 2005. As I have already recorded, the plaintiff became aware of her late husband’s cancer diagnosis in July 2008 and he died less than a year and a half later. There is no doubt that testifying was very stressful for the plaintiff. It emerged during cross-examination that she herself had had breast cancer in 2001 but had recovered. It was the plaintiff’s evidence that the respective roles of herself and her husband were very well defined. Her role was to rear the children and to be the homemaker. He was the provider. The plaintiff’s evidence, which I accept, was that Mr. O’Meara was a very private person. She did not know about his business or his bank accounts. Before the opening of joint deposit account No. 101, as far as she was aware, she never had a joint bank account with Mr. O’Meara. He provided her with signed cheques on a current account in his sole name at the Naas branch of AIB and she had a current account for household related expenses in her sole name in the Kilcock branch of AIB.
3.2 The plaintiff’s evidence was that towards the end of November 2008, after he had started chemotherapy treatment, Mr. O’Meara told the plaintiff in the kitchen of their home that he was opening a joint account in both of their names and he was going to put “over a million and a half into it in cash” for the plaintiff and “the boys”, should anything happen to him. The plaintiff’s evidence was that she knew nothing about the defendant bank. As regards the documents she signed in relation to accounts with the defendant, her evidence was that she did not remember specifically any documents, although she recollected that her late husband got her to sign something. She did not remember seeing the front of the Anglo cheque but acknowledged that her signature was endorsed on it. She also acknowledged that the signatures on the application/mandate and on the right of set-off document were her signatures. She had no specific recollection of signing either document. Her evidence was that her late husband would have just asked her to sign her name and she would have done so. She received no explanation as to why she was signing the right of set-off document.
3.3 I accept the plaintiff’s evidence in relation to the matters referred to in the next preceding paragraph. I am satisfied that her late husband did not involve her in his business or financial affairs, save to procure her signature when it was necessary. Although the address of Mr. O’Meara and the plaintiff, as shown on the bank statements and other documentation in relation to joint deposit account Nos. 101 and 102, was their family home, Pitchfordstown Stud, Kilcock, County Kildare, the plaintiff’s evidence was that post was not delivered to the house but was collected by her husband from what she described as a “pigeon hole” in the Post Office. Her evidence was that she never saw post from a bank or even utility bills. I accept her evidence on that, because it is consistent with the documentation which was put in evidence. Mr. O’Meara’s address as shown on the bank statements or other documentation in relation to loan account No. 128 was his business address in the town of Naas. Many of the relevant documents were marked with a date stamp showing the date of receipt and the same type of receipt appears on the documentation in relation to joint deposit account Nos. 101 and 102.
3.4 Early in the course of her cross-examination the plaintiff stated that she knew nothing about the “Anglo money” and that she did not recall any form of joint investment in Anglo and she had no knowledge of her husband and herself making other joint investments previously. The plaintiff’s evidence was that she was unaware of the withdrawal by Mr. O’Meara of the two sums of €300,000 each from joint deposit account No. 101 in December 2008 and her explanation was that she never discussed money with her late husband. Later, she stated that in November 2008, when her husband told her he was depositing €1.5m, she was not concerned to check as to whether all the “paper work” was “legal”. She trusted him. She gave that evidence in a very distressed state and the remainder of her cross-examination was postponed until the following day.
3.5 A number of controversies arose when the cross-examination of the plaintiff was resumed on the following day. First, as was pleaded in the statement of claim, the plaintiff, in an affidavit to ground an application for an interlocutory injunction, which had been brought on behalf of the plaintiff at an early stage in the proceedings, had averred that the joint deposit account No. 102 had been opened on 22nd December, 2008 by her and Mr. O’Meara. It was put to her that that averment was not correct. Her response was that it was absolutely correct on the basis of the information she had seen in the bank statements. That, I believe, was her honest understanding of the situation. The plaintiff did not agree with the explanation put to her by counsel for the defendant as to the circumstances in which joint deposit account No. 102 was opened, which I do not find surprising. However, she did say that her understanding was that the monies which went into joint deposit account No. 102 were her and her husband’s money.
3.6 Secondly, contrary to the submission made on behalf of the defendant, I did not understand the plaintiff to make a concession in her evidence that the proceeds of the Anglo cheque were the sole property of her husband and were not joint property of herself and her husband, as the cheque prima facie indicated. The particular response of the plaintiff in cross-examination on which the defendant relies to support that submission arose in the context of counsel for the defendant putting to the plaintiff that Mr. O’Meara had effective control over the monies represented by the Anglo cheque, that the plaintiff gave him control over the monies, that she had not been induced into or tricked into so doing and that it was implausible that, given the knowledge she had at the time about Mr. O’Meara’s health, she would not have read at least the important points of the relevant documents and would not have understood their import. The plaintiff’s response was that her husband was an exceptionally wealthy man, she had no reason to be “intricately reading any small print”, she signed “millions of documents”, she did not know what she was signing, she trusted her husband emphatically, he was a wonderful provider and there was nothing they ever wanted and she knew nothing “about intricacies”. She went on to say that she believed he had a cheque for €1.5m in his hand. At that stage counsel interjected saying “With respect”. The plaintiff then stated:
“and it sounds now like he stole it, you are saying and he didn’t. It was his money.”
When that last sentence is considered in the context of all of the evidence of the plaintiff and, indeed, all of the evidence adduced by both parties, in my view, it cannot be taken as a concession by the plaintiff that she was not the beneficial owner jointly with her husband of the monies represented by the Anglo cheque.
3.7 The impression I formed of the plaintiff was that she was an intelligent and honest woman who respected her late husband and, as regards the business and financial matters, deferred to him. Her perception was that her husband was a very wealthy man and that perception may have been justified before the fateful events of mid-September 2008 and subsequently globally. I can fully appreciate why in late 2008 and throughout 2009 there were matters of greater concern to her other than the meaning and detail of business and financial documents which her husband asked her to sign.
4. Submissions/issues
4.1 The Court has had the benefit of comprehensive written submissions from both sides to which I will refer, as appropriate, when analysing the issues, the legal principles applicable and in setting out my conclusions hereafter.
4.2 Out the multiplicity of issues which arise on the pleadings, the evidence and the submissions made by the parties, I propose addressing the following, which I consider to be the key issues:
(a) Who was the beneficial owner of the monies represented by the Anglo cheque and what is the relevance of the answer?
(b) How did the monies in joint deposit account No. 101 devolve on the death of Mr. O’Meara?
(c) Were the monies in joint deposit account No. 101 impressed with a trust?
(d) What was the effect of the death of Mr. O’Meara on any valid right of set-off vested in the defendant?
(e) How was the defendant permitted to operate joint deposit account No. 101 having regard to the terms of the mandate given by the joint account holders?
(f) What was the effect of the operation of joint account No. 101 by the defendant from the time it was opened to 23rd December, 2008?
(g) Did the defendant have a right of set-off against joint deposit account No. 101 on 5th January, 2010 on any basis – at common law, in equity or contractually?
(h) If it is found that a contractual right of set-off was not created over joint deposit account No. 101, should an order rectifying the right of set-off document, that is to say, attachment (5) to the letter of offer of 17th December, 2008 be made?
(i) Is the plaintiff estopped from contending that the defendant had no right of set-off against joint deposit account No. 101?
(j) Does the beneficial ownership of joint deposit account No. 102 differ from the beneficial ownership of joint deposit account No. 101 and, if it does, what are the consequences?
5. Beneficial ownership of the monies represented by the Anglo heque/relevance
5.1 While on the pleadings and in their submissions the parties addressed the beneficial ownership of the monies in the joint deposit accounts, in my view, the starting point for the Court has to be consideration of who was the beneficial owner of the monies represented by the Anglo cheque before those monies were lodged in joint deposit account No. 101. As I have already indicated, prima facie, the cheque being payable to Mr. O’Meara and the plaintiff jointly, the monies were owned by them jointly. The provenance of those monies was not traced, although the evidence suggests that they represented the proceeds of an investment, which it must be inferred was in the joint names of Mr. O’Meara and the plaintiff, with Anglo, which had matured. This is supported by the application to the defendant’s credit committee, which is a reliable source as to what was known to the defendant’s officials, which records that Mr. O’Meara “received €1.6m cash from a matured Anglo Irish Bank investment”. Save that it establishes that Mr. O’Meara alone put up the entire money to acquire the joint investment with Anglo, because of the application of the equitable principles which I will outline, it is immaterial to the issue of the beneficial ownership thereof that the plaintiff was unaware of the existence of the joint investment.
5.2 In their written submissions, counsel for plaintiff asserted, reflecting what is pleaded in paragraph 6 of the statement of claim, that the monies deposited in joint deposit account No. 101 were contributed by both Mr. O’Meara and the plaintiff through the medium of the Anglo cheque, which was payable to them jointly. It was reiterated that the purpose of so doing was for the benefit and future welfare and security of the plaintiff and her two sons. Having referred to their relationship of husband and wife, it was asserted that Mr. O’Meara “is presumed to have advanced his “contribution” to the plaintiff”, without citing any authority. Counsel for the defendant did not, in their submissions, address the plaintiff’s reliance on the presumption of advancement. While I consider that the presumption of advancement does bear on the ownership of the funds lodged to joint deposit account No. 101, I consider that its application must be considered by reference to the acquisition of the investment with Anglo in the joint names of Mr. O’Meara and the plaintiff.
5.3 The core question which has to be considered as a prelude to determining all of the issues outlined earlier is what was the effect of Mr. O’Meara contributing the entire monies for the acquisition of the investment with Anglo but acquiring it in the joint names of himself and his wife, the plaintiff. Professor Delany in Equity and the Law of Trusts in Ireland (5th Ed.) quotes (at p. 170) the following passage from the judgment of Keane J., as he then was, in JC v JHC (High Court, unreported, 4th August, 1982), which explains the doctrine of advancement:
“Where property is taken in the joint names of two or more persons, but the purchase money is advanced by one of them alone, the law presumes a resulting trust in favour of the person who advanced the purchase money. This presumption may however be rebutted; and in particular the circumstances of the person in whose name the property is conveyed being the wife of the person advancing money may be sufficient to rebut the presumption under the doctrine of advancement.”
As Professor Delany observes, in that case, Keane J. appeared to base his decision on the fact that the evidence “overwhelmingly” reinforced the presumption of advancement, which he said would arise had there been no other evidence of the parties’ intentions. Professor Delany suggests that one could argue that Keane J. regarded the presumption of advancement as being relevant only where evidence to establish the parties’ true intentions was lacking. Moreover, Professor Delany later (at p. 172) observes that, having regard to the decision of the Supreme Court in RF v. MF [1995] 2 ILRM 572, the presumption can readily be rebutted by evidence establishing a contrary intention and in practice it is only likely to directly influence the outcome of a case where there is little or no evidence to show what the parties’ intentions in relation to the ownership of the property actually were.
5.4 The Anglo cheque was payable to Mr. O’Meara and the plaintiff jointly and, prima facie, represented monies jointly owned by Mr. O’Meara and the plaintiff. Even if, as one must assume was the case, Mr. O’Meara was the sole contributor to the matured investment, the proceeds of which were represented by the Anglo cheque, in the absence of rebutting evidence, the presumption that Mr. O’Meara intended to advance the plaintiff in acquiring the investment in joint names applies, so that it must be assumed that Mr. O’Meara and the plaintiff were the beneficial owners of the matured investment and monies represented by the Anglo cheque.
5.5 The foregoing analysis is based on the assumption that the matured investment was some type of investment, for example, a bond, purchased by Mr. O’Meara in the joint names of himself and the plaintiff. If that assumption is incorrect and the matured investment was a fixed term deposit in their joint names, which matured by expiry of the fixed term, the position as to beneficial ownership is the same. Professor Delany states (at p. 162):
“So, where money is deposited by a husband in an account in their joint names the presumption of a resulting trust in these circumstances may be rebutted by the presumption of advancement and prima facie the relationship between the parties will usually result in the wife taking the balance remaining in the account beneficially.”
However, Professor Delany issues a note of caution, in stating that such a result should not always be assumed and one question which must be addressed is whether the account was opened merely for the parties’ mutual convenience or whether it was intended as a means of making provision for the other spouse. On the evidence, there is nothing to suggest that the purpose of the joint investment in Anglo was for the mutual convenience of Mr. O’Meara and the plaintiff. In my view, the only reasonable inference which can be drawn is that Mr. O’Meara’s intention was to make provision for the plaintiff should he predecease her.
5.6 The defendant attempted to establish through cross-examination of the plaintiff, that Mr. O’Meara was the sole beneficial owner of the monies represented by the Anglo cheque, which was at variance with the position adopted by the officials of the defendant in their dealings with Mr. O’Meara. On 26th November, 2008 the officials of the defendant became aware that Mr. O’Meara and the plaintiff were the joint payees on the cheque. Aside from the fact that the cheque was crossed “Account Payee only”, the officials of the defendant obviously formed the view that Mr. O’Meara and the plaintiff were the joint owners of the proceeds of the cheque and all of the defendant’s conduct thereafter is consistent with that conclusion. In particular, the defendant required that the application to open a six month deposit account in which the proceeds of the Anglo cheque were to be lodged be made in the names of, and by, both Mr. O’Meara and the plaintiff, and this was done. In consequence, joint deposit account No. 101 was opened in the joint names of Mr. O’Meara and the plaintiff. I have come to the conclusion that the defendant has not displaced the presumption of advancement which applies to the creation of the joint investment with Anglo. Accordingly, I find that Mr. O’Meara and the plaintiff were the joint beneficial owners of the money in joint deposit account No. 101 when it was opened with the proceeds of the Anglo cheque.
5.7 If the Court was only concerned with the effect of the opening of joint deposit account No. 101 and the fact that the plaintiff was the surviving joint account holder, that conclusion would be of little relevance, having regard to the decision of the Supreme Court in Lynch v. Burke [1995] 2 IR 159. On the authority of that decision, the legal effect of the opening of that account in the joint names of Mr. O’Meara and the plaintiff on foot of the application signed by both of them was that the defendant became contractually bound to both account holders and, as a matter of contract between the plaintiff, as surviving joint account holder, and the defendant, she became entitled to the balance in the account on the death of Mr. O’Meara. The relevance of establishing the beneficial ownership of the monies on deposit in joint account No. 101 relates to the defendant’s claim to a right of set-off.
6. Devolution on death of Mr. O’Meara
6.1 Leaving aside for the moment the implications of the defendant’s claim to a right of set-off against the monies in joint deposit account No. 101, it follows from what is stated at para. 5.7 above that, in accordance with established law, on the death of the first of the joint owners to die, that is to say, on the death of Mr. O’Meara, the monies which remained in that account accrued to the surviving joint owner by right of survivorship. Indeed, counsel for the defendant accepted in their written submissions that, where a deposit account is held in joint names, upon the death of one of the parties, the proceeds devolve to the surviving account holder, as was held by the Supreme Court in Lynch v. Burke. The defendant’s subsequent contention, both as pleaded and in its written submissions, that, if the Court were to hold that the defendant has no right of set-off, the monies in both joint deposit accounts devolved to Mr. O’Meara’s estate, and that the plaintiff has no direct personal claim to the monies, in my view, is wholly contradictory and at variance with the true legal position.
6.2 It may be that that proposition is based on the contention that Mr. O’Meara was the sole beneficial owner of the monies lodged to joint deposit account No. 101. If that is the case, it is based on a false premise in the light of the conclusion I have reached as to the beneficial ownership of the monies represented by the Anglo cheque. As I have indicated–
(a) prima facie the monies represented by the Anglo cheque were owned jointly by Mr. O’Meara and the plaintiff,
(b) given the husband and wife relationship of Mr. O’Meara and the plaintiff, the presumption of advancement, rather than the presumption of a resulting trust, has arisen in relation to the beneficial ownership of the matured investment, in respect of which the cheque issued,
(c) there is no evidence, objective or otherwise, to rebut the presumption of advancement and, in the absence of any other evidence, there is no basis for inferring that the conduct of Mr. O’Meara in proffering ex post facto the Anglo cheque to “cash-back” the loan he was applying for is inconsistent with the finding of advancement, and, in any event, it is reasonable to infer that he did not anticipate that the defendant would have to resort to those monies; and
(d) the conduct of the defendant was wholly consistent with the monies being jointly owned by Mr. O’Meara and the plaintiff.
Accordingly, in my view, if the defendant has not established a right of set-off against those monies, the plaintiff is entitled to so much thereof as remained in joint deposit account No. 101 at the death of Mr. O’Meara.
6.3 Different considerations apply to the monies in deposit account No. 102, which I will address later.
6.4 It is difficult to understand the rationale of Clause 3(d) of the terms and conditions in relation to joint deposit account No. 101, which I have quoted at para. 1.7 above, in requiring production of “testamentary documentation”, whether Mr. O’Meara died testate or intestate, and whether representation has been raised to his estate or not. As a matter of law, the plaintiff, as the surviving account holder, was entitled to the monies in joint deposit account No. 101 at the date of his death, if the defendant has not established that it is entitled to a right of set-off against that account.
7. Trust?
7.1 While I consider that, as between Mr. O’Meara and the plaintiff, on the one hand, and the defendant, on the other hand, the defendant, having regard to the documentation and information it had, had to, and did, assume in November 2008 and at all material times subsequently that monies on deposit in joint deposit account No. 101 were owned jointly by Mr. O’Meara and the plaintiff and became contractually liable to them on that basis, I accept as correct the submission made on behalf of the defendant that the plaintiff has not established that the monies lodged to that account were impressed with a trust for the benefit of the plaintiff and her two sons on the basis of either the plea in the statement of claim that the monies were lodged “for the benefit and future welfare and security” of the plaintiff and her two sons, or the plaintiff’s evidence, because the defendant was not on notice of any such trust.
7.2 The following passage from Paget’s Law of Banking (13th Ed., 2007) (at para. 11.28) quoted by counsel for the defendant in their submissions represents the law in this jurisdiction:
“If a bank has notice, however received, that an account is affected with a trust, express or implied, or that the customer is in possession or has control of the money in a fiduciary capacity, it must regard the account strictly in that light. Of course, where there is no such notice, the mere fact that, unknown to the bank, monies are held by the customer in a fiduciary capacity in no way affects the bank’s right to treat them as the absolute property of the customer.”
The authority cited by the editor of Paget for the proposition in the second sentence quoted above is the decision of the House of Lords in Thomson v. Clydesdale Bank Ltd. [1893] AC 282.
7.3 As regards the application of that proposition in the case of joint deposit account No. 101, even if the account holders, Mr. O’Meara and the plaintiff, regarded themselves as holding the money in a fiduciary capacity, that was not known to the defendant, and the defendant was entitled to, as it did, treat the funds as the absolute property of both Mr. O’Meara and the plaintiff, the account holders. However, the manner in which the defendant was permitted by the account holders to operate that account is crucial to the determination of the ultimate ownership of the monies lodged to it in November 2008.
8. Effect of the death of Mr. O’Meara on any valid right of set-off
8.1 Before addressing that issue, I think it is appropriate to record that I agree with the submission of the defendant that, if a valid right of set-off against the funds in joint deposit account No. 101 was created prior to the death of Mr. O’Meara, Mr. O’Meara’s death did not eradicate or prejudice that right. I agree with the submission that, as regards the effect of a pre-existing right of set-off, the implication of the death of one of two joint account holders, in this case, Mr. O’Meara, on the respective rights of the surviving account holder, the plaintiff, and the defendant is analogous to the effect of the commencement of a liquidation on a pre-existing right of set-off. In the case of a voluntary liquidation, in Dempsey v. Bank of Ireland (the Supreme Court, Unreported, 6th December, 1985) Henchy J. stated (at p. 11):
“The intervention of the winding up did not override or pre-empt the Bank’s ability to give effect to that right, any more than it would affect an enforceable lien or charge on those accounts existing at the relevant date. It follows that the bank’s accrued right to debit took precedence over the liquidator’s title to the accounts.”
8.2 The right referred to in that passage was a right which had been given by EuroTravel Limited, the company in liquidation, to Bank of Ireland that, if Bank of Ireland was called upon to pay on foot of a guarantee given by it on behalf of the company, Bank of Ireland could debit any account in the company’s name with any sums payable by the bank under the guarantee. The underlying rationale of the decision was that the liquidator could only get such title to the assets as the company had – no more, no less. By analogy, in my view, if the defendant had a valid right of set-off against joint deposit account No. 101, that right would have been exercisable notwithstanding the death of Mr. O’Meara and the plaintiff’s entitlement by way of survivorship would have been subject to it.
8.3 In the interest of clarity, I should say that, while recognising that on the death of Mr. O’Meara the banker/customer relationship between him and the defendant terminated, the submission made on behalf of the plaintiff, in reliance on a passage in Derham on The Law of Set-Off (4th Ed. 2010) at p. 739, that the defendant was precluded after his death from combining accounts, which could have combined during the lifetime of Mr. O’Meara, although strictly an issue between the personal representative of Mr. O’Meara and the defendant, is not in line with the rationale underlying the decision of the Supreme Court in Dempsey v. Bank of Ireland.
9. Permitted operation of joint account No. 101
9.1 The manner in which the defendant was permitted to operate joint deposit account No. 101 was determined by the terms of the application form and, in particular, the “Withdrawal Instructions” segment thereof, which was signed by both account holders. I am at a loss to understand why, according to Ms. Corrigan’s evidence, the officials of the defendant could have interpreted the withdrawal instructions given by the applicants as limiting the authority to withdraw to Mr. O’Meara alone. The option which was ticked was “any one Account Holder” which, in accordance with the explanation given immediately underneath, permitted the defendant to act on the instructions of either account holder. If Mr. O’Meara alone was to be entitled to give withdrawal instructions, the “Others” option should have been ticked and his name should have been specified in relation to that option. In any event, I consider that nothing much turns on that because, as I have set out earlier, there seems to be consensus on the pleadings, at any rate on the basis of the assumption I have made in the last sentence in para. 2.4 above, that no monies could be withdrawn from joint deposit account No. 101 without the express authority of “any one” of the account holders.
9.2 However, both on the pleadings and in its counsel’s written submissions, the defendant goes further, in that it contends that the defendant was entitled to set-off monies standing to the credit of joint deposit account No. 101 with the authority (express or implied) of any one of the account holders, namely, the plaintiff or Mr. O’Meara. The submission made on behalf of the defendant, while superficially attractive, is fallacious. It is based on the well established principle that, while the normal relationship between a banker and its customer is that of debtor and creditor, quoad the drawing and payment of the customer’s cheques as against the money of the customer in the banker’s hands the relationship is that of principal and agent as stated by Lord Atkinson in Westminster Bank Ltd. v. Hilton (1926) 43 TLR 124 at p. 126. On the basis that the instructions given on the application form were that “any one Account Holder” could give written instructions, it was submitted that either Mr. O’Meara or the plaintiff could instruct the defendant to withdraw money from the account without reference to the other. That is undoubtedly correct. However, whether it is correct, as the defendant contends, that the creation of the right of set-off document was a form of withdrawal instruction, and that it was entitled to treat the execution of attachment (5) as an instruction by Mr. O’Meara only and, as such, as having been provided by any one account holder, so that the defendant was entitled to act upon it and effect the set-off without further reference to the plaintiff, is primarily a matter of construction of the withdrawal instructions in the application form.
9.3 When it was executed by the plaintiff, the application form, which included the withdrawal instructions, was a “standalone” document. It would not be correct to regard its commercial context as subsuming the terms of the letter of offer dated 17th December, 2006 which stipulated the terms on which the loan would be granted to Mr. O’Meara.
9.4 When one looks at the entirety of the application form it is clear that it was envisaged that the completed application form might be brought in person by the applicant to the defendant or might be sent in by post. It set out, for instance, identification requirements generally regarded as “anti-money laundering” requirements, although they seem not to have been a consideration in this case. Taking an overview of it, the terms of the application form were addressed to the ordinary bank customer, who might or might not attend in person at the defendant’s office. Applying “commonsense principles” advocated by Lord Hoffman in ICS v. West Bromwich B.S. [1998] 1 WLR 896, which were adopted by the Supreme Court in Analog Devices B.V. v. Zurich Insurance Company [2005] 1 IR 274, given the purpose and nature of the application form, in my view, the withdrawal instructions which I have quoted are not open to the construction that, by ticking the “any one Account Holder” option, one joint account holder was permitting the defendant to put in place what would, in effect, be a form of security over the monies in the account, such as a right of set-off, without the consent of the other joint account holder. The words used in the explanation to the customer, which I have quoted earlier, must be given their natural and ordinary meaning. The explanation points to the withdrawal of funds, even all of the funds, by one account holder without requiring the consent or signature of the other. It does not point to, or envisage, a withdrawal of the funds by the defendant pursuant to a right of set-off given by one account holder.
9.5 Moreover, the reality of the situation is that the defendant did not consider that the right of set-off could be put in place without the consent of the plaintiff. In fact, Ms. Corrigan’s evidence was that when Mr. O’Meara brought the letter of offer back to the defendant on 22nd December, 2008 she considered that the right of set-off document “looked okay” because it was signed by Mr. O’Meara and the plaintiff, she having noted that the account was in joint names.
9.6 Accordingly, I have come to the conclusion that the defendant cannot make the case, in reliance on the withdrawal instructions in the application form, that the right of set-off could be validly put in place on the written instructions of Mr. O’Meara only as one account holder.
10. Operation of joint deposit account No. 101
10.1 The next question which requires to be considered is how joint deposit account No. 101 was operated between the time it was opened and the 23rd December, 2008 when joint deposit account No. 102 was opened, and the implications of that for the plaintiff and the defendant. In acting on Mr. O’Meara’s withdrawal instructions of 4th December, 2008 and 15th December, 2008, the defendant clearly acted in accordance with the withdrawal instructions given to it by both account holders. Therefore, the plaintiff cannot advance any claim to the two sums aggregating €600,000 were transferred to Mr. O’Meara’s business account in Bank of Ireland in Naas. The reality of the situation is that by 23rd December, 2008 she could only claim a joint legal interest in and joint ownership of the balance in joint deposit account No. 101, which at the time was €934,126.60.
10.2 Counsel for the defendant, properly in my view, took issue with the plaintiff’s contention that the sum of €665,873.40 which was lodged in joint deposit account No. 102 when it was opened on 23rd December, 2008 was from monies provided by Mr. O’Meara and the plaintiff jointly. The source of that money was loan account No. 128 in the sole name of Mr. O’Meara. It is clear from the statement of account that the transfer was made out of that account on 23rd December, 2008. The purpose of the transfer was to “top-up” the monies on joint deposit in the joint names of Mr. O’Meara and the plaintiff to the level of the security by way of right of set-off specified in the letter of offer of 17th December, 2008. The practical aspects of the transaction were that the joint deposit account No. 102 was opened and there was an internal transfer from loan account No. 128. On the basis of the documentation and oral evidence before the Court, it is clear that neither Mr. O’Meara nor the plaintiff were in any way consulted in advance about the implementation of the transaction, although, as I have stated earlier, clearly Mr. O’Meara tacitly accepted what was done. The account holders were not required to fill out a new application form because joint deposit account No. 102 was considered by the defendant’s officials to be a “sub-account” of joint deposit account No. 101.
10.3 As to what the implications of the transactions were, it was submitted on behalf of the defendant that, in commercial terms, the defendant’s “own” monies were used to “top-up” the joint deposit account over which Mr. O’Meara was required to give security. From a banking law perspective, as regards the first step in the transaction, the withdrawal from loan account No. 128, Mr. O’Meara became a debtor of the defendant in the amount drawn down. As a result of the second step in the transaction, that the sum drawn down was placed by the defendant’s officials in the joint names of Mr. O’Meara and the plaintiff in joint deposit account No. 102, the question arises as to whether the ownership thereof, including any right to which the ownership was subject, was the same as affected the balance which remained in joint deposit account No. 101 or different. As a matter of principle, one must come to the conclusion that it was not the same, for the reasons I have set out later at para. 17. Indeed, one must also conclude that, notwithstanding that her name was put on joint deposit account No. 102, there was no contractual relationship between the plaintiff and the defendant in relation to the monies in that account.
10.4 Having regard to those conclusions, it is necessary to address the remaining issues in relation to both joint deposit account No. 101 and the joint deposit account No. 102 separately.
11. Right of set-off against joint deposit account No. 101 – general observations
11.1 Although the security condition in the letter of offer of 17th December, 2008, which I have quoted at para. 1.10 above, referred to a “lien” incorporating a right of set-off over a deposit account, as was held by the House of Lords in Westminster Bank v. Halesowen [1972] 1 All ER 641, no man can have a lien on his own property. As the money lodged to joint deposit account No. 101 became the defendant’s money, although the defendant was indebted to the account holders for the balance on the account, a lien could not have been created. Indeed, I did not understand the defendant to claim that it had a lien. It claimed that such security as it obtained under the right of set-off document, that is to say, attachment (5), was a right of set-off or a right to combine accounts.
11.2 The contention of the defendant in this case, however, is that it is not limited to whatever right was created by the set-off document, but that its right of set-off falls within each of the following recognised categories of set-off, namely:
(a) a bank’s common law right of set-off of accounts;
(b) equitable set-off, although that is not pleaded; and
(c) contractual set-off.
While I will consider the application of each category to the facts in turn, a preliminary observation is apposite. When the requirement of a right of set-off was conditioned into the letter of offer dated 17th December, 2008 by the defendant, the targeted deposit account, joint deposit account No. 101, was in the joint names of Mr. O’Meara and the plaintiff and the defendant’s contractual relationship in relation to that account was with both account holders. What the defendant required was a contractual right of set-off in the defendant’s “standard form” from both joint account holders. Mr. O’Meara accepted the offer on the basis of that express condition. In my view, the only issue which could properly arise in relation to the monies in that joint deposit account on 22nd December, 2008 is whether the defendant followed through on the express condition and obtained an enforceable right of set-off in the standard form from both account holders. I can see no basis on which the Court could find that there was some other implied agreement in the “ether”, which could be resorted to by the defendant if it did not ensure that the express term was effectively complied with.
12. Bank’s common law right of set-off?
12.1 As regards the application of a bank’s common law right of set-off to the facts as found, on the basis of the finding I have made that the joint deposit account No. 101 was legally (that is to say, contractually as against the defendant) and beneficially owned by Mr. O’Meara and the plaintiff, whereas the loan account No. 128 was in the sole name of Mr. O’Meara and he had sole liability for it, the defendant had no right at common law to set-off or combine the two accounts. The fundamental principle which underlies the entitlement of a bank to set off under the general law is mutuality, which requires that the debts be between the same parties in the same right. The finding that the defendant was contractually liable to Mr. O’Meara and the plaintiff jointly, who were beneficial joint owners of the monies on deposit in joint deposit account No. 101, precludes any application of the rule of set-off at common law.
12.2 Accordingly, it is unnecessary to express a definitive view on the submission made on behalf of the plaintiff, by reference to the decision of the Supreme Court in Bank of Ireland v. Martin [1937] I.R. 189, that, in the absence of a contractual arrangement, a bank may not combine a deposit account and a loan account, although I appreciate that particular emphasis was laid in the submission on the fact that the deposit account was a joint account, whereas the plaintiff was not indebted to the defendant and the plaintiff was not relying merely on the proposition that in this jurisdiction combining accounts at common law is confined to current accounts.
12.3 Nor do I consider it necessary to comment on the point made by counsel for the plaintiff in their submissions that, in any event, the defendant could not combine the loan account with any other account at any time prior to the death of Mr. O’Meara, because the loan account was for a term of three years, and the principal advanced had not become repayable prior to Mr. O’Meara’s death. Having said that, the reality of the situation is that, apart from whatever, if any, right of set-off the defendant has, it is clear on the evidence that the defendant is not going to recover the amount due on loan account No. 128.
13. Equitable set-off?
13.1 As regards the principle of equitable set-off in the context of bank accounts, the requirement of mutuality in relation to the beneficial interests in the cross-debts pervades its application. Having made the finding that Mr. O’Meara and the plaintiff were the joint beneficial owners of the monies in joint deposit account No. 101, in my view, there is no basis on which the principle of equitable set-off could avail the defendant and the argument based on the principle is misconceived. Nonetheless, I propose analysing the argument made on behalf of the defendant.
13.2 As counsel for the defendant pointed out, the most recent exposition of the principle of equitable set-off is to be found in a note on the decision of the Court of Appeal in England and Wales in Geldof Metaal Constructie NV v. Simon Carves Ltd. [2010] 4 All ER 847, which, in my view, is of little assistance in addressing the application of the principle to the facts of this case. Having considered the jurisprudence on equitable set-off, Rix L.J. set out his conclusions in para. 43 of his judgment, which is quoted in full in the note. He set out his conclusion at page 849 as follow;
“For all these reasons, I would underline Lord Denning MR’s test, freed of any reference to the concept of impeachment, as the best restatement of the test, and the one most frequently referred to and applied, namely ‘cross-claims . . . so closely connected with [the plaintiff’s] demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim’. That emphasises the importance of the two elements identified in Hanak v. Green; it defines the necessity of a close connection by reference to the rationality of justice and the avoidance of injustice; and its general formulation, ‘without taking into account’, avoids any traps of quasi-statutory language which otherwise might seem to require that the cross-claim must arise out of the same dealings as the claim, as distinct from vice versa. Thus, if the Newfoundland Railway test were applied as if it were a statute, very few of the examples of two-contract equitable set-off discussed above could be fitted within its language. I note that in Chitty on Contracts (30th edn., 2008) vol. II, para. 37 – 152 the test for equitable set-off is formulated in terms of Lord Denning MR’s test.”
13.3 The test of Lord Denning MR referred to in that quotation was postulated in Federal Commerce v. Molena Alpha Inc [1978] 3 All ER 1066, sometimes referred to as “The Nanfri”, which is also of little assistance in addressing the application of the principle of equitable set-off to the facts here. Although there were three time charterparties at issue in that case, in reality it was a one-contract case. The matter came to court by way of an award of an umpire in the form of a special case, following an arbitration in which the two arbitrators disagreed. One of the questions which the Court of Appeal had to consider was whether the charterer was entitled to deduct from hire, without the consent of the owner, claims against the owner. It was held that he was by virtue of the terms of the charterparty and by reason of the fact that a rule of law in relation to a charterparty, which required payment in full without deduction, did not extend to hire payable under a time charterparty, so that the charterer was entitled to deduct claims which constituted an equitable set-off. Having alluded to the distinction made at common law between set-off and cross-claim and the strictures imposed by the courts of common law, Lord Denning MR stated (at p. 1077):
“But the courts of equity, as was their wont, came in to mitigate the technicalities of the common law. They allowed deductions, by way of equitable set-off, whenever there were good equitable grounds for directly impeaching the demand which the creditor was seeking to enforce: see Rawson v. Samuel . . . per Lord Cottenham LC.”
Later, having referred to the effect of the Judicature Act 1873, Lord Denning MR continued (at p. 1078):
“We have to ask ourselves: what should we do now so as to ensure fair dealing between the parties? . . . This question must be asked in each case as it arises for decision; and then, from case to case, we shall build up a series of precedents to guide those who come after us. But one thing is quite clear: it is not every cross-claim which can be deducted. It is only cross-claims that arise out of the same transaction or are closely connected with it. And it is only cross-claims which go directly to impeach the plaintiff’s demands, that is, so closely connected with the demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim.”
On the facts of that case, Lord Denning MR and Goff LJ held that in time charterparty cases, the equitable right to deduct should be limited to instances when the ship owner wrongly deprives the charterer of the use of the vessel or prejudices him in the use of it. It should not be extended to other breaches or default of the ship owner, such as damage to cargo arising from the negligence of the crew. What is significant for present purposes is that there is nothing in the test for equitable set-off as formulated by Lord Denning MR or in the Geldof decision which dispenses with the requirement of mutuality in relation to beneficial interests.
13.4 The application of the doctrine of equitable set-off in the context of bank accounts is considered in Paget (op. cit.) at paras. 29.27 et. seq. relied on by counsel for the defendant. Reference is made by the editors of Paget to the decision of the Court of Appeal in Bhogal v. Punjab National Bank [1988] 2 All ER 296 which, like many of the authorities on the issue of equitable set-off, arose in the context of entitlement of a plaintiff to summary judgment. The appeal related to two actions, in each of which the plaintiff, who had monies on deposit in the defendant bank, had obtained summary judgment for the amount on deposit, and the defendant bank appealed, contending that it should be granted unconditional leave to defend the actions because it had a valid defence by way of equitable set-off. The basis of the claim for equitable set-off was the defendant bank’s contention that each of the plaintiffs was merely a nominee of a third party, who was indebted to the defendant bank and that it was entitled to set off the credit balance on each deposit account against the debit balance on the third party’s account. It was held by the Court of Appeal that, since the evidence did not clearly establish that the deposit account of each of the plaintiffs was a nominee account, the defendant bank could not raise a defence of equitable set-off in their actions. In the Court of Appeal the following passage from the judgment of Scott J. at first instance in one of the cases was quoted and in the judgment of Bingham L.J. there was reference to “the wisdom of the rule” which Scott J. laid down. The passage (which appears at p. 306 in the judgment of Bingham L.J.) is to the following effect:
“The commercial banking commitment that a bank enters into with a person who deposits money with it is just as needful of immediate performance as are a bank’s obligations under a letter of credit or bank guarantee. I think it would be lamentable if a bank were able to defeat a claim by a person who had deposited money on such grounds as the bank is asserting in the present case. It is possible that this action will come to trial in some two or three years’ time and that the bank will fail to make good the arguable case that it has set out before me. It would have succeeded in postponing for that considerable period its obligation to repay a customer who had made a simple deposit of money with it. That seems to me to be totally contrary to the basis on which banks invite and get money deposited with them. I hold that the bank is not entitled to refuse repayment of money deposited with it on the basis merely of an arguable case that some other debtor of the bank has an equitable interest in the money.”
13.5 Of course, on the facts here, on the basis of the finding I have made, no question remains as to the ownership in equity of the monies in joint deposit account No. 101. Apart from the contractual liability of the defendant, which in my view is the paramount consideration, as I have found that Mr. O’Meara and the plaintiff were the beneficial owners of the monies on deposit in joint deposit account No. 101, they, or, after the death of the first to die, the survivor (subject to the fixed term aspect of the particular deposit, which is not in issue) was entitled to withdraw the balance in the account on demand. Because of the lack of mutuality, the defendant had no entitlement in equity to set-off Mr. O’Meara’s sole liability for the debt on foot of loan account No. 128 against the balance in that deposit account.
13.6 The basis on which the defendant sought to demonstrate that there was an equitable right of set-off does not stand up to scrutiny. The defendant undoubtedly entered into two agreements with Mr. O’Meara which were closely connected from its perspective and probably also from Mr. O’Meara’s perspective. Under one, say Agreement A, the defendant advanced a loan of €1.6m to Mr. O’Meara. Under the other, say Agreement B, Mr. O’Meara and the plaintiff deposited the proceeds of the Anglo cheque with the defendant. The defendant contends that the two agreements are intimately connected and it would be unjust to enforce Agreement B by requiring the release of the monies on deposit on the demand of the plaintiff, because to do so would be to ignore the defendant’s claim to recover the loan advanced under Agreement A. That proposition ignores the absence of mutuality between the defendant’s liability under Agreement B and its entitlement under Agreement A. In the absence of some contractual foundation binding not only Mr. O’Meara, but also the plaintiff, the requirement of mutuality cannot be overridden by the defendant. It is not unjust that the defendant should be compelled to release the monies on deposit to the surviving joint account holder, the plaintiff, in accordance with its contractual obligation. The principle of equitable set-off does not apply.
13.7 Furthermore, it ill behoves the defendant to seek to rely on an equitable principle in support of the exercise of a right of set-off against the plaintiff, having regard to the fact that there was absolutely no communication between the defendant and the plaintiff and, in particular, the defendant did not advise the plaintiff to obtain legal advice and made no inquiry as to whether she had the benefit of legal advice in accordance with the principles referred to later in para. 15.6, when dealing with the issue of rectification. Given the plaintiff’s lack of understanding of what the defendant contends she was doing in subscribing her name to the right of set-off document, and her lack of understanding as to what was being agreed by Mr. O’Meara with the defendant, it would be unfair and inequitable to enforce the right of set-off against the plaintiff, if she is not contractually bound.
13.8 The kernel of the issue as to whether the right of set-off was validly exercised on 5th January, 2009 is whether the defendant, as it clearly had intended to do, effectively obtained from both of the account holders of joint deposit account No. 101 a contractual right to set-off Mr. O’Meara’s liability on loan account No. 128 against the monies in that account.
14. Contractual right of set-off?
14.1 That question turns on the construction of the right of set-off contained in attachment (5). I think it is worth recalling that the plaintiff endorsed her signature on the Anglo cheque on or before the 26th November, 2008 in her home. Some time later Mr. O’Meara put the application form for the six month fixed deposit account, which he had been given after the defendant’s officials decided that a joint deposit account should be opened, before the plaintiff and she signed on the third page. Just short of a month later, on 20th December, 2008, the right of set-off document was put before her. It was the twelfth page of the compendium of documents which comprised the letter of offer and attachments. The only reference to a deposit account with the defendant was on the second page of the letter of offer and it was in the provision in relation to security which I have quoted at 1.10 above, which refers to a deposit account in the names “of John O’Meara and Claire O’Meara”. The entire document was complex. Having regard to the manner in which it was completed, it is reasonable to infer that Mr. O’Meara, an experienced and astute businessman, had difficulty navigating his way through it, in that he arrived back in the defendant’s office on St. Stephen’s Green on 22nd December, 2008 without having signed the most crucial part of it, namely, the acceptance on page 7, which resulted in the involvement of Mr. Abdullah as a witness. He had signed attachment (2) in relation to insurance instructions, apparently on the 19th December, 2008. He did not sign attachment (3), dealing with authorised signatures on the loan account apparently until 22nd December, 2008. Similarly, attachment (4) containing the instruction to Bank of Ireland, Naas Branch in relation to the direct debit in respect of the interest payments was not executed until 22nd December, 2008.
14.2 Counsel for the plaintiff submitted that the right of set-off document should be construed contra proferentem. They submitted that, as a matter of interpretation of that document, neither Mr. O’Meara nor the plaintiff agreed to a right of set-off being effected against the deposit accounts. In fact there was only one deposit account in existence at the time – joint deposit account No. 101. For illustrative purposes, and not intending to preclude any argument which the personal representative of the defendant may make in the future, it can be observed that, if that account had been in the sole name of Mr. O’Meara, as a matter of construction, it would appear to have been captured by the right of set-off document in that, as borrower/account holder, he agreed that the defendant might “debit any credit balance on any account in my name”, which, prima facie, would capture the credit balance on a deposit account in his sole name. The real problem with the right of set-off document, from the defendant’s perspective, is that it was clearly drafted for execution by a sole account holder and, while it might have been, it was not adapted to bind joint account holders conferring a right of set-off on the defendant over a specific existing joint deposit account. The document did not signify that it was to be executed by a person other than a sole account holder and, ex facie, the plaintiff signed as a witness. Having regard to the finding I have made that Mr. O’Meara and the plaintiff had a joint legal interest in, and were jointly beneficially entitled to, joint deposit account No. 101, I consider that the right of set-off document was not effective to bind the plaintiff as one of the joint account holders and, in the events which happened, as the surviving account holder, so as to confer a right of set off on the defendant in relation to that account.
14.3 From the evidence of Mr. Savage, it is clear that when he reviewed the documentation following the meeting with O’Meara in July 2009, he noticed the fact that the right of set-off document was signed by the plaintiff only as a witness and had a concern about that. However, no steps were taken to rectify the situation.
14.4 It is convenient at this juncture to consider the relevance or otherwise of an authority relied on by counsel for the plaintiff – the decision of Costello J. in O’Keeffe v. O’Flynn Exhams and Partners and Allied Irish Banks (the High Court, Unreported, 31st July, 1992). The basis on which that case was decided against Allied Irish Banks in favour of the plaintiff, Mrs. O’Keeffe, is summarised in the judgment as follows (at p. 35):
“In my opinion if a request is made for a joint loan to purchase property which is accompanied by an agreement to deposit the title deeds of the property then an equitable claim over the interest of both purchasers is created once the loan is made as requested and the land conveyed to both. But if contrary to the request the loan is made to one of the purchasers only and the property is subsequently purchased jointly the interest of the customer with whom the bank contracted and to whom it lent the money is the only interest which is subject to an equitable charge. When subsequently the title deeds are lodged the equitable charge created by the agreement over the customer’s interest becomes an equitable mortgage by the deposit of the deeds. This means that in the events that happened in this case the bank obtained an equitable mortgage over Mr. O’Keeffe’s undivided moiety in the Kilpeacon lands, but it obtained no equitable interest of any sort over Mrs. O’Keeffe’s interest.”
14.5 Frankly, I do not see the relevance of that finding to the factual circumstances of this case. It concerned the severance of a joint tenancy in land by one joint owner creating an equitable charge by deposit of title deeds. Here the Court is concerned with a joint deposit account at the defendant bank, in respect of which the defendant was contractually liable to both joint account holders. More importantly, in this case, the agreement between the defendant and Mr. O’Meara was that the loan would be to Mr. O’Meara solely and that is what happened. The defendant wanted security over the monies on deposit with it, the source of which was the Anglo cheque, which, as I have held, were beneficially owned by Mr. O’Meara and the plaintiff. The mistake the defendant made is that, as it could not either at common law or in equity obtain a right of set-off of the monies due from Mr. O’Meara on loan account No. 128 against the monies in the joint deposit account because of lack of mutuality, it needed to obtain a contractual right of set-off, which bound both account holders, but it failed to do that. Accordingly, it obtained no right of set-off against the monies in joint deposit account No. 101 as of 23rd December, 2008.
15. Rectification?
15.1 Emphasising that the issue which is being addressed is whether the Court should find that the defendant is entitled to exercise the claimed right of set-off against the balance of the monies on deposit in joint deposit account No. 101, as it purported to do on 5th January, 2010, I will now consider the defendant’s counterclaim for rectification. In the circumstances which I have found prevailed, the defendant could only acquire a right of set-off by contract and the objective of the defendant clearly was to extend the general law to a tri-partite situation where the joint owners of the monies on deposit with the defendant would agree with the defendant that those monies might be set off against a debt due to the defendant by one of the joint owners, Mr. O’Meara, solely. I emphasise that, because it seems to me that the fundamental question is whether the other joint owner, the plaintiff, ever signified the intention to be bound by such agreement.
15.2 On the basis of the defendant’s claim for rectification as pleaded, it is not suggested that the text of the right of set-off document as quoted at para. 1.11 above requires rectification. What is suggested is that the details of execution require rectification. If the application were acceded to, the details of execution (the words in bold type having been added) would read:
Signed/Witness John O’Meara
Borrower/Account Holder
Date: 20/12/08
Signed/Witness: Claire O’Meara
Borrower/Account Holder
Address: Pitchfordstown Stud
Kilcock
Date: 22/12/08
In the interests of clarity, I should say that the elements which are shown in italics are the signatures of Mr. O’Meara and the plaintiff, the date of execution by Mr. O’Meara, which I think it probable was inserted by Mr. O’Meara, and the address and final date, which also appear in manuscript and I think it probable were inserted by Ms. Corrigan on 22nd December, 2008. It was submitted on behalf of the plaintiff that, given that the preceding text is not proposed to be rectified, the additions to the right of set-off document proposed would still not expressly authorise the exercise of a right of set-off of the monies due on loan account No. 128 against the balance in joint deposit account No. 101.
15.3 The legal basis on which a court can order rectification is well settled. It was recently succinctly summarised by Clarke J. in Mooreview Developments & Ors. v. First Active Plc & Ors. [2009] IEHC 214 in the following terms (at para. 9.9):
“Rectification is a discretionary remedy which allows a court to amend the wording, but not affect the making, of a contract, where the wording does not reflect the intentions of the parties to the contract. The party seeking rectification must provide evidence of a common continuing intention in relation to the provisions of the contract agreed between the parties up to the point of execution of the formal contract. In Irish Life Assurance Co. v. Dublin Land Securities Ltd [1989] I.R. 253, Griffin J., at p. 263, described this standard of proof as ‘convincing proof, reflected in some outward expression of accord, that the contract in writing did not represent the common continuing intention of the parties on which the court can act’. The court in Irish Life further held that there will be an especially onerous burden on a party seeking rectification where long negotiations have taken place between the parties, both of whom have taken legal advice during such negotiations.”
15.4 The criterion stipulated in the last sentence in that quotation has no application to the facts of this case because, not only was no legal advice taken by the plaintiff but there was no engagement by the defendant with the plaintiff at all and, in fact, there was no direct communication or contact with her by any official or agent of the defendant in relation to the condition imposed by the defendant on Mr. O’Meara in the letter of offer of 17th December, 2008 that the defendant be granted a right of set-off against the monies in joint deposit account No. 101. There is absolutely no evidence in this case of a common continuing intention to which the plaintiff was a party that the defendant would be given security by way of right of set-off against joint deposit account No. 101 in respect of the monies to be advanced to Mr. O’Meara, which were subsequently the subject of loan account No. 128. The only evidence before the Court on which the defendant could rely in support of the existence of such an intention is that the facility letter, with attachment (5) stapled to it, was probably handed by Ms. Corrigan to Mr. O’Meara when he called to the defendant’s office at St. Stephen’s Green, probably on the 17th December, 2008. Ms. Corrigan, in her evidence said that it was “more than likely” that she told Mr. O’Meara that the plaintiff had to sign the right of set-off document. She had no exact recall of doing so, although she suggested that, if she did not say it to Mr. O’Meara, then she doubted that the plaintiff’s signature would be on it. I do not think it is reasonable to infer that, because the plaintiff’s signature appears on attachment (5), the plaintiff was signing in her personal capacity, rather than as a witness, as the document suggests. The fact that Mr. O’Meara signed attachment (5), which was the last page of the twelve page document and had the “witness” portion of the execution details completed by the plaintiff, while not having completed what was arguably the most important element of the document, the acceptance on page 7, is open to the inference that Mr. O’Meara got the plaintiff to sign as a witness rather than as a party to the transaction. Accordingly, the defendant’s claim for rectification must fail because there is no evidence of a continuing common intention on the part of the plaintiff to execute a right of set-off document to comply with the security condition provided for in the letter of offer of 17th December, 2008.
15.5 Even if it were possible to conclude that it was the intention of the plaintiff to execute the right of set-off document not merely as a witness but in a manner which would bind her as one of the beneficial owners of joint deposit account No. 101, and that the document needs to be rectified to reflect that, a question would arise as to whether the Court should exercise its discretion to grant the equitable relief of rectification in circumstances in which the defendant took no steps whatsoever to ensure that the plaintiff understood the implications of executing a document which would have given the defendant the type of security it was seeking over the monies in joint deposit account No. 101. In particular, the question would arise as to whether the defendant should have advised the plaintiff to seek legal advice to avoid being disentitled to equitable relief. While, on the basis of the finding I have made in the next preceding paragraph, the question is hypothetical, I propose to comment on it generally.
15.6 Apart from reference to a text (Hodge on Rectification, 1st Ed., 2010 at para 1 – 41 et. seq.), no authority was specifically cited by counsel for the plaintiff to support their contention that the defendant did not take the steps it should have taken, including advising the plaintiff to obtain independent legal advice. I have noted earlier that the plaintiff did not allege either in the pleadings or in her evidence that Mr. O’Meara exerted undue influence over her or that he took any unfair advantage of her. Her position was that she just signed what Mr. O’Meara put in front of her without seeking or obtaining any explanation. There is authority in the United Kingdom that a bank is always on inquiry when a wife provides security for her husband’s debt and that it must take reasonable steps to satisfy itself that the practical implications of the proposed transaction have been brought home to the wife, in a meaningful way, so that she enters into the transaction with her eyes open so far as its basic elements are concerned and reliance by the bank upon confirmation from a solicitor, acting for the wife, that he advised her appropriately is sufficient to discharge the bank’s obligation (the decision of the House of Lords in Royal Bank of Scotland v. Etridge (No. 2) [2002] 2 AC 773). The manner in which the defendant went about obtaining what it considered as security for the loan it was advancing to Mr. O’Meara solely over a deposit account in the joint names of Mr. O’Meara and his wife, the plaintiff, is so egregiously at variance with the principles enunciated by the House of Lords in Etridge (No. 2), which, as academic commentators have suggested should be applied by the courts of this jurisdiction (Mee (2002) 27 Ir. Jur. 292; Delany Equity and the Law of Trusts in Ireland, 5th Ed. at p. 746), that it is unlikely that a court would afford an equitable remedy to the defendant to perfect its security, if such was necessary and it was appropriate to do so, without seeking to explore in depth the application of those principles in this jurisdiction, having regard to the conduct of the defendant and the potentially improvident nature of what the defendant was requiring the plaintiff to do.
15.7 Finally, it is pertinent at this point to make two general observations in the interests of clarity. First, in the context of the application of equitable principles, in my view, it is necessary to distinguish between the operation of a joint deposit account by the account holders, which banks, understandably, as reflected in condition 3(a) of the general conditions quoted at para. 1.7 above, leave to the account holders, on the one hand, and the creation of what, in effect is a type of security over a joint deposit account, on the other hand. Secondly, I accept the argument advanced on behalf of the defendant that the defendant did not occupy a fiduciary position vis-à-vis the plaintiff and that the plaintiff’s claim, insofar as it is based on alleged breach of fiduciary duty, is misconceived.
16. Estoppel?
16.1 The basis on which counsel for the defendant contended that the plaintiff is estopped from asserting that the monies on deposit in joint deposit account No. 101 were not to be applied in reduction of Mr. O’Meara’s liability to the defendant under loan account No. 128 was that all necessary ingredients of an estoppel are present, namely: a representation by the plaintiff; reliance on the representation by the defendant; and the defendant acting to its detriment. The defendant’s officials appear to have assumed on 23rd December, 2008 that there was an effective right of set-off against the monies in joint deposit account No. 101 in place by reason of the plaintiff’s signature on the right of set-off document. The defendant certainly acted to its detriment in advancing the loan to Mr. O’Meara when, as I have found, it had no right of set-off. The question which remains is what representation was made by the plaintiff, whether by word or conduct, to the defendant which, in the words of Griffin J. in Doran v. Thompson Ltd. [1978] I.R. 223 relied on by counsel for the defendant, amounted to “a clear and unambiguous promise or assurance” that she would participate in granting a right of set-off to the defendant against the monies on deposit in joint deposit account No. 101?
16.2 The defendant’s submission was that it is to be found in the plaintiff’s assent to the lodgement of the Anglo cheque, which was to be “cash backing” for the loan to Mr. O’Meara, and her agreement (in effect) that Mr. O’Meara could mandate withdrawals from that account without reference to her, and her knowledge (if not her explicit assent) of the set-off commitment provided by Mr. O’Meara. All the plaintiff did was that –
(a) she endorsed the Anglo cheque,
(b) she signed the application form to open joint deposit account No. 101, which included the withdrawal instructions, which resulted, in due course, in the joint deposit account being depleted to the extent of €600,000, and
(c) she subscribed her name as a witness to Mr. O’Meara’s signature to the right of set-off document.
Those actions, separately or in conjunction with each other, did not amount to “a clear and unambiguous promise or assurance” that the defendant would have a right of set-off against the monies in joint deposit account No. 101.
16.3 The fundamental problem for the defendant in this case is that it did not get the commitment it required from the plaintiff in order to obtain the security which it sought. In fact, it completely ignored the plaintiff’s interest. The result is that it must suffer the consequences of its own mistake.
17. Ownership/ rights over joint deposit account No. 102
17.1 The monies which the defendant transferred to joint deposit account No. 102 were sourced from loan account No. 128. Sole liability for the sum of €665,873.40 so transferred was assumed by Mr. O’Meara under loan account No. 128. The sole purpose of the drawdown was to meet the security requirement in relation to providing a right of set-off against a joint deposit account with a balance equivalent to the amount of the loan, €1.6m. It was the defendant’s officials, on their own initiative, who put the joint deposit account in place in the joint names of Mr. O’Meara and the plaintiff to meet that requirement. While the “sub-account”, as it was characterised, was opened in the joint names of Mr. O’Meara and the plaintiff, the plaintiff was not a party to it at any time. Therefore, the decision of the Supreme Court in Lynch v. Burke, in my view, does not assist the plaintiff. Moreover, before it was opened, she had no legal or beneficial entitlement to any part of the sum of €665,873.40 transferred by the defendant’s officials to it. Accordingly, in my view, one has to look behind the names on the account.
17.2 On the basis of the doctrine of a resulting trust, as Mr. O’Meara, through the medium of the draw down from loan account No. 128, was the sole contributor to the monies in joint deposit account No. 102, prima facie, he was the beneficial owner of those monies, unless the presumption of advancement overrides the doctrine of resulting trust.
17.3 The plaintiff implicitly relied on the evidence of Mr. Savage in support of its contention that the monies in joint deposit account No. 102 were jointly beneficially owned by Mr. O’Meara and the plaintiff and passed to the plaintiff by right of survivorship. Mr. Savage was asked in cross-examination why a deposit account in the sole name of Mr. O’Meara was not opened to bring up to the level of €1.6m the balance on deposit with the defendant, given that the right of set-off document extended to any account in his name. The response of Mr. Savage was that Mr. O’Meara wanted it that way. He wanted the money to go back into the joint deposit account, which he had set up at the particular time. What he had instructed the defendant to do was to put the money in the name of himself and his wife. That response is inconsistent with the evidence of Ms. Corrigan and Ms. Dwyer, who were the officials of the defendant who were implementing the transactions on 23rd December, 2011 and who, on their evidence, did so without reference to Mr. O’Meara.
17.4 Even if Mr. O’Meara intended that the monies in joint deposit account No. 102 would be beneficially owned by himself and his wife, effect could only have been given to that intention subject to any trust or equitable interest known to the defendant to which the monies were subject. Mr. O’Meara was facilitated by the defendant in the draw down the sum of €665,873.40 from loan account No. 128 and its transfer to joint deposit account No. 102 for a specific purpose – to top up the monies on deposit to the level of the set-off requirement conditioned into the letter of offer of 17th December, 2008. Therefore, the monies in joint deposit account No. 102 must be deemed to have been impressed with an obligation in equity to fulfil that purpose. Accordingly, the right of the defendant to have that purpose fulfilled would have had priority in equity over the beneficial ownership of the monies, whether the beneficial ownership was vested in Mr. O’Meara and the plaintiff jointly or in Mr. O’Meara solely. It follows that, wherever the beneficial ownership was vested, the plaintiff cannot rely on beneficial ownership by right of survivorship to make the case that the defendant did not have a right of set-off as against those monies for Mr. O’Meara’s sole liability on foot of loan account No. 128 on 5th January, 2010.
17.5 The question whether Mr. O’Meara and the plaintiff jointly were the beneficial owners, or Mr. O’Meara was the sole beneficial owner, of the monies on deposit in joint deposit No. 102 subject to the defendant’s right of set-off arises between the plaintiff, on the one hand, and the personal representative of Mr. O’Meara, on the other hand. Representation has not been raised to the estate of Mr. O’Meara and his personal representative was not before the Court. Accordingly, it would be inappropriate for the Court to express any definitive view on that question. Notwithstanding the absence of the personal representative of Mr. O’Meara, it has been necessary to reach a conclusion as to whether beneficial ownership of the monies, wherever it lay, was subject to the right of the defendant to set-off, and I have concluded that it was.
17.6 Consistent with the view I have expressed earlier in relation to the analogy with the liquidation situation addressed by the Supreme Court in Dempsey v. Bank of Ireland, the personal representative of Mr. O’Meara would acquire no better title to the monies in joint deposit account No. 102 than Mr. O’Meara had.
18. Summary of conclusions and orders
18.1 As regards joint deposit account No. 101, I have come to the conclusion that the monies in that account were jointly beneficially owned by Mr. O’Meara and the plaintiff and that they passed to the plaintiff by right of survivorship on the death of Mr. O’Meara. I have further concluded that the defendant was not entitled to set-off the monies due on loan account No. 128 against those monies, as it purported to do in January 2010. Accordingly, the plaintiff is entitled to a declaration that all the monies which were standing to the credit of that account on 28th November, 2009 are the property of the plaintiff. As to how the plaintiff is to be compensated for the breach of contract by the defendant in not paying those monies to the plaintiff on being requested to do so, although the plaintiff claimed interest under the Courts Act 1981, as amended, in the statement of claim, no case was made on behalf of the plaintiff for pre-judgment interest at the Court rate. I consider that the plaintiff will be properly compensated by payment by the defendant to her of interest from 28th November, 2009 to the date of judgment at the rate applicable to six month fixed term deposits with the defendant and thereafter interest at the Court rate.
18.2 There will be judgment for the appropriate sum, the quantification of which should be agreed between the parties.
18.3 Having come to the conclusion that the plaintiff did not have a beneficial interest in the monies lodged in joint deposit account No. 102, the plaintiff is not entitled to any relief in respect of those monies. While, in the absence of the personal representative of Mr. O’Meara before the Court, I think it is inappropriate to make the declaration sought by the defendant in its counterclaim that the defendant was entitled to set-off the monies in that account, I propose that a declaration be made that the plaintiff has no claim to the said monies.
18.4 Subject to that, the defendant not being entitled to rectification of the set-off document, the defendant’s counterclaim will be dismissed.
Irwin v. O’Connell and Others.
[1936] IR 45
Johnston J.
The question in this case is whether a certain transaction which took place as, long ago as 1897 amounted in law to the transfer of an agricultural holding by a husband to his wife. The close relationship of the parties is the chief element of difficulty in the case. In May, 1891, old Daniel Irwin assigned his, farm to his son, John, reserving a right of residence and maintenance for himself and his wife, Ellen. In lieu of the right of maintenance an annuity of £10 for each was, charged upon the farm, and that was payable at the discretion of Daniel or Ellen. John, who was at the time a youth of twenty-one or twenty-two years, was about to be married to the daughter of a neighbouring farmera lady who was about thirty years older than himselfand the marriage took place in July, followed on November 12th by a formal deed which carried out the terms of the assignment by Daniel to his son. There was, of course, no issue of this union, but shortly after the marriage the wife brought a niece of her owna young girl of nine or tento live on the farm. There cannot have been much difference in the ages of the mother and the daughter-in-law, and disputes and quarrels arose, with the result that the father and mother left the house and went to reside in a separate part of the building. The Irwins were in debt to a considerable extent, and the wife’s fortunea sum of £150was spent, £100 in paying off a mortgage on the farm and the balance in discharging ordinary debts.
The family, however, could not keep out of debt. The landlord took ejectment proceedings against John and Daniel in 1897, and a decree in ejectment for non-payment of rent was pronounced on October 22nd, 1897. I am satisfied, however, that that decree never was executed and the Irwins never were disturbed in their occupation. What happened was this. John took money out of the family stocking and got a bank draft in the neighbouring town for £50. When the landlord’s agent and the sheriff came to the house, this draft was accepted by the latter and nothing more appears to have taken place in regard to the decree. On that occasion a conversation took place, according to the evidence given by John, between the agent, the sheriff and Bridget, and as a result of some arrangement Bridget’s name was entered up in the landlord’s books as the tenant and henceforward the receipts also were in her name. There is a remarkable dearth of evidence as to this transaction. No information from either the landlord’s or the sheriff’s point of view is forthcoming. The general effect of John Irwin’s testimony is that he was not consulted about the change and that when he knew that the rent receipts were being given in his wife’s name he made no protest. The effect of the evidence of Mrs. Roche is that her uncle-in-law did know of, and acquiesced in, the arrangement to alter the name of the tenant in the landlord’s books, and probably that is correct; but I arrive at that conclusion not from the evidence of Mrs. Roche, who at the time was a little girl of fourteen or fifteen years of age and not a person who was likely to have an intimate knowledge of what was going on in her aunt’s house in regard to such a matter, but from the probabilities of the case.
In regard to the quaint ceremony that Mrs. Roche describes as having taken place some time after the sheriff had been paid and he and the landlord’s agent had retired, I find it difficult to know what to say. The ceremony as described by Mrs. Roche resembles more a feudal livery of seisin, in the days when handwriting was the exception rather than the rule, than a dealing with an Irish agricultural farm held from year to year in the nineteenth century. There is no corroboration of Mrs. Roche’s story, and it is very hard to believe that she could have remembered so clearly and described so minutely what had happened thirty-seven years previously. Further, I do not understand why the sheriff was present, nor what the ceremony was intended to effectuate.
In 1902 old Ellen Irwin, whose annuity of £10 had fallen into arrear, brought an equity civil bill to recover £50 and to have it charged upon the land. Her husband, Daniel, had died in 1897, a short time after the decree in ejectment had been given, and nothing had been paid to the old lady until she took proceedings five years later. It is a remarkable fact that on the hearing of this civil bill the only evidence that was given was that of John Irwin, one of the defendants, and it was on that evidence alone that the decree in favour of the plaintiff was based. The learned Judge in his order refers to an eviction as having taken place and a letting made to Bridget Irwin at the former rent; but I rather think that the Judge in this part of his order was referring to the fact that a decree in ejectment had been granted, because later in the order he says definitely that “the parties were never disturbed or removed from the possession of the said lands”that is, things went on after the decree in ejectment just as they had been before. There was an appeal to the Judge of AssizeLord O’Brienwhen the witnesses who were examined were Ellen Irwin and John, her son, and Judge Adams’s order was upheld, except that the amount of the arrears was reduced from £50 to £10 and by consent the annuity payable to the plaintiff was reduced from £10 to £7.
Five years later Bridget, whose name was in the landlord’s books as tenant, signed an agreement to purchase the holding, under, I suppose, the Act of 1903, and it was not unnatural or unusual that her name should have been used for this purpose. There was great delay in the carrying out of the sale, and the agreement was not fiated by the Land Commission until January 27th, 1921. In the meantime Ellen died, in 1918. Bridget, on March 17th, 1921, was registered as the full owner of the lands, subject, of course, to equities and subject to a land purchase annuity of £19 6s. 2d. payable as from June 1st, 1921, until an advance of £594 had been repaid. On May 26th, 1925, Bridget made a will leaving the farm to her husband for his life and to her niece in remainder. This niece in 1922 or 1923 had married a man named Roche, and she is one of the defendants. Bridget died in February, 1931, and her husband, who knew nothing as to the will that she had made, took out a grant of administration of her estate on October 26th, 1931, and on December 31st he was registered on the Registry of Titles as the full owner. He then made an application to the Registrar to discharge the equities, and the Registrar refused to do so.
Wylie J., however, on July 11th, 1933, reversing the ruling of the Registrar, discharged the equities, but the order was reversed by the Supreme Court on March 5th, 1934, and the Registrar’s ruling was restored. The Court, however, made the order “without prejudice to any equitable right of the parties protected by the note as to equities.” The executors of Bridget’s will, who seemed to be strangely shy of taking up their executorial duties, did not take out the grant until March 5th, 1934, the date of the order of the Supreme Court.
On that state of facts, passing over for the moment the incidental matters upon which Mr. Ryan so strongly relied, it seems to me that there is no evidence upon which I could find that John Irwin surrendered his tenancy, or that the landlord made a new valid letting to Bridget, and that she became entitled to this farm as her separate estate. The law is so very jealous of the rights of tenants and lessees and their various interests that sect. 7 of Deasy’s Act (re-enacting in effect the Statute of Frauds) enacts that the interest of any tenant cannot be surrendered otherwise than by deed or note in writing or by act and operation of law. The Courts, however, must be astute to see that oral arrangements, alleged to be surrenders by operation of law, are not allowed to repeal in effect the strict terms of the statute law. In Wallis v.Hands (1), Chitty J. said: “To hold that mere oral assent to the new lease operates as a surrender in law would be a most dangerous doctrine: it would practically amount to a repeal of the Statute of Frauds, and let in all the mischief against which the statute intended to guard.”Accordingly in the old case of Magennis v. McCullogh (2),Gilbert C.B. seemed to consider that the only form of surrender by operation of law was the taking by the tenant of a new lease, “which being in writing is of equal notoriety with a surrender in writing.” However, that principle was considerably extended in the case of Thomasv. Cook (3) where a surrender by operation of law was held to have taken place where the tenant underlet the premises to another and let him into possession. The landlord with the assent of the tenant accepted the undertenant as his tenant, and that was held to be enough. Sir Edward Sugden, however, in Creagh v. Blood (4), stated that that doctrine could not be carried further.
However, I am relieved from the necessity of considering further the older cases by a recent Irish case which to my mind is exactly in point, the only difference being that the position of the parties was reversed, the original tenant being the wife and the claimant being the husband. In the case of Glynn v. Coghlan (1), it appeared that a married lady who was the lessee of lands for ever at a yearly rent, signed this document in favour of her husband: “I, Kate Coghlan, do hereby give my husband leave to get his name on the receipt.” The husband sent the document to the landlords and requested that his name should be put into the estate books and that was done. The husband thereafter paid the rent. The wife subsequently repudiated the document and devised the lands to the plaintiffs. Mr. Justice O’Connor held that the husband had acquired no title to the lands, and this result was arrived at mainly on the grounds that there had been no change in possession, which is “a necessary ingredient in such a transaction,” and that “nothing had been done or undone by John Coghlan to his detriment on the faith of the transaction.” A somewhat similar situation arose in the case of Nicholson v. Mulligan (2) as between a brother (who was the owner of the property) and a sister who was living with him. Walsh M.R. said: “I find no proof that she ever was treated as the owner of the place. Her living there and everything else which it is proved she did is amply accounted for by the circumstances that she was living with her brother, and naturally acted as mistress of the household. She was managing it for him.”These words apply a fortiori, in the case of a husband and wife.
The matter then resolves itself into the very ordinary case of a husband allowing the name of his masterful wife to go into the rent receipts, the conditions on the farm going on exactly as before. I think that what happened was this. Mrs. Irwin and her daughter-in-law were not on good terms, and Daniel and Ellen had had to leave the house and live by themselves. Then the young husband got into arrears with his rent. I formed the impression when he was in the witness box that he was a quiet, easygoing sort of a fellow, inclined to follow the line of least resistance, and I have no doubt that as ever December and May did not harmonise. The landlord probably was better pleased to have the lady’s name in his books; she no doubt thought that the change would make her position more secure; and John Irwin did not much care.
The first extraneous matter relied upon by Mr. Ryan may be put in this way. He alleges that the transaction was a fraud perpetrated by husband and wife to cheat old Ellen Irwin out of her annuity, that the parties werein pari delicto, and that this Court ought not to give any assistance to one of them. But where is the evidence of any delictum in the case? It is true that, on the hearing of the equity civil bill, a full decree was granted by Judge Adams against both defendants and further that he set out on the face of the decree a statement of his belief as to the defendants’ motives; but when the case came on appeal before Lord O’Brien, the defendants got a substantial measure of relief. The question involved in the case was one of motive, and motivea state of mindcan only be proved by the overt acts of the parties concerned. The arrears of the annuity claimed by Ellen and decreed by the County Court Judge were reduced by Lord O’Brien from £50 to £10 and the annuity itself was reduced from £10 to £7. It is true that that was done on consent, but it was the consent of Ellen Irwin, and she could scarcely be heard to say that the defendants were not entitled to the relief which she was willing that they should get. Further, in the later proceedings Mr. Justice Wylie evidently did not think that this maxim had any applicability to the case, because he was willing to give John Irwin the relief that he asked. Even, however, if there was delictum, the parties were not in pari delicto. I do not think that the plaintiff ever at any time wished or intended to cheat his old mother. The maxim in question does not apply where the delictum is not par, as Fry L.J. pointed out in Kearlyv. Thomson (1), and I think that the facts in this case would bring it within the principle established in Reynellv. Sprye (2). There Lord Justice Knight Bruce said:”Where the parties to a contract against public policy, or illegal, are not in pari delicto (and they are not always so), and where public policy is considered as advanced by allowing either, or at least the more excusable of the two, to sue for relief against the transaction, relief is given to him” (p. 679).
Mr. Ryan relies also on the doctrine of laches. He contends that the plaintiff did nothing to regularise his title previously to the death of his wife; but the answer to that is that he did not require to do anything. When his wife was registered automatically in 1921 as the full owner, subject to equities, Irwin was yet a middle-aged man whilst his wife was an old woman of eighty years or so and he knew that in all human probability he would be the survivor and that his position was secure. The wife, on the other hand, if she had a real claim to this farm, did nothing between 1921 and 1931 to regularise her position by getting the equities discharged. What she did do was this. In 1928 she proceeded without her husband’s knowledge, to make a will, by which she left the farm to her husband for life and to her niece, Mrs. Roche, in remainder. In order to make her family absolutely secure, there was a further remainder in favour of a nephew. I infer that she was afraid to face her husband in her own lifetime with such a claim, and she was willing that her niece should chance it after she was gone. This will of Mrs. Irwin is of the baldest possible character. There is no reference to other possible assets and no residuary clause. The executors who are nominated are another nephew of the testatrix and an outsider. The husband is not given even the melancholy privilege of having a hand in the administration of her estate. The plaintiff was allowed by his wife’s people to take out a grant of administration, which he did not do until eight months after his wife’s death. He was, therefore, not in a hurry, and it was not until nearly two and a half years, when he applied to the Registrar to discharge the equities, that the will came to light. So far, therefore, as the question of laches is an element in the case, it tells against the wife rather than against the husband.
It was quite natural that the plaintiff when he was proceeding to take out a grant of administration, should include the farm in the schedule of assets. As a matter of fact he was advised by his solicitor that that was the simplest and cheapest way of getting his title established. The value of the estate was so small that his doing so did not add to the death duties that were chargeable, and he was advised that with such a grant in his hand, the registration of his title was a matter of course. It is obvious that neither he nor his solicitor had any suspicion of the existence of a will.
Having decided, as I have done, that these transactions did not alter the plaintiff’s title to the farm in the least, that the parties never were evicted in fact, that there was no change of possession, that the plaintiff continued to work the farm and pay the rent as he had always done, that the change of name in the landlord’s books was effected by the wife, and that there is no evidence upon which I could hold that there was a surrender of John Irwin’s interest in this farm by operation of law, I cannot believe that the fact that the plaintiff, on his solicitor’s advice, allowed his wife’s name to go into the schedule of assets as the owner of the farm, ought to be allowed to prejudice his case.
I must therefore give the plaintiff the necessary declaration of title.
J. H.
The defendants, Thomas O’Connell, James Barrett and Catherine Roche, appealed to the Supreme Court (1) and applied for an order that the entire of the judgment and order of Johnston J. should be set aside and reversed and that in lieu thereof judgment be entered for the defendants.
KENNEDY C.J. :
31. July
I have had the advantage of reading the judgment about to be delivered by Mr, Justice FitzGibbon. I agree with it and have nothing to add.
FITZGIBBON J. :
This action was brought for a declaration that Bridget Irwin, deceased, the late registered owner of the lands comprised in Folio 11141 of the Land Registry, County of Limerick, held the lands as a trustee for the plaintiff, and that the plaintiff is entitled in equity to the said lands, and for an order directing the defendants, O’Connell and James Barrett, the executors of the said Bridget Irwin, to execute a transfer of the said lands to the plaintiff. There was an alternative claim for an order directing the Registrar of Titles to discharge the note as to equities contained in the said Folio, and to enter the plaintiff thereon as full owner of the said lands. The defendants, Roche and John Barrett, were sued as devisees in remainder under the will of the said Bridget Irwin.
The farm, which contains about 40 acres, was originally held by Daniel Irwin, the father of the plaintiff, upon a yearly tenancy at the rent of £32 8s. 0d. In 1891 a marriage was in contemplation between the plaintiff and Bridget Barrett, and Daniel Irwin put the plaintiff in possession of the farm, and the name of the plaintiff was, with the consent of his father Daniel, entered in the landlord’s books as tenant of the farm. Upon November 12th, 1891, a deed was entered into between Daniel Irwin and the plaintiff whereby the plaintiff, in consideration of this transfer to him of the farm, covenanted with Daniel Irwin to support, clothe and maintain him and his wife Ellen, the mother of the plaintiff, during their joint lives and the life of the survivor, or to pay them an annuity of £20 during their joint lives, and £10 during the life of the survivor, in lieu of such support and clothing and maintenance, and to give to them and to the survivor the exclusive use of a bedroom with furniture in the house on the farm. The plaintiff’s father died in the year 1897, and on October 22nd, 1897, a decree was granted in a Civil Bill ejectment for non-payment of rent against John Irwin, Daniel Irwin and John Reidy (who appears to have been in occupation as sub-tenant or otherwise of part of the land), the arrears of rent up to September 29th, 1897, amounting to two years, upon a rent stated to be £24 11s. 0d. per annum. It does not appear whether Daniel Irwin was dead at the date of the decree, but, if not, he must have died almost immediately afterwards. The decision of the questions at issue in the present action depends for the most part upon the inferences to be drawn from the conduct of the plaintiff at and after the granting of this decree in ejectment, supplemented or qualified by the oral testimony given by him at the trial of the present action.
The decree in ejectment was never executed by an actual putting of the plaintiff and the other occupants of the holding out of possession, but it is common case that the sheriff and his bailiff accompanied the landlord’s agent to the holding for the purpose of executing the decree, and that a conference took place, as a result of which the amount of the decree, together with a sum for costs, was handed to the sheriff and by him to the landlord’s agent, Mr. Cornwall; the name of the plaintiff’s wife, Bridget Irwin, was substituted as tenant in the landlord’s books for that of the plaintiff; and on and from the next gale day the rent was handed to the landlord’s agent by Bridget Irwin and receipts were given to her in her name, with the full knowledge of, and without any protest by, the plaintiff. It is also common case that the working of the farm and the buying and selling of stock were carried on by the plaintiff and his wife in exactly the same way as they had been theretofore, and that the only change which had taken place was the substitution of the name of Bridget Irwin for that of the plaintiff in the landlord’s books and upon the receipts for rent.
It also appears from the next document in evidence that from the date of the ejectment and the death of Daniel Irwin the payment of the annuity of £10 to the plaintiff’s mother, Ellen Irwin, was never made, for on the 23rd of January, 1903, the County Court Judge of Limerick granted a decree in an equity suit between Ellen Irwin as plaintiff and John Irwin and Bridget Irwin as defendants in which, after reading the deed of November 12th, 1891, and hearing the evidence of John Irwin, it is recited that “it appearing that the said John Irwin allowed himself to be evicted from the lands of Kilready for non-payment of rent with the object of discharging said lands from said annuity, and his wife the said defendant Bridget Irwin subsequently became tenant of said lands at the same rent payable previous to said eviction, and that the parties were never disturbed or removed from the possession of said lands both the defendants well knowing at the time that said lands were charged under said deed of the 12th November, 1891, with payment of said annuity, and on hearing Mr. Kelly, Barrister-at-Law, instructed by Mr. J. P. Lavan for plaintiff and Mr. Robert Cussen, Solicitor, for defendant,” the Court did “declare that the interest of the defendant Bridget Irwin in said lands of Kilready be deemed to be a graft upon the previous interest of the said John Irwin and that the annuity of £10 per year created by said indenture of the 12th November, 1891, in favour of the plaintiff is well charged on the interest of the defendant Bridget Irwin in said lands.” The decree found that there was due £50 arrears of the annuity to January 1st, 1903, showing that there had been no payment since December 31st, 1897, and it was ordered that the defendants should pay that sum with costs within three months, and in default that the lands should be sold. The defendants appealed to the Judge of Assize, and the appeal was heard by the then Lord Chief Justice of Ireland, Sir Peter O’Brien, at the Summer Assizes at Limerick for 1903, when it was ordered that the annuity should be reduced by consent from £10 to £7, and that a sum of £10 should be paid to the plaintiff in discharge of the arrears to July 1st, 1903, and that in all other respects the decree of the County Court Judge should be confirmed. Ellen Irwin lived until some time in 1918, and up to the date of her death she was paid her annuity at the reduced rate of £7. Some three or four years before her death she left the house and went to live elsewhere with a daughter.
On the 1st of May, 1908, Bridget Irwin entered into an agreement for the purchase of the holding under the provisions of the Land Act of 1903 for the sum of £594. In the Purchase Agreement it is stated that “the said holding is now held by the said tenant who has been residing on and in occupation of the same since 1890 at the annual rent of £27 11s. 6d. payable under a contract of tenancy from year to year “and” there is not any person in occupation of the said holding, or of any part thereof, as tenant or otherwise save as mentioned in the following Schedule. Second Schedule. None.” The original contract of tenancy was at a rent of £32 8s. 0d., the annual rent in 1897 was £24 11s. 0d., Bridget Irwin had never come into occupation, even as wife of the tenant, until the latter half of 1891, and had never been in occupation as tenant until 1898, and, when the purchase agreement was signed by her in 1908, Ellen Irwin was in actual occupation of part of the holding under the deed of 1891, but these inaccuracies do not affect the decision in the present case, unless perhaps as indicative of another attempt on the part of Bridget to rid the premises of the burden of her mother-in-law. On March 19th, 1921, Bridget Irwin was registered as owner in fee simple of the holding “subject to the rights or equities (if any) arising from the interest vested in Bridget Irwin by Fiat of the Land Commission, dated the 27th of January, 1921, being deemed to be a graft on her previous interest in the land, or arising in any other manner from the existence of such previous interest.”
Bridget Irwin died on the 24th of February, 1931, and the plaintiff, believing that she had died intestate, applied for and obtained a grant of letters of administration intestate of her personal estate, and, armed with this grant, applied for, and on the 31st of December, 1931, obtained, the registration of his name as full owner of the lands. Bridget Irwin had in fact made a will, dated May 26th, 1925, of which she had appointed the defendants Thomas O’Connell and James Barrett executors, by which she bequeathed the lands to her executors upon trust for the plaintiff during his life, and after his death to her niece, the defendant Catherine Roche, or, in the event of Catherine Roche predeceasing the plaintiff, to her nephew, the defendant John Barrett. There is no reason for doubting the testimony of the plaintiff that the existence of this will was concealed from him by his wife during her life, and that the application by him for a grant of administration was made in the bona fide belief that his wife had died intestate.
On the 15th of September, 1932, the defendants O’Connell and James Barrett issued a Testamentary Civil Bill against John Irwin claiming revocation of the grant to him and a grant of probate of the will of Bridget Irwin, and on May 6th, 1933, a decree was made revoking the grant to John Irwin and granting probate of the will to the executors named therein.
Before this decree had been made, John Irwin had lodged an application with the Registrar of Titles for the cancellation of the note as to equities upon the folio, and for the registration of himself as full owner of the lands. The Registrar refused the application but John Irwin appealed, and on July 11th, 1933, an order was made by Mr. Justice Wylie allowing the appeal, upon the ground that the proceedings in the Limerick County Court and at Assizes in 1903 were binding upon the parties, and that Bridget Irwin had no disposing power over the lands. An appeal was taken to this Court, which discharged the order of Wylie J. and restored the ruling of the Registrar of Titles, dated June 2nd, 1933, but without prejudice to any equitable right of the parties protected by the note as to equities, and giving liberty to the executors of Bridget Irwin deceased to apply, as such executors, to the Registrar of Titles to note the death, will and probate of Bridget Irwin on the Register, and to note them on the Register as executors of Bridget Irwin, and liberty also to apply to have the Register rectified by cancelling the registration of the plaintiff John Irwin as full owner. This was all duly done before the 8th of May, 1934, and on May 11th, 1934, the Plenary Summons in the present action was issued. The action was heard by Johnston J. On the 6th and 7th of March in the present year, when, after hearing the evidence of the plaintiff and Patrick O’Grady, a farmer, and Mr. Joseph O’Mahony, solicitor, for the plaintiff, and that of the defendant Catherine Roche and Patrick Hartnett for the defendants, he declared that Bridget Irwin held the lands as trustee for the plaintiff, and that the plaintiff was entitled to the lands in equity in fee simple. From that decree the defendants O’Connell, James Barrett, and Roche have appealed.
The decision of the case must depend upon the circumstances in which the name of Bridget Irwin was substituted for that of the plaintiff in the landlord’s books as tenant of the holding in the year 1898. The first and main contention put forward by the plaintiff is that this substitution was effected behind his back, without his knowledge, and that he never assented to or acquiesced in the change of tenancy thereby effected. That in the case of tenancies from year to year one tenant may be substituted for another by act and operation of law without any writing, by a change of name in the landlord’s books assented to by the outgoing and the incoming tenant, has been settled law in this country for over a century and it is unnecessary, since 1881, in the case of a holding within the Land Acts, to enquire whether the substitution of one tenant for another was effected according to the original theory of a surrender by operation of law and the creation of a new tenancy, or by an assignment by operation of law from the former tenant to his successor.
The plaintiff denies that he assented to, or even knew of, the substitution of his wife’s name for his own in the landlord’s books, and, if the learned Judge by whom this case was tried, who saw the plaintiff in the witness-box, had found as a fact that the plaintiff did not know of and did not assent to the substitution of his wife’s name for his own, I should have great hesitation in reversing a decision based upon such a finding of fact, inconsistent though it may appear to be with the conduct of the plaintiff contemporaneous with and subsequent to the change of names in the landlord’s books. The way in which the learned Judge deals with the evidence upon this point is as follows:”What happened was this: John took money out of the family stocking and got a bank draft in the neighbouring town for £50. When the landlord’s agent and the sheriff came to the house, this draft was accepted by the latter and nothing more appears to have taken place in regard to the decree. On that occasion a conversation took place, according to the evidence given by John, between the agent, the sheriff and Bridget, and as a result of some arrangement Bridget’s name was entered up in the landlord’s books as the tenant and henceforward the receipts also were in her name. There is a remarkable dearth of evidence as to this transaction. No information from either the landlord’s or the sheriff’s point of view is forthcoming. The general effect of John Irwin’s testimony is that he was not consulted about the change, and that when he knew the rent receipts were being given in his wife’s name he made no protest. The effect of the evidence of Mrs. Roche is that her uncle-in-law did know of and acquiesced in the arrangement to alter the name of the tenant in the landlord’s books,and probably that is correct; but I arrive at that conclusion not from the evidence of Mrs. Roche, who at the time was a little girl of fourteen or fifteen years of age and not a person who was likely to have an intimate knowledge of what was going on in her aunt’s home in regard to such a matter, but from the probabilities of the case.” He then goes on to discount and disbelieve a fantastic story told by Mrs. Roche of an alleged second visit by the sheriff to the farm at a later date, and I agree with him that no reliance can be placed upon the evidence of Mrs. Roche so far as the arrangement for the substitution of Bridget’s name for John’s is concerned. But, after making that allowance, it appears to me that the conclusion at which the learned Judge did arrive “from the probabilities of the case” was that John Irwin “did know of and acquiesced in the arrangement to alter the name of the tenant in the landlord’s books” and, if this be so, the assent of the landlord and the consent of Bridget Irwin to the alteration are abundantly established, with the result that there is proved a surrender by operation of law of John’s tenancy, and the creation of a new tenancy in Bridget upon the same terms. It is said that there must be also a “change of possession” before this can be effected, and that as John was never even formally put out of the holding no change of tenancy could have taken place. In my opinion, John could have waived the necessity for a formal dispossession, and I am prepared, if necessary, to hold that he did so, but I am also of opinion that having regard to the relationship which existed between him and his wife, the new tenant, such a formal dispossession was unnecessary in the circumstances, and that the law would attribute the possession to the title. In Ramsay v. Margrett (1),the question arose upon a sale by a husband to his wife of personal chattels in the house in which she lived with him and of which there had been no formal delivery. The goods were taken in execution under a judgment obtained against the husband, and an interpleader issue was tried by Wright J. who decided that they were the property and in the possession of the wife. There was a second question whether the receipt for the goods was a bill of sale and was void for want of registration under the Bills of Sale Acts. Upon the question of the wife’s possession of the chattels, the Master of the Rolls, Lord Esher, and Davey L.J. decided, affirming Wright J., that the wife was in actual possession of the chattels which were her property by assignment, and that her possession and title defeated the claim of the execution creditor. Lord Esher says (at p. 25): “When she bought these goods from her husband and paid him the price, they became her separate property. The goods were in the house in which the husband and wife were living together, and in that state of things you could not say which of them had the actual possession of the goods. What is the rule of law as to possession in such a case? When the possession is doubtful it is attached by law to the title. Therefore, under such circumstances, the law considers the goods to be in the possession of the wife, who has the legal title to them.”Davey L.J. says (at p. 27):”The plaintiff had separate estate, and she purchased from her husband goods which were then in their common use in the conjugal domicile, and the goods remained there after the purchase. How does the question of possession stand upon principle? In Littleton on Tenures, S. 701, it is said: ‘Where two be in one house, or other tenements, and the one claimeth by one title, and the other by another title, the law shall adjudge him in possession that hath right to have the possession of the same tenements.’ A passage has been read from a very learned work on Possession (Pollock and Wright on Possession) in which the rule is there stated (at p. 24):’Where possession in fact is undetermined, possession in law follows the right to possess,’ and the following dictum of Maule J. in Jones v. Chapman (2) is cited: ‘It seems to me that, as soon as a person is entitled to possession, and enters in the assertion of that possession, or, which is exactly the same thing, any other person enters by command of that lawful owner so entitled to possession, the law immediately vests the actual possession in the person who has so entered. If there are two persons in a field, each asserting that the field is his, and each doing some act in the assertion of the right of possession, and if the question is which of these two is in actual possession, I answer, the person who has the title is in actual possession, and the other person is a trespasser.’ Mr. Lawrence says that that rule applies only to real estate. I can see no reason why the same principle should not be applied to personal chattels, the situation of which is consistent with their being in the possession of either of two persons. Mr. Lawrence says that there was no apparent change of possession after the purchase by the plaintiff, but that the ostensible possession remained just as it was before. Was it necessary that there should be any change in the ostensible possession?”
The Wright who was one of the authors of that “very learned work on Possession” was the Wright J. whose judgment was affirmed by the Court of Appeal, and the passage I have cited from the judgment of Davey L.J. shows that the principle is applicable alike to real estate, to personal chattels, and therefore to chattels real. In the present case John Irwin had done everything in his power to transfer the title and the right to possession to his wife, and the case is an authority that the law will attribute the possession to the title. Moreover, during a period of thirty-three years, John Irwin did not assert, or try to assert, any right adverse to the claim of his wife during her lifetime, and it is admitted that he went with her when she paid the first gale of rent after the change had been made in the landlord’s books, and saw the receipt made out in her name and handed to her without making any objection.
But the strongest evidence, in my opinion, that the change in the tenancy was made with the active concurrence of John Irwin, is afforded by the proceedings in the Limerick County Court, and at the Limerick Assizes in 1903, when Ellen Irwin claimed that her annuity was well charged upon the interest of Bridget Irwin in the holding. That claim was resisted by John Irwin, who gave evidence for the defendants, himself and his wife. The only defence was that the annuity had been a charge upon his tenancy, and that his tenancy had been determined by an eviction, and that the new tenancy of Bridget was not subject to the charge. The decree was based upon the existence of a new tenancy in Bridget, accepting to that extent the evidence of John Irwin that his tenancy had been determined, but then going on to hold that”the interest of the defendant Bridget Irwin be deemed to be a graft upon the previous interest of the said John Irwin and that the annuity of £10 per year created by said indenture of the 12th November, 1891, in favour of the plaintiff is well charged on the interest of the defendant Bridget Irwin in the said lands.” The defendants appealed, demonstrating that the defendant John Irwin affirmed and relied upon the determination of his own tenancy, and the creation of a new tenancy in his wife free from the incumbrance in favour of his mother. The decree affirms the surrender of John’s tenancy, but declares that it was ineffective in equity to defeat the claim of Ellen Irwin. That does not amount to or involve an adjudication that it was inoperative as between John and Bridget or between either of them and the landlord.
I do not rely upon this decree and affirmance as an estoppel, but they are in my opinion the strongest evidence against John Irwin that the alteration in the landlord’s books had been made with his consent and approval, and are a complete ratification of anything, if there was anything, that had been done in the matter without his formal antecedent authority. From the date of the ejectment in 1898 down to the institution of the present proceedings there has been neither act nor word on the part of the plaintiffwith the exception of a suggestion, not persisted in, that his name should be joined with that of his wife in the purchase agreementinconsistent with the title of his wife to the ownership of the holding. He accepted without question for thirty years the making out of the receipts for rent, and for the land purchase annuity, in his wife’s sole name, he knew of and accepted the signature by her of the land purchase agreement, and he returned the farm and stock as her assets when he applied for a grant of letters of administration to her estate. I place little weight upon the last matter which I think has been unduly pressed by Mr. Ryan, as I think that the explanation of Mr. O’Mahony is quite satisfactory, but I am satisfied that the plaintiff was well aware of, and concurred in, the registration of his wife as owner in 1921 and that it never entered into his mind to allege that she was merely a trustee for him until after the discovery of her will had cut down his interest to a life estate.
Holding, as I do, that there was a transfer of the tenancy to Bridget Irwin in 1898, it is unnecessary to consider the mass of case law with which Mr. Ryan occupied our attention for two days. There was a surrender of John’s tenancy and the creation of a new tenancy in Bridget by operation of law. If the transaction be regarded as an assignment of John’s tenancy to Bridget, which in my opinion it was not, we are not concerned with the question whether there was a sufficient consideration, in the acceptance by Bridget of the liability to rent, to support the assignment as against a subsequent purchaser for value or a creditor, as in Lee v. Mathews (1) or to defeat any claim on the part of the assignor to an interest by way of resulting trust which the plaintiff could only establish by giving evidence to show that the assignment was made by him to his wife with the same object as Judge Adams found he had in view in the collusive ejectment proceedings, namely, to defeat the rights of his mother under the deed of November, 1891, and I am unable to follow the reasoning by which the learned Judge arrives at his conclusion that the transactions to which I have referred”did not alter the plaintiff’s title to the farm in the least”and “that there is no evidence that there was a surrender of John Irwin’s interest in this farm by operation of law.”In my opinion, once he decided as a fact that John “knew of and acquiesced in the arrangement to alter the name of the tenant in the landlord’s books” and that this alteration was in fact made in accordance with that arrangement, and was ever thereafter acted upon by John Irwin and his wife, it was impossible to hold that Bridget Irwin was a bare trustee for her husband, and bound to assign the farm to him on demand.
The collusive character of this eviction is further demonstrated by the evidence of the plaintiff to the effect that the money to pay the rent was in fact available some considerable time before there was any attempt on the part of the landlord or the sheriff to execute a decree, and I strongly suspect that if we had heard, as Judge Adams did, the cross-examination of the present plaintiff by Mr. Patrick Kelly, we should have had as little doubt as he appears to have had in coming to the conclusion at which he arrived, and for the same reasons as those recited in his decree.
It has been suggested on behalf of the plaintiff that there was some onus on the defendants which they have failed to discharge, and that they ought to have called Mr. Cornwall, the landlord’s agent, or the sheriff, to prove what took place on the occasion of the eviction in 1898.
In my opinion, the onus was upon the plaintiff, who came into Court to displace the title of the party designated as owner by the Register of Titles, and that onus is not shifted by proof that the registered owner was the plaintiff’s wife. There is no presumption of a trust, or of a resulting trust, in favour of the plaintiff, and the onus of establishing such a trust, if it was a term of “the arrangement” in 1898, remains upon the plaintiff. In my opinion it has not been discharged or shifted so as to render it incumbent upon the defendants to produce evidence to disprove a trust.
In the view I have taken of the facts it is unnecessary to consider whether the plaintiff would have lost by laches a right, if he had originally possessed one, to have Bridget declared a trustee for him.
In my opinion the appeal should be allowed and the action should be dismissed.
MURNAGHAN J. :
I agree for the reasons stated.
Rev. M. J. Owens and P. Freeley v John Greene
Supreme Court.
18 March 1932
[1933] 67 I.L.T.R 161
Kennedy C.J. FitzGibbon, Murnaghan JJ.
March 1 to 7; 18th, 1932
Kennedy, C.J., giving judgment, said: The defendant (appellant) was the executor of Austin Freeley, who died, aged 92 years, on December 29th, 1930, having made his will the previous day. He was unmarried and lived on his farm at Ballyhaunis, in the County of Mayo, with an aged sister, Mrs. Cunningham, a young cousin, Thomas Greene, and a nephew, Richard Owens, brother of Rev Michael J. Owens, one of the plaintiffs. A grievance against the Revenue authorities seemed to have *161 been constantly in his mind when dealing with his wealth. The largest part of this consisted of cash, which was kept on deposit accounts at the Ballyhaunis branch of the Ulster Bank, and for these accounts he had a number of receipts which the bank manager kept for him at his request. He seemed to have considered for many years how he might pass on his fortune to his intended beneficiaries in such a way as to defeat any claim by the State for death duties or the like. The present actions dealt with two sums of money which he had placed on deposit receipt, one a sum of £5,000 standing in his own name and that of the plaintiff, Patrick Freeley, and the other a sum of £10,826 6s. 3d. standing in the names of himself and of his nephew, Rev. Michael J. Owens, plaintiff in the second action, and the issue in each action was, were the moneys so placed by way of gift to the persons whose names were joined in the deposit accounts, and if so were such gifts effective? The old man was very secretive, and practically the only evidence available on the matters in question was that of Mr. Frank McNelis, Manager of the Ballyhaunis Branch of the Ulster Bank, who was called as a witness in support of the plaintiffs’ claim, but his evidence was not as full nor as convincing as could be wished.
There were three important dates in the bank manager’s evidence The first was the 2nd of March, 1927. Prior to that date Austin Freeley had kept large sums of money on deposit account with the bank in his own name alone. On that date he transferred large sums of money to a deposit account in the joint names of himself and Mr. Patrick Freeley—the plaintiff in one of these actions. Mr. Patrick Freeley carried on business in Ballyhaunis and the old man used to visit him frequently. They were related in blood but not nearly—they were said to be cousins of the third or fourth degree. On the 2nd of March, 1927, according to the bank manager’s evidence, Austin Freeley called to the bank and asked for his receipts. He said that he wished to settle his money, and that he was not able to do so till he saw Father Owens, but that he thought Patrick Freeley was a decent man and he would like to do something for him, and he then gave the manager a number of receipts which he asked him to put in the name of Patrick Freeley and himself. The manager stated that the old man asked him to put the money in such a way that he could draw the interest without going to Mr Freeley and the manager added, “the only way he could do that was by putting it payable to them or either of them.” It appeared this form of deposit receipt was usual in banks in Northern Ireland but not in other banks. The total amount dealt with on this occasion was £16,917, represented by ten deposit receipts in the joint names of Austin Freeley and Patrick Freeley. Austin Freeley left the receipts in the custody of the manager. Two days later he called again at the bank and said that he wanted to take £700 out of the joint account and put it in his own name, which he accordingly did, leaving £16,217 standing in the joint names on nine receipts.
The form of deposit receipts used for these transactions was the bank’s printed form, which acknowledged the receipt of the sum deposited as from Austin Freeley and Patrick Freeley—“for which we promise to be accountable” to which there was added, by a rubber stamp:—“To them or either of them.” So that the receipt read:—“For which we promise to be accountable to them or either of them.”
On the back of the receipt there was a printed “Note” which stated amongst other things that the receipt must be produced at the time of payment and that ten days’ notice must be given when payment is required.
The money remained on that account until the 8th of March, 1928, when Austin Freeley cashed all the deposit receipts with interest and, having taken the interest, relodged them to the same account, where they remained until the 2nd of May, 1929, when he again cashed the receipts and relodged the principal.
On the 17th of October 1929, he again cashed all the money standing to this deposit account, but restored to that account the sum of £11,265 only, and placed the balance in his own name alone.
On the 29th of May, 1930, he again drew the money standing to the joint account and restored only £6,000 to the joint account and put the balance in his own name also.
Patrick Freeley, whose name he had joined in the account, was no party to any of these dealings, and appeared to have known nothing about the account or the dealings with it, nor that his name was associated in the account.
The second was the crucial date, the 8th of September, 1930, when there were standing in the names of Austin Freeley and Patrick Freely the sum of £6,000 on one deposit receipt, and in the name of Austin Freeley alone £13,450 17s. 5d. on nine deposit receipts. The first-mentioned receipt was in the form by which the bank promised to be accountable for the £6,000 “to them *162 ( i.e., Austin Freeley and Patrick Freeley) or either of them.”
The books of the bank showed the dealings with the deposit account on the 8th of September, 1930, as follows—Austin Freeley cashed the ten deposit receipts, receiving into his own hands the £6,000 which he had placed in his own name and that of Patrick Freeley, and the £13,450 17s 5d. which then stood to the account of his own name alone, making £19,450 17s 5d in all. He disposed of this sum as follows:—He put back to the account of himself and Patrick Freeley the sum of £5,000 only, taking a deposit receipt in the form by which the bank promised to be “ accountable to them or either of them .” He put a sum of £3,506 to a deposit account in his own name alone. Finally he opened a new deposit account in the names of himself and the Rev. Michael J. Owens to which account he lodged the sum of £10,826 6s. 3d. for which he took four deposit receipts in unequal amounts, all in the form by which the Bank promised “to be accountable to them or either of them.” (A small balance —£118 11s. 2d.—was not accounted for.) That was the naked money transaction of that date. Mr. McNelis, the bank manager, gave the only account they had of the circumstances of the transaction as follows:—
“He called about 11.30 or 12 o’clock and asked for his receipts, and he said that he was going to settle the money finally. And he told me to put £5,000 in the names of Patrick Freeley and himself, and he gave me a number of receipts totalling £14,000 to put in the names of Father Owens and himself. He told me that he wished that no person would know anything of these moneys, and that the moneys were to be the property of Patrick Freeley and Father Owens if anything happened to him and that the receipts were to be handed to the survivors. And when the receipts came in done up …”
Q. “You filled in the requisitions as directed and the receipts came back?
A. “Yes. And when they came back, he said that he had made a mistake in Father Owens’ receipt and he wanted to change it. He wanted £3,500 kept in his own name— he wanted it for a certain purpose. Which I did.
“Q. Was that what he said? Yes, those were his very words.
“Q. He did not tell you what the purpose was? A. No. So I got the receipts as he asked me and changed them as directed and handed them to him and he looked them over and handed them back again to me. And he told me that the joint receipts, if anything happened to him, were to be handed to the survivors, but that no one was to know anything of the money and the money was to be their property. So he told me to keep the receipts in my possession and I did so.
“Q. “And the result then was that there were four receipts in the names of Austin Freeley and Father Owens totalling £10,846 8s. 3d. (sic. in stenographer’s transcript of evidence)? A. Yes.”
Mr. McNelis then told of another deposit which Austin Freeley made on the same occasion of a sum of £200 in the joint names of the Rev. Michael Owens and one Richard Owens, the receipt in this case was in favour of them (Richard Owens and Father Owens) “or the survivor of them.” Richard Owens, a brother of Father Owens, had worked for Austin Freeley for a number of years. Austin Freeley instructed Mr. McNelis to get from Richard Owens a receipt acknowledging payment of all his claims up to date, and on getting it to deliver the deposit receipt to Richard Owens. The Manager carried out these instructions on the same day.
The third important date was the 15th of December, 1930. The books of the bank showed the following entries. Austin Feeley cashed the deposit receipt for £3,506 standing in his own name alone and re-lodged that sum on a new deposit receipt in his own name alone. He drew the sum of £5,000 standing on deposit account in his name and that of Patrick Freeley and re-lodged it on a new deposit receipt in the same names, and again to be accounted for “to them or either of them.” He drew the sums amounting to £10,826 6s. 3d standing on deposit account in his own name with that of the Rev. M. J. Owens, and re-lodged the same sums of money on four new deposit receipts of the same amounts in the same names and again to be accounted for “to them or either of them.” The bank manager’s story of these transactions was as follows:—
Q. “Do you recollect any further dealing with the deposit receipts by Austin Freeley?
A. “Yes. On the 15th December he called and said that he had some bills to pay, and he would like to get the interest on those receipts. And I gave him the interest on the receipts, and he told me to keep the receipts as they were, which I did.
Q. “And that is what appears by the entries on the 15th? A. Yes.”
From the 8th September, 1930, he never again dealt with these deposit accounts ex *163 cept for the purpose of drawing interest on the 15th of December, 1930.
Austin Freeley died on the afternoon of Monday, the 29th of December, 1930, after a very short illness. According to the bank manager’s evidence at the trial, on the day of Austin Freeley’s death, the son of Patrick Freeley called at the Bank and asked for the deposit receipt in the names of Austin Freeley and Patrick Freeley, and Mr. McNelis says that he handed it to him in an envelope to give to his father. Father Owens came to the bank in the evening of the same day and Mr. McNelis handed him the four receipts in which he was named.
The prompt application of Father Owens and Patrick Freeley for the deposit receipts raised very important questions as to when and by whom each of them had been informed of his name having been introduced into the deposit account by this very secretive old man, Austin Freeley. While the bank manager’s evidence on this point was not free from contradiction, he (the C.J.) understood its effect to be as follows: — Austin Freeley on the 8th of September, 1930, told him that no person was to know anything about this money except the people who were joined on the receipts with him and that if Mr. McNelis liked he could tell them any time about it. (He corrected a previous answer indicating that he might give any information necessary to the survivors. ) Patrick Freeley visited the Bank in the course of his business and told Mr. McNelis that Austin Freeley had told him that he had left him well off in the bank and asked what the amount was, when Mr. McNelis informed him of the £5,000 in their joint names. Some days later Father Owens asked him the same question and he told him. He first placed the time of giving this information as the 8th of September, 1930, but afterwards said it was six weeks later.
Father Owen’s evidence was very unhelpful. He used to see his uncle from time to time and discuss the old man’s affairs with him, but his health was poor, his memory bad, and he had no notes or memoranda. On one occasion he advised the old man that when money is left on joint deposit receipts the survivor takes the money without having to pay any duty whatever Though he appeared to have gleaned hints from his uncle of an intention to leave him something, the nearest to a definite statement in his evidence was that about July, 1930 (months before the joint deposit account) the old man gave him to understand that he had left him “a certain amount of money.” A couple of months before the death of Austin Freeley the bank manager informed Father Owens that there was money in his name, about £10,000. According to his own evidence Father Owens was not told anything definite by Austin Freeley nor authorised by him to go to the bank to enquire about it. He said he never discussed with his uncle the question whether he had left him any money nor tried to ascertain the fact from him.
Patrick Freeley was also kept in the dark by the old man. He said that in May or June, 1930, Austin Freeley told him he need not worry about business being bad because he (Austin Freeley) had money in the bank in their two names. That joint account, however, was brought to an end and was not intended to be a “final settlement.” On cross-examination, he stated quite definitely that Austin Freeley never told him that he was leaving money in the bank for him. He did not give any explanation how the bank manager came to tell him of the deposit in joint names, but he admitted that that was his only definite information.
It was not necessary for the purpose of this judgment to refer to any other parts of the evidence, as, e.g., the deposit receipt for £500 in the joint names of Austin Freeley and Thomas Greene “or survivor of them,” which was a provision made for Thomas Greene in recognition of personal services. It was effected through a third person, and the Court had not Austin Freeley’s instructions as to the form of receipt.
He should, however, refer to the will of Austin Freeley made the night before he died, while still in possession of his faculties of mind Amongst a number of pecuniary legacies he gave a legacy of £150 to Father Owens and a legacy of £150 to Patrick Freeley. He disposed of his house and farm and gave the residue of his property to all his nephews and nieces, his sister Mrs. Cunningham, John and Thomas Greene in equal shares absolutely. He appointed John Greene and Patrick Freeley to be his executors. Probate was taken out by John Greene only.
If, at the death of Austin Freeley, the only information as to the several transactions was the records of the deposit accounts in the books of the bank, a resulting trust would clearly arise by equitable presumption in favour of Austin Freeley and his legal personal representatives as to all the moneys which were, on the 8th of September and the 15th of December, 1930, lodged to the deposit accounts in the names of Austin Freeley and Patrick Freeley and in the names of Austin Freeley and the Rev. *164 M. J. Owens. There was no such relationship between Austin Freeley and either of the plaintiffs as would raise a presumption of advancement. The onus of rebutting the implication of such a resulting trust rested upon the plaintiffs, who claimed to be beneficially entitled by survivorship to the moneys standing to the accounts in which they were respectively named as joint creditors with Austin Freeley. They might discharge that onus by proving that it was the intention of Austin Freeley, when putting the moneys to the deposit accounts in the bank, to give to the plaintiffs respectively, then and there and by that act, an immediate present right to take the moneys with which he associated their respective names by survivorship for their own respective use and benefit as surviving joint beneficial owners with him. It would not suffice to prove a merely testamentary intention on his part, for a testamentary disposition can be made only by will. It would not suffice to show an incomplete, or a conditional, or a postponed gift, nor could such an attempted gift be made good by means of a fictitious trust. But a gift completed by immediate transfer of legal ownership or by declaration of trust taking immediate effect would support an intention to give a voluntary benefit and rebut the presumption of resulting trust These principles were well established and were neatly summarised by FitzGibbon, L.J., in O’Flahcrty v. Browne (1907, 2 I. R. at p. 434).
The form of the deposit receipts did not, in his opinion, determine the question under consideration. The intention of the depositor must still be ascertained. The use of the particular form might be a convenience in transacting the depositor’s business, the other name in the receipt being that of an agent for the actual depositor, as in Marshall v. Crutwell (L. R., 20 Eq. 328), or it might be an attempt to give whatever might remain to credit of the account at the depositor’s death, as Gibson, J., appeared to have held in the Circuit case of Diver v. McCrea (42 I. L. T. R. 249). In such a case, however, the intention was not to make a joint deposit operating as a present gift. It was an attempt to make an ambulatory and postponed gift of such moneys as should remain undrawn from the account at the depositor’s death This, in his opinion, was contrary to the established principles inasmuch as it was really testamentary in character and intention, and for that reason he could not accept the decision in Diver v. McCrea (42 Ir. L. T. R. 249), which was, he thought, erroneous. That was a Circuit case and the report showed that some of the authorities were not cited to the learned Judge (although he gave judgment in Dublin after consideration). Again, this form of deposit receipt might be used for the purpose of creating machinery of revocation of the trusts of a gift on trust, continuing until revoked, as was held by the Master of the Rolls in the case of M’Dowell v. M’Neilly (1917, 1 I. R. 117), which, however, could not, in the nature of things. apply to a case of a gift immediately complete and absolute, but only to a gift on a continuing trust.
In the present case Mr McNelis said that it was on his advice that the particular form of deposit receipt was adopted by Austin Freeley, because it would allow him, without the concurrence of the other persons named in the account, to get the interest on the deposits paid to him from time to time while leaving the capital untouched. When Austin Freeley made the lodgments to the joint account in March, 1927, he had not yet formed an intention of making a final settlement and there would have been a resulting trust in his favour. But if he had finally made up his mind, on the 8th of September, 1930, as to how he would dispose of his moneys, it was, in his Lordship’s opinion, competent for him to have placed his moneys on joint deposit accounts as he did, with the intention of making then and there immediate complete gifts in trust for himself and Patrick Freeley in the one case and in trust for himself and Father Owens in the other case, as joint tenants with right of survivorship as regards the capital sums only, the interest to be paid to him (Austin Freeley) during his life, the intention as to the capital not to be capable of alteration. To do this he might well have adopted the form of deposit receipt in question with the intention and for the purpose only of drawing the interest payable on the deposits and his use of the deposit receipts would be limited by that intention, notwithstanding their form (“accountable to them or either of them”). for it would follow from the complete gift of capital made that the other parties would have the right to prevent him drawing, or at least appropriating to his own use, any part of the capital That was the only tenable basis upon which the plaintiffs could rest their claims in these actions His Lordship suggested it to their counsel during the argument, but probably because of the concealment of the transactions by the old man from the plaintiffs, his close retention of the deposit re *165 ceipts under his own sole dominion, certain weaknesses and uncertainties in the evidence of the bank manager and of the plaintiffs themselves, and no doubt for other good reasons in the case as they had it upon their instructions, the suggestion was not pursued, and the case of an immediate gift such as he had indicated as perhaps open to argument on the evidence, was not put forward. On the contrary, counsel for the plaintiffs definitely disclaimed any question of trust in the case, relied on Diver v. McCrea (42 Ir. L. T. R. 249), and pressed the matter as a gift in each case of whatever would remain to credit of the deposit accounts at the death of Austin Freeley, admitting that, in the meantime, by reason of the form of the deposit receipts, he might at any time withdraw the capital moneys for his own use or benefit That was, in his Lordship’s opinion, an invalid gift as an attempt to make a testamentary disposition otherwise than by will.
Mr Leonard relied on possession of the deposit receipts obtained after Austin Freeley’s death as making a complete legal title to the money. Even if the plaintiffs got the receipts properly (which perhaps should have been given to the executor) the legal title could not defeat the resulting trust in equity.
His Lordship considered that the plaintiffs had failed to rebut the resulting trusts and that the appeals should be allowed with costs The declarations and judgments of Meredith, J., in favour of the plaintiffs respectively should be set aside, and the actions dismissed and the defendant should have judgment on his counterclaim in each case with a declaration and consequential relief as prayed.
The defendant would have his costs of action as executor’s costs out of the assets of Austin Freeley deceased. No order as to plaintiffs’ costs of action.
FitzGibbon, J., said:—Both actions depended upon the same evidence and were heard together, and the same considerations were applicable to each, so he would treat them, as they were treated in the Court below and in the argument there, as if they were one action. The common defendant was the personal representative of Austin Freeley, who died on the 29th of December, 1930, and the claim in each action was that the moneys claimed belonged to the plaintiff as beneficial owner by right of survivorship. In each case the defendant counterclaimed for a declaration that the plaintiff held the deposit receipt as trustee for the defendant as personal representative of Austin Freeley, and that the sum deposited was part of Austin Freeley’s estate, and for consequential relief.
There was not much controversy about the facts, but the inferences to be drawn from the acts and declarations of the deceased as to his intention in his dealings with his property, and the legal effect to be given to that intention, required careful consideration, and were by no means free from doubt.
The transactions with which these actions were concerned began in 1927, when, on March 2nd, the deceased, Austin Freeley, called at the Ballyhaums Branch of the Ulster Bank, and asked for his deposit receipts, which, to the total amount of £16,601, were handed to him by the manager. The account given by the latter of what then occurred was:—“He said that he wished to settle his money, and that he was not able to do so till he saw Father Owens, but that Pat Freeley was a decent man and he would like to do something for him. And then he gave me a number of receipts, which he asked me to put in the names of Pat Freeley and himself. He asked me to put the money in such a way that he could draw the interest without going to Pat Freeley. And the only way I could do that was by putting it payable to them or either of them, which I did.” The amount so lodged amounted to £16,917, £700 (?) more than the sum withdrawn. The deceased came back two days later, withdrew this £700, and relodged it in his own name. Twelve months later, on March 8th, 1928, he called again at the Bank, withdrew the £16,217 from the account in the name of himself and Patrick Freeley and the £700 from his own account, and relodged £16,917 in the names of himself and Patrick, on the same form of deposit receipt as before. On May 2nd, 1929, he again withdrew the £16,917, and on the same day relodged it as before On October 17th, in the same year, he withdrew the £16,917, lodged £5,652 in his own sole name, and replaced £11,265 in the names of himself and Patrick Freeley. On May 29th, 1930, he withdrew the £11,265, relodged £6,000, and transferred £5,265 to his own sole account, to which there was then standing £13,450 17s. 5d. He operated on this account by additions and withdrawals in May. June and July, 1930.
It was not contended on behalf of Patrick Freeley, and Meredith, J. expressly negatived the conclusion, that if Austin Freeley had died during the period between March *166 2nd, 1927, and September 8th, 1930, Patrick Freeley would have had, by survivorship or otherwise, any beneficial interest in any moneys for the time being so standing on deposit in the names of deceased and himself. But it was alleged that the transactions deposed to by the bank manager as having taken place upon September 8th, 1930, so altered the relationship between the deceased and Patrick Freeley in respect of the moneys deposited in their names and payable to them or either of them, and created between the deceased and the plaintiff, Father Owens, a relationship in respect of the moneys deposited by the deceased on that day in their names, and payable to them or either of them, as to entitle Patrick Freeley in the former case, and Father Owens in the latter, to succeed by survivorship upon the death of Austin Freeley.
The plaintiff’s counsel refused to state in any intelligible legal terms what this relationship was They repudiated the suggestion that there was either a gift or a declaration by the deceased man of a trust affecting the moneys on deposit in the two names. They did not deny that Austin Freeley could at any time during his life have withdrawn all moneys standing in his own name and that of either of the plaintiffs and appropriated them to his own use, and that neither plaintiff would, in such an event, have had any claim upon Austin Freeley or his estate.
The bank manager’s account of the transaction of September 8th was:—“There was one deposit receipt for £6,000 in the joint names of Austin Freeley and Patrick Freeley and accountable to them or either of them, and there were nine in the sole name of Austin Freeley, and the aggregate of these nine was £13,450 17s 5d”“He called in about 11 30 or 12 o’clock and asked for his receipts, and he said that he was going to settle the money finally And he told me to put £5,000 in the names of Patrick Freeley and himself, and he gave me a number of receipts totalling £14,000 to put into the names of Father Owens and himself He told me that he wished that no person would know anything of these moneys, and that the moneys were to be the property of Patrick Freeley and Father Owens if anything happened to him, and that the receipts were to be handed to the survivors. I filled in the requisitions as directed, and when they came back he said that he had made a mistake in Father Owens’ receipt and he wanted to change it He wanted £3,500 kept in his own name, he wanted it for a certain purpose, which I did. He did not tell me what the purpose was, So I got the receipts as he asked me, and changed them as directed, and handed them to him, and he looked them over and handed them back again to me. And he told me that the joint receipts, if anything happened to him, were to be handed to the survivors, but that no one was to know anything of the money, and the money was to be their property. So he told me to keep the receipts in my possession and I did so.”
Later in his evidence the bank manager, after a little judicious leading, said “the deceased told me that I could give any information that was necessary to the survivors —at least to the joint depositors” As he had previously said “survivors” three times and had specifically stated “that the receipts if anything happened to him were to be handed to the survivors, but that no one was to know anything of the money,” this belated correction was not very convincing In any case, it would only be material if the question was one of the communications of a declaration of trust to the cestuis que trustent, but the plaintiffs had expressly disclaimed any suggestion that there was any declaration or creation of a trust in their favour.
If Austin Freeley had been dangerously ill and in contemplation of death when this conversation took place, there was material to support a claim that there was a valid donatio mortis causa of these deposit receipts “If anything happened to him,” reminded them of the condition in Justiman (Inst. II., 7 s. 1), st quid humanitus et contigisset, but there was no suggestion that Austin Freeley was not in excellent health on the 8th of September, 1930, though he did in fact die on the following 29th of December.
The plaintiffs stressed the alleged statement by the deceased man “that he was going to settle the money finally.” If he had insisted upon a change in the form of the deposit receipt, and provided that the money deposited should really be placed in the joint names of himself and another, or that it should be payable “to them jointly.” or “to them or the survivor of them,” or should be so lodged as to be no longer under his own sole control, there would be ground for holding that he had an intention to alter the dominion over the deposited money, and to confer an immediate interest upon the co-depositor Instead, he lodged the moneys upon a receipt in the old form, under which the bank acknowledged the receipt “from *167 Austin Freeley, Esq., Carrowreagh, and Patrick Freeley, Esq., Ballyhaunis, of £—. For which we promise to be accountable to them or either of them.” He directed the manager to keep the receipt for him, not to hand it to the co-depositor until after his death, and did in fact demand it back, endorse it and draw all the money deposited with interest, and re-deposit the principal, on December 15th, 1930. The plaintiffs did not deny that if, on December 15th, Austin Freeley had lodged the money he had drawn, upon a deposit receipt in his own sole name or appropriated it to his own use, he would have been within his rights, and neither of them would have had any claim. If that were, and he (FitzGibbon, J.) believed it to be, the true state of affairs he could not follow the contention that the moneys became on relodgment any more the property of Patrick Freeley or Father Owens than they had been before they were withdrawn, or while they were in the actual possession of Austin Freeley.
In considering if there was ever a gift to either of the individuals whose names appeared with that of the deceased upon the deposit receipts, the form of those documents was of great importance. In the ordinary case of money invested or deposited in two names it could not be withdrawn by either without the concurrence of the other. In the words of Lindley, L.J., in Standing v. Bowring (31 Ch. D. 282, at p. 290, “the donor has put the thing given out of his own power, and has placed it in such a position that he can only get the thing back with the concurrence of the donee.” Even where there was such a transfer of the dominion, the law presumed, in the absence of additional evidence of intention, a resulting trust in favour of the donor, except where the joint owner was the wife or child of the donor, or a person to whom the donor stood in loco parcntis. Except Dwer v. McCrea (42 I. L. T. R. 249), he knew no case in which the alleged donor retained throughout his life the complete power of disposition over the property in dispute, and it was held that there had been a complete gift by him in his life time. Austin Freeley was well acquainted with the various methods of depositing money in the names of two or more persons, and the effect which the form of the deposit had upon the powers of the depositors to deal with the sum deposited. It was proved that he adopted the special form of deposit in the case of the sums in dispute there so that he could withdraw the principal money from time to time without the concurrence of any other person, and that he took the most careful precaution to prevent any person but himself from having any opportunity of dealing with the moneys in any way, and that he did exercise his dominion over the money when he had occasion to do so.
Meredith, J., attributed some weight to the fact that there was only one dealing by Austin Freeley with the money after September 8th, 1930, viz., on December 15th. It was remarkable that he drew and relodged the sum which it was alleged he had given away, only three months after the alleged gift, while his custom theretofore had been to leave it untouched for twelve months together. The money in the names of himself and Patrick Freeley remained untouched from March 2nd, 1927, to March 8th, 1928, and again from March 8th, 1928, to May 2nd, 1929, and from May 2nd, 1929, to October 17th, 1929, from October 17th, 1929, to May 29th, 1930, and from May 29th, 1930, to September 8th, 1930, in each case a far longer period than that from September 8th to December 15th. When he did intend to make a gift he knew well how to give effect to his intention. At the request of Father Crowe he decided to give £500 to a young man named Thomas Greene, and on the 13th of June, 1929, he deposited £500 in the joint names of himself and Thomas Greene, upon a deposit receipt which expressed that the money was to be payable “ to them or the survivor of them, ” thus putting it out of his own power to deal with the fund without the concurrence of his coowner. It appeared, too, that Austin Freeley knew that money deposited on a receipt in that form could not be withdrawn except upon the request of both depositors. Upon the very day upon which he first deposited the sums in dispute he made a deposit of £200 in the joint names of Richard Owens and the Rev. Father Owens, payable to them or the survivor of them The inference was almost irresistible that when he made the other deposits in two names payable to himself and another or either of them, and kept absolute control of the receipt, without production of which the money could not be withdrawn, he had no present intention of parting with the property, but was endeavouring to make a disposition of it which would take effect upon his death on so much of the money as then remained upon deposit, but retaining all power of disposition over it during his life.
Mr. Leonard contended “that Austin *168 Freeley did an act, the consequence of which was that on his death each of the co-depositors became legally entitled to the money. It was not a gift of £10,000, it was only a gift of what was left when he died.” That statement brought this case directly within such authorities as Gason v. Rich (19 L. R. Ir. 391) and O’Flaherty v. Browne (1907, 2 I. R. 416. In the former case, a son held some bank shares in trust for his father, the trust being evidenced by a written acknowledgment. The father endorsed on the acknowledgment a transfer of the shares to his daughter, for her sole use and benefit. The father also held two I.O.U.’s, and upon each of these he wrote: “I transfer the debt of £— to my daughter for her sole use and benefit.” He handed the documents to his daughter. The Master of the Rolls, Sir Andrew Porter, after holding that there was nothing which could amount to a declaration of trust (which was admitted in the present case) went on (at p. 395): “But beyond these considerations there is another, applying to them all, which I look upon as quite decisive against the claim of Miss Rich. From the sworn evidence, and the letters and other documents in the case … I am satisfied of two things:—First, that those attempted transfers were intended by Captain Rich to defeat pro tanto the covenants contained in the settlements of his several married daughters, which covenants would only become operative at his death; and, secondly, that notwithstanding the words of present transfer employed by him, he never meant to deprive himself of any property whatever by virtue of them during his life time. As a matter of fact, he continued for years after, and down to his death, in receipt of the dividends and interests, not a penny of which was paid to or intended to be the property of, or ever claimed by, Miss Rich. In fact those so-called transfers were meant in substance to be testamentary, while clothed with the appearance of gifts inter vivos, designed only to mislead. The principle upon which Courts of Equity have sometimes aided imperfect transfers is in order to give effect to the real intention of the parties. But to hold these transactions to have been in equity complete and binding according to their appearance would be to do what the parties did not intend.”“According to the appearance” of the deposit receipts in the present case, Father Owens and Patrick Freeley could on September 9th, the day after the deposit, have withdrawn every penny from the bank, and appropriated it to their own uses. This would be clearly contrary to the intention of Austin Freeley. Morris, L.C.J., speaking of the I.O.U.’s said (at p. 398): “In my opinion he never intended to deprive himself of the property in them during his lifetime, and trust (sic) reserved a locus penitentiae. Under such circumstances the property in them did not pass.” Barry, L.J., said (at p. 402): “I am of opinion that the alleged donee here is defeated on the ground stated by the Master of the Rolls, namely, that the transaction was not intended at the time to be a complete and final divesting by the donor of all interest in the property purported to be assigned. I think the evidence shows that the transaction was intended to be revocable or ambulatory or testamentary in its nature, and that till the death of J. S. Rich the arrangement with his daughter was that he was to be master of the property.” Austin Freeley took care that he did not even have to make “an arrangement,” he ensured by his retention of the deposit receipt in the hands of his agent that he “was the master of the property.”O’Flaherty v. Browne (1907, 2 I. R. 416) was even more closely analogous In that case the Rev. Maurice O’Flaherty, parish priest of Barraduff, having withdrawn some £880 which he had on deposit receipt, stated on June 15th, 1905, to the bank manager that he did not want to make a will, that he wished to leave all his money to his two nieces, and to leave to his successor as parish priest of Barraduff £60 for Masses and £50 for repair of Barraduff Chapel, but that he was in a difficulty as he did not know who was to be his successor as parish priest. He then lodged on deposit receipt in the name of “the Parish Priest of Glenflesk and Barraduff the sum of £60 for Masses,” a like sum of £50 “for repairs and building to church,” and two sums of £385 each, one in the name of the Rev. Maurice O’Flaherty and Mary Griffin, and the other in the name of the Rev. Maurice O’Flaherty and Hannah Griffin. Shortly afterwards he withdrew the £50, and applied it to his own use. On September 20th he again called at the bank with one Father Costelloe and Mary Griffin. He said he desired to leave £50 to his successor for the repair of Barraduff Chapel, but on the suggestion of Father Costelloe he decided to increase it to £100. He then withdrew £50 from each of the deposits in the names of himself and his two nieces, relodged £335 in place of £385 in the same names, and deposited £100 in favour of the Parish Priest of Barraduff for repairs and rebuilding of the church. He died on November 15th, having *169 made a will. His successor as parish priest of Barraduff claimed the two sums of £100 and £60. The executor claimed that these two sums were assets of the testator. The King’s Bench Divisional Court (O’Brien, L. C. J., Johnson, Boyd and Wright, JJ.), held that the deposits were good charitable gifts, and that Father Browne as successor of the Rev. M. O’Flaherty as parish priest of Barraduff was entitled to the two sums claimed by him. This decision was reversed by the Court of Appeal (Walker, L.C., FitzGibbon and Holmes. LL. JJ.), upon the ground “that as the money on deposit receipt remained in the possession and under the control of the Rev. M. O’Flaherty during his life, the relationship of the bank and Father O’Flaherty was that of debtor and creditor, and that a valid trust had not been created” Walker. L.C., after stating the facts, said (at p. 431) “Under these circumstances what other conclusion can we draw from the facts than that this money remained the property of the Rev. M. O’Flaherty? First, on the form of the deposit receipts themselves, these sums were lodged in his name as parish priest of Barraduff. which he then was. At that date, on the face of the deposit receipt, the money belonged to him and no one else. He exercised proprietary rights over it, by taking up the money lodged on one of the deposit receipts, showing that he wished to retain control over it …. In my opinion, the entire facts of the case show at most an intention on the part of the reverend gentleman to effect a disposition to become operative only at his death, and the principle laid down by the Court of Appeal in Gason v. Rich (19 L. R. Ir. 391) governs this case, that once there is a testamentary intention, and not an immediate gift, there is not a trust enforceable in equity” FitzGibbon. L.J., after discussing the facts, which he decided to indicate an intention and understanding that “the depositor was the owner of the money, and retained the power of dealing with it in his own hands so long as he lived,” said (at p. 433) “The mevitable conclusion is that of the Lord Chancellor, viz, that this transaction was, in effect an attempt to make a nuncupative testamentary disposition. Father O’Flaherty remained the owner during his life of money which, on his death, he wished to pass to his successor, just as he intended, in the case of his meces, that the money which he intended for them should go by survivorship”“There are two principles applicable to the subject matter, of which one or other appears to be fatal to the respondent’s contention. The first is that a testamentary disposition can only be made by will, and that any attempt to make it by parol inter vivos must fail The other is exemplified in Richards v. Delbridge (L. R. 18 Eq. 11). A voluntary trust may be created by a declaration of trust, or by a complete assignment of the legal ownership to a trustce, but it is impossible to turn an incomplete conditional or postponed gift into a trust, where there is no intention to create the relationship of trustee and cestui que trust. It was not intended that this money should be left derelict, or that any trust should take effect upon it during the life of Father O’Flaherty. So long as he lived he was owner and nothing else” (So was Austin Freeley.) “This is one of the many cases in which a man has tried to pass his property to another when he dies but not until then otherwise than as the law allows. In my opinion these dealings did not create a trust, and could not operate as a testamentary disposition.” Holmes, L.J., who agreed. said (at p. 435) “The natural inference seems to me to be that he desired to substitute for a will some plan which, like a will, would give him full control over his property during his life.”
M’Dowell v. M’Neilly (1917, I. L. R. 117). decided by O’Connor, M.R., was the same in result, though the Master of the Rolls put his decision upon a different ground. A husband deposited money in the names of himself and his wife—payable to either of them or the survivor Shortly before his death he endorsed the receipt and handed it to a clergyman for charitable purposes, who cashed it. The wife brought an action for return of the money on the ground that there was a gift to her by way of advancement in the event of her surviving her husband, and that having made the gift he could not revoke it.
O’Connor. M.R., held that there was a gift, with a power of revocation, which had been exercised Neither Gason v. Rich (19 L. R. Ir. 391) nor O’Flaherty v. Browne (1907 2 L. R. 416) was cited. In view of those authorities he (FitzGibbon, J.) would think it more in accordance with the evidence to hold that there was no present gift at all, but that, in the words of Barry, L.J., “the transaction was intended to be ambulatory or testamentary,” having regard to the finding of the Master of the Rolls, “that the deceased was careful that he also should have dominion over it, because the evidence is that he kept the custody of the deposit *170 receipts, so that he alone during the joint lives should exercise the power of withdrawal.”. That case differed from the present in favour of the claimant in two respects. It was a case of husband and wife, where there is a presumption of advancement, and the deposit receipt was payable to husband or wife or the survivor. The latter words were omitted from the receipts in the present case, yet the Master of the Rolls inferred an absence of intention to make a gift to the wife from the retention by the husband of a power of disposition during his own life, although “survivor” was named in the receipt.
There was one case which closely resembled the present one on the facts, and the plaintiffs had pressed it strongly.
In Diver v. McCrea (42 I. L. T. R. 249). the deceased had placed a sum of £65 upon deposit receipt in the names of himself and a nephew, with whom he resided until his death. The deposit was payable to either of the two parties named in the receipt, and it was proved that the deceased when depositing the money had expressed it to be his intention that any portion of the sum which might not be drawn during his life time should belong to his nephew. Gibson. J., in a civil bill appeal from the County Court Judge of Donegal, held that there had been an effectual gift to the nephew, that there was no resulting trust, and that the sum of £65 did not form portion of the assets of the deceased. He based his decision upon the analogy of the cases of husband and wife, prior to the Married Women’s Property Acts, where it had been held that the marital right of disposition possessed by a husband during his life over his wife’s property did not rebut the presumption of advancement. No authority had been cited to him during argument upon the point of the retention by the deceased of the power of disposition, and Gibson, J., referred to this, as leaving him to decide the point as best he could. The case very much in point, of O’Flaherty v. Broune (1907, 2 I. R. 416) had only just been reported, and his attention was not called either to it or to Gason v. Rich (19 L. R. Ir. 391). It was remarkable that Gibson, J. seems to treat the deceased man’s disposition as in substance testamentary. “Kilpatrick’s object was to avoid making a will, and he desired that the deposit receipt, if uncashed, should on his death, belong to his nephew.”
“The substantial question argued was whether the circumstance that Kilpatrick was to possess power during his life time to draw the money defeated his intention that the deposit receipt should go to his nephew.” Gibson, J., had evidently much doubt about the case, and said that but for husband and wife cases—in which there is a presumption of advancement—he would have felt much difficulty in deciding as he did. It did not appear from the report that the deceased kept absolute control over the recerpt, which Gibson, J., said was drawn in an unusual form, and was clearly not intended to divest Kilpatrick’s ownership absolutely, but was for the purpose of enabling his nephew, as his uncle’s agent, to draw the money for him should he require it.
In his (FitzGibbon, J. s) opinion this decision was inconsistent with O’Flaherty v. Browne (1907. 2 I. R. 416) and Gason v. Rich (19 L. R. Ir. 391), which were not cited to Gibson, J., and which were binding on him. They were not bound by them, but he agreed with them, and considered that Diver v. McCrea (42 I. L. T. R. 249) if, and in so far as, it was in conflict with them, was not good law. It appeared to him to have been, even upon the findings of Gibson, J., himself, “an attempt to make a nuncupative testamentary disposition”(1907. 2 I. R. 433), “a disposition to become operative only at his death” ( lb 431), and that accordingly the £65 should have been held to be part of the assets of the deceased.
In his opinion the plaintiffs failed to establish any present intention on the part of Austin Freeley to part with his property in, and absolute dominion over, the deposited money during his lifetime. A disposition to take effect only upon his death, if he should not have previously disposed of the money could not be effected except by a declaration of trust, which was admitted not to have been made by him.
The actions should be dismissed, and judgment should be given for the defendants upon their respective counterelaims for the declaration and consequential relief sought by them.
Murnaghan, J., said he also considered that the appeals should be allowed.
They were asked to take a view of the evidence given on behalf of the plaintiffs different from that taken by Mr. Justice Meredith, who tried the action. No sufficient ground was shown for departing from the general principle that the credibility and accuracy of the witnesses is particularly a matter for the Judge who heard the witnesses at the trial of the action. Accepting *171 the evidence given on behalf of the plaintiffs, the question remained as to what was the legal effect of that evidence and the inferences which could properly be drawn from it.
The plaintiffs said that as Austin Freeley on the 8th September, and again on the 15th December, 1930, placed the large sums of money in question on deposit receipt in his own name and in that of the respective plaintiffs, and as he died while the moneys remained on deposit receipt the legal title remained in the survivor. They further said that the beneficial interest in the moneys which would prima facie under equitable doctrines belong to Austin Freeley as owner did not form part of his estate passing under his will inasmuch as Austin Freeley desired that the beneficial interest should pass at his death to the plaintiffs.
In ascertaining the intention of Austin Freeley on the critical dates, viz., the 8th September, 1930, and the 15th December, 1930, it was very material to know whether Austin Freeley intended to deprive himself of the power of dealing with the corpus during his lifetime. On this important matter the attitude of the plaintiffs was extremely perplexing. They would not admit that Austin Freeley could have disposed of the corpus after the dates mentioned, but they did not argue that he was unable to do so. They said they were willing to assume that he could have dealt with the money as he pleased, but even then they claimed to be entitled to the money because he did not in fact remove it from the bank and appropriate it to his own use.
His view of the evidence was that Austin. Freeley never intended to part with his complete dominion over the corpus in his lifetime. Austin Freeley was familiar with another form of deposit in two names where it was necessary that both parties should concur to draw out the money. He chose a form of receipt under which he could draw out the money himself. He arranged that the deposit receipt would be available to himself at all times and that during his lifetime the receipts would not be available to the plaintiffs. According to the practice of the bank, interest on the deposit receipt could only be drawn by retiring the money lodged with accumulated interest, and the evidence was express that Austin Freeley required that he should be able to draw the interest.
If the plaintiffs could establish that on the 8th September, 1930, the deceased made a definite declaration of trust in relation to the money deposited, apart from the mode of investment on deposit receipt, effect might be given to such declaration of trust. Thus, if the evidence supported a declaration of trust under which Austin Freeley was to draw the interest during his lifetime and the principal sum should go to the survivor, there would be no impediment in the way of effecting the purpose so declared. That would put it out of the power of Austin Freeley to dispose of the corpus unless he survived the plaintiffs. But the plaintiffs would not state what precise trusts were declared in respect of the money: they said that there was no declaration of trust at all. His Lordship agreed that it was not possible to specify any precise trusts as having been declared on the 8th September, 1930, in respect of the money in question.
If, then, the money belonged beneficially to Austin Freeley during his lifetime, if he had not bound himself by any trust in reference to it, and if he retained full dominion over it, the contrivance to make the money pass on death was an attempt to make a nuncupative will to which the law did not give effect.
Sect. 3 of the Wills Act, 1837, so far as material, read:—“It shall be lawful for every person to … bequeath or dispose of by his will executed in manner hereinafter required … all personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which if not so … bequeathed or disposed of would devolve upon his executor or administrator.” Austin Freely was during his life and at the time of his death entitled in equity to the money on deposit receipt in the bank, and his interest could only legally pass at his death by a will made in accordance with the Wills Act. The ingenious suggestion that on the death of Austin Freeley the property passed at law to the plaintiffs, and that this property, which was his up to the moment of his death, was not bound by a resulting trust, had neither principle nor established authority to support it. It would be a direct method of circumventing the Wills Act. His Lordship agreed with the full statement of the law made by Mr. Justice FitzGibbon on this point, and held that the attempt of the deceased to circumvent the Wills Act must fail in law.
McEvoy v Belfast Banking Company
Court of Appeal.
24 April 1933
[1934] 68 I.L.T.R 3
Moore L.C.J. Andrews, Best LL.JJ.
Megaw, J.
This action was brought for:—
(a) A declaration that the plaintiff is entitled to the monies represented by a Deposit Receipt of the Belfast Banking Company, Limited, No. 65564, dated 20th July, 1921, for the sum of £10,000 in the names of John McEvoy (since deceased) and the plaintiff, and payable to either of the named parties or the survivor.
(b) An account of the interest due in respect of the money comprised in the said deposit receipt
(c) Payment of the sum of £10,000, together with the sum found due as Interest thereon.
(d) The sum of £10,000, with interest thereon from the 20th day of July, 1921, as money had and received by the defendants for the plaintiff’s use.
(e) Delivery to the plaintiff of the said deposit receipt.
The questions for decision are concerned with money lodged on deposit receipt in the Belfast Banking Company (Newry Branch) by one John McEvoy. On the 20th July, 1921, John McEvoy, who was an old customer of the Newry Branch of the Belfast Banking Company, had a sum of £10,000, which was standing to his name on deposit receipt, withdrawn and, after giving directions to the branch manager as to the accrued interest thereon, redeposited the £10,000 in the Bank on a deposit receipt in the joint names of himself and the plaintiff, who was his only son and was then under sixteen years of age. The form of the deposit receipt on which the lodgment was made is probably better known among the Irish banks than in Great Britain. It was expressed to be made payable to either John McEvoy himself or Joseph D. L. McEvoy (the plaintiff), or the survivor. I shall have to analyse the effect of this more closely at a later stage.
The circumstances in which the transaction took place are the subject matter of contradictory evidence. Uncontested facts, however, may be first stated. John McEvoy had for many years carried on the combined businesses of licensed vintner, grocer and undertaker in Newry. In the early part of 1921 he had fallen into bad health and had brought Miss Alice Kinney, the sister of his deceased wife, to assist him in his businesses. The plaintiff, who had been a pupil in Castleknock College, Dublin, was brought home some time before, as apparently John McEvoy anticipated an early fatal termination of his disease. On 10th August, 1921, John McEvoy made his will. I gathered that he had sought some medical advice in Dublin between the Bank transaction and his will.
By his will testator appointed James Adamson, of Banbridge, in the county of Down, merchant, Patrick McEvoy, of Cloghogue, James Kinney and Edward Kinney, both of Killen, all in the County of Armagh, farmers, to be his executors and trustees— he gave a number of pecuniary and charitable legacies and dealt with the residue as follows —All the rest residue and remainder of my property is to be held in trust for my son Joseph Dominick Laurence McEvoy until he attains the age of twenty-five years, and on his attaining said age for him absolutely, and pending his attaining said age I authorise my said business to be carried on by my sister-in-law Alice Kinney on such terms as my Executors in their absolute discretion may arrange.
McEvoy died on 20th September, 1921. Some time after a rather curious transaction took place; an envelope was left on 22nd October, 1921, by the executors with Mr. Coleman, the manager of the Newry Branch of the defendants, for safe-keeping. Afterwards, on being opened on 25th January, 1922, after probate was granted, it was found to contain the deposit receipt for £10,000 in question in the action and another deposit receipt for £2,000 in the sole name of John McEvoy. Probate was granted to all the executors on 16th December, 1921. The probate was noted by the defendants on 20th December, 1921, in Newry, and on 21st December at the head office.
On 25th January, 1922, the money on the £10,000 deposit receipt was transferred by *4 the bank to a new deposit receipt in the names of the trustees and executors, on the basis that the money still formed part of the estate of John McEvoy, notwithstanding the transaction of July and the form of the deposit receipt. It is this action on the part of the defendants that is challenged, and the effect of it has got to be considered in this action. A further question has got to be considered, viz., if in fact the money was wrongly transferred, whether the dealings of the plaintiff in regard to it relieve the defendants from liability in respect of it.
The plaintiff was the first witness called. I formed the impression from his evidence that he is a young man of great ability and intelligence in business matters. After mentioning the death of his mother when he was four years of age and stating that he went to school in Castleknock in 1919, and that he stayed at home from Easter, 1921, till after his father’s death and went for drives with his father, he went on to say that his father and he went to Belfast Bank in July. In his presence his father had an interview with Mr. Coleman, the manager of the Newry Branch of the defendants; he can’t recollect what was said, but after a discussion his father took out the receipt in the joint names. It was changed into the names of “myself and father.”“My father said nothing to me when that was being done.” In cross-examination he mentioned that it was he who drove his father to the bank, that he couldn’t say whether his father filled up any form of request, but that he saw Mr. Coleman at the counter at his own private desk.
This evidence is entirely contradicted by Mr. Coleman, but if it be true, it seems inconceivable that a father intending to make an absolute gift to his only son, from whom he knew he was so soon to part, would take him to the bank, and carry on such a conversation in regard to his interests, and say nothing to him as to his intentions. This is the transaction, and it is on this evidence, and the actual change of name on the deposit receipt in the form that it took, on which the plaintiff relies.
The next event deposed to by the plaintiff was an interview with the manager after his father’s death. To this interview the plaintiff at different times assigns different dates. He first mentioned it as having taken place in January, and then changed the date to Easter, 1922. He says that having heard that the deposit receipt had been changed into the names of the trustees, he asked Mr. Coleman why this had been done, and that Mr. Coleman replied that as plaintiff was a minor it would save compound interest if so changed. Again, he dealt with another interview with Mr. Coleman. My note of the evidence reads:—“I saw Coleman on another occasion about eight months after when I came home from school altogether. I remained at school till summer, 1923. It was after I left school. I asked why the deposit receipt was changed, and he said it was changed under the will and belonged to the trustees till I was twenty-five. These were the only two occasions, and I accepted what Mr. Coleman said.” At a later stage I asked plaintiff did he not recognise that these replies were inconsistent. He said that he did, but took no steps to have his doubts cleared up.
If this evidence stood uncontradicted, it is clear that plaintiff knew in July, 1921, about the original transaction, that he knew what the bank had done at the time it was done, that his inquisitive, intelligent mind was awake to his own interests, but that having got what he admitted were inconsistent and unconvincing explanations from the bank manager, he remained quiescent until Mr. Fisher made him acquainted with his rights at the end of 1930.
Mr. Coleman gives an entirely different account of the transaction. “19th July, 1921. Got a verbal message from McEvoy that he wanted to see me after Bank. Went over to his house; saw him—sitting up in drawingroom upstairs. Was very ill—internal disease; he realised that he was near death. Adamson and Edward Kinney were with him. Had conversation. About his affairs—will—generally; told me he was going to settle affairs. Gave names of four executors. He said he was going to leave all to his son, to tie it up till he was twenty-five, that Miss Kinney would manage his business. Conversation about deposit receipt £10,000. Related to estate duty. McEvoy very careful and not anxious that estate duty should be paid. He said so. Adamson also said he wouldn’t pay estate duty at any price. They asked my opinion. I said I couldn’t tell them. Then they said if there could be two names, would it meet the case. Mr. McEvoy and Mr. Adamson also. I said I didn’t know, they should see their lawyer, he would be able to advise them. Agreed to send it over in the morning to put in two names. McEvoy gave the directions. He said put in names of self and son payable to either of the survivors. Adamson was with him. Knew he was under age. Quite customary to issue deposit receipt in that form and to minors. He said he would require cash £20 and balance to account. I went *5 away. Old deposit receipt sent to me next morning. Mr. Edward Kinney brought it. Endorsed by John McEvoy. £20 0s. 0d. £36 14s. 3d. £10,000 0s. 0d. Filled deposit receipt in two names as directed. Identifies deposit receipt of July, 1921. Requisition form filled up in my own handwriting, not signed. We keep them with records. It is not so that plaintiff brought his father down to bank. He was not in the bank on that day. I never saw him again alive. Bank afterwards received probate of will from Hunter, Moore & Boyle.”
I feel bound to accept in substance Mr. Coleman’s evidence with regard to the transactions connected with the deposit. Mr. Adamson was not called by either side. He was not, I think, a customer of the defendants, and though it was stated but not proved that the plaintiff had issued a writ against the executors, there did not seem to be any strained relations between him and the plaintiff. It may be that Mr. Coleman has after ten years forgotten interviews. It may be that the plaintiff did accompany his father to the bank, but I certainly cannot regard Mr. Coleman’s evidence of the interview in McEvoy’s house as a concocted story. I am quite satisfied, however, that plaintiff was aware, if not before his father’s death, at any rate very soon after, that his name was on the deposit receipt, that the change was made for a purpose connected with avoiding death duties, and that the executors had had the sum transferred to their names.
January, 1922, was an impossible date for the first interview to which plaintiff deposed. It was only on the 25th January, 1922, that the deposit receipt was transferred, and plaintiff could not have interviewed Mr. Coleman on the subject if he had returned at the beginning of the term to Castleknock.
In the light of these facts the first defence raised by the pleadings may be considered. It is clear that there was no immediate gift made to the plaintiff by the transaction of 20th July, 1921. The nature of a transfer to joint names was dealt with by Parker, J., in Re Warwick, 56 Sol. J. 253, and the effect of a deposit receipt like the present was the subject of a decision by O’Connor, M.R., in McDowell v. McNeilly [1917], 1 I.R. 117.
(His Lordship then read the judgment of O’Connor, M.R., at pp. 121 and 122 of the report).
From this it would appear that any declaration made by the original owner while the gift—if I may so call it—was ambulatory would not fall within the principle that declarations of intention by the donor by will or otherwise after the date of the transfer could not be given in evidence, as otherwise a donor might revoke his gift. In the present case John McEvoy had full power over the fund during his lifetime, and if there were any doubt about his intention I should have no hesitation in admitting any declaration made in regard to it during his lifetime, while he, holding in his own custody the deposit receipt, could dispose of it as he wished. Indeed, in the present case one might properly consider the transaction of 20th July, 1921, and the will made on 10th August as interlocked transactions. However, there can be no doubt what the intention of the deceased was. The name in the deposit receipt was changed, not to take the beneficial interest away from John McEvoy or his estate, but to enable the executors to commit perjury in their affidavit after John McEvoy’s death without running the risk of being found out, and in order that no complications might arise.
The proved intention of the settlor would in ordinary circumstances refute the presumption of an advancement, and equity would have regard to the intention and treat the money as belonging to the settlor. In point of fact, in the present case the transaction could in no circumstances have lawfully averted the dreaded liability to estate duty. As I have said, it would make the subsequent perjury more capable of effecting its object. The transaction, however, is tainted with illegality. I am not sure that Childers v. Childers, 3 K. & J. 310, with its subsequent history, is a very convincing authority, nor do I think that the cases cited by Mr. Black in regard to legacy duty really touch the present case; and, though it is stated on high judicial authority that public policy is a very unruly horse, and when you get astride of it, you never know where it will carry you, I do think that the principles laid down in Gascoigne v. Gascoigne, [1918] 1 K.B. 223, apply to the present case, and that where a transaction such as the present occurred, the doctrine supporting the preponderating right of the person in possession applies. On the death of John McEvoy the plaintiff became the legal owner of the money on deposit receipt, and equity cannot be called into action in a case of the kind to undo a consequence of such a flagrant transaction.
Accordingly, though I have no doubt that there was no intention to take this sum of £10,000 out of the estate of the deceased or the operation of the will, I feel bound to hold that, in the circumstances, the Court *6 must leave the ownership in the condition it was as between the plaintiff and the estate at the death of John McEvoy. The defendants can have no higher rights than the executors. The bank found themselves at John McEvoy’s death by their own contract the debtors not to the trustees but to the plaintiff. Accordingly, on this issue I must decide against the defence raised by paragraph 1 of the Defence.
But this does not put an end to the action.
The defendants rely on an alternative defence, viz., that the plaintiff was a party to and so acquiesced in and ratified the dealings of the executors and trustees, and the action of the bank in advancing the moneys to meet the trading account of the business, with which the plaintiff had been associated almost since his father’s death, has resulted in a situation that the moneys on deposit receipt must be held to be paid or applied by the defendants for the use of the plaintiff.
In regard to this defence, it is necessary to weigh the evidence in regard to the conduct of the business.
John McEvoy, as I have said, carried on an extensive business in Newry in three departments. In his will he had evidently contemplated that these should devolve on his son. The executors and trustees, as I have stated, concealed in their affidavit of assets the existence of the two receipts. They opened three accounts in the defendants’ bank. No. 1 connected with the businesses, No. 2 with the rents of house property, and No. 3 an administration account.
The business was carried on uninterruptedly, Miss Alice Kinney acting as manager according to the trusts of the will. The cheques were signed in batches by the four executors, at first in Messrs. Hunter, Moore & Boyle’s office, and then filled in by Miss Kinney during her managership. After his father’s death, the plaintiff returned to Castleknock and stayed there with a very liberal allowance of pocket money, until the summer of 1923, when he went into the business. Whatever criticism may be made against the trustees for their management of affairs, they certainly did not err on the side of strictness with the plaintiff. The case was opened as if he were a mere message boy, but throughout the case I did not see a single instance of any control being exercised over him by manageress or executors. The executors, no doubt looking forward to the extreme probability of his ultimately succeeding to the control of all, as his father had wished, seem at no stage to have checked his drawings of such moneys as he wished, and he was normally present at trustees’ meetings and was taken by them to their solicitors when business affairs were under discussion. From beginning to end, I don’t see a trace of evidence of concealment by the trustees from the plaintiff of his rights, or any deception on their part.
The businesses as carried on were never prosperous. During the first two years of Miss Kinney’s management, according to the accounts produced on behalf of the plaintiff, there was a slight profit, but the last year of her management was marked by a serious loss. She married an assistant in the business, Con McAnulty, in Easter, 1925, and they set up a rival business. Then a manager called Murden was brought in by the trustees. During his managership the businesses continued to lose money. The plaintiff, who attained age during the period of Murden’s management, was taking more and more control. Shortly after Miss Kinney’s departure, the plaintiff took a very active part in the purchase of some houses in Rooney’s Terrace in May, 1925, a transaction in respect of which the defendants claim to be relieved from liability as against the advance of the purchase money. From all the evidence I am satisfied that the plaintiff was, though a minor, in the centre of this transaction, and it is perhaps the only profitable transaction in the sordid history of the McEvoy estate. It is significant of his position when in his own evidence plaintiff says “Hunter, Moore & Boyle rang me up. Boyle asked me to take Adamson over to see the property.” The plaintiff advocated the purchase, and was conversant with the financing of the transaction. It was actually financed by a transfer of the funds that had been taken from the deposit receipt sued on and placed on 25th January, 1922, in the names of the trustees. This sum was clearly earmarked, and this was the first transaction by which the capital sum of £10,000 was depleted. A sale was made last year of this property, and the proceeds of the sale have found their way into the plaintiff’s pocket. Yet in this Court of Equity he demands that the £10,000 should be paid to him without any deduction in respect of the proceeds of the property.
It is hardly conceivable that during this time and when this transaction was completed, the plaintiff, who was often at the bank, who was calculating the value of the investment, who, according to his own account, had been present when the deposit receipt was originally put into the joint names, who had interrogated Mr. Coleman as to the reasons for the change, was asleep *7 as to his rights in the matter. Weighing all the evidence, I should say that, while there was some sort of a divided control of the businesses under a lax supervision of three trustees when Murden was manager, after his departure the plaintiff was the real master. For some time, from Easter, 1927, to February, 1928, there was no other manager except the plaintiff himself, and from July, 1929, he was solely in charge. He had attained age in November, 1926, and from that time he had practical control of the filling in of the cheques. As Mr. Thompson, of the firm of Atkinson & Boyd, who first audited the accounts for the trustees, said in his evidence, it was the plaintiff who priced the stock for the auditors, and the auditors looked to him for that. He was the man in control then (in 1925) and was the brains of the place. The ledger was entirely in his handwriting. It is found by the auditors “to be kept in a very irregular fashion,” and in his evidence Mr. Thompson said there was a “leakage” more pronounced in 1925. To a question put by me, plaintiff answered, “No salary was paid me. I just took whatever I liked.” As the plaintiff himself deposed, the trustees neverinterfered with his drawings, which were for the most part cash drawings. There is some evidence that some of these were occasionally entered in the books, but the reports of the auditors show that very large sums were unaccounted for in the books.
Messrs. Sheeran, Carton & Co., were, according to the plaintiff, asked to audit the accounts at his instance, really to meet demands of the Income Tax authorities. In answer to Mr. Lowry, plaintiff said “it was at my instance audit was taken and they reported to me.” The first report of Messrs. Sheeran, Carton & Co. was made on 24th April, 1928. It was addressed by them to “the Reps. of John McEvoy, deceased.” It was made at a time after Murden left, and covered the period in which plaintiff was sole manager before McParland, the succeeding manager, came, when admittedly there was no other manager than the plaintiff. It was a very damaging report, condemning the system of book-keeping, suggesting leakages of cash and/or stock during the period 6th December, 1926, to 31st January, 1928. The second report covers the period from 1st February, 1928, to 30th April, 1930, and was made to the plaintiff himself. If the first report was bad, this was still worse, but the plaintiff, who was of age and, I am satisfied on the evidence, in virtual control of the businesses, made no attempt to change his ways.
Three of the executors during this time were legally responsible for the carrying on of the business. The fourth disappeared at an early stage to America. They never exercised more than a nominal supervision. Probably they regarded their responsibility as only being concerned with the plaintiff, and that as he was of age and managing it according to his own ideas, they should not challenge the management. So far as I can see, Adamson was the most active. He was friendly to the plaintiff. He interested himself in the purchase of the Rooney Terrace property, for a time collecting its rents and, to the knowledge of the plaintiff, charging a commission therefor. He and the other trustees signed cheques in blank necessary for the business, which were at first given to Miss Kinney, and afterwards were left in the business establishments, when they were filled in first by the manager, afterwards, when plaintiff came of age, mostly by him, but at times by McParland. The trustees from time to time would drop in to the business concerns and have a look at how trading was going on; but apart from their appointing the two managers, and signing bank documents, including deposit receipts, I do not see that they exercised any control. Indeed, McParland’s appointment was made at the instance of the plaintiff, who, recognising the penurious views of Adamson as to remuneration of managers, for a time deceived Adamson as to the amount of salary which was actually paid to McParland. The agreement with McParland signed by Adamson apparently was 35s. a week. The sum actually paid during his tenure of the post was £2 10s. McParland’s evidence was impeached where it differed from the plaintiff’s. To me it seemed that McParland was a reliable witness, and I may say that I believed his evidence, which is of considerable importance as regards the knowledge which the plaintiff had of his own position and rights.
Adamson had a stroke in 1929, and from that time he is not shown to have done anything more than sign his name, and plaintiff himself says that it was on his report that McParland was dismissed. This was in July, 1929. After that no person in the position of manager appeared in the business other than the plaintiff.
Let me now turn to the important dealings with the bank that took place through these years.
Consistent with the legal position, the No. 1 business account being in the name of the trustees, the defendants through Coleman, the Manager, dealt at first chiefly with *8 Adamson, the acting trustee. The defendants had interpreted the law for themselves and decided that the moneys on deposit receipt still remained part of the estate of John McEvoy, and they so dealt with the money on deposit receipt all through, though it is clear they never left out of sight the fact that the person most interested in that estate was the plaintiff, and the dealings show that from the time he came of age they laid great stress on his being acquainted with and acquiescing in the disposal of the fund on deposit receipt. There does not seem to have been any correspondence in regard to the advance made for the Rooney Terrace property. There had been some withdrawals and relodgments, including a transaction on 27th February, 1925, when £257 12s. 10d. interest which had accrued was transferred to current account. The plaintiff was in the business actively engaged at 27th February, 1925, but he is not shown to have had any special knowledge of the transaction in regard to the transfer of the £257 12s. 10d. to current account. The £10,000 put on deposit receipt in January, 1922, remained intact with interest that had accrued other than the £257 12s. 10d. till 1st May, 1925, when the Rooney Terrace property was bought. I accept Mr. Coleman’s evidence in substance in regard to what took place at that transaction. As the result of an application by the plaintiff and Adamson, fortified by Mr. Boyle, forwarded to the Head Office by Mr. Coleman, the Head Office agreed to the withdrawal of £2,076 from the moneys on deposit receipt to pay the purchase money of this property. Plaintiff was then a minor, but he had a very active voice in the transaction, and the moneys spent on it have been repaid in full to him or his account within the past two years.
At the time all the moneys remaining after deducting the £2,076 were relodged the same day in the names of the four trustees (the absent one acting by power of attorney). As might have been expected from the facts I have mentioned, the overdraft in the business was increasing rapidly, and more than once Mr. Coleman writes to Adamson on the subject, and I am satisfied that Mr. Coleman also had discussed the matter with plaintiff, who was often in the bank.
Plaintiff came of age in November, 1926 On 22nd December, 1926, we find a memorandum of plaintiff to Mr. Coleman specially referring to the deposit receipt. This is not the letter of an unsophisticated child. He knew then that the deposit receipt had been in his own name. He also knew that the business was his, and that he would come into complete ownership if he lived till he was twenty-five. He knew that the present deposit receipt, less the Rooney Terrace purchase money represented the money that was once in his own name and had been transferred to the names of the trustees. With that knowledge, without a suggestion of duress or deception on the part of the trustees, he became, at the very least, an intermediary in the transfer of the £1,709 17s. 6d. With that letter of 22nd December before them, what were the defendants to think? This young man engaged in the business of which he was the owner to all intents and purposes, joins in arranging with the trustees for a transfer from deposit receipt to the current account of moneys that were, as events turned out, and as seemed probable, then destined to be his own. It is said he did not know what his rights were, that he did not know that he might have brought the business to an immediate downfall by insisting on those rights and insisting that the moneys were his own. He who, according to himself, had been duped by Mr. Coleman five years before, had fully accepted Mr. Coleman’s statement, and now without a question or remonstrance writes the letter of 22nd December, 1926. In any case, £1,709 was withdrawn on 7th January, 1927, and I believe the evidence of Mr. Coleman, who says that plaintiff directed him to put it to the current account. £7,000 was then left on deposit receipt, and plaintiff made specious promises as to the future conduct of the business and getting in outstanding debts.
On April 14th, 1927, at the instance of the Manager of the Newry Branch of the defendants, an important letter or memorandum is written. At first, after hearing Mr. McGonigal’s skilful opening of the case, I was disposed to believe that the plaintiff had no knowledge of affairs and to think that an undue advantage was taken of youth and inexperience; after I saw the plaintiff I modified my view. The letter was drafted at the bank and given to McEvoy, who took it away with him. There is no suggestion of anything like deception or duress. It is a pity the plaintiff was not told to consult his solicitor in regard to it, but on cross-examination plaintiff practically admitted all the averments it contained. The document is undoubtedly in the handwriting of the plaintiff. Though it is not an estoppel, it is a powerful piece of evidence, especially in view of the conduct of the business for the next three years. The plaintiff was no child, he was not under the influence of the trustees nor the bank. He was a young man who *9 might have been a very successful business man if his energies and talents had been better directed. If I can form an opinion from his appearance in the witness box, he has a very considerable knowledge of the world and business affairs. He must have recognised the fact that the bank had some compunction as to their transactions with the trustees and were desirous to have a written acknowledgment of his consent to the dealings which had taken place during his minority.
Practically at the same time—viz., the 7th April, 1927—Mr. Coleman wrote a long letter to Adamson marked private and confidential, on which the plaintiff strongly relies. Undoubtedly this letter stresses the responsibilities of the trustees, who were principals in the accounts so far as the bank was concerned. In the draft Mr. Coleman has submitted to the plaintiff his “responsibility” was also referred to, and I do not see that this letter assists the plaintiff. The bank was nervous and wished to have trustees and beneficiary kept aware of their responsibilities, and I think they desired to have two strings to their bow, and keep open possibilities of getting indemnified against loss in respect of everyone concerned with the affair.
The next transaction affecting the deposit receipt moneys took place in October of the same year. I see no reason to doubt the evidence of Mr. Coleman that in this McEvoy, the plaintiff, was the intermediary. The deposit receipt was given to him, taken by him to the trustees, was indorsed by them, £3,142 6s. 0d. transferred to current account, and a new deposit receipt given for £4,000, and this left the current account in credit. These transfers were duly chronicled in the ledger by the plaintiff.
The last letter written by Mr. Coleman to Adamson was 4th June, 1928. The plaintiff since he came of age was evidently taking the dominant part in the business.
A letter of 10th July, 1928, by the plaintiff to Mr. Coleman is illuminating. At this time Mr. Coleman recognises McEvoy as the master of the business, just as at an earlier date, Messrs. Atkinson & Boyd, and at this time Messrs. Sheeran and Carton recognised him. After another letter of 24th September by the plaintiff to Mr. Coleman, another raid is made on the deposit receipt—again this was done through the plaintiff, and only £1,000 of the £10,000 now remained.
In February, 1929, the plaintiff wrote again to Mr. Coleman. If words mean anything, these show that the plaintiff at any rate assumed that he was in command. Mr. Coleman’s letter of 17th June is to the same effect and the deposit receipt through plaintiff has now been fully absorbed in the business— all the payments being made with the full knowledge of the plaintiff, and I might add quorum pars magna fuit.
Messrs. Fisher came on the scene early in the next year. On 1st April, 1930, on behalf of plaintiff, they ask an overdraft of £350 a request which was turned down. On 20th November, after referring to the plaintiff’s having attained twenty-five, they asked again for an overdraft, now of £650, on security of Rooney’s Terrace; and make complimentary references to the friendly relations in the lifetime of deceased’s father. The request is refused on 26th November, and straightway on 28th November, 1930, comes the demand for particulars of the deposit receipt and the consternation of the writers because of the non-disclosure of its existence in the Probate.
It was only then, according to the plaintiff, that he became acquainted with his rights, after the proceeds of the deposit receipt had become exhausted and after the bank declined to give him a further overdraft.
Assuming, as I have already decided, that the bank acted wrongly in January, 1922, in taking the moneys on the deposit receipt and putting them, less interest, to a new account of the executors as if they were moneys of the estate, what consequences follow?
This transaction in law was a conversion which occurred at that date, but at a date on which the plaintiff was an infant. The fund was earmarked and can be traced all through the various dealings. In the view that I take of the law, the plaintiff could, on attaining age, have brought an action against the bank in which he would have succeeded, though on equitable grounds, but the Rooney Terrace property would have been available to recoup the bank, as I cannot see on what principle the plaintiff could retain the entire £10,000 and the Rooney Terrace property. They would thus have had in their power the deposit receipt for £8,309 and the Rooney Terrace property available.
In considering how after events may affect the position, one cannot leave out of sight that if the plaintiff attained the age of twenty-five, he would, as he knew, succeed to all the estate of his father, and that, when he was for all practical purposes given dominion over the moneys transferred to the names of the executors, it did not much matter whether they had been placed in his own name or the names of the trustees. As I have already said, I have seen no evidence that would suggest that the executors deceived the plaintiff in any way. I should gather, indeed, that he knew the facts from the first. I don’t believe that Mr. *10 Coleman deceived him in any way. Plaintiff’s own admission shows that he knew immediately after, if not before, his father’s death that the money had been placed in the joint names payable to the survivor. He does not say from whom he heard it, but he says he asked an explanation from Mr. Coleman. Would his enquiring mind be satisfied with the feeble replies that he attributed to Mr. Coleman? In any case, he knew of the transfer and he knew how the deposit receipt stood when he came of age. He was a party to all which had taken place during his minority, transactions which, during those years when he in reality managed the business, transferred the moneys which he now claims to himself while his facile trustees looked on and light-heartedly permitted him to squander. It is all a sordid story. None of the parties, plaintiff, defendants, trustees, have reason to be satisfied with their conduct, but the plaintiff presents a sorry spectacle to-day. He has dissipated his valuable patrimony and, having done so, now asks a court of equity that he shall have it all over again.
If in such circumstances as the present, a court of equity would be bound to decide in favour of the claim, it would seem a perversion of right and justice. I have come to the conclusion on the evidence that the payments made out of moneys to which he was entitled to the current account were made at the instigation of and with the full consent and authority of the plaintiff when he was a free and informed agent, and I also incline to the view that in the circumstances he is estopped, having for over four years after coming of age, dealt with the defendants as he has done, from making his present case. I place no reliance on his evidence that it was only in November, 1930, after consulting Messrs. Fisher he learned his rights. I believe from the evidence given by McParland, supported by McAnulty, that in the year 1929 the plaintiff had already conceived the scheme which he has attempted in this action, viz., to get a second payment of the amount in the deposit receipt.
I have no hesitation in deciding that, as regards the Rooney Terrace property, the purchase was made with the full concurrence of the plaintiff while still a minor, that this purchase and the expenditure of the moneys advanced by the bank from the deposit receipt fund was ratified by the plaintiff after he attained age.
The other subsequent transfers to current account made on 7th January, 1927, 10th October, 1927, 2nd October, 1928, and 19th July, 1929, were made, as I have said, with plaintiff’s full consent, acquiescence, and with his authority. It follows, therefore, that the defence succeeds so far as these payments are concerned.
The sums of £170 and £257 12s. 10d. stand on a somewhat different footing. They were dealt with before the plaintiff had gone into the business and before he had attained age. He was no active party in these transactions between the bank and the trustees. He cannot, however, in his dealings with the bank and his knowledge of the transactions about the deposit receipt, have remained in total ignorance of the fact that the two sums were taken from the deposit receipt account and were employed in the business of which he was, for a considerable time, the prospective owner and manager. These moneys have enured, as mentioned in the defence, for his benefit. Perhaps it might be more accurately said that they were made available for him to squander. While I am of this opinion and while I strongly suspect that the plaintiff was acquainted with the legal position from the very first, and while I am convinced that he knew his full rights from the time that he became twenty-one, I do not see such active ratification of the two withdrawals in question as would prevent his taking advantage of the mistake of the bank, and with very considerable doubt, I decide that he shall succeed in recovering these two sums.
By his claim, the plaintiff asks interest on the amount payable. If these sums had remained on deposit receipt, the current account would have been more overdrawn and more interest would consequently have been charged against it. I do not think that in the circumstances the bank should be charged a higher rate of interest than the ordinary deposit receipt interest. No doubt the money was used in trade, but in a trade where it was in reality under the control of the plaintiff himself.
I therefore find that the plaintiff should be held entitled to the sum of £427 12s. 10d. with interest at deposit rates— i.e., £514 4s. 4d. On the 10th of June, 1931, the sum of £594 11s. 2d. was lodged in Court, more than enough to satisfy the amount found due.
The defendants are, therefore, entitled to judgment with costs after the date of the defence.
The plaintiff appealed.
McGonigal, K.C., Murphy, K.C., and Copeland for the appellant.
Lowry, K.C., Black, K.C., and MacDermot for the respondents.
Sir William Moore, L.C.J.
I am so much in agreement with the inference of fact drawn *11 and the proposition of law stated by Mr. Justice Megaw in his admirable judgment in this case that I think it would be wrong to indulge in unnecessary recapitulation, and I therefore merely desire to add a few observations of my own. Firstly, as to the form of action, as to which there was some comment during the hearing of Appeal. The law is well settled since Foley v. Hill, 2 H. L. Cas. 28, that the relation of customer and banker is that of creditor and debtor; and if in the present case on the facts which have been proved, the executors of James McEvoy’s will were to sue the bank for the sum of £10,000, or whatever may be due in this action, the claim would be a common law one and the simple defence would be that the moneys had been paid. But here, however, plaintiff was not a customer of the bank except technically for a very few weeks when the bank determined that relationship in so far as it was ever in existence by reason of the plaintiff being the survivor in a deposit receipt account. The plaintiff as beneficiary under his father’s will could bring an action in the Chancery Division against the trustees and executors for misapplication of his father’s estate, and if he chose he could make the bank defendants in that action, and obtain relief, provided he could prove that with due knowledge and notice of his own rights they were “implicated” and deliberately assisting in the commission of any breach of trust by the trustees in management of the estate.
The present suit is one in which plaintiff has not thought fit to join the trustees, and the bank as sole defendant has not thought fit to bring them in under the third party procedure, apparently for the same reason that they are not worth powder and shot, and for this reason the action proceeds against the bank alone. For though the statement of claim is very reticent so far as allegations of the existence of a trust are concerned, this is the objective of the whole trend of the evidence and the case made by the plaintiff. I think, therefore, subject to the necessary proofs, that the action has been rightly brought in the Chancery side of the court.
With regard to the capital sum involved of £10,000, I would like to point out that the plaintiff was either entitled ( a ) to the whole sum under the doctrine of advancement, in which case it ceased to form part of his father’s estate, or ( b ) including it in his father’s estate, he would be entitled to so much of it as would legitimately be in existence once he attained the age of 25 years by virtue of the provision in his father’s will.
The leading case that is always quoted in the Irish Courts since I have been called to the Bar is that of Talbot v. Cody, Ir. R. 10 Eq. 138; 146, with the luminous judgment of the then Master of the Rolls, Sir Edward Sullivan.
In my opinion, the transaction in this case, so far as the deposit receipt is concerned, was an attempt to defraud the revenue, and when the court enquires into this afterwards more than sufficient evidence is forthcoming to rebut any presumption of advancement from father to son. In my opinion it is clear that the plaintiff took no beneficial interest in this money by way of advancement outside his father’s estate. But he was the survivor of his father and himself on the deposit receipt, representing moneys lodged with the bank and as such had a possessory right as between himself and the bank. The bank behaved in a most extraordinary way in the matter. They ignored the principle of Talbot v. Cody (supra), they assumed the right at their own will to wipe out the plaintiff’s interest in the money by a stroke of the pen, they reversed the decision in Gascoigne v. Gascoigne [1918] 1 K. B. 223, by replacing in the testator’s estate moneys which no court of equity would assist him to recover. But it was a terrible risk for the bank to take and in my judgment wholly unjustifiable, and had it not been for the defence of acquiescence in the subsequent dealings in which the plaintiff is personally involved, I would grant the plaintiff the relief he seeks, with costs.
As therefore this £10,000 was in fact handed over to the trustees of the testator’s testamentary estate, it falls to be dealt with under his will. There is no dispute as to the effect of the contents of the will; debts and legacies were to be paid; the publican’s business was to be carried on, the plaintiff to be maintained, and the residue was to become his own when he attained the age of twenty-five. This, however, would not happen until the year 1930 (?). Should he die in the meantime, he had no disposing power, as the testator had provided for distribution of the fund under his own will. It is plain on the evidence that the bank treated this young man throughout as the virtual owner of the business. I need not refer to the precise words; they will be found in the learned judge’s note. And here again they were taking a risk in treating the plaintiff as owner of the business from his twenty-first birthday in 1926, because if he had died between his legal coming of age and his testamentary coming of age—four years later—the bank might have had considerable difficulty in arranging matters with those entitled in remainder. However, they were *12 favoured by fortune, and he attained his testamentary full age.
In opening the sentences of this judgment I referred to the necessity of the plaintiff proving that the bank had notice of all his rights under the will of his father. In spite of Mr. Coleman’s statement that he never read the will and his assumed ignorance of its contents, I am quite satisfied that the bank knew all about the financial position of the plaintiff. Had they not done so, they would not have treated him as owner, and if the matter had stopped there I would have been prepared to hold that the bank along with the trustees were liable for whatever breaches of trust were proved. But I am also satisfied, contrary to the plaintiff’s own description that he was a mere message boy, that he was fully alive to his legal position, including his rights under his father’s will, and in the case of every reduction of the moneys held by the bank for the trustees he gave a willing assent, just as he did to the application of such moneys in defraying the debts of the business in which he was so vitally interested.
I have said I desire to avoid recapitulation, and therefore I content myself merely by saying that I should like to be allowed to adopt every word on these issues which fell from the learned judge at first instance. I think acquiescence, so far as it was necessary, and ratification on the part of the plaintiff, were established beyond a doubt. I think the appeal fails and should be dismissed with costs.
Before concluding, I would wish to express my appreciation of the admirable manner in which the appeal books have been made up for the use of this court. Clearly typed, indexed, and containing everything that is necessary, it has been a pleasure to work with them, and personally I would like to thank plaintiff’s solicitors.
Andrews, L.J.—The material facts of this case are fully stated in the judgment of Megaw, J. I am satisfied upon the evidence that the sole object which the plaintiff’s father, John McEvoy, had in view, when, on 20th July, 1921, he placed the sum of £10,000 on deposit receipt with the defendants in the joint names of himself and the plaintiff, was the avoidance of estate duty. He was very ill at the time, suffering from an internal disease, and it is apparent that he realised that his death was near at hand. His will, executed three weeks later, on 10th August, 1921, was under consideration at the time. The settlement of his affairs was not an easy task, as his property, including the three businesses of publican, grocer and undertaker, was reasonably substantial, and the natural object of his bounty was his only child—a motherless schoolboy, then under 16 years of age He shared with many other good citizens a natural reluctance to hand over any of his life savings which he could avoid doing to the National Exchequer; and he hoped, and possibly believed, that by the device of putting the sum of £10,000 into the joint names of himself and his son payable to either or the survivor, coupled with the ignorance or the elastic conscience of his executors, this substantial sum might escape the vigilant eye of the estate duty authorities. We are not concerned now with the temporary success which followed. Our only interest lies in the fact that the real motive—the real object—of the transaction was not the advancement of his son, who under his will would not become entitled to the corpus of his estate until he attained the age of 25 years, but the desire to avoid the payment of duty.
Now, what is the legal effect of his action? The principles underlying the conflicting doctrines of resulting trust and advancement are perhaps to be found most clearly stated in the notes to Dyer v. Dyer, 2nd White & Tudors L. C., 8th ed., 820. In general, where property, whether real or personal, is taken in the names of the purchaser and others, or in the names of others without that of the purchaser, a trust results to the man who advances the purchase money. Such resulting trust, arising simply from equitable presumption, may, however, be rebutted by parol evidence. Thus, it has long been settled that a purchase by a father in the name of his child is a circumstance of evidence which displaces such equitable presumption, and raises a primâ facie case of advancement. So also a presumption of advancement may arise where a father alters a deposit receipt from his own name to the names of himself and his wife: Talbot v. Cody (supra). Such circumstance is, however, only evidence of an intention, and may in turn be met with other evidence tending to show a contrary intention. Such evidence usually is in the nature of showing that the child or wife had been already fully advanced, or that the father retained possession of the property. But there are certain well defined limitations upon the class of evidence admissible to rebut the presumption of advancement, one of which is that the Court will not receive, or, at any rate, will not act upon evidence, the object of which is to show that the person who made the transfer intended it to take effect in fraud of the law or in contravention of public policy. This limitation has been frequently recognised in such cases as Childers v. Childers, 3 K. & J. 310 and 1 De G. & J. 482; Cottington v. *13 Fletcher, 2 Atk. 156; Muckleston v. Brown, 6 Ves. 52, 68, and in the comparatively recent case of Gascoigne v. Gascoigne, [1918] 1 K. B. 223, where a husband who was in debt took a lease in his wife’s name with the object of protecting the property from his creditors. He was not permitted to rebut the presumption which the law raises by setting up his own illegality and fraud, or to obtain relief in equity because he had succeeded in proving his own dishonest act.
I, accordingly, agree entirely with Megaw, J., that, whilst it is clear upon the evidence that there was no intention on the part of John McEvoy to take this sum of £10,000 out of his estate and to make an advancement of it to his son, the Court cannot have any regard to the evidence which establishes this fact because of its illegal taint.
I have felt it right to make my views clear upon this point, which was properly raised for determination in the action, yet, strictly speaking, is not in issue on this appeal as the defendants, having succeeded, with the aid of the lodgment in Court, on the further plea of acquiescence, did not consider it necessary, or perhaps advisable, to raise the matter before us by the service of a cross-notice of appeal.
I now turn to the question of acquiescence. For the determination of this issue it is, in my opinion, in the first place necessary to consider what was the relation of the plaintiff and the defendants to one another upon the death of John McEvoy. In my opinion, Foley v. Hill, 2 H. L. Cases 28, is a clear authority that it was the relation of creditor and debtor, not that of cestui que trust and trustee. In the performance of his ordinary duties—the receiving of money from his customer—a banker is not even, like an agent, a quasi-trustee. Money paid into a bank ceases altogether to be the money of the customer. It becomes the banker’s money. He can deal with it as his own; he is guilty of no breach of trust in employing it; he is not answerable to his customer if he puts it into jeopardy; he is not bound to keep it or deal with it as the property of his customer, but he is, of course, answerable for the amount because he has contracted, having received that money, to repay to his customer when demanded a sum equivalent to that paid into his hands. This relationship of debtor and creditor exists, of course, as clearly in the case of a deposit as of a current account: Pearce v. Creswick, 2 Hare 286. It was fully appreciated by the pleaders in the present action, who nowhere in the statement of claim allege anything in the nature of a breach of trust, but base their claim on an alleged wrongful payment of the £10,000 without the authority of the plaintiff to four named persons, who in fact were, though they were not referred to as such, the executors and trustees of John McEvoy’s will. Alternatively the sum is claimed as money had and received. In substance on the facts of this case there is no difference between the two counts; and the only Chancery flavour which the statement of claim contains is the prayer for a declaration and for an account of interest due, both of which could, if necessary at all, have been obtained in the King’s Bench Division, though more conveniently sought on the Chancery side.
Under these circumstances, it was somewhat remarkable to find that practically every authority cited on behalf of the plaintiff was a decision of the Chancery Courts, in which an issue of a breach of trust was involved.
Before proceeding further, however, with the legal aspect of this question, let us consider the facts. What material facts were within plaintiff’s knowledge, and of what was he ignorant? His evidence was not, in my opinion, characterised by excess of candour, yet certain facts he was bound to admit. He knew that the £10,000 which had been on deposit receipt in his father’s name was transferred into the joint names of his father and himself, and he knew, a short time after his father’s death, that it had been changed into the names of the trustees. He heard his father’s will read after his death, and heard the discussion upon it which followed. In no part of his evidence does he suggest that he was unaware of the fact that under the will the residuary estate, including the businesses, were to be held by his trustees in trust for him until he attained the age of 25 years and then for him absolutely. All the facts established in reference to his connection with the business would negative any such suggestion; and indeed in cross-examination by Mr. Lowry he admitted that he knew he would be “entitled to everything at 1925 (? at 25).” Actively engaged in the business from the moment he left school, though during part of the time he was assisted by a manager, he knew, as he admits, that the business account needed to be reinforced, and that some money should be transferred to shop current account. He knew that large sums were taken from deposit for this purpose. Indeed, he admits that he “got” the executors to endorse the deposit receipt on several occasions for this purpose, and knew it would soon be gone. Ledger entries of such withdrawals from deposit and of lodgments to business account were made in his own handwriting. In his conduct of the business he frequently filled up cheques which had been signed in blank— 20 or 30 at a time—by the executors. He *14 admits that he may have done this even before 1925. Sometimes, on the other hand, cheques would be filled up by the managers. The last manager was McParland, who was dismissed on plaintiff’s report in August, 1929, after which the plaintiff carried on the business himself. He received no salary; he just took what he liked. He would take money out of the drawer and the trustees and executors never interfered with his cash drawings. Sometimes also—he suggests on only three or four occasions—he drew cheques for his drawings. One of the cheques which he so drew was for £150 in favour of himself personally on the eve of his marriage. There is also an unexplained cheque, dated 2nd September, 1929, for £20 in favour of his wife. As illustrative of his financial methods and his independence of the trustees, the petty cash book for the month of February, 1928, shows twelve payments to or withdrawals by the plaintiff, amounting to £9 0s. 6d. Obviously, however, all that was taken by plaintiff out of the business was not entered. This applies to both cash and stock, in respect of which, as plaintiff admits, his accountants, Sheeran, Carton & Company, reported “serious leakages.” Indeed, their report, covering a period of 2¼ years—from 1st February, 1928, to 30th April, 1930—shows a sum of almost £2,000 unaccounted for, including cash sales omitted in the grocery business amounting to £1,389, and similar sales in the bar amounting to £60. Perhaps a still more startling item in the report is “private entertainment, etc., in bar £250. No records kept.” Such an item helps to explain the intemperate habits which plaintiff admitted he acquired; for, in answer to Mr. Lowry, he said that “when Kinney was nursing me it was because of drink— six days.”
The importance of the part which plaintiff was playing in the business which was to become his absolute property at twenty-five was also clearly established by his principal witness, Mr. John Thompson, the manager of the Newry office of Messrs. Atkinson & Boyd, who from time to time prepared the accounts and made the audits of the businesses. “They looked,” he said, “to Joseph McEvoy (the plaintiff) for pricing stock. There was nobody but McEvoy to price the stock. He was the brains of the place. Apparently he was the man in control then (1925) … McEvoy always made drawings for his own purposes.”
This is only part of the evidence which could be cited—the correspondence would be at least equally valuable—to show how grossly inaccurate was plaintiff’s description of himself when he described his position in the business in the words “I was only acting as a messenger boy.”
What is the plaintiff’s case in support of his claim? In a word it is this—that although he knew, as he must admit, all material facts, he did not know his legal rights until he was informed as to them by Mr. Fisher; and that, ignorant of his rights, he cannot be bound by the doctrine of acquiescence. If the law be such, we must give effect to it; but in my opinion, on the facts of the present case, the result would be certainly an injustice, if not, indeed, a fraud.
It seems to me that in pressing this action against the bank, whilst the claim against the trustees is allowed to remain in abeyance, the plaintiff is really seeking to visit responsibility for the alleged wrongful acts of the trustees on the bank. This would rather appear from his evidence, in which he said that “he blamed the executors for carrying on the business as they did”; and in his argument before us Mr. McGonigal contended that “even if the doctrine of advancement was rebutted, that didn’t entitle them to put the money in the business; it was a breach of trust.” The answer to this argument is that, so far as the bank were concerned, there was no breach of trust, as the relation in which they stood to the plaintiff was, as I have shown, that of debtor and creditor, and not that of trustee and cestui que trust.
The first occasion upon which capital was withdrawn from the deposit moneys was on 1st May, 1925. The money was required for the purchase of Rooney’s Terrace. Plaintiff, though still under age, took an active interest in the purchase, which was regarded as in the nature of a good investment. He went with one of the trustees, Adamson, to see Coleman, the bank manager. At the request of Mr. Boyle, of Messrs. Hunter, Moore & Boyle, plaintiff took Adamson over to see the property. He says that he “saw this would be a good return.” The purchase, effected by deed of 4th May, 1925, was made in the names of the four trustees. The purchase money— £2,025—was obtained from the deposit moneys —the total withdrawal on 1st May, 1925, being £2,076, which doubtless included costs and expenses. That the purchase was made by the trustees as trustees there can be no doubt, both because of the source from which the purchase money came and also because of the subsequent history of the property; but quite properly the deed contained no reference to the fact that the moneys were affected by any trust, as it was desirable that this should be kept off the title. The plaintiff admits that he knew how much the property cost and where the money came from, and that he approved *15 of it. Adamson collected the rents until he became ill about January, 1928, and subsequently plaintiff collected them. From the beginning, however, Adamson handed over the rents as soon as he collected them to the plaintiff for lodgment, and they were in fact lodged to the credit of a No. 2 account either by the plaintiff or the bookkeeper. The first lodgment docket—5th May, 1925—was admitted to be in plaintiff’s handwriting. Transfers were made from time to time of credits from No. 2 to No. 1, the business account; and eventually No. 2 account was closed in 1930. The property was sold in 1931, and the established facts in connection with this sale are, in my opinion, of the utmost importance, especially as the plaintiff had then not only attained the age of twenty-five years, but had received the independent advice of Mr. Fisher, who, according to his evidence, was the first person to apprise him of his rights in regard to the deposit moneys. In the conditions of sale the plaintiff was referred to as “the vendor.” Mr. Fisher’s replies to the purchaser’s requisitions, dated 7th July, 1931, disclosed that, though no trust had been declared, the trustees had bought in trust for the estate of John McEvoy, deceased, and that the plaintiff took the property over on attaining the age of twenty-five years, i.e., on 14th November, 1930. The date is important in view of the fact that plaintiff tells us that he first went to Mr. Fisher and told him about the deposit in January, 1930, and that he had another interview with him “after 20th November, 1930,” when he became aware of bis rights as to the deposit receipt. I can draw no conclusion from the above facts other than this that, whatever irregularity may have existed in the original purchase, it was adopted and approved of by plaintiff after he had attained the age of twenty-five years and had full knowledge of his rights.
The completion of the sale and disposal of the purchase money clearly confirm this view. The conveyance of 6th November, 1931, to the purchaser recites that the purchase had been made out of moneys forming part of the residuary estate of John McEvoy, and that upon the plaintiff attaining the age of twenty-five years, the trustees assented to his entering into receipt of the rents and profits of the premises as representing portion of the residuary estate. The deed contains the further important statement that the purchase money of £2,260 was paid by the purchaser to the plaintiff. Dealing with this in his oral testimony, the plaintiff said that the property was sold on the instructions of the trustees to pay creditors; that he joined in the deed; and that Fisher was acting for him at that time.
The transaction assumes a still more important aspect when we remember that the writ of summons in this action was issued on 27th April, 1931, and that on 19th May, 1931, the statement of claim was delivered, in which the plaintiff claimed that he became entitled to the deposit receipt and moneys on the death of his father. It seems to me that no facts could more clearly establish than those which I have mentioned that the plaintiff, fully informed as to the facts and fully advised as to his rights, adopted and acquiesced in the action of the trustees in the investment of portion of the deposit moneys in the purchase of Rooney’s Terrace; and, furthermore, that he recognised that the trading, though unsuccessful, had been carried on under the authority contained in the will in his supposed interests, and that the trustees, in whose names the debts of the business had been incurred, were entitled to be indemnified against personal loss by having these debts discharged. But the point that is so unintelligible to me is how it can be suggested that the bank are now liable for this sum of £2,076 paid to the trustees to enable them to make this investment in the purchase of Rooney’s Terrace which was subsequently adopted by the plaintiff. The money was not put into the business by the trustees; and plaintiff is estopped by the terms of his own deed from denying that when the substantially increased sum of £2,260 was realised, it was within his own control. If under these circumstances it was used to pay creditors, I am unable to see how plaintiff, in the absence of evidence of duress or fraud, could have any redress in respect of such payment against anyone. In particular, how could any liability exist on the part of the bank? For, even if it be admitted that they were technically wrong in handing over these moneys to the trustees for an investment in their names approved by the plaintiff, such action on their part produced no loss, but on the contrary resulted in an appreciable gain. Their action was at most an injuria sine damno.
It now becomes necessary to consider whether, in the circumstances to which I have referred, the plaintiff has any remedy against the bank in respect of the deposit moneys which were transferred direct from the deposit into the current account of the business, and there utilised either to pay ordinary trade creditors or to liquidate the amount of the overdraft due to the bank.
As regards the first two withdrawals of £170 and £257 12s. 10d., which were made on *16 25th January, 1922, and 27th February, 1925, respectively, before plaintiff attained the age of twenty-one years, I share the doubts of Megaw, J., in regard to ratification; and, as his decision in reference to them is not the subject of cross-appeal by the bank, I am of opinion that they should be allowed to the plaintiff. I heard no argument which, in the special circumstances to which he refers, affected in any way the wise exercise of his discretion in regard to allowance of interest at deposit receipt rate only. It would be quite wrong to look only to the fact that the money was used in trade, and to ignore the fact that the business was in truth, in the events which have happened, the plaintiff’s own business, and that if the overdraft had not been reduced, more interest would have been charged upon it.
As regards the remaining four withdrawals, made between 7th January, 1927, and 19th July, 1929, different considerations apply. Plaintiff was of age. He was an active moving party in effecting them. He knew where the money had originally come from—his father. He knew where it was then coming from—the deposit receipt, he knew where it was going to—the current account; he “got” the executors to endorse the deposit receipts, and he afterwards recorded the transactions in the ledger; he knew the object of the change, he knew from the attitude of the bank manager, Coleman, that the bank would not allow more extended credit, and that it was essential for the continuance of the business in which he had such a vital interest—both immediate and prospective—that the transfers from deposit to current account should be made. He knew that the bank overdrafts had been created largely by business cheques which he had himself filled up, and that to no inappreciable extent it was attributable to his own personal drawings of cash, consumption of stock, and “private entertaining.” The value or amount of the personal benefit so derived over the full period we do not know, but Mr Thompson says that the plaintiff “was always making drawings for his own purposes.” This, however, is clear that, in pressing the claim which he now makes against the bank, no allowance is made in respect of same; and the bank are now seriously asked by the plaintiff to make good (amongst others) the moneys and the value of the stock which he has personally received and dissipated. It would only be under the strongest compulsion of law that I would arrive at a finding which effected such a manifest injustice. More than once the plaintiff says in his evidence that until he went to Mr. Fisher he didn’t know his rights, I am clearly of opinion that he knew more than he says, especially as he is slow in particularising the points upon which he was ignorant. He admits that he had an interview with Hunter, Moore and Boyle about the deposit receipt, but he doesn’t till us what advice he received, and he admits that he was present at every meeting of the trustees in Boyle’s office. Mr. McParland’s evidence, if accepted, as it was by the learned judge at the trial, indicates that plaintiff’s knowledge of his rights was greater than he was prepared to admit. Further, it is not unimportant to note that in neither statement of claim nor reply does he allege ignorance or mistake. Mr McGonigal contended, however, that the plaintiff didn’t know that he was absolutely entitled to the deposit moneys under the doctrine of advancement, and that he was further unaware that the trustees had no right to put outside assets, and particularly the deposit moneys, into the business. Without expressing any finding on the matter, I shall assume that this is so. Does ignorance upon these points confer upon the plaintiff the right to undo all that he was actively instrumental in accomplishing? Is he entitled to say: “As I didn’t know, and as, indeed, none of us knew my fall lights, I am in no way bound by anything that was done, even though it was done at my request or by my direction, in part for my immediate personal benefit, and as to the remainder to enable a business to be carried on in which I was then actively engaged, to which I was then contingently entitled, and to which I subsequently became absolutely entitled. You, the bank, must make good to me all this money which I have lost through our common mistake; but I am not under any liability to recoup to you or give credit for any moneys which, as a consequence of such mistake, my business, or even I personally, received. You must pay me over again, not only the moneys lost in the business, but also the moneys which I drew out of the business, the moneys which my wife drew out of it, the £150 which I spent on my honeymoon, and you must make good also the loss sustained through my drinking and treating my friends to the stock in the publichouse. All this you must do for this reason—at the time I did these things I did not know that the moneys which I withdrew and which supplied the stock were absolutely my own. I thought I was merely entitled to a life interest in them with a contingent absolute interest when I became twenty-five years of age.”
In my opinion there are at least three answers to plaintiff’s claim. In the first place, as regards money or money’s worth actually received by the plaintiff, and applied by him *17 for his own purposes in the manner which I have indicated the plea of payment is established. Secondly, there is the plea of acquiescence. In regard to this I wish to say nothing which would detract in the slightest from the necessity for a trustee who relies upon the equitable plea of acquiescence establishing not only a complete knowledge of the facts and circumstances on the part of his cestui que trust, but also knowledge and appreciation of Ms rights. Acquiescence, which operates by way of estoppel, implies assent—and the assent must be to the breach of trust. But in the present case, as I have pointed out, the claim is made not against the trustees (as to whose legal position I say nothing, for they are not before the Court) but against the bank, who, at most, received the payment in liquidation of the current account; and there is, in my opinion, sound principle underlying the authorities to which the editors of White & Tudor’s Leading Cases in Equity refer when they say (8th edit., Vol. II., p. 687):—“Where money was paid with knowledge of facts but under a mistake of rights, it was considered inequitable to allow the claim of a person who had ‘stood by’ and allowed the payment.” In Stafford v. Stafford, 1 De G. & J. 193, payments made annually for 15 years with the acquiescence of the plaintiff for the benefit of the residuary legatees on the erroneous assumption that the income of a legacy to which she was entitled was liable to contribute to a loss occurring on the reinvestment of part of the estate, were held irrecoverable from the residuary legatees. As Turner, L J., said:—“It would be most unjust now to give her relief as against the residuary legatees.” Again, in Rogers v. Ingham, 3 Ch. D. 351, an executor, acting on the advice of counsel on the construction of a will, proposed to divide in certain proportions a fund between two legatees One of the legatees, being dissatisfied, took the opinion of counsel, which agreed with the former opinion. The executor then divided and paid over the fund in accordance with the opinions. Two years later the dissatisfied legatee filed a bill against the executor and the other legatee, alleging that the will had been wrongly construed, and claiming repayment from the other legatee. It was held that the suit could not be maintained. In his judgment, James, L.J., points out the position in terms equally applicable to the present case. “When,” he says, “a trustee by the direction or with the authority of his cestui que trust, pays money to a third person, no matter under what claim of right or under what circumstances, it is exactly the same as if the cestui que trust had received the money from the trustee and had herself paid it to that person. It is simply a question of money paid by the lady or by the lady’s direction, out of money of hers which the trustee had in hands to a person who said that he had a claim to the money. That being so, it is reduced, as it, appears to me, to be a mere action for money had and received.” Later on he adds:—“I have no doubt that there are some cases which have been relied on in which the Court has not adhered strictly to the rule that a mistake in law is not always incapable of being remedied in this Court; but relief has never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties.” Mellish, L J., after referring to the familiar rule of law that money paid with a full knowledge of all the facts, although it may be under a mistake of law on the part of both parties, cannot be recovered back, proceeds to say (at p. 357):—“I think there is no doubt that the rule at law is in itself an equitable and just rule which is not interfered with by Courts of Equity; but, on the other hand, I think that, no doubt, as was said by Turner, L.J.:—‘This Court has power (as I feel no doubt that it has) to relieve against mistakes in law as well as against mistakes in fact: Stone v. Godfrey,’5 De G. M. & G. 90; that is to say, if there is any equitable ground which makes it, under the particular facts of the case, inequitable that the party who received the money should retain it.” I shall only say no such equitable ground exists in the present case. On the contrary, it would in my opinion be grossly inequitable to order the bank to pay to the plaintiff the moneys which he claims in this action—moneys from which both he and his business received benefit. When it is urged that the bank also received benefit by the reduction or liquidation from time to time of the amount due on current account, it should be remembered that no such extended credit as was in fact given would have been given had the first transfer which was sought been declined, and at that time there would have been ample security, apart from the deposit moneys, to meet a judgment for the amount due to the bank.
The third reason why in my opinion the plaintiff cannot recover is that, admitting that the plaintiff and all other interested parties were mistaken as to the plaintiff’s rights, and assuming that the plaintiff has suffered loss by the withdrawals and gradual disappearance of the deposit moneys, yet the plaintiff has absolutely failed to establish to my satis *18 faction that the loss was the effect of or that it was directly consequential upon the mistake. There is not a suggestion throughout the whole of the plaintiff’s evidence to support the view that, had plaintiff known that he was absolutely entitled to the deposit moneys, he would have acted differently from what he did when he thought, as he says, that his interest in them would only become absolute on his attaining 25 years of age. Why should his attitude in reference to the transfer of the deposit moneys to current account be affected by the precise nature of his interest in them? The transfer was necessary, as the plaintiff knew, in order to permit of the continuance of the business in which he was at the time actively engaged, and in which he had such a vital interest, both immediate and prospective. The same necessity would have existed, and it would obviously have affected the plaintiff in just the same way, had he known all that Mr. Fisher ultimately advised him, or all that Megaw, J., has determined in reference to his rights in the deposit moneys. Any doubt which I might have had on this point is removed by a consideration of his conduct in reference to the proceeds of sale of Rooney’s Terrace. As I have already pointed out, he received these moneys after he had obtained Mr. Fisher’s advice; and, when, accordingly, under no legal compulsion to do so, he either utilised it or permitted it to be utilised for the payment of creditors or reduction of the bank overdraft. Is it not the obvious inference to draw that, even if he had possessed the most complete knowledge of his rights, his action would have been precisely the same as it in fact was. It was for the plaintiff to establish not only the mistake and the loss, but also that the latter was directly caused by the former. The onus of proving this causal relationship he has failed to discharge The whole effect of the evidence is that, admitting he was under a mistake, the plaintiff was not influenced by it in making the decisions which he did. This point was very clearly made by Mr. Black. Mistake was, he said, just like negligence; in the abstract it has no effect; you cannot have actionable mistake, so to speak, in the air. He cited Home & Colonial Insurance Co. v. London Guarantee and Accident Co., 45 T. L. R. 134, as a recent authority for his proposition; and, though materially differing in its facts from the present case, it substantially supports the view. The principle for which Mr. Black contends is shortly expressed in 21 Halsb. 16 thus:—“In order that a mistake may be a ground for legal remedy, the party who pleads it as a reason why the ordinary consequences of his act should not obtain must be able to show that his conduct has been determined by the mistake.” Several cases are cited in support of this view—a case in which the mistake was one of fact: Carpmael v. Powis, 10 Beav. 36, 43; a case in which the mistake was one of law: Stone v. Godfrey, 5 De G. M. & G. 76; and one in which errors both as to matters of law and fact were alleged. Trigge v. Lavallee, 15 Moo. P. C. C. 270, 298. It will suffice to refer to a passage in the judgment of Turner, L.J., in Stone v. Godfrey, 5 De G. M. & G. 76 (at p. 90), where he said:—“The ground on which he (the plaintiff) founds his title to this relief is. that in the year 1826 he was erroneously advised that his equitable title could not be maintained; and I assume that the advice so given to him was erroneous, and that this Court has power (as I feel no doubt that it has) to relieve against mistakes in law as well as against mistakes in fact. When, however, parties come to this Court to be relieved against the consequences of mistakes in law, it is, I think, the duty of the Court to be satisfied that the conduct of the parties has been determined by those mistakes; otherwise great injustice may be done.”
In the present case the plaintiff has completely failed to satisfy me that the conduct of the parties, and, in particular, his own conduct, was determined by a mistake as to his rights to or his interest in the deposit moneys; and I am clearly of opinion that to grant the plaintiff the relief which he seeks would work a great injustice to the defendants which this Court should not countenance. If relief against a mistake of law can only be granted on equitable grounds, it would be, indeed, strange if we were to exercise the jurisdiction in a case which would manifestly produce such an inequitable result
In my opinion, the judgment of Megaw, J., was correct upon every point, and the appeal should be dismissed with costs.
Best, L.J.(dissenting)—Plaintiff’s claim is for a declaration that he is entitled to the monies represented by a deposit receipt of the defendant company, dated 20th July, 1921, for the sum of £10,000 in the names of his father, John McEvoy (since deceased) and of the plaintiff and payable to either of the named parties or the survivor, and to this claim the defence is two-fold —(1) The defendants do not admit that the plaintiff ever was, or became, entitled to the said deposit receipt or to the monies represented thereby or any part thereof: and (2) they say that the said monies were transferred from time to time to a current account in connection with the *19 business belonging to the late John McEvoy which the plaintiff was managing at the times of the transfers, and that such monies have come to his hands or have been applied at his direction, or, to use the language of Megaw, J., the second defence is that the plaintiff was a party to and ratified the dealings of the executors and trustees, and the action of the bank in advancing the monies to meet the trading account of the business with which the plaintiff has been associated almost since his father’s death has resulted in a situation that the monies on deposit receipt must be held to have been paid or applied by the defendants for the use of the plaintiff.
On the issue raised by paragraph 1 of the defence I agree with the learned judge when he says “that in the circumstances the court must leave the ownership in the condition in which it was as between the plaintiff and the estate at the death of John McEvoy The defendants can have no higher rights than the executors. The bank found themselves at John McEvoy’s death by their own contract the debtors not to the trustees, but to the plaintiff, and the defence raised by that paragraph fails.”
It follows, then, that when John McEvoy died on 20th September, 1921, plaintiff was the owner of the monies represented by the deposit receipt.
It is admitted by Mr Coleman, manager of the defendants’ branch bank at Newry, that the change of the £10,000 deposit receipt into the joint names of father and son on 20th July, 1921, was effected with the fraudulent purpose and in the hope of evading the payment of duty, and with this knowledge present to his mind and knowing that the schedule of assets of the deceased John McEvoy. in pursuance of that illegal purpose, contained no reference to the £10,000, Mr. Coleman proceeded, on 25th January, 1922, without any intimation to the plaintiff to have the deposit receipt endorsed by John McEvoy’s executors and to have a new deposit receipt for the same amount issued in their names He thereby put it in the power of the executors and trustees of the will to deal with the deposit receipt as if it belonged to the estate of deceased and to commit the various breaches of trust alleged against them. Plaintiff at this time was just over sixteen years of age, having been born on 14th November, 1905
It appears repeatedly from the correspondence between Mr. Coleman and the bank and from his evidence that in his view the £10,000 belonged to the estate, that the executors had a right to control it until plaintiff attained the age of twenty-five years, and to make use of it in carrying on the deceased testator’s business.
Plaintiff says that early in 1922 he asked Mr. Coleman why the deposit receipt was changed into the names of the trustees and received the answer that as he was a minor it would save the compound interest if so changed. Mr. Coleman denies that this question was put to him and that he gave any such answer. He also denies that on another occasion, fixed by inference from plaintiff’s evidence at the beginning of 1924, plaintiff asked why the deposit receipt was changed from his name, and that he (Coleman) said it was changed under the will and belonged to the trustees until he, McEvoy,should attain the age of 25 years. I think it quite likely that some such question may have been put, and if it were put I cannot see how Coleman, having regard to his views on the matter, could have answered it in any other way than that sworn to by plaintiff. The answer appears to tally exactly with those views.
Testator’s business was carried on by Alice Kinney in accordance with directions contained in the will and under the control of the executors. After her marriage at Easter, 1925, it was carried on as before under their supervision by a manager called Murden, and then by another called McParland, and finally by the plaintiff himself, who had left school in 1923, and had begun to help in the business, and was consulted from time to time by the trustees, and it was about eight months after leaving school that he says inquiry was made the second time from Mr. Coleman as to the reason for the change in the deposit receipt.
If there be one thing clear in this case it is that all the parties to the dealings with the deposit receipt—Coleman, the bank, the trustees, and the plaintiff—held the view that the monies represented by it belonged to John McEvoy’s estate and that it did not belong to plaintiff Even if this view had been correct, it was in my opinion a breach of trust on the part of the trustees to allow, without express authority from their testator, a sum of money which was independent of the business to be used for carrying it on. McNeillie v. Acton, 4 De G. M. & G. 744.
The trustees were guilty of a breach of trust in dealing as they did with the £10,000, and it was owing to the unwarranted action of the defendants in transferring the money into the names of the trustees that the latter were empowered to commit the said breach, and as they were urged thereto from time to time by the defendants with the object of reducing the overdraft on the business account the defendants can, in my opinion, be in no better position as regards this money than the *20 trustees through whom they claim to have paid it for the use of plaintiff. The breaches of trust were only made possible by the wrongful action of the defendants and their manager. Defendants seek to acquit themselves of liability by the plea that when plaintiff came of age he ratified what had been done up to that point, and that subsequently he acquiesced in every transaction relating to the deposited money. As early as 1925 defendants were alive to the necessity of having these transactions ratified by plaintiff. This appears from the correspondence between Mr. Coleman and the head office and from his account of how the so-called letter of ratification of 14th April, 1927, came to be written. It is unnecessary to incorporate here the terms of that letter, but it is clear that from beginning to end of it there is not a word to suggest that plaintiff knew what his rights were, that he knew, as the learned judge has decided, that having attained age he could have brought an action against the bank in which he would have succeeded in recovering the sum of £10,000, with interest thereon.
Having attained age, plaintiff was in a position to ratify what had been done if knowledge of his rights with a corresponding full appreciation of the wrongful acts of the trustees and of the defendants had been brought home to him. Before he could be bound by the letter he should have been informed by the trustees or by the bank that in reality they were operating with monies which, in law, were his own property, and that instead of using those monies in the administration of his father’s estate and to finance a business which he might not live to own, he was in a position to have them transferred to him at once. I cannot find ratification in a letter written by a young man who has just attained his majority a few months before the letter is written, who is without any independent advice in the matter, and who is under the mistaken notion that he is not the owner of property which in reality is his.
As regards the transactions entered into after plaintiff had attained age, the defence is that he fully acquiesced in them. Nowhere in Mr. Coleman’s evidence, nor from any other part of the case, does it appear with the exception to be mentioned hereafter in regard to the Rooney’s Terrace property, that plaintiff was in full possession of the knowledge of his rights or that he acted with such knowledge. Mr. Coleman himself, as already mentioned, did not possess such knowledge. The learned judge in his judgment says that from beginning to end he doesn’t see a trace of evidence of concealment by the trustees from the plaintiff of his rights or any deception on their part. In my opinion this is not sufficient to relieve the trustees and through them the bank from responsibility. The duty of proving an effectual discharge would lie on the trustees if they were defendants and the burden cast upon them in such a case is stated very clearly by Lord Chancellor Westbury at p. 109, in Farrant v. Blanchford, 1 De. Jo. & S., p. 107. They must show that the release was given by the cestui que trust deliberately and advisedly, with full knowledge of all the circumstances and of his own rights and claims against them. The defendants do not stand to the plaintiff in the relation of banker to customer, and cannot therefore avail themselves of the defences applicable to such a relation. In my view of the case the transfers from deposit to current account were induced by the defendants in their own interest and for their own purposes, and were made possible only by their action in changing the £10,000 into the names of the trustees, and if this be so, they cannot, I think, rely upon any defence except such as would have been open to the trustees if they had been sued in the action Further, if all the parties were acting under a common mistake as to plaintiff’s rights—and of this there can be no doubt—plaintiff cannot be held to have acquiesced, and it is unnecessary as a condition of his right to succeed that the trustees or the defendants should have acted fraudulently. In re Garnett, Gandy v. Macauley, 31 Ch. D. 1.
Plaintiff’s evidence is that he only learned what his rights were after consulting Messrs. Fisher in November, 1930. The learned judge rejects this evidence, and his judgment proceeds on the basis that the transfers to current account were made out of monies to which plaintiff was entitled, and were made at his instigation and with his full consent and authority when he was a free and informed agent. That plaintiff was an informed agent is a matter of inference from the facts proved but is itself nowhere proved. I think it is an inference that ought not to be drawn, and that the evidence taken as a whole is inconsistent with it. This brings me to a short consideration of the exception already mentioned. To purchase Rooney’s Terrace property in 1925 the sum of £2,076 was taken from deposit account. Having regard to his state of knowledge at the time, I do not think that plaintiff ratified this transaction by his letter of 14th April, 1927, but when he executed the deed of 6th November, 1931, he was in full possession of the knowledge of his rights, and he must be held bound by being a party to the deed and by his acknowledgment of the receipt of the purchase money.
The result is that in my opinion there should *21 be judgment for the plaintiff for the amount claimed, less the sum advanced for the purchase of the Rooney’s Terrace property, with appropriate interest thereon, and that he should have the costs of the action and of this appeal.
Roberta Parkes v David Parkes
[1980] I.L.R.M. 137
(Costello J)
1 July 1980
S
COSTELLO J
delivered his judgment on 1 July 1980 saying: Mr and Mrs Parkes were married on 28 June 1957. Mr Parkes is a British subject; Mrs Parkes is an Irish citizen. They were husband and wife in the year 1965 when 222 acres of land situated behind the strand at Tramore in the County of Waterford were puchased with money provided by Mr Parkes. The land was registered land and the transfer was taken in Mrs Parkes’ name and she was duly registered as full owner. The consideration for the sale was £2,500. Some four years later Mr and *138 Mrs Parkes were divorced by a decree of an English Court which was made absolute on 24 September 1969. No reference to the Tramore land was made by either party on an application for maintenance made in the divorce proceedings and both would appear to have largely ignored its existence until the year 1977. In that year Mr Parkes caused an inhibition to be registered on the Folio which reads ‘no registration under a disposition by a transmission from the registered owner is to be made without prior notice to David Parkes’ and in the affidavit grounding his application for registration of the inhibition he swore that the lands were purchased by Mrs Parkes in trust for him. Mrs Parkes instituted these proceedings early in the year 1978 claiming a declaration that the inhibition was wrongly registered and an order directing its removal from the Folio. Her reasons for doing so became apparent in the course of her evidence — she had received an offer to purchase the land for the sum of £130,000 in the previous year. Although the sale did not in fact go through it is clear that the lands have now become extremely valuable and, not surprisingly, Mr Parkes has counterclaimed a declaration that he is entitled to the entire beneficial ownership in the lands and that the plaintiff holds them in trust for him. The resolution of the conflict between the parties would involve no legal issues if I could have decided that Mrs Parkes was expressly given the lands as a gift by her husband as she claimed in her evidence. But for reasons which I will develop later I cannot accept that this is what happened. This does not mean, however, that her claim fails and that of her husband succeeds because the transfer to her contained a certificate as follows:
It is hereby certified by Roberta O.P. Parkes being the person becoming entitled to the entire beneficial interest in the property conveyed or assigned that she is an Irish citizen.
This certificate was a false one. It was included in the instrument of transfer at Mr Parkes’ direction. The evidence (which I will consider in greater detail later) was to the effect that at the suggestion of his solicitor he directed that the transfer be taken in his wife’s name in order to avoid the necessity of applying to the Land Commission for its consent to the transfer — an application which would have been necessary by virtue of s. 45 of the Land Act, 1965 had he taken the property in his own name as he was not an Irish citizen. And so the effect on the transaction of that false certificate falls for consideration and indeed is the crucial issue in this case. Before turning to it and to the findings of facts which I must make I think it would be helpful if I first outlined the relevant provisions of the Finance Acts and the Land Act, 1965 which it is clear had a decisive influence on Mr Parkes’ actions in this case.
When Mr Parkes first became interested in the lands at Tramore the stamp duty provisions relating to the sale of land to non-Irish nationals contained in the Finance (No. 2) Act, 1947 were still in force. S. 13(1) of that Act provided:
The stamp duties chargeable on conveyance or transfers of lands tenements and hereditaments under the heading ‘Conveyance or transfer on sale of any property’ in the First Schedule to the Stamp Act, 1891, as amended by subsequent enactments shall, on and after 1 December 1947, be at the rate of £2/10s for every £50 or fractional part of £50 of the amount or value of the consideration in lieu of the rates immediately theretofore chargeable.
The rate of £2/10/0 for every £50 of the consideration was amended by s. 17 of the Finance Act, 1951, to £1/10/0 for every £50 of the consideration.
But this rate of duty did not apply in every case. The exception to it with which this case is concerned is that which arises from the operation of sub-sections (4) and (5). Sub-section (4) of the section provided:
The foregoing provisions of this section shall have effect if, but only if, the instrument contains a statement by the party to whom the property is being conveyed or transferred certifying that the person who becomes entitled to the entire beneficial in the property … is some specified one of the following:
(a) an Irish citizen
If the instrument of transfer did not contain a certificate as required by sub-section (4) then a much higher rate of duty becomes payable by virtue of sub-section (5) which provided:
In any case in which by virtue of sub-section (4) of this section the provisions of sub-section (1), (2) and (3) of the section have no effect the stamp duties chargeable on conveyances or transfers of lands tenements and hereditaments under the heading ‘Conveyance or transfer on sale of any property’ in the First Schedule to the Stamp Act, 1891 as amended by subsequent enactments shall, on and after 1 December 1947, be at the rate (in this section referred to as the higher rate) of £25 per cent of the amount or value of the first consideration in lieu of the rates immediately theretofore chargeable.
As will later appear Mr Parkes’ solicitor was well aware of these provisions and advised him on them. However, in the year 1965 the Oireachtas enacted two measures which considerably altered the rates of duty payable on transfers of land to non-Irish citizens and the law relating to the transfer of such land. By virtue of s. 66(6) of the Finance Act, 1965 (enacted on 30 July 1965) s. 13(4) and (5) of the Finance Act, 1947 were repealed. This meant that the certifying provisions of the 1947 Act no longer applied and that non-Irish citizens were no longer required to pay stamp duties at the rate of 25% of the amount of the consideration on a purchase of land. But prior to these repeals the Oireachtas had enacted on 9 March 1965 the Land Act of 1965 which by s. 45 had placed restrictions on the vesting of interests in agricultural land in non-Irish nationals. As the effect of this section is of considerable importance on the issues that arise in this case I must refer to it in some detail.
The section commences with definition provisions which provide that the term ‘qualified person’ when used in the section means, inter alia, an Irish citizen and that the phrase ‘land to which this section applies’ means land not situated in a county borough, borough, urban district or town. Sub-section 2 (a) of the section provides as follows:
Notwithstanding any other enactment or any rule of law but subject to sub-paragraph (b) of this sub-section and to sub-section (3) of this section, no interest in land to which this section applies shall become vested in a person who is not a qualified person except with the written consent (whether general or written) of the Land Commission and subject to any conditions having been complied with …
The provisions of paragraph (b) of the sub-section are not of relevance in this case but those of sub-section (3) are. These read as follows: *140
Subject to paragraph (b) of this sub-section, an instrument by which an interest to which this section applies purports to become vested (being an instrument which, apart from this section, would affect such vesting) shall affect such vesting provided that it contains a certificate by the person in whom the interest is purported to be vested—
(2) That the person who becomes entitled to the entire beneficial interest … is a qualified person by reference to the special category of definition of ‘qualified person’ contained in sub-section (1) of this section.
The section goes on to make it a criminal offence to make a false statement in a certificate given for the purpose of sub-section (3) by providing in sub-section (6) as follows:
Where a person—
(a) makes any statement which to his knowledge is false or misleading—
(iii) in a certificate under sub-section (3) of this section he shall be guilty of an offence triable at the election of the prosecution either summarily or on indictment …
The legal effects of these provisions have been subject to some debate in this case but their meaning and effect on the facts as now established seem to me to be perfectly clear. Firstly Mrs Parkes, being an Irish citizen, was a ‘qualified person’ within the meaning of the section. There was nothing in s. 45 which prevented the vesting of the land in her and as the transfer to her contained the certificate referred to in sub-section (3) of the section the legal estate in the land vested in her. What has to be determined in this case is whether the court will permit Mr Parkes to claim an equitable interest in the lands and give effect to such a claim. In this connection it is relevant to underline the fact that it is illegal for a person to make a statement in the certificate referred to in sub-section (3) which to his knowledge is false.
I come now to my findings of fact. It would seem that the defendant first became interested in the purchase of the lands at Tramore in the year 1964. These lands had formerly been used as a racecourse and golf links but the encroaching tides had long ago caused them to be abandoned and at the time of their purchase they were regularly flooded at high tide. The defendant, however, had since the year 1960 been actively associated with a large public company engaged in the business of land development and his experience and knowledge of this business caused him to consider that the lands behind the strand at Tramore — which to others might appear a picturesque but valueless wasteland — might have a development potential. He set about acquiring them and in addition two other parcels of adjoining land. At this time he and his wife were living in London and he employed a solicitor (who has since died) in Waterford as well as a local auctioneer to negotiate the purchase on his behalf. He failed to acquire any adjoining land but his solicitor was successful in agreeing a price with the owner of the land behind the strand which is contained in Folio No. 1405 of the County of Waterford. Having obtained acceptance of Mr Parkes’ offer of £2,500 for the land his solicitor wrote to him explaining certain aspects of the purchase and added a significant postscript to his letter as follows:
As you recollect for stamp duty reasons you cannot be named as the purchaser, but Roberta, being an Irish citizen, can be named.
Mr Parkes replied to this letter on 5 July and stated:
As you state in your P.S. the property should be put in Roberta’s name.
The contract for sale was signed in trust by Mr Parkes’ solicitor on 6 July 1965 and a deposit paid and a draft transfer sent on 20 July for the approval of the vendor’s solicitor. On 28 July the vendor’s solicitor wrote asking for Roberta’s full name for insertion in the transfer deed and on 6 September Mr Parkes’ solicitor wrote to Mr Parkes a letter in which he stated:—
I am now sending you for Roberta’s signature the transfer deed of the above property.
What may well illustrate a somewhat casual approach to this transaction on the part of the solicitor is to be seen from the fact that he asked that Mrs Parkes’ signature on the deed should not be witnessed and added:
I can do that when you send back the transfer deed to me, as it saves complications if a solicitor is the witness.
The instrument of transfer is dated 21 October 1965 and was sent to the Land Registry on 26 October 1965. The exact date on which Mrs Parkes executed it cannot now be established with precision — but it would appear that it was sometime not long before 21 October.
It can clearly be inferred from the postscript to the letter of 29 June 1965 which I have just quoted that sometime prior to that time Mr Parkes had been informed by his solicitor of the fact that a higher rate of stamp duty would be payable if the purchase was taken in his name than would be paid if the transfer was taken in his wife’s name. In the course of his evidence Mr Parkes accepted that he may have obtained this advice but he stated that the reason why the land was put in his wife’s name was not to avoid a high rate of stamp duty but to avoid having to apply to the Land Commission for its consent to the sale. He stated that he had been told by his solicitor that if he took the land in his own name such an application would be necessary because he was not an Irish citizen and he was informed that the application would take a long time to be processed and that it was very likely that it would become public knowledge that he was trying to buy land in the area. As he was still negotiating the purchase of adjoining land Mr Parkes said that he did not want it known that he was the purchaser of the old racecourse. He was quite positive that he had no intention of giving the land to his wife as a gift and he claimed that the land was put in her name merely for the purpose of avoiding having to apply to the Land Commission for its consent to a sale to him.
Mrs Parkes’ evidence was to a different effect. She could not remember actually signing the transfer but she claimed that she was given the land as a present by her husband. She knew the land was of little value and she regarded the whole thing as a bit of a joke. She agreed that she did not disclose this asset in her maintenance application in the English divorce proceedings and that she did not swear in an affidavit filed in the Land Registry and sworn on 12 August 1977 that the lands had been given to her as a gift.
I have little difficulty in preferring Mr Parkes’ recollection of the transaction *142 to that of his wife. Not only is his memory of the matter clearer than his wife’s but I am satisfied that he had decided to purchase the land with a view to its possible future development with other land in the area and that in such circumstances it is extremely improbable that he would have parted with the beneficial ownership in the old racecourse in favour of his wife. Whilst the contemporary correspondence makes no reference to the matter, I am satisfied that his solicitor was aware in the summer of 1965 (as most solicitors in the country were) of the changes effected by the Finance Act, 1965 and the Land Act, 1965 and that Mr Parkes was told some time before the transaction was completed that if the transfer was taken in his name he would have to apply to the Land Commission for its consent to the transfer. To avoid such an application he decided that the transfer should be taken in his wife’s name. I am also satisfied that he must have read the Deed of Transfer sent by his solicitor to him and that he must have been aware that the certificate which was contained in it and which he requested his wife to sign was a false one. It is likely, however, that Mrs Parkes did not bother to read it and that even had she done so I think it is unlikely that she appreciated that she was knowingly giving a false or misleading certificate. In the light of these findings of fact how should the Court determine the issue between the parties?
There are, it seems to me, four general principles of law which are relevant to the facts which I have just outlined. The first is that where a person buys property and pays the purchase money but takes the purchase in the name of another, who is neither his child, adopted child or his wife, there is prima facie no gift, but a resulting trust in favour of the person paying the money. The second principle is that where a person in whose name a purchase is taken is the wife, child, or adopted child of the person paying the purchase money there is a presumption that a gift was intended. Thirdly, however, the presumption in favour of a wife, child or adopted child may be rebutted by evidence which establishes that a gift was not intended. The defendant relies on these principles and claims that as his intention was that no gift was to be effected the plaintiff holds the lands as trustee for him. But the plaintiff’s counsel ripostes with a fourth principle which it is claimed a court applying equitable principles should apply in this case. Put shortly, it is that a purchaser will not obtain relief in equity by setting up his own illegality or fraud. This is the crucial point of law in this case, and I will now consider the cases which it is claimed illustrate and justify its application to the facts I am now considering.
The first case to which I was referred by the plaintiff’s counsel was that of Gascoigne v Gascoigne [1918] 1 KB 223. This was a case in which a husband took a lease of land in his wife’s name and built a house on it with his own money. He used his wife’s name with her knowledge and connivance because he was in debt and wished to protect the property from his creditors. He brought proceedings against his wife in which he sought a declaration that she held the property as trustee for him. His claim failed. In the course of the court’s judgment reference was made to the findings of fact in the lower court and then went on (p.226)— *143
These findings of fact must be taken to mean that the plaintiff, with his wife’s knowledge and connivance, concocted the scheme of putting his property in her name, while retaining the beneficial interest, for the purpose of misleading, defeating and delaying present or future creditors. This was the whole basis of the plaintiff’s case, and it could not be put in any other way consistently with his claim to the owner of the property. It was the reason he himself gave for his conduct. Now, assuming that there was evidence to support the finding that the defendant was a party to the scheme which the plaintiff admitted, but without deciding it, what the learned Judge has done is this: he has permitted the plaintiff to rebut the presumption which the law raises by setting up his own illegality and fraud, and to obtain relief in equity because he has succeeded in proving it. The plaintiff cannot do this: and whether the point was taken or not in the county Court this Court cannot allow judgment to stand which has given relief under such circumstances as that.
The principle in Gascoigne was applied in somewhat different circumstances In re Emery’s Investment Trusts [1959] 1 Ch 410. In that case the plaintiff (who was a British subject) was married to an American citizen. American savings bonds were purchased with the plaintiff’s money (the defendant’s husband) and were registered in the name of the wife with the husband expressly named as a beneficiary with her. Later the bonds were changed for common stock in American securities. These were registered in the name of the wife but with the intention that the beneficial interest in the securities should be as to one half in the wife and one half in the husband. But in order to avoid the payment of American withholding tax to which as an alien the plaintiff was liable under American Federal Law, no mention was made of his beneficial interest. After the wife had sold the securities the husband applied to the Courts in England for a declaration that at the date of the removal and sale of the securities his wife held them as to one half for him. His claim failed. Wynn-Parry J pointed out that had the tax involved in the case been United Kingdom tax the case would have been covered by Gascoigne’s case and would have been concluded against the plaintiff. Having considered the facts of Gascoigne’s case and the decision in it he went on as follows (p.419):
In the analysis it will be found that there were two relevant intentions in Gascoigne v Gascoigne. The first was the intention of the husband that the house and land should, so far as the beneficial interest was concerned, be and remain his. The second intention was that he put the land and house into his wife’s name with a view to protecting it from his creditors in case he should get into financial difficulties. In this case the first intention, corresponding to that in Gascoigne v Gascoigne, is the intention that the husband had throughout that the beneficial interest in the security should be shared between himself and his wife. The second intention, which corresponds with the second in Gascoigne v Gascoigne is the intention which the husband had in putting the securities in his wife’s name, without any reference being made to the retention by him of any beneficial interest, namely to avoid payment of withholding tax on his beneficial interest.
The court held that it should apply the principle in Gascoigne’s case even though the tax involved in the transaction was an American tax. The judge pointed out that there was a clear breach of the federal law in the way the transactions were carried out by the husband’s non-disclosure of his beneficial interest in the security and he concluded that the plaintiff could not seek the aid of equity in such circumstances.
More recently the principle to which I have referred was considered in the Court of Appeal in England in Tinker v Tinker [1970] P 136. This was a case *144 in which a husband intended to buy a house in his own name but was advised by his solicitors that if the new business venture he was then undertaking failed the house could be taken by his creditors as part of his business assets and his solicitors recommended that it should be put in his wife’s name. This was done and the house was conveyed to her. The marriage broke down and the wife claimed the house as her own. It was held that on the evidence the husband had an honest intention at the time of the conveyance that the house would belong to his wife and accordingly the wife’s claim to the property succeeded. In the course of his judgment Salmon LJ, said:
It is trite law that anyone coming to equity to be relieved against his own act must come with clean hands. If, in a case such as the present, he were to put forward, as a reason for being relieved against his own act, a dishonest plot on his part, for example, to defraud his creditors, the court would refuse him relief and must say: let the estate lie where it falls. But, of course, this is not this case … (p. 143).
Finally, I was referred to a decision of the Court of Appeal in Northern Ireland (McEvoy v Belfast Banking Co Ltd [1934] NI 67; [1935] AC 24) in which the principle in Gascoigne’s case was applied in relation to a deposit of £10,000 made by a father in the joint names of himself and his son. It was established that the object of the deposit was to avoid death duties. Although there was no intention on the father’s part to benefit his son the Court took the view that it could not have regard to the evidence which established this fact ‘because of its illegal taint’ (see p.99).
In my opinion the fourth principle to which I have referred and which is illustrated in the cases quoted above should be applied in this case. Just as the courts will not grant relief to a person who has allowed property to be placed in a wife’s or son’s name for the fraudulent purpose of defeating creditors (Gascoigne) or for the illegal purpose of evading liability to tax (Emery and McEvoy) so it seems to me the courts should not grant relief to a purchaser who has placed property in his wife’s name dishonestly and by means of an illegal act performed for the purpose of evading the law relating to the transfer of land. This is what the defendant has done in this case. The defendant claimed that he acted on his solicitor’s advice — but I am sure that his solicitor did not advise him to commit a criminal offence and by suggesting that the property could be taken in his wife’s name he did not advise him to produce a false certificate in the deed of transfer. The defendant said that he thought the certificate was a mere formality — but he is an experienced man of affairs and no neophyte in the business of buying and selling land and he knew he was asking his wife to execute a transfer which contained a certificate which was false. I am not obliged to reach a conclusion as to whether or not Mr Parkes committed a criminal offence under the section. It suffices in this case that he knowingly authorised the commission of an act which was prohibited by the section for the purpose of evading the statute. As a result the whole transaction is tainted with illegality. Mr Parkes is in the same inescapable dilemma in which the plaintiff in Tinker’s case found himself: if he acted honestly, and the certificate was a true one, then the property belongs to his wife; if he acted dishonestly, and certificate was a false one, the courts will not allow him to take advantage of his own dishonesty. What the defendant *145 asks is that the court should apply its equitable principles and hold that a resulting trust exists and that the plaintiff holds the land in trust for him. But the very equitable principles which the defendant calls in aid prevent the court making a declaration in his favour. The estate must lie where it falls; the plaintiff’s claim succeeds; the defendant’s counterclaim fails.
In conclusion, I should add that my decision has been based on the equitable principles applicable when a husband purchases land and transfers it into this wife’s name. The result would have been the same had I applied another well known principle which seems to me to be relevant to the facts of this case, ex dolo malo non oritur actio , and which was applied in a case where it was established that a purchaser had practised a deceit on the public administration: see Chettiar v Chettiar [1962] AC 294.
O’Brien v Sheil
(1873) IR 7 Eq 255 (Rolls Court)
The facts are set out in the judgment.
O’Sullivan MR: The question which remains undisposed of in this case is an important one. It is simply this: Whether a sum of £2000 in Russian 5 per cent. bonds, and £200 in Victoria 6 per cent. bonds, having regard to the mode in which those securities were dealt with by Sir Justin Sheil, constituted any portion of his assets.
The facts with regard to these securities are as follows: It appears that Sir Justin Sheil in his lifetime, as it appears by the books of the Bank of England Western Branch, Burlington Gardens, London, deposited the securities which I have mentioned in the name of his wife, Mary Leonora, Lady Sheil, and left them so deposited until her death. After that event, about the 5th of January 1870, he transferred these securities into the joint names of himself, Sir Justin Sheil, and his daughter Miss Frances Sheil, one of the defendants in this suit, and no alteration was made in this lodgment during the life of Sir Justin Sheil.
The question raised is, whether these securities have become the property of Miss Frances Sheil, she having survived her father, or whether they still remain assets of Sir Justin Sheil. The only evidence relating to the lodgment of the securities is what I have mentioned. There is no evidence of any contemporaneous writing under the hand of Sir Justin Sheil, or of any contemporaneous declaration by him as to the object he had in view in making the lodgment of these securities in the manner I have described. The securities, according to the evidence before me, are represented by bonds or certificates which pass from hand to hand like a bank note; and the lodgment of the securities at the Bank was made personally as if actual cash had been the subject-matter of it. After the death of Sir Justin Sheil there was found among his papers a memorandum in his handwriting, in the following words:
“To Frances, Edward, Emily, Laura, Justin, Stephen, Richard, Honor, Denis, Grace. The money invested at the Bank of England, or branch, on a joint account (myself and Frances), amounting to £2000 in Russian 5 per cents., and £200 in Victoria 6 per cents., besides the balance in hands, was and is intended for the purchase of a trousseau, should any of the girls happen to be married. The expenses of my funeral should be paid out of this money; a portion of the expenses of probate and succession duties should be paid out of this money. Let the executors determine what portion.
Justin Sheil.
April 7th 1871.
Of course, I do not mean that the above sums are intended for the purchase of one trousseau. The trousseau is to be regulated by one’s station in life.
Justin Sheil.
April 7th 1871.”
The Frances mentioned in the above memorandum is the daughter of the late Sir Justin Sheil, and the other persons named therein are her brothers and sisters. The lodgment in the Bank of England Branch was on the 5th of January 1870, a year and three months before the date of the memorandum. Frances, the daughter, claims these two sums under the ordinary doctrine of this Court, as being a gift by way of advancement, she having survived her father. She says she does not mean to keep the money herself, but to carry out the intention of her father; with that intention of hers I have nothing to do. She is at liberty to do what she likes with this money if she is entitled to it. But the course she has resolved upon is such as one would expect from a lady in her position, who has got a child’s portion by her father’s will.
It is contended on behalf of some of the children that this document is admissible in evidence, as indicating what the intention of Sir Justin Sheil was at the time he lodged these securities in the Branch of the Bank of England; and it is said that this is the document which regulates the trust which is to be attached to these two sums, and that the trust being vague and uncertain it must fail, and that the subject of it became the property of Sir Justin Sheil, and forms a portion of his personal estate. Now, the first point is, whether this document can be looked at all – having regard to its date – as any evidence to control the lodgment of the securities made on the 5th of January 1870.
Beyond a doubt, what took place on that day, unexplained by any contemporaneous evidence, would, on the authorities, amount to a plain and manifest advancement for Frances, she having survived her father. That is, I think, the clear result of the authorities. Whatever may at one time have been thought (see Pole v Pole 1 Ves 76) of a lodgment in the name of a parent and child being a weaker case of advancement than a lodgment in the name of the child alone, it is now settled law that a lodgment by a father in the joint names of himself and his child is as powerful and strong an indication of advancement as a lodgment in the name of the child alone. Now, what is the effect of that doctrine of advancement attaching on a sum lodged in the joint names of father and child (the latter surviving), or in the name of a child alone, unexplained by any evidence? It is a gift of the property to the child in the one case immediately, and in the other if the child survives. It takes effect immediately in possession in the one case, the beneficial enjoyment being postponed in the other. Case after case establishes that proposition, and I need only refer to one of the most recent, Hepworth v Hepworth LR 11 Eq 10, where the consequence of advancement as being a direct gift, making the property pass, is explained and illustrated. That being so, it is difficult to see how a declaration by the father at a subsequent period can alter the property in the gift which he has made. In my opinion, the authorities are clear that the declarations of the father, subsequent to the advancement, if they are not so connected with it as to be reasonably regarded as contemporaneous, cannot be evidence to rebut the presumption of advancement. There is a case in this country of great importance, which was not referred to, Fox v Fox 15 Ir Ch R 89, heard before Lord Chancellor Brady, Lord Justice Blackburne, and Baron Deasy. That was the case of a lodgment of a sum of money by a father in the joint names of himself and his son, and having regard to the state of the family, an advancement operated very unequally. The hardship of the case influenced the Lord Chancellor’s judgment when the case was heard before him, and he seems to have admitted subsequent declarations of the father, which affected his mind very much, and he held that there was no advancement. That decision undoubtedly interfered with the well-acknowledged rules of law respecting advancements. But on appeal he himself reversed his own decision, and there are some valuable observations in the judgments of the Lord Justice and Baron Deasy in relation to the entire want of value and weight to be attached to subsequent declarations. In my opinion, nothing is more dangerous than to allow the facts of a particular case to invade a rule of law which, when once settled, ought to be invariably applied.
Perhaps one of the most important cases on the subject is the decision of Lord Langdale in Sidmouth v Sidmouth 2 Beav 447, a well known case. It was stated in the argument before me, that Lord Langdale in that case weighed and considered the subsequent declarations made by Lord Stowell, as to his intention in making the lodgment which he had made. Lord Langdale did nothing of the sort. He had to deal with two sets of conversations, one set which was actually contemporaneous with the lodgment, and another set which was subsequent to the lodgment. He put aside altogether the latter, and entertained solely the conversations and declarations which were contemporaneous with the lodgment. And he has so expressed himself very plainly. He says, p 455:
“That contemporaneous acts, and even contemporaneous declarations of the parent, may amount to such evidence, has often been decided. Subsequent acts and declarations of the parent are not evidence to support the trust, although subsequent acts and declarations of the child may be so; but generally speaking we are to look to what was said and done at the time.”
Sidmouth v Sidmouth is accordingly one of the ruling authorities that subsequent declarations of the parent are not admissible to alter the presumption raised by the advancement; and if I were to name any one principle of law as better settled than another, I should say that it is the rule that no declaration of the father, at a period subsequent to the advancement, is admissible to control the gift which the law implies as against him. I should not have considered it necessary to comment on these principles of law but for the character and length of the arguments which were addressed to me.
But it is also contended that, whatever may have been the rule of law before, it has been altered by Vice-Chancellor Stuart’s decision in Devoy v Devoy 3 Sm & G 403, which it is said is an express authority to compel me to admit this document of April 1871, in evidence, and the following passage in the judgment of Vice-Chancellor Stuart is referred to: He says (3 Sm & Gif 406):
“In support of that argument it has been said, that if the father had died before he gave evidence of the nature of the transaction, no record would have been preserved of the transaction, and the Court must then have given effect to it as an advancement to the child. The circumstance that if the father had died, the evidence would have been lost, cannot in the slightest degree affect the truth of the case, where the evidence is not lost.”
And then it is said, that the evidence here is not lost, and that we have it under the hand of the man himself that he made the lodgment for the purpose stated in the memorandum. It would appear to me, assuming Devoy v Devoy to have been rightly decided, that there is a marked distinction between the evidence of a living man on his oath, and a scrap of paper written by him, and found among his papers after his death. In the former case you can probe his conscience, and examine him as to the truth and grounds of his statement. That case was followed in Stone v Stone 3 Jur NS 708; and it came again before the same Judge in Forrest v Forrest 13 WR 380. Now the last case was a very peculiar case. Two points arose in it; first, whether certain transactions of the testator in relation to certain shares, he standing in loco parentis at the time, were to be considered as amounting to an advancement. These the Vice-Chancellor considered did not amount to an advancement, and it is unnecessary that I should go into the grounds on which he so decided. But I feel bound to say, that it appears to me that the report can scarcely be accurate as to the grounds on which he rested that decision. Because the Vice-Chancellor is made to state that, in order to support the advancement, it should be shown that the purchase of the shares, when it was made by the testator in the defendant’s name, was intended by him as an advancement. This view would throw the onus of proof on the party claiming the advancement, which is at right angles with all the authorities. But another question arose in that case, viz., whether there had been a subsequent gift inter vivos; and on this part of the case a document was produced in which the testator called the shares his own property: and the question was, whether that document was admissible in evidence. This case of Forrest v Forrest has been relied on before me as an authority, that in a case of advancement, such a subsequent document was admissible. It decided no such thing. The document was offered in relation to the gift inter vivos; and Vice-Chancellor Stuart, apparently with great doubt, admitted the document, but at a stage of the case when he had entirely disposed of the question of advancement. He is reported to have said, that “he had great difficulty in making up his mind, whether the paper in the handwriting of the testator, giving an account of his property, was receivable in evidence or not.” There was this entry in the paper, “South Wales Railway in CBT’s (the defendant’s) hands belong to JRF.” the testator. The Vice-Chancellor proceeds, “No doubt, if an advancement was once made, subsequent declarations by the person who made the advancement were immaterial, inasmuch as the property had already passed.” It was another question, however, in a case of alleged gift, where the only evidence was that of the claimant. In the very valuable Treatise of Mr Lewin on Trusts, p 137 (4th Ed), is this passage – “Of course the father cannot defeat the advancement by any subsequent declaration of intention. But his evidence is admissible for the purpose of showing what was the intention at the time.” The only authority for that latter proposition was a case of Devoy v Devoy 3 Sm & Gif 403; 5 WR 222. That was a very difficult case. There the father was living, and he had admitted his evidence as to the nature of the transaction. He still thought that he was justified in admitting the evidence of the father in that case; but he was not sure that the case went quite so far as to support the proposition of Mr Lewin. After those observations I do not think that Devoy v Devoy can be fairly cited as an authority that declarations of the father subsequently to the advancement are admissible. I say nothing about the actual decision in Devoy v Devoy. I have no such case before me here; but I must say that it is no authority whatever for the admission in evidence of mere declarations of the father subsequent to the advancement. Vice-Chancellor Stuart himself, in Forrest v Forrest, as will be observed in the passage I have quoted from his judgment, states the rule of law to be otherwise.
I think it right that I should call attention to the case of Williams v Williams 32 Beav 370, before Lord Romilly, who had to consider the admissibility of the father’s evidence even in his lifetime. That was the case of a purchase of real estate made by the father in the name of the son, who afterwards had died. But the father was a living man, and the question was, whether that purchase was intended for the son, or whether the son was a trustee for the father. The father himself had given evidence, and Lord Romilly at page 372 says, “This is solely a question of intention; it depends on what the intention of the Plaintiff was when he made this purchase and these advances on mortgage, not what his intention now is.” He then went through the evidence, and says, page 274, “I think myself therefore bound to reject from my consideration all that portion of the evidence of the father now, as to what his intention was before.” That was the way Lord Romilly dealt with the evidence. “The decided cases show that his present declaration to that effect could not have been regarded after his decease to create a trust in the son, and I consider myself equally bound to disregard them now, although he is alive. On such occasions, the declaration to that effect by the father must be contemporaneous with the event itself.” I am of opinion, therefore, that this document is not admissible in evidence.
It was also contended that this document was receivable in evidence, on the ground that it was an admission by Sir Justin Sheil against his pecuniary interest. I do not at all comprehend such a view of the memorandum. I have examined the cases relied on; they seem to me to have no application whatever, and that ground for the admission of the memorandum also fails.
The document being inadmissible, it is altogether unnecessary to consider the question whether the trust declared by it is too vague.
I shall, therefore, declare that the £2000 Russian 5 per cent. bonds, and £200 Victoria 6 per cent. bonds, form no part of the assets of Sir Justin Sheil.
RF v MF
[1995] 2 ILRM 572 (Supreme Court)
Henchy J: The husband and wife in this case were married in 1956. He was an agricultural instructor and she was a clerk. It did not turn out to be a happy marriage. Over the years it passed through a series of vicissitudes which I need not recount. It is sufficient to say that the marriage, of which there is no issue, is now irretrievably broken down for some years.
The present proceedings were commenced by the wife in the High Court in 1980, following on the breakdown of the marriage, and in them she sought a series of reliefs against the husband. When the proceedings came on for hearing before D’Arcy J in December 1982 he made an order dealing with the several issues raised in the pleadings. I need not go into the various matters that were in dispute, for this appeal, which has been taken by the wife against the order of D’Arcy J, is limited to two matters, namely, the findings made by the judge as to the ownership of a farm in north Co Dublin, and of a house in M, Co Dublin.
When the parties married in 1956 they first lived in S, Co Dublin. In 1961 they decided to purchase the farm in north Co Dublin. It was a farm of some 35 acres and the purchase price was £4,200. Between money given by an aunt and money lent to her by a bank, the wife put up £4,100 of the purchase money. The husband’s contribution was £100. With the aid of an advance from the bank – as a security for which the title deeds of the farm were lodged – they stocked the lands with cows and began dairy farming. The farm had been acquired in the wife’s name.
Meanwhile, relations between the parties were steadily deteriorating. They intended to leave S and go to live on the farm, but the wife refused to do so. She has complained of physical ill-treatment by him, due, according to the judge, to persistent nagging by her. Her nervous health deteriorated and she had to get psychiatric treatment. Because it was he who was effectually running the farm he felt that she should assign it to him. In April 1963 he had transferred the house in S to her. The running of the farm was financed out of a joint bank account. When she froze that account, he pressed her to assign the farm to him. Eventually she did so, by a deed executed in May 1965.
D’Arcy J held that this deed was a valid transfer. The wife contests that finding and asks this Court to hold that the deed should be set aside on the ground that she executed it under undue influence by the husband. In my opinion, that contention is unsound.
In the first place, the deed was not a voluntary one. While the transfer is expressed in the deed to be in consideration of natural love and affection, the reality was, as the judge held, that she was to be repaid everything she had expended on the purchase of the land, and he was to take over her liability to the bank for the amount the bank had advanced in respect of the purchase and stocking of the land. It was, therefore, an assignment for valuable consideration. But even if it could be said that the consideration was inadequate or illusory, she had been independently advised as to her rights by two separate firms of solicitors. In the circumstances, there is no equitable principle on which she could claim that the transaction could be set aside.
It was not an improvident transaction. As well as that, the fact that she allowed eight years to pass before making any complaint that her execution of the transfer was oppressive or unfair was, as the judge held, so tainted with delay as to be inconsistent with her claim that she had acted under undue influence when she executed the transfer. I entertain no doubt that the judge was correct in holding that the transfer is valid and is binding on the wife.
The second ground of appeal argued is concerned with a house at O, M, Co Dublin. This was a house acquired in the joint names of the husband and wife. The judge held that the wife’s interest thus acquired was acquired as trustee for the husband. Whether that finding is correct is the issue that has mainly exercised the court in this appeal.
It is common case that the wife made no contribution towards the cost of the purchase of the house at O and that, although she had promised to do so, she never resided there. The matrimonial home was the house in S, but the marital relationship there was poor. In 1974 the husband bought another house, in M, in his own name and went to live there. The marriage had now virtually collapsed, but the parties kept up desultory contacts. He pressed her to go to live with him in his house in M. She at first agreed to do so, but then refused because that house was not in their joint names. Instead of living together there, she suggested that he sell that house and buy a new house at O in their joint names. If he did so, she would go to live with him there. Being anxious to attempt to revive the marriage in a new matrimonial home, he agreed to do so.
The husband thereupon proceeded in 1976 to buy the then unbuilt house at O for £26,750 and the conveyance was taken in their joint names. He then sold his other house in M for £18,750. The financing of the purchase of the house at O was arranged by the husband getting a bank loan.
When the house at O was built, the husband moved in and asked the wife to join him there. Despite her earlier promise, she was reluctant to do so. As an added inducement to her to honour her agreement to live with him in that house, he bought her a motor car which cost £1,600. All to no avail. She continued to live in the original matrimonial home in S. Despite all entreaty by him, she resolutely refused to go and live with him at O. She has never gone to live there. Nevertheless, she claims that, because the conveyance was taken in their joint names, she is now beneficially entitled to a half share in that house. D’Arcy J rejected that claim and the wife’s second argued ground of appeal is that the judge was wrong in so deciding.
The equitable doctrine of advancement, as applied to transactions between husband and wife, has the effect that when a husband (at least where the circumstances show that he is to be expected to provide for the wife) buys property and has it conveyed to his wife and himself jointly, there is a presumption that the wife’s paper title gives her a beneficial estate or interest in the property. Unless the presumption is rebutted by evidence showing a contrary intention on the part of the husband at the time of the transaction, he will be deemed to have entered into the transaction for the purpose of conferring a beneficial estate or interest on the wife. That estate or interest is treated in law as an advancement, that is to say, a material benefit given in anticipation of the performance by the husband of his duty to provide for the wife.
The presumption of advancement in those circumstances is, of course, rebuttable. For a rebuttal to be made out, it is for the husband to show, by reference to acts or statements before or around the transaction, that a beneficial interest was not intended to be conveyed in the circumstances relied on. As to subsequent acts or statements, the authorities show that they are admissible in evidence against the party making them, but not in his or her favour. Thus, subsequent acts or statements on the part of the wife are admissible in evidence to rebut the presumption of advancement.
The essence of the transaction in regard to the house in O was – and the judge has so held – that the husband was to buy that particular house and take the conveyance of it in the joint names of the wife and himself, provided the wife was prepared to live there with him. The latter condition, from his point of view, was paramount. He was anxious to revive the faltering marriage. He had asked her to leave S and come to live with him in his other house in M. She had refused because that house was in his sole name. That was the sticking point. She countered by agreeing to a resumption of normal marital relations if he bought the O house in their joint names. This condition emanated from her and he fell in with it. It was the cornerstone of the transaction as far as he was concerned. Nevertheless, she has repudiated it and contends that the presumption of advancement stands unrebutted.
In construing conduct alleged to amount to advancement, the court’s task is essentially a fact-finding one. It has to ascertain, from the admissible matters relied on by the parties, the true intention behind the transaction which has given the wife a paper title. If the relevant circumstances show that the paper result produced by the conveyance conceals the real intention of the husband in entering into the transaction, so that the benefit contended for by the wife was not intended, the court will hold that the presumption of advancement has been rebutted.
In the present case, I am satisfied that the presumption of advancement, arising from the terms of the conveyance, was clearly rebutted. It is plain that the husband would never have agreed to the transaction if the wife had not promised to live in the house. That promise was an integral part of the arrangement. The wife cannot cast aside that promise and take the benefit of the conveyance. It is a fundamental rule that a person who comes to court seeking the benefit of an equitable doctrine will be denied that benefit if the grant of it would amount to a reward for unfair, unconscionable or inequitable conduct. To hold in this case that the wife acquired the beneficial interest she claims would, apart from being based on a false interpretation of the arrangement made by the parties, allow the wife to profit by her bad faith. That is something the court should not do. The position would be less clear if it were a question as to whether the wife had in reality or in substance performed her part of the agreement. For example, if she had gone to live with the husband in the house for only a short or nominal period, it might be difficult for the husband to contend successfully that she had not complied with her promise that she would go to live with him in the house if he bought it. But that is not the case here. She has made no attempt to live there. What she wants is to be allowed to renounce totally her promise to live in the house and at the same time to be allowed to get a beneficial interest in the house, when it is plain that the passing of such an interest was made conditional on the performance by her of the promise. In such circumstances it must be held that the presumption of advancement has been rebutted and that she has not acquired under the deed any beneficial interest in the house.
Being of opinion that the two grounds of appeal argued have not been made out, I would dismiss this appeal.
Heavey v Heavey
(1977) 111 ILTR 1 (High Court)
Kenny J: The plaintiff married the defendant on 30th August 1954. After their marriage they lived for some years in a house in Dublin which had been purchased by him in his name for £2,300. The plaintiff, who owned a business in Thurles where a grocery and confectionery trade was carried on, sold it in 1956 for £3,105 and this together with arrears of rent and £1,130 received on the sale of the fittings and stock were given by her to him and he lodged it in her name in the Educational Building Society. Between 1958 and 1961 three endowment policies, which she had taken out on her life, matured and she paid the £1,173 which she got from the insurance companies to him. She also had some saving certificates and when they became payable she gave the £402 which she got to him. She was also the owner of a one-seventh interest in a cinema in Thurles which yielded an annual income of £550 which she gave to him each year until 1968. From the time they were married until 1968, he gave her a generous housekeeping allowance, paid all the bills in connection with the household and the expenses of the education of the children. He opened a joint bank account in their names and lodged most of the money he got from her in it. Each could draw cheques on this account.
In 1957 the husband bought two houses in Haddington Road, Dublin, in his name and converted the two houses into flats. In 1959 he bought a house in Northumberland Road (“house A”), Dublin for £2,450 in his name and converted it in the same way. The family home in North Circular Road, which had been brought for £2,300, was sold in 1959 for £7,500 and with this he bought a fine house in Merrion Road, which was conveyed to him for £5,000 and he then spent about £12,000 in altering and decorating it. He and she and their children went to live in the house in Merrion Road where she still resides.
In 1967 another house in Northumberland Road (“house B”) was purchased by him for £15,500 and on the 7th July 1967, he had it conveyed into her name. Most of the purchase money came from the joint account. In an affidavit sworn on the 23rd April 1974, the husband gave his reasons for having this property conveyed into the sole name of the wife: “I purchased the premises … in June 1967: I put the said premises in the plaintiff’s (the wife’s) name (a) to help avoid death duties after my death (b) to invest the plaintiff’s money given to me over the previous years. When I purchased the said premises it was in three flats, unfurnished, undecorated, letting value about £20 per week. That is what I put in the plaintiff’s name, a big empty house with no income from the same. When I put the said premises in the plaintiff’s name it never occurred to me that the plaintiff would ever claim the said premises until after my death. I most definitely would not have put the said premises in the plaintiff’s name if it ever entered my mind at that time that the plaintiff would claim the said premises or rents therefrom. The reason why I spent so much money converting the said premises into luxury flatlets was to give the plaintiff and our children a trouble free property after my death”.
The total cost of the purchase of that house including auctioneers’ fees and solicitors’ fees, was £16,904. The cost of converting the premises into luxury flats was £16,560 and this was financed by an overdraft given by the Bank of Ireland to the husband. He has a very prosperous business and the bank were prepared to advance this sum to him on the security of the title deeds of the two houses in Haddington Road and the other house he owned in Northumberland Road. The husband used this account for his business also and in April 1972, shortly after the banks in this country had decided to convert overdrafts into term loans, part of this overdraft became a term loan of £17,000 at interest of 16%. He received most of the rents from house B in Northumberland Road until the 19th May 1973, when the wife began to collect them. The conversion of the premises was done on such an elaborate scale that the annual gross income from them was £6,380 in 1969 and £6,747 in 1970.
In 1972 the wife began proceedings against him for a judicial separation, for custody of the children and for a declaration under the Married Women’s (Status) Act, that she was the owner of the house in her name as from the date of purchase of it and of the other four houses. The three proceedings were heard together and I made an order for judicial separation because of his cruelty, awarded the custody of the children to her and fixed alimony at £75 per week. Subsequently, when I had heard further evidence, I found that she was beneficially entitled to the entire interest of the lessee in house B in Northumberland Road as from the date of purchase and that he was beneficially entitled to the other four houses and an order giving effect to this was made on 16th May 1973. By it the husband was also restrained until further order from selling the house in Merrion Road until he provided such alternative suitable accommodation for the wife as might be sanctioned by the Court.
She subsequently applied for an account of the rents and profits of the house in Northumberland Road received by him from the 7th July 1967, to the 19th May 1973. On the 4th February 1974, I directed the following accounts to be taken before the Examiner:
1.An account of the rents and profits of the premises in Northumberland Road in the City of Dublin received by the defendant (the husband) from the 7th July 1967, to the 19th July 1973.
2.An account of the amounts expended by the defendants in converting the said premises into flats between June 1967, and May 1973.
3.An account of the amount due by the defendant to the Bank of Ireland in connection with the purchase of the said premises by the defendant in the name of the plaintiff.
The Examiner made up his certificate on the 12th June 1974. He found that the husband had received £30,514.11 of the rents and profits of the premises from the 7th July 1967, to the 19th May 1973, and that he had paid £7,472.39 on account thereof leaving a balance of £23,041.721 on that account. Bank interest paid by the husband on the amounts expended on the purchase and conversion of the premises was not included in this account. On the second account the Examiner found that the husband had expended £16,560 in converting the premises into flats between June 1967, and May 1973, and on the third account he found that on the 22nd October 1973, £7,385 was due by the husband to the Bank of Ireland in connection with the purchase by him of the premises in the name of the wife. This was the proportionate part relative to the purchase price of the amount due by the husband to the bank.
Counsel for the wife have argued that she is entitled to be paid the £23,041.72 because the husband is not entitled to credit for the amounts expended by him in converting the premises into flats and so cannot claim that this should be paid out of the rents. It has also been submitted that he the husband is not entitled to credit for the sum which he owes the bank in respect of the purchase or conversion. The husband, who has appeared in person, did not direct his argument to any of the interesting legal questions which arise but abused his wife for her greed.
It is a presumption of law that when a husband makes a purchase of property or transfers money or securities into the name of his wife solely, it is intended as a gift to her absolutely at once and there is no resulting trust in his favour. (See: In re Eykyn’s Trusts (1877) 6 Cld D 115; In re Condrin, Colohan v Condrin [1914] 1 IR 89 and McCabe v The Ulster Bank Limited [1939] IR 1, 14.) The same principle applies when a husband expends his own money on the property of his wife even if that property has been transferred by him to her. It is, however, not an absolute rule of law that the wife gets the benefit of the expenditure, it is a presumption only which may be rebutted by evidence so that if the wife leads the husband to believe that money which he spends on improving her property will be repaid to him out of the rents of the property when improved, he has a valid claim to be reimbursed out of the rents. I agree with the statement of the law in the speech of Lord Upjohn in Pettitt v Pettitt [1969] 2 All ER 385, at p 409:
“It has been well settled in Your Lordship’s house (Ramsden v Dyson (1866) LR 1 HL 129) that if A expends money on the property of B, prima facie he has no claim on such property. And this, as Sir William Grant MR held as long ago as 1810 in Campion v Cotton (1810) 17 Ves 263, is equally applicable as between husband and wife. If by reason of estoppel or because the expenditure was incurred by the encouragement of the owner that such expenditure would be rewarded, the person expending the money may have some claim for monetary reimbursement in a purely monetary sense from the owner, or even, if explicitly promised to him by the owner, an interest in the land …”
It seems to me that it is unreal to approach the question of the ownership of or claims for shares in or reimbursement of expenditure on property as between husband and wife when each has made contributions to its purchase or improvement by trying to ascertain what the agreement between them was or what agreement can be implied from their behaviour. Husband and wife do not contemplate disputes or the break up of their marriage when they are getting married or when they are living happily together and the arrangements about domestic expenditure and their dealings in property are very informal and are not the result of negotiations between them which result in legal agreements. I am fortified in this conclusion by the judgments of the Lord Chief Justice of Northern Ireland, Lord MacDermott, and of Mr Justice Lowry (as he then was) in McFarlane v McFarlane [1972] NI 59, from which I have got considerable assistance. When there is an express agreement, the Courts must give effect to it but, in the absence of a proved contract, I think that the question whether a husband has a claim for improvements carried out to his wife’s property should be solved by the application of the flexible concept of a resulting or constructive trust (see the speech of Lord Pearson in Gissing v Gissing [1970] 2 All ER 780). When this concept is adopted, the guiding principle is that stated by Lord Diplock in the same case:
“A resulting, implied or constructive trust – and it is unnecessary for present purposes to distinguish between these three classes of trust – is created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land, whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held so to have conducted himself if by his words or conduct he had induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land.”
This principle should, I think, be applied to a transfer of property by a husband to a wife and to expenditure on improvements carried out by him on her property. If he expended his money in improving his wife’s property, particularly property which he has transferred to her, he has in my view, no claim to be repaid the amount which he spent even if he thought that the amount would be repaid out of the rents unless she led him to believe that it would be refunded.
This principle, however, does not apply when the husband has borrowed the money to purchase the property or to carry out the improvements. If the wife is aware that the husband is borrowing the money for either of these purposes, it would, in my view, be inequitable for her, when a dispute arises between them, to retain the rents for herself and to refuse to have the outstanding debt incurred by the husband paid out of them. In this case the wife was keeping the husband’s books and knew that part of the cost of purchasing house B in Northumberland Road and the entire cost of converting them were being financed by a bank loan given to the husband.
The accounts, which were directed by the order of the 4th February 1974, do not include an account of the amount due by the husband to the Bank of Ireland in connection with the conversion of the premises into flats between June 1967, and May 1973.
Subject to the result of this account, the financial position of the parties seems to me to be that the husband is entitled to credit against the rents which he collected for the amount which he owes the Bank of Ireland in connection with the purchase and conversion of the premises by him in the name of the wife together with the probable amount of interest which he will have to pay. The amount which he owes the bank in connection with the purchase is £7,385; the amount of interest which he will have to pay is not proved in evidence. At 16% the annual interest on £7,385 is £1,168 and the best estimate I can make of the interest which he will pay on the term loan is to allow five years at £1,168 and four years at £584 (which is half the original sum of interest) on the assumption that the husband will be repaying capital and interest each year. The total amount of interest is therefore £8,176 and when this is added to the principal, the total is £15,561. The husband is entitled to credit for this sum against the amount of the rents which he received. He will also be entitled to credit for the amount which may be found to be due to him by the Bank of Ireland for principal and interest in connection with the conversion of the premises into flats.
I regret the necessity of sending the case back to the Examiner for another account. If the husband had retained a legal adviser to conduct this case on his behalf, it would not have been necessary but the claim that part of the expenses of conversion had been financed out of a bank overdraft on which money is still due was not made until after the Examiner had made up his certificate.
There will accordingly be an account before the examiner of the amount due by the defendant to the Bank of Ireland for principal and interest in connection with the conversion of the premises house B in Northumberland Road by the defendant. When the result of this is known, it will be possible to dispose of the matter.
The wife is now receiving alimony of £75 a week, maintenance for the children and has a right to live in the house in Merrion Road without payment of rent. She is in receipt of an annual gross rental income from house B in Northumberland Road of about £7,000. Having regard to this income I think that the figure for alimony is too high and I propose to reduce it to £10 per week as from today. It may be that the wife at a subsequent hearing will be able to establish that the net income which she has from house B in Northumberland Road is not sufficient with the £10 per week and the children’s maintenance to enable her to live in the house in Merrion Road. I have no evidence at the moment of the net income from house B in Northumberland Road which enables me to form a decision on this matter.
NAD v TD
[1985] ILRM 153 (High Court)
Barron J: The parties in this case were married in the Roman Catholic Church of St Patrick in Galway on 16 July 1962. They have five children of whom the eldest was born on 17th November 1963 and the youngest on 28th July 1969. These children are now aged 20, 19, 18, 17 and 14 respectively. The husband was a small farmer and the wife was a shopkeeper having inherited from her mother a couple of months before the marriage a restaurant and take-away business in the centre of town which dealt mainly in confectionery, minerals and chips but also some groceries.
Following their marriage, the husband left his farm where he had been living with his aunt and went to reside with his wife and her father in living accommodation above the shop. His aunt continued to reside on his farm and was maintained by him. He remained living over his wife’s shop until the Spring of 1964 when he moved back to his own farm. During the period while he was away from his farm in this way he looked after it during the day time but spent most of his time assisting his wife in the business and effecting improvements to the business premises.
When the husband left his wife’s home he did so with the intention of building a house for the family on a site which he had purchased in February 1964. He commenced work on this new home in or about the month of April 1964 and continued it until the house was finally completed some time in the Spring of 1965. It was sufficiently habitable by November 1964 at which time he and his wife and children moved into it on a permanent basis. Following her move to the new family home, the wife continued to run her business but this proved difficult to accomplish and she sold it early in the year 1965. Her father who had remained living over the shop then came to live with his daughter and her husband and their children in their new home. Once the home was finished the husband obtained employment. In the Summer of 1965 he obtained ten weeks employment as a builders’ labourer. After that he obtained employment as a milk roundsman in the morning and as a rental collector for a television hire company in the evening. At the same time as holding these two jobs he also worked on his own farm during the afternoon. He and his wife were of very different character and these differences caused considerable disharmony in their marriage. By the Summer of 1966 these differences had reached the stage where he left home and worked in England for six months. During this period his aunt who was living on his farm died and he returned for the funeral. After his ultimate return from England he sold his farm early in 1967 to his brother.
In February 1967 the husband obtained employment with Roadstone Ltd by whom he has been employed since and by whom he is now employed as a contract foreman. Relations between himself and his wife were totally restored during the first half of 1967, but began to deteriorate again after that period. In October 1971 the wife left the family home without any warning and after a few weeks in the neighbourhood of the family home during which neither party communicated with the other the wife went to England. In England she formed an association with another man with whom she lived until 1976 and by whom she bore a son on 21st October 1974. She ended this association in the year 1976 when she walked out without any warning taking her son with her.
While in England the wife obtained good employment in the catering industry. Since the break-up of her association in England, she appears to have had no employment and has lived mainly in this country but at all times with the assistance of social welfare payments.
After the wife left home, her father remained and assisted his son-in-law in bringing up the children until his death in 1975. Sometime in the year 1975 or 1976 the wife commenced divorce proceedings in England but apparently discontinued them. The husband then commenced similar proceedings in the same jurisdiction as a result of which a decree absolute was granted on 20th July 1976. Subsequently the husband obtained a Church annulment of his marriage on 31st January 1980. In the month of July 1980 he married in Church a woman in the same position as himself who had six children all in or about the same age as his own. He built a second house beside the family home and the two adults and eleven children now share the accommodation of the two houses.
Since the wife ended her association with the man with whom she had been living in England she has in addition to the present proceedings instituted proceedings in the District Court on two occasions both times for maintenance. In November 1977 her claim was dismissed for want of jurisdiction; in March 1981 her claim was struck out because she did not appear owing to illness. These proceedings appear to have been brought as a requirement for the wife’s claim to deserted wife’s allowance, though in fact she was regarded as being ineligible for such payments. No legal submission has been made that the wife is in any way prevented from pursuing her present claim by reason of any of the proceedings to which I have referred.
The present proceedings were issued on 11th May 1982. They raise a number of issues of fact and law. The claim can be divided into three parts. The wife seeks access to her children; she seeks maintenance from her husband; and she seeks a declaration as to the ownership of the family home and its furniture, and, if appropriate, an order for the sale of such home to realise the value of her interest therein.
The evidence adduced indicates that the parties did not have a satisfactory marriage. Each has made allegations against the other that the other was responsible for its break-up. The husband claims that the wife was a bad manager, that she was irresponsible with money, that she stayed out late drinking and did not look after her children properly. The wife accuses the husband of giving her insufficient monies and also violence towards her. There is some independent evidence which bears on these several complaints. One of the matters in dispute is whether the husband, when he was working in England during the latter half of 1966, sent home money to his wife from the first week that he was away and then regularly thereafter. His wife says, that he did not. His evidence that he did is fully supported by the evidence of his landlady.
The evidence on behalf of the husband alleges that when he was in England in 1966 it was necessary to call in the assistance of the Irish Society for the Prevention of Cruelty to Children and that his local inspector called on the family home on a number of occasions. The wife admits that the inspector called but denies that it was because of any suggestion that she was not looking after her children properly. Evidence has been given by the husband’s sister-in-law that on one occasion during this period the wife without any warning brought over two of her children and literally dumped them on the witness. She kept them for some days and then returned them to their home to the care of their grandfather. In support of his allegation that the wife was careless in money matters, the husband produced a number of bills showing that when the wife left the family home in 1971 she left behind her accounts owing to approximately four different commercial concerns amounting in all to something in the order of £300.00. The wife does not deny the debts but says they arose because of the husband’s failure to supply her with adequate monies. In relation to these several issues of fact I accept the case made by the husband and reject that made by the wife. It seems to me that the former is the more probable. The wife is a woman of strong character with a stubborn and determined streak in her which prevents her from seeing any wrong in her own actions. It is this part of her character which led to her leaving the family home. Nevertheless I do not accept the allegations against her of drunkenness nor do I accept that her husband showed violence towards her on any occasion.
It is clear on the evidence that the wife left home without warning. Her explanation is that she couldn’t stick it any more. She sought to justify her action by saying that her husband was alright with the children but that marriage was a different story. Even if her leaving was brought about by her husband’s conduct, this explanation does not excuse her treatment of her children. On this view of the matter and because I prefer the husband’s evidence on this aspect of the case, I am satisfied that her action in leaving the family home amounted to desertion. It was an action which she virtually repeated five years later save that on that occasion she took her two year old son with her. It follows that the plaintiff is not entitled to any maintenance.
The question of access has to be considered in the light of the wife’s desertion. This has produced a natural reluctance on the part of her children to have anything to do with her. Her husband has not contributed to this reluctance. In May 1980, a meeting was arranged between the parties at which the children attended. They met in the grounds of a hotel approximately half way between their respective homes. A difficult reunion was made more difficult because the wife brought her six year old son to that meeting. Her other children had up to that time been totally unaware of his existence and it came as a shock to them. This boy spent the entire of the period of the visit with the husband and in his car. The meeting lasted half an hour and was strained. The wife has not seen these five children since.
My function is to see whether or not it would be for the benefit of these children to see their mother. I have seen the two older boys in Chambers. I am satisfied from what transpired in the course of this meeting that the present home circumstances of all of them is secure and well supported. It seems unlikely that any benefit would accrue even to the youngest child if any form of access was arranged on the lines of what occurred in May 1980. So long as the wife continues to live in Dublin as she does at present and her children continue to live in Galway no practical benefit will accrue to any of them from infrequent meetings with their mother at some town between Galway and Dublin. The distance alone makes it difficult for such meetings in either Galway or Dublin nor do I favour overnight access even if this could be arranged. The present relationship between the wife and her children can only be hampered by seeking to impose a solution particularly one which would not appear to have any realistic hope of producing a better relationship between them. If this end could be seen to have any reality then steps should be taken to achieve it. The wife says she intends to move to Galway to live there permanently. If she does so, then the position as to access should be reconsidered depending upon the new circumstances. However, even now the youngest is too old to be forced to see her mother with whom her older brothers and sisters may have no communication.
The final matter relates to the property rights of the parties. The family home was built directly under the supervision of the husband who also engaged in the manual work involved in its construction. He paid for the site and obtained a loan from a Building Society. He says that in addition he obtained a grant from both local and central Government amounting to £1,100.00 and also used the proceeds of prize bonds amounting to between £250 and £500 and such income as he had from his farm. His wife claims to have paid him sums of £800 and £100 respectively in cash in August 1964. She also says that her husband was more able to finance the construction of the house because her income maintained them during the year which it took to build.
There is a dispute between the parties as to how much the house cost and as to the sources from which the finance came. The husband undoubtedly paid £690 for the site and borrowed a sum of £1,500 from the Irish Permanent Building Society which was used in part to repay the bank from which the husband had earlier borrowed the money to purchase the site. The other items are all disputed either as sources of finance or as giving any right to a proportionate share in the beneficial interest in the home. In relation to this latter question there are two pieces of evidence of significance. The wife in her evidence said that there were never any discussions between herself and her husband as to the ownership of the family property. She says that she took things for granted. Her husband in his evidence said that he was always short of money and that he paid the most pressing accounts from such monies as he had, and further says that it was his wife who had the money at that stage.
The evidence as to the amount spent by the husband on the construction of the house and the sources of the necessary finance is not very satisfactory. As the events occurred twenty years ago this would not normally be surprising. However in the present case, the evidence indicates that records are probably still available. The wife gave evidence that the husband kept all his records in a tin box. This has been admitted by the husband. Indeed some of the documents produced establish this.
In the course of his evidence the husband produced two Bank sheets showing the operation of his account with the Munster and Leinster Bank in Galway between 6th January 1965 and 6th September 1965 together with all the paid cheques referred to on those sheets. He also produced cheques drawn on the Provincial Bank of Ireland in Galway dated between 18th August 1964 and 6 January 1965 but without the corresponding bank sheet or sheets. Other documents produced included a solicitor’s account relating to the purchase of the site, a promissory note for £575 dated 30th July 1974 in favour of the Munster and Leinster Bank in Galway showing that it was paid on 27th October 1964, and two Irish Permanent Building Society pass-books showing the payment of £700 less expenses on 15th October 1964 and £800 less expenses on 31st December 1964. Two cheques for costs paid to his solicitors appear on the Bank sheets produced, but these sheets do not show any reference to the transactions evidenced by the promissory note and the pass entries relating to the payments of the loan. The husband was given an opportunity to look for and produce any further documents which he might still have. He produced a Bank sheet from the Munster and Leinster Bank in Galway for the period 13 December 1963 to 26 June 1964 which showed eight cheques drawn and one lodgment. Both the lodgment docket and the paid cheques were also produced. In addition a letter was furnished from the Allied Irish Banks without obligation stating that there had been no activity on his account between 26 June 1964 and 20 August 1964, but without indicating whether the account referred to was the account with the Munster and Leinster Bank or the account with the Provincial Bank of Ireland. Having regard to the nature of the documents produced, it seems to me that on the probabilities the husband has further documents which would have assisted the court had they been produced.
The wife’s evidence in relation to her payments of £800 and £100 respectively was that the former was given to her husband out of the takings of her business during Galway race week in 1964 and the latter about two weeks later. There is no doubt that the sum of £800 represents a very large sum relatively in 1964. However I accept that the wife is telling the truth on this matter and prefer her evidence to that of her husband who denies having received either the sum of £800 or the sum of £100. It seems to me having regard to the period during which the monies were taken and the nature of the business in which they were taken and the fact that she had four to five assistants that unlikely as it may be the business was able to generate this type of turnover during that period. I do not think that it would have been impossible for the wife to have this sum in turnover in her business in the period claimed as is suggested by counsel for the husband.
In my view the house was built with the balance of the Building Society loan after deduction of the cost of the site together with the sums of £800 and £100 supplied by the wife and with such other small sums as the husband earned from his farm. Since it was the wife who has the money at this period of their marriage, I think it unlikely having regard to the evidence that the husband provided any other source of funds towards the building of the house. The husband was further helped by the fact that his wife had a sufficient income from her business to keep herself and her children. If the husband had been required to do so, he would have had to borrow further to meet such commitment.
The amount if any of the loan is immaterial so far as the respective interests of the parties in the house are concerned, because grants were not repayable and must be deemed to accrue for the benefit of whoever was entitled to the completed project. Nevertheless on the evidence adduced I do not accept that grants totalling £1,100 were received by the husband. Grants were undoubtedly available at that period but I have no evidence from which I can determine the exact amount of any such grant if in fact it was received.
The husband further contributed to the cost of the building by the value of his own work. I would assess the value of this work during the year it took to build the home as being £500. I am also prepared to hold that his earnings from his farm during the same period amounted to the sum of £250. If his wife had not been able to keep herself and her children her husband would have had to provide for them. I assess the probable cost of this at £500 for the relevant year.
The husband’s contribution to the cost of building the home was accordingly £1,500 together with the two sums of £250 and £500 amounting to £2,250 in all. The wife’s contribution was £900 together with the value of her indirect contribution because she maintained the family. The wife spent £500 in this fashion, while the husband’s earnings or deemed earnings for the same period were £750. Accordingly, the wife contributed indirectly 40% of the £750 contribution by the husband, ie the proportion which £500 bears to £1,250. This means that the real contribution of the husband was £2,250 less £300 or £1,950 and that of his wife £900 plus £300 or £1,200. I must now determine whether this contribution gives the wife any interest in the home whether as owner of a proportionate share of the beneficial interest or by way of a charge for the amount of her contribution.
Since the decisions of Kenny J in Heavy v Heavy (1977) 111 ILTR 1, and C v C [1976] IR 254, such claims fall to be considered in accordance with the law of trusts and, generally, as if the parties were strangers rather than husband and wife. The authorities show that a claim by a wife to an interest in property in the name of her husband as a result of payments made or work done fall generally into one of two basic categories: either in relation to property which was in the process of being acquired or in relation to property which had already been acquired by her husband. Where the property is being acquired the claimant wife must establish a resulting trust in her favour; whereas where the property has already been acquired by her husband before the contribution upon which she relies the trust to be established is a constructive trust. While the cases do not say so specifically, this is the conclusion which must be drawn from the fact that a contribution in one case gives an interest proportionate to the value of such contribution having regard to the total value of the house whereas in another it gives no right whatsoever in the absence of an agreement or circumstances which led the party contributing to believe that a benefit would accrue. The resulting trust arises from the unexpressed but presumed intention of the parties where both contribute to its purchase either directly or indirectly and it is put in the name of one of them alone. Once each contributes, it is presumed in the absence of any expression or indication of contrary intention that the unexpressed but common intention of the parties arising from the fact of contribution coupled with its acceptance is that the beneficial interest shall be held in the same proportion as their contributions. So where the property is placed in the name of the husband alone without any expression of intention to how the beneficial interest should be held there is a presumption that it is their common intention that it should be held proportionately to the amounts of their respective contributions.
The constructive trust is imposed by operation of law independent of intention in order to satisfy the demands of justice and good conscience. Its imposition is dependent upon the conduct of the person upon whom when the trust is imposed and prevents him from acting in breach of good faith. There is no fixed set of circumstances in which such a trust is imposed. Examples vary from the trust imposed where there has been a misuse of funds by a trustee, in which case the entire fund or the property replacing it is held for the beneficiary of the original trust, to the case of a vendor’s lien for unpaid purchase money or a purchaser’s lien where purchase money has been paid in advance, in which case the amount of the lien is a charge on the property: see Snell Principles of Equity 18th edition (1920). This distinction in the nature of the trust to be established is the basis for the different propositions of law to be applied to the facts in these cases as set out in the judgment of Finlay P in W v W [1981] ILRM 202. The propositions relating to payments by a wife appear at pages 204 and 205 as follows:
1.Where a wife contributes by money to the purchase of a property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court would decide that the wife is entitled to an equitable interest in that property approximately proportionate to the extent of her contribution as against the total of the property at the time the contribution was made.
3.Where a wife contributes either directly towards the repayment of mortgage instalments or contributes to a general family fund thus releasing her husband from an obligation which he otherwise would have (to) discharge liabilities out of that fund and permitting him to repay mortgage instalments she will in the absence of proof of an inconsistent agreement or arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was deemed approximately proportionate to her contribution to the mortgage repayments: to the value of the mortgage thus redeemed and to the total value of the property at the relevant time.
5.Where a wife expends monies or carries out work in the improvement of a property which has been originally acquired by and the legal ownership in which is solely vested in her husband she will have no claim in respect of such contribution unless she establishes by evidence that from the circumstances surrounding the making of it she led to believe (or of course that it was specifically agreed) that she would recompensed for it. Even where such a right to recompense is established either by an expressed agreement or by circumstances in which the wife making the contribution was led to such belief it is a right to recompense in monies only and cannot and does not constitute a right to claim an equitable share in the estate of the property concerned.
In that case both the second and third of these propositions were applied. The wife had made a claim to be entitled to a beneficial interest in a farm of land in the sole name of her husband. This farm was given to the husband by his mother and brother at the time of the marriage of the parties in 1966 subject to certain encumbrances. The parties engaged in a scheme of improvements to turn the farm into a dairy farm and built up and maintained a good dairy herd. The wife’s involvement continued until the year 1974 at least and during that period she paid into the farm account considerable sums of her own money. In addition to the original encumbrances, the husband at one stage obtained a loan from the Agricultural Credit Company on the security of the farm for the purpose of erecting a modern milk parlour and fitting it with equipment. The wife claimed to be entitled to a beneficial interest in the lands by reason of her payments into the farm account and the value of her work in building up the dairy herd including the improvements to the land itself. Her claim based upon her contribution to the improvements was rejected but her claim was allowed to the extent that she had contributed to paying off the encumbrances and the Agricultural Credit Company’s loan.
In the present case, the wife had made her contribution in relation to the improvement of property which had been acquired by and was solely owned beneficially by her husband. Applying the last of the propositions which I have quoted from W v W such contribution would entitle her to recompense in monies only in the event of it being established by her that either by virtue of an express agreement between her husband or by other circumstances for which her husband would have been aware she was led to believe that such would be the case.
The essential prerequisite for the imposition of a constructive trust of this type is that there is an element in the conduct of the person upon whom the trust is imposed which would make it inequitable for him to assert his legal rights. Such a trust was imposed by Kenny J in Heavy v Heavy (1977) 111 ILTR 1. In that case a claim was made by the wife for an account of rents collected by her husband in respect of lettings made of the property owned by her. Her husband counterclaimed for credit as against such sums in respect of monies spent by him in converting his wife’s property into separate and self-contained flats. Kenny J allowed the husband’s claim. He said at page 4:
“If he (the husband) expended his money in improving his wife’s property, particularly property which he has transferred to her, he has in my view, no claim to be repaid the amount which he spent even if he thought that the amount would be repaid out of the rents unless she led him to believe that it would be refunded. This principle however does not apply when the husband has borrowed the money to purchase the property or to carry out the improvements. If the wife is aware that the husband is borrowing the money for either of these purposes, it would, in my view, be inequitable for her, when a dispute arises between them, to retain the rents for herself and to refuse to have the outstanding debt incurred by the husband paid out of them.”
In the present case, the wife clearly contributed a substantial proportion towards the cost of their home. It would certainly be fair and reasonable that she should have an interest proportionate to that contribution. Certainly if reasonable persons had given a thought to the matter at the time when the contribution was made they would have so agreed. However, this is not the basis upon which the rights of the wife are to be determined. An approach based upon implied agreement was specifically rejected by Kenny J in Heavey v Heavey in favour of an approach based upon the law of trusts. Kenny J said at page 3:
“It seems to me that it is unreal to approach the question of the ownership of or claims for shares in or reimbursement of expenditure on property as between the husband and wife when each has made contribution to its purchase or improvements by trying to ascertain what the agreement between them was or what agreement between them was or what agreement can be implied from their behaviour. Husband and wife do not contemplate disputes for the break-up of their marriage when they are getting married or when they are living happily together and the arrangements about domestic expenditure and their dealings in property are very informal and are not the result of negotiations between them which result in legal agreements. I am fortified in this conclusion by the judgment of the Lord Chief Justice of Northern Ireland, Lord McDermott, and of Lowry J (as he then was) in McFarlane v McFarlane [1972] NI 59, for which I have got considerable assistance. When there is an express agreement, the courts give effect to it but, in the absence of approved contract, I think that the question whether a husband has a claim for improvements carried out to his wife’s property should be solved by the application of the flexible concept of a resulting or constructive trust …”
Kenny J does not appear here to distinguish between resulting and constructive trusts although he does in the earlier part of this passage refer both to contributions to purchase and to contributions towards improvements. Nevertheless, having regard to the distinctive nature of each of these types of trust, he must have intended to indicate that questions between husband and wife should be decided by the principle applicable to the establishment of resulting trusts or constructive trusts as might be appropriate.
The circumstances in which a wife may contribute to the improvement of the property of her husband may obviously vary considerably between minor decorative improvements at one end of the scale and payment for the erection of an entire dwelling-house at the other end. In each case, since the legal and beneficial ownership of the property was already vested in her husband he is entitled at law in the absence of a contrary agreement to take the entire benefit unless by his conduct he has in effect led his wife to act to her detriment. In the absence of such element, equity does not impose a trust in favour of the wife. At first sight, it might look as if the husband must be taken to have led his wife to her detriment whenever the improvement is so substantial having regard to the property as it originally stood that no stranger would have contemplated making such contribution without recompense. If so, then a line should be drawn somewhere. Should it be when the improved property is substantially a different thing as where a site is converted into a home; or should it be where an addition is made to a house as by building over the garage; or should it be whenever any substantial sum has been expended? No doubt in each of these cases reasonable spouses would be taken to have agreed that the wife should have either an interest in the property or some recompense following upon such expenditure. But the question is not what was the nature of the improvement nor what reasonable spouses would have agreed nor even what is fair, but whether or not the conduct of the owner of the property has been such that equity ought to impose a trust for the benefit of the contributor. In Heavy v Heavy, Kenny J found that the circumstances that the husband had borrowed to the knowledge of the wife was sufficient to make it inequitable for the wife to rely upon her legal rights. In each case it is necessary to establish the circumstances from which the court will conclude a like result. No such circumstances existed in W v W. No doubt, the greater the contribution the slighter the evidence which would be required to establish such circumstances. Nevertheless, there is no evidence whatsoever of any conduct upon the part of the husband in the present case which would make it inequitable to allow him to deny his wife’s claim. Accordingly, the wife’s claim to a share in the family home fails.
The wife’s final claim relates to the furniture in the family home. The husband has produced no receipts showing that he paid for any of this furniture. For the reasons which I have already indicated I think that there would be documentary evidence if his claim was correct. I accept the wife’s evidence that she purchased all the furniture for the home. However it does seem to me that there is some truth in the husband’s evidence to the effect that the furniture or some of it was purchased originally for the shop premises and was subsequently brought to the home. Clearly furnishings some of which were new, and some second-hand, and provided by the wife twenty years ago will have little value today. Nevertheless that is not a matter for me to decide at present. I will make a declaration that all items of furniture which have been in the family home since 1964 the property of the wife.
McC v McC
[1986] ILRM 1 (Supreme Court)
Henchy J: In these proceedings the wife as plaintiff is claiming against the husband as defendant that she is entitled to a share in the family home in Cork. The marriage has broken down and the wife has instituted these proceedings for the purpose of asserting a number of claims. In this appeal, however, the only question is whether Costello J was correct in holding that the wife’s claim to a share in the family home in Cork was unfounded.
In 1972 the husband and wife were living in Dublin. He was employed by an insurance company. In that year he was transferred to Cork. That meant that he had to sell the family home in Dublin. This he did. It realised £5,000, but out of that sum there had to be paid £3,200 in discharge of a mortgage on the house. That left £1,800. It seems to be agreed that because the wife had in effect contributed one-third of the purchase price of that house, she was entitled to one-third of the £1,800. However, she never got any part of the £600 she was entitled to. She allowed her husband to use it.
The husband proceeded to buy a family home in Cork. It cost £9,000. Because he was in the employment of an insurance company, he was able to get his employers to take a mortgage for the full amount of the purchase money. Thus he did not have to lay out any part of the purchase money. He merely had to pay the instalments due under the mortgage.
As to the £1,800 left over from the sale of the Dublin home, the wife allowed the husband to use it in full. He spent it in furnishing and fitting-out the Cork home. Costello J held that, because the wife was entitled to one-third of the £1,800, she became entitled to a one-third share in the furniture and fittings (including carpets) in the Cork home. Counsel for the wife contends that that was not a correct conclusion. He says that the proper conclusion to be drawn from the use of the wife’s money in furnishing and fitting-out the Cork home is that it gave her a one-third share in the house itself.
Since the decision of Kenny J in C v C [1976] IR 254, it has been judicially accepted that where the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contributions towards the purchase price or towards the discharge or mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify the conclusion that the acquisition of the house was achieved by the joint efforts of the spouses.
When the wife’s contribution has been indirect (such as by contributing, by means of her earnings, to a general family fund) the courts will, in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the ground that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.
In the present case it has been contended on behalf of the wife that, in allowing the husband to use her one-third of the £1,800, which he spent on furniture and fittings for the house in Cork, he should be held to be a trustee for her of a one-eighteenth share in the house (one-eighteenth being the proportion between the wife’s £600 and the £10,700 spent by the husband on acquiring the house and furnishing it). This contention rests on the submission that the wife’s £600 went into a family fund and that to that extent it eased the financial liability incurred by the husband in purchasing the house.
I am unable to accede to this proposition. The wife’s £600 was in no way applied to the purchase of the house. The full purchase price was provided by the husband’s employers, who got a mortgage on the house. The employers collected the mortgage payments by means of deductions from his salary. So it could not be said that the £600 or any part of it relieved the husband of any share of the financial burden he incurred in purchasing the house.
The true position, it seems to me, was that found by Costello J, namely that £600 was applied by the husband, not in acquiring the house, but as part of the £1,800 he spent on furniture and fittings. The expenditure thus by the husband of the £600 could not be said to have given the wife any beneficial interest in the house. All she got was, as was held in the High Court, a one-third share in the furniture and fittings (including carpets).
I would accordingly dismiss this appeal.
McFarlane v McFarlane
[1972] NI 139 (Court Of Appeal)
The facts are set out in Lord McDermott LCJ’s judgment.
Lord MacDermott LCJ: This appeal, by way of case stated, concerns the beneficial interest in two properties, namely, the dwelling-house and yard known as 6/8 Cliftonpark Avenue, Belfast, and the dwelling-house known as “St Valentines”, Church Road, Holywood, Co Down. The facts material to an understanding of the general nature of the dispute respecting these properties may now be stated in outline.
The parties are husband and wife. They married in 1946 and have four children. They separated in 1968 and the wife has since instituted proceedings for divorce. When she married, the wife was principal of a primary school outside Belfast. As such she occupied a free residence. The husband dealt in second-hand cars and carried on this business in the vicinity of the school-house, the school residence having become the first matrimonial home. In 1952 the parties moved to Belfast where there appeared to be more scope for the husband’s activities. This meant the wife had to give up her principalship, but she quickly secured another teaching post in Belfast, though at a reduced salary. Things did not go well at first with the husband’s business. He took a tenancy of 6/8 Cliftonpark Avenue and moved in there with his wife and family. The yard appears to have been used for the car business, but his partner in this business proceeded against him, the partnership was dissolved and the husband was ordered in 1954 to pay £600. He had to borrow to do this and it may therefore be taken that as of that year what remained of his business was in poor shape. About this time the wife got a better post as principal of a school at Crumlin in Co Antrim to which she travelled from 6/8 Cliftonpark Avenue daily. From somewhere about 1955 the husband’s fortunes began to improve and this seems to have been due in large measure to his decision to enter on an insurance broking business. Here the wife played an important and increasing part. After school had ended in the afternoon she would work at this business at home until 10 p m. It is found that she had “a very quick brain and was very good in the business.”
By 1957 the wife’s salary as a teacher had risen to £941 per annum. She used it in meeting the ordinary household expenses including the feeding of the entire family and most of her own and the children’s clothing, thus relieving the husband of much, though not all, of his domestic financial obligations. She spent all she had in this way and if more was needed the husband gave her more. At this time there was only one bank account. This was in the name of the husband and he alone operated it. The wife’s salary as a teacher was not paid into this account, but all monies received from the car and insurance broking businesses were; and all the outgoings (including the husband’s drawings) were met from it. This account was therefore essentially a business account though some other items may have passed through it.
At the end of 1957 the husband persuaded the wife to give up her teaching post at Crumlin and to spend her entire time in the insurance broking business. In return she got a salary, comparable with her teacher’s salary, from that business, and this, it would seem, was expended, as her former salary had been, in meeting the expenses of the household as far as it went.
By March 1958 the insurance broking business had grown to such dimensions that a separate bank account was opened for it, all premiums being paid in and all remittances to insurers being paid thereout. This is referred to in the stated case as the No. 2 account, the earlier account being the No. 1 account which continued to be used in relation to the car business. The No. 2 account was also in the husband’s name.
Shortly after the No. 2 account was opened the parties thought it would be well to purchase 6/8 Cliftonpark Avenue (of which the husband was tenant) and this transaction seems to have been completed in the early summer of 1959 when this property was bought and paid for by two cheques for the total sum of £1,500 drawn on the No. 1 account. It is found that “at the time it was intended by both parties that it (ie 6/8 Cliftonpark Avenue) should continue to be the matrimonial home until a suitable alternative could be acquired.” Later that year, however, an alternative was acquired, namely, “St Valentines” in Holywood. It was bought by the husband for £4,000 which was paid partly out of the No. 1 account and partly out of the No. 2. The parties and their family moved into “St Valentines” in April 1960, and it remained the matrimonial home until the separation in 1968. The assurances of both these properties were taken by the husband in his own name alone. But there can be no doubt that the wife, by keeping down the household expenses and, even more, by the services she rendered in connection with the insurance broking business, had made a substantial, if indirect, contribution to the balances out of which the two properties were purchased. As the case finds “the wife relieved the husband of a considerable financial burden and indirectly increased the amount of money in the bank accounts of the husband or otherwise available to him”.
After the separation, the wife claimed by summons in the county court, under s 17 of the Married Women’s Property Act 1882, a declaration that she was entitled beneficially to a half interest in each of these properties. Section 17, so far as material, reads thus:
“17.In any question between husband and wife as to the title to or possession of property, either party … may apply by summons or otherwise in a summary way to any judge of the High Court of Justice in England or in Ireland, according as such property is in England or Ireland, or (at the option of the applicant irrespectively of the value of the property in dispute) … in Ireland to the chairman of the civil bill court of the division in which either party resides, and the judge of the High Court of Justice … or the chairman of the civil bill court (as the case may be) may make such order with respect to the property in dispute, and as to the costs of and consequent on the application as he thinks fit …”.
The learned county court judge, Judge Brown, QC, delivered a considered judgment in which he referred to two recent decisions of the House of Lords and held, mainly on the opinions therein expressed, that the wife’s claim failed in law and should be dismissed. These decisions are – Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. On appeal the decision of the county court judge was reversed by Gibson J who held that the cases just cited did not preclude the wife’s claim, and found that she was entitled to a beneficial interest in each of the properties, which he measured at a two-fifths share, and that the husband was similarly entitled to the remaining three-fifths share. At the request of the husband he then stated the case dated 19 February 1971 which is now before us and which incorporates the learned judge’s written judgment.
Before Pettitt (the earlier of the cases I have cited) s 17 of the Act of 1882 had been interpreted on occasion as conferring a wide discretionary power which enabled the courts to dispense a kind of palm-tree justice in property disputes between spouses or former spouses, unshackled by the rules of law which had previously obtained in this particular field. This development was to some extent formalised by the emergence of what may be called the “family assets” doctrine which found favour in the English Court of Appeal and is thus described by Lord Denning MR in his judgment in that court in Gissing [1969] 2 Ch 85 at 93:
“We come down to the question: to whom does this house belong? This depends on whether it is a family asset. This principle has been frequently stated. I tried to do it myself in Fribance v Fribance (No 2) [1957] 1 WLR 384 at p 387, but it has been much better done by Diplock LJ in Ulrich v Ulrich and Felton [1968] 1 WLR 180, 189. It comes to this: where a couple, by their joint efforts, get a house and furniture, intending it to be a continuing provision for them for their joint lives, it is the prima facie inference from their conduct that the house and furniture is a ‘family asset’ in which each is entitled to an equal share. It matters not in whose name it stands: or who pays for what: or who goes out to work and who stays at home. If they both contribute to it by their joint efforts, the prima facie inference is that it belongs to them both equally: at any rate, when each makes a financial contribution which is substantial.”
If the present case could have been decided under the “family assets” doctrine the wife might well have succeeded in her claim; for, as I have indicated, her efforts made a substantial, if indirect, contribution to the funds out of which the properties in question were purchased. In my opinion, however, that approach is no longer possible in the light of the opinions expressed in the House of Lords in Pettitt and in Gissing. The facts of those cases, unfortunately, were not such as to facilitate or encourage a comprehensive statement of this vexed branch of the law, and much remains unsettled. But two points were put beyond question. The “family assets” doctrine was definitely rejected. See Pettitt, per Lord Reid at p 795, per Lord Hodson at p 810, and per Lord Upjohn at p 817. And, secondly, s 17 of the Act of 1882 was held to be only a procedural provision which did not empower the court to alter the existing rights of the parties. See per Lord Reid at p 793, per Lord Morris of Borth-y-Gest at pp 798-799, per Lord Hodson at p 808, per Lord Upjohn at p 813, and per Lord Diplock at p 820.
These decisions, as I understand them, have also established or affirmed two rather less negative propositions of law to which I must now refer. The first is that, in the absence of proof to the contrary, a spouse who has acquired the legal title to property purchased with the aid of a substantial monetary contribution from the other spouse will hold the property subject to a beneficial interest therein belonging to the other spouse: see Pettitt, per Lord Reid at p 794B, per Lord Hodson at p 810G, per Lord Upjohn at p 815 G-H; and Gissing per Lord Pearson at p 264G-265B. This may be the result of some binding agreement between the spouses; but more usually it will flow from a resulting trust in favour of the contributing spouse who has not the legal title. The extent of the beneficial interests will depend on the circumstances. They will not necessarily be equal, but may be held so where that conclusion accords with the broad merits of the respective claims or with what is fair and reasonable when there is some difficulty or uncertainty in assessing the contributions: see Rimmer v Rimmer [1953] 1 QB 63.
The second proposition which I take to be now accepted in Pettitt and Gissing must be stated in a qualified form. It is that in certain circumstances the first proposition can also apply in favour of the spouse without the legal title where that spouse has contributed to the purchase, not directly by finding a part of the price, but indirectly and in a manner which has added to the resources out of which the property has been acquired as, for example, by work done or services rendered or by relieving the other spouse of some, at any rate, of his or her financial obligations.
The facts in Pettitt related to improvements in the property concerned after its acquisition, and what I have referred to as the second proposition did not arise for decision. But I think it would be right to say that the general tenor of Lord Reid’s opinion in that case was to make no distinction in principle between the consequences of direct and indirect contributions. To the same effect was the decision of the Court of Appeal in Nixon v Nixon [1969] 1 WLR 1676; and later, in Gissing, Lord Reid, as we shall see, went far in his opinion to assimilate the two types of contribution.
Holding, as I do, that the authorities support the second proposition in the qualified form in which I have stated it, the next step is to ask what is imported by the qualifying words I have used – “in certain circumstances”. It is at this point that the light of precedent gets dim and there arises what I consider to be the main debatable issue of law in this case. It is whether contributions of the kind mentioned in the second proposition (ie indirect contributions) have to be the subject of some agreement or arrangement between the spouses before they can be held to found a claim to a beneficial interest in the property acquired with their aid; or whether, as in the case of direct monetary contributions to the price of what was acquired, a resulting trust in favour of the contributor will follow as a matter of course in the absence of rebutting evidence. On this Lord Reid in Gissing stated his view clearly at p 896F in the following passage:
“As I understand it, the competing view is that, when the wife makes direct contributions to the purchase by paying something either to the vendor or to the building society which is financing the purchase, she gets a beneficial interest in the house although nothing was ever said or agreed about this at the time: but that, when her contributions are only indirect by way of paying sums which the husband would otherwise have had to pay, she gets nothing unless at the time of the acquisition there was some agreement that she should get a share. I can see no good reason for this distinction and I think that in many cases it would be unworkable.”
It seems open to doubt, however, whether that view has gained general acceptance, and Lord Pearson’s opinion in Gissing indicated that some kind of “arrangement” was necessary before one could derive a beneficial interest from indirect contributions. What he said on this will be found at p 903B:
“Contributions are not limited to those made directly in part payment of the price of the property or to those made at the time when the property is conveyed into the name of one of the spouses. For instance there can be a contribution if by arrangement between the spouses one of them by payment of the household expenses enables the other to pay the mortgage instalments.”
The conclusion I have reached on this important and difficult question is that there is a relevant distinction between the two kinds of contribution and that the indirect contribution, if it is to earn a beneficial interest in the property acquired, must be the subject of agreement or arrangement between the spouses. Here I do not refer to a contractual relationship solely, but would include any understanding between the spouses which shows a mutual intention that the indirect contributions of one or the other will go to create a beneficial proprietary interest in the contributor. Such, in my opinion, is the nature of the qualification mentioned in what I have described as the second proposition. I do not think it has, as yet, been ruled upon by the House of Lords My reasons for the view expressed may be enumerated as follows:
(1) The point has to be settled in relation to the institution of marriage rather than in relation to broken marriages and the length of the divorce lists. To choose the latter course would be to found general rules on special situations and to ignore what is perhaps the outstanding feature of normal matrimony, namely, that it depends primarily on a state of mutual trust and co-operative striving rather than on a building-up of legal rights by the individual spouses under the law of the land. So it is, I believe, that most married couples arrive at some informal modus vivendi by which they harness or apply their energies, their talents, their standards and their resources to the common purpose of their joint lives, including of course provision for a home and family. The pattern is not stereotyped. Where a bank account is kept, for example, it will sometimes be in the husband’s name, sometimes in the joint names, occasionally in the wife’s name alone, or it may be that each spouse will maintain a separate account. But, by and large, the common purpose remains dominant, and I think it may be postulated with reasonable certainty that in most cases what either spouse contributes thereto – in work or services or in bearing the cost of household or other expenses – will not be contributed with any thought of building up a beneficial interest in one form of property or another. Such activities are, I believe more often than not, all part of a joint and unselfish adventure; and while that remains the true state of affairs I see no ground on which a court of equity should say to one spouse that he or she has gained by such indirect contributions and must as a matter of fair-dealing share that gain beneficially with the contributor. But circumstances may arise, even in the best regulated marriages, where the spouses agree in thinking it provident and right that some form of wealth to be produced by the indirect contributions of one or other of them should enure and be held for the benefit of the contributor – perhaps against a rainy day or as a reward, or for some other reason. In such event a court of equity would be faced with quite a different situation. It would not then be asked to intrude upon the ordinary collaborative course of married life, but would be asked and entitled to say that the holder of the fund or property in question was bound as a matter of fair-dealing to hold the same or some share thereof on behalf of the contributor. At this point the indirect contribution has become, by virtue of the arrangement or undertaking between the spouses, as much the basis of a resulting trust as a direct contribution in money to the cost of acquiring a particular property.
In stating this reason for the conclusion I have reached I am conscious of the weight that must attach to the views of Lord Reid and the reasoning which led him in this context to equate direct and indirect contributions. I feel, however, that the distinction is too well marked to be disregarded. Money contributions are apt of their very nature to be more formal and deliberate than those that are indirect; and when the doctrine of the resulting trust developed that was probably even more the case than it is to-day. But I cannot accept that that doctrine was ever intended to regulate the usual co-operative efforts of matrimonial life regardless of the intentions of the spouses.
(2) If the indirect contributions of a spouse for family purposes were to be put on an equality with direct contributions in order to ascertain the resulting beneficial proprietary interests, it would amount, in the absence of any agreement or arrangement between the spouses, to an application of the now discredited doctrine of family assets.
(3) Where (as here) the husband carries on a business in which his wife has no proprietary interest as a partner or otherwise, and the husband’s business bank account is under his sole control, the wife’s indirect contributions, though helping to create a credit balance, cannot raise a trust in her favour unless her interest is sufficiently defined and protected by some agreement between the spouses. Without that her contributions may never have any chance of coming back to her in the form of a proprietary right for they may be called upon to meet the needs of the business and, it may be, the demands of its creditors as well. And –
(4) If, as I think, there can be no resulting trust in respect of indirect contributions in the absence of some agreement or arrangement between the spouses, and if, as I would also hold, the family assets doctrine cannot be applied, the only remaining way of upholding an indirect contributor’s claim without any basis of agreement would seem to be to have recourse to some kind of legal fiction, as by imputing an intention or other state of mind which never existed or by implying some stipulation or agreement which was never made. In the past our jurisprudence owed much to legal fictions; but that day has waned and the fiction has fallen into general disuse as a device for finding the answer to modern issues. In London Graving Dock Co Ltd v Horton [1951] AC 737 at 756 Lord Normand observed that “fiction is no longer an acceptable solution for the problems of industrial relationships.” In my opinion the same may be said of proprietary issues between spouses such as that with which we are now concerned.
So much for my reasons for the view stated – that the indirect contributions of a spouse must, if they are to earn or generate a beneficial interest in the fund built up or the property acquired, be the subject of some agreement or arrangement between the spouses sufficient to show a mutual intention that the indirect contributions will benefit the contributor in this way. It remains to consider the result of applying this proposition to the facts and findings of this case. Gibson J had no difficulty in reaching the conclusion that the wife had made a substantial but indirect contribution over the years to the funds out of which the properties in dispute were bought. But he seems to have been of opinion that this was enough to establish a beneficial interest in the wife and his task then became one of measuring what the interest should be.
After a close scrutiny of the stated case and the written judgment of Gibson J I have been unable to discover anything to support the existence of any agreement or arrangement or understanding, such as I have mentioned, between the parties. I can find nothing sufficient to establish even the most informal of understandings from which the necessary intention regarding the wife’s indirect contributions could reasonably be inferred. These indirect contributions helped to create what the learned judge describes as “a surplus pool derived from their joint and several efforts”; and it was from this pool that the properties in question were purchased. But while the surplus was accumulating the indirect contributions of the wife seem to me, on the findings, to have been nothing more than the fruits of her able, energetic and willing collaboration as a spouse. There is no sign that I can discern of her having sought or agreed to some quid pro quo in the nature of a proprietary benefit. During the lean years that would have been very difficult, for she must have realised that her contributions to the business could not stay in her control as they would have to be available to carry it on and to help finance its expansion. Later, as things got easier, there seems to have been no material change of attitude. The spouses were doing well and living in amity and the nature of their collaboration does not appear to have changed significantly. If, then, I am right in the proposition of law I have stated, it would follow that the wife had acquired no beneficial interest in the surplus monies in the bank accounts out of which the properties concerned were purchased.
If the matter ended there my conclusion would therefore be that the wife’s claim failed and that the appeal should be allowed. But the stated case contains further findings relative to the understanding or agreement between the spouses when the properties were purchased in succession, and each as a matrimonial home. These findings raised some difficulty for they are in apparent contradiction. In paragraph 5(4) of the case it is found:
“At the dates of the purchases of 6/8, Cliftonpark Avenue and “St Valentine’s” the husband and wife were living amicably together and collaborating in their business activities and the common, though unexpressed, intention at these dates was that each should be the matrimonial home and that each should be beneficially enjoyed by both parties.”
I read that finding as referring not to the ownership but to the user by the spouses of the premises in question. Later, in paragraph 6 there is this finding:
“I found no evidence as to the intention of either party on the question of who should own either house, save that the purchase price in each case was paid by cheques drawn by the husband on his bank accounts and that the deeds showed him as the purchaser and owner in each case.”
In the incorporated judgment, however, there is to be found the following passage, the concluding part of which seems at variance with what I have just quoted. It runs:
“In the case of both 6/8, Cliftonpark Avenue and the Holywood house I find that there was a resulting trust to the wife commensurate with the amount of her contributions and I also find that both husband and wife at the dates of purchase intended, though they may never have formulated it in words, that each should be owned beneficially by both.”
If these findings were material, on the views I have expressed, it would be necessary to send the case back for clarification. I am of opinion, however, that this course is unnecessary. The last finding is that most favourable to the wife. I shall assume it is true and correct. But if so, does it show a beneficial interest in the wife? This question must be examined on the basis that my previously stated conclusion is right and that the wife had no beneficial interest in the monies out of which the properties were purchased. Does the finding of an intention that the purchased houses should be beneficially owned by both spouses suffice to give the wife an interest therein which she had not in the purchase monies? I fear the answer to this must again be unfavourable to the wife, for on the basis mentioned she was in the position of a volunteer and the doctrines of equity had nothing to give her.
For these reasons I am of opinion and hold that the wife had no interest of a beneficial kind either in the purchase monies or in what those monies bought and, accordingly, that the husband’s appeal should be allowed and the first question answered in the negative.
I reach this decision with some reluctance. We do not know enough to be sure as to where exactly, the merits lie; but, I certainly do not presume to think that the conclusion I have reached does any better justice between the parties than that of Gibson J. It may well do less, but in this type of litigation the law now is that it is the law and not the merits that must be followed.
Lowry J: I respectfully concur in my Lord’s conclusions and also in his general observations, but, without pretending to exhaust this complicated subject, venture to add a few remarks of my own.
As Lord Reid has said in Pettitt v Pettitt [1970] AC 777, 792D, “for the last twenty years the law regarding what are sometimes called family assets has been in an unsatisfactory state.” This may be traced to a number of causes, among which is the fact that disputes regarding such assets have commonly arisen between spouses whose marriage has broken down and in whose case accordingly the alleged merits of the parties have tended to obtrude upon the question as to rights of property. Moreover, s 17 of the Married Women’s Property Act 1882 gives the judge power to make “such order with respect to the property in dispute … as he thinks fit.” And finally, even if both parties are frank, the facts are often hard to ascertain.
The House of Lords, however, in Pettitt and in Gissing v Gissing [1971] AC 886 has, so to speak, made a fresh start by reviewing the cases and by deliberately going further into general considerations than would have been strictly necessary for the purpose of decision, so that it now seems possible with reasonable confidence to derive from their Lordships’ observations some general principles.
It seems that, where one spouse claims a beneficial interest in property the legal title to which is vested in the other, the claimant must show that he or she has made a pecuniary contribution to the purchase. The contribution may be direct, whether it is made in one payment or by instalments and whether it is made before purchase or afterwards (for example by helping to pay off an overdraft or building society instalments) or partly before and partly afterwards. In such a case the legal owner will be a trustee to the extent of the contributions for the contributing spouse, whose beneficial interest in the property will be proportionate to his or her contribution.
This may have to be worked out and, if the proportions cannot be ascertained, the maxim “Equality is equity” may be applied. A husband who has contributed all or part of the price to property bought in his wife’s name may be confronted with the presumption of advancement, but the presumption is more easily rebutted than it used to be.
The contribution may be indirect and in practice this will most often happen where the husband is the legal owner and the wife has an income, whether from employment, from her own business or from other sources, or works in the husband’s business and in one way or another eases the husband’s financial position and thereby indirectly augments the fund out of which the husband buys the property. In such a case the wife acquires a beneficial interest if, and only if, there is an agreement or arrangement between the spouses that she is to have such an interest.
During the last twenty years, however, many property disputes between husband and wife have been decided on the footing that indirect contributions do not require any agreement or arrangement in order to give the wife an equitable interest in property, such as the matrimonial home, standing in the husband’s name. This solution has been promoted by a liberal interpretation of the court’s powers under section 17, by the framing of a doctrine of “family assets” in a modern society, and, (more logically, perhaps), by a willingness to equate indirect with direct contributions, as if on the basis that equity looks to the substance rather than to the form.
Concerning the first of these three factors I need only say that the House of Lords has clearly established, – “restored” may be the better word – the meaning of the words “as he thinks fit” in section 17. As to the second, “family assets” and its attractive sister, “family savings,” the term used by Mr Appleton to embellish his argument, may be useful expressions, so long as one heeds the warnings of Lord Upjohn in Pettitt at p 817F and of Viscount Dilhorne in Gissing at p 262E and so long as it is recognised that neither here nor in England do they warrant a departure from the ordinary law of property and trusts.
Thirdly, it has now been made clear that indirect contributions serve the purpose of direct contributions only where there is a mutual intention that they should do so. See Gissing per Viscount Dilhorne at p 900GH, per Lord Pearson at p 903B, and per Lord Diplock at p 909E-G, where he says:
“Difficult as they are to solve, however, these problems as to the amount of the share of a spouse in the beneficial interest in a matrimonial home where the legal estate is vested solely in the other spouse, only arise in cases where the court is satisfied by the words or conduct of the parties that it was their common intention that the beneficial interest was not to belong solely to the spouse in whom the legal estate was vested but was to be shared between them in some proportion or other.
Where the wife has made no initial contribution to the cash deposit and legal charges and no direct contribution to the cash deposit and legal charges and no direct contribution to the mortgage instalments nor any adjustment to her contribution to other expenses of the household which it can be inferred was referable to the acquisition of the house, there is in the absence of evidence of an express agreement between the parties, no material to justify the court in inferring that it was the common intention of the parties that she should have any beneficial interest in a matrimonial home conveyed into the sole name of the husband, merely because she continued to contribute out of her own earnings or private income to other expenses of the household.”
Thus a tacit, or even express, agreement that the wife in the present case should use her salary as she did is not an agreement or an arrangement that by doing so she was to acquire an interest in the property. Or, as Mr Murray put it, indirect contributions which are unrelated to the acquisition of the property cannot found an equitable interest in it.
The House of Lords has further made it plain that imputed intention is not enough: the intention must be a real one and not a legal fiction introduced for the purpose of achieving a result thought by the court to be just but not intended by the parties. A real intention may be either express or to be implied from the conduct of the parties, but the latter must be confused with imputed intention. To find an implied intention one has to look at the facts of each case and see whether they warrant the implying of an intention by the spouses that, for example, the matrimonial home should be beneficially owned, (and not merely beneficially enjoyed), by both of them. One cannot imply an intention by predicating a supposedly desirable legal result and then inferring from what the spouses do in the course of a normal marriage that they must have intended that result. I would just refer at this point to the observations of Lord Morris of Borth-y-Gest in Pettitt at p 804F:
“The mere fact that parties have made arrangements or conducted their affairs without giving thought to questions as to where ownership of property lay does not mean that ownership was in suspense or did not lie anywhere. There will have been ownership somewhere and a court may have to decide where it lay. In reaching a decision the court does not find and, indeed, cannot find that there was some thought in the mind of a person which never was there at all. The court must find out exactly what was done or what said and must then reach conclusion as to what was the legal result. The court does not devise or invent a legal result. Nor is the court influenced by the circumstances that those concerned may never have had occasion to ponder or to decide as to the effect in law of whatever were their deliberate actions. Nor is it material that they might not have been able – even after reflection – to state what was the legal outcome of whatever they may have done or said. The court may have to tell them. But when an application is made under section 17 there is no power in the court to make a contract for the parties which they have not themselves made. Nor is there power to decide what the court thinks that the parties would have agreed had they discussed the possible breakdown or ending of the relationship.
Nor is there power to decide on some general principle of what seems fair and reasonable how property rights are to be reallocated. In my view, these powers are not given by section 17.”
See also the further observation in Gissing of the noble Lord at p 898C and of Viscount Dilhorne at p 900F.
Discussion of implied intention calls to mind the doctrine of implied terms in relation to contract. It is useful to remember that terms are implied in order to give business efficacy to the contract on the understanding that without them the contract would not be businesslike or, in some case, workable. It would often be easy, in the interests of business efficacy, to imply, in relation to individuals who were not husband and wife, a term that one person making an indirect contribution to the wealth of another should have his recompense in the shape of an equitable interest in property purchased by that order, but to speak of giving “business efficacy” to domestic relations in unusually a contradiction in terms: Balfour v Balfour [1919] 2 KB 571.
In my opinion the recent cases in the House of Lords clearly show that the rights acquired by a wife in property which at law belongs to her husband depend not on her deserts as a wife but on legal principles which are equally applicable between strangers: a direct contribution to the purchase price will, in the absence of a contrary intention, attract an equitable interest; an indirect contribution accompanied by an agreement will, and unaccompanied by an agreement will not, give the contributor as equitable interest. Two modifications apply between spouses, first that an arrangement is as good as an agreement, and second that the doctrine of advancement may operate against a husband contributor.
Lest is be argued that such a result is unfair to wives, one may consider the position of the virtuous wife who “looketh well to the ways of her household, and eateth not the bread of idleness”, but who in most cases neither pursues a career nor helps directly in her husband’s business. Her price may be far above rubies, but such a wife has nothing to gain from the family assets doctrine. Yet who could deny her merits or even her probable financial value to her husband from a business standpoint? Where community of ownership between spouses is not the law, it seems unfair to give to some wives but not to others property rights beyond those of other people in similar circumstances.
In applying the principles to this case I am forced to conclude that the reason given in paragraph 6 of the case stated does not support the learned judge’s conclusion of law. The facts indicate an indirect contribution by the wife without any mutual intention, express or implied, or even any understanding on the part of the wife, that she was to acquire a beneficial interest in property purchased or to be purchased by the husband.
Therefore I agree that the first question should be answered in the negative, and the second question does not arise.
I have not in this judgment mentioned the position of third parties, such as business creditors and equitable mortgagees; and what I have said is not meant to affect the discussion of their rights against a family fund or against property bought therewith.
L v L
[1992] 2 IR 101; [1992] ILRM 115 (Supreme Court)
Finlay CJ: This is an appeal brought by the defendant who is the husband against so much of the order made by Barr J in the High Court, on the hearing of a summons pursuant to the provisions of the Married Women’s Status Act 1957 as declared that the husband held a moiety of his beneficial interest in the family home, its curtilage and gardens, in trust for the wife.
The wife had instituted in the High Court two sets of proceedings, one being a petition for divorce a mensa et thoro and the other being the claim for declarations pursuant to the Married Women’s Status Act of 1957.
The proceedings were heard in 1988, and judgment was delivered in both of them together by the learned trial judge on the 3rd October 1988 (See [1989] ILRM 528). Originally, the husband appealed against certain aspects of the order made in the proceedings for judicial separation, but that appeal was abandoned before us, and the only issue which arose before us was the appeal against the finding of a trust in favour of the wife as to one half of the beneficial ownership in the family home.
No issue arose on the hearing of this appeal as to the correctness of the findings of fact made by the learned trial judge in the High Court. In so far as they are relevant to this aspect of the proceedings between the parties, they are as follows. The parties married in 1968 and originally resided in rented accommodation. In 1970 the husband purchased and had conveyed to him in his own name a family home and a substantial farm of land for the sum of £40,000. This purchase was funded by way of a gift of £30,000 from the husband’s father and by way of a deferred payment of the balance of the purchase price by the vendor over a period of five years. The latter amount was discharged out of farming profits.
The family took up residence in the property in 1971, and the parties resided in the family home, with some interruptions, when one or other of them left it for a period, from that time up to 1988 when, as a result of differences between the parties and a threatened application by the wife for a barring order the husband voluntarily left the home. At the time of the trial in the High Court the wife was still residing in the family home and the husband was excluded from it. It would appear that at the time of the hearing in the High Court the family home was unencumbered by any mortgage or charge.
From the time of the marriage the wife did not earn in any outside employment or profession. Having reviewed these facts in considerable detail, and having reviewed the existing authorities with regard to the claim made by a spouse to an interest in the family home, arising from contributions towards its acquisition, the learned trial judge stated as follows at p 541:
“Reviewed in the light of the formidable line of judicial authority on this topic since 1976, the conclusion is inescapable that the wife is not entitled to a beneficial interest in the family home or farm because she has made no contribution in money or money’s worth, directly or indirectly, towards the acquisition of either property. Her claim in that regard must fail unless she can rely upon other rights not previously considered by the courts.”
The learned trial judge then went on to consider submissions which had been made to him on behalf of the wife, concerning the provisions of Article 41 of the Constitution and the jurisdiction which it was contended that those provisions gave to the courts with regard to a claim by a wife to a share in the beneficial ownership of the family home. That jurisdiction was to declare her entitled to a share in trust in such beneficial ownership arising not from any contribution, direct or indirect, by her to the acquisition of the home, but on the basis that the Constitution warrants the declaration of such a share as a method of endorsing the constitutionally preferred option that a wife who is also a mother should remain at home and devote herself entirely to the family, after the marriage.
The portion of the judgment in which the learned trial judge sets out this concept reads as follows at p 542:
“Article 41 contains two fundamental concepts which are inter-related. First, the family is recognised as the natural, primary and fundamental unit group of society, which is the necessary basis of social order, and it possess inalienable rights that are superior to all positive law. Secondly, it is recognised that a woman’s life within the home gives to the State a support without which the common good cannot be achieved. It seems to me that Article 41, in so far as it relates to woman, underscores the pivotal role which she has within the family, and recognises that in the day-to-day life of the unit group she plays a crucial part in weaving the fabric of the family and in sustaining the quality of its life. The strongest possible emphasis is placed on woman’s role within the home. Having regard to the terms of sub-article 2 which casts a specific duty on the State to endeavour to ensure that mothers will not be obliged by economic necessity to engage in labour to the neglect of their duties in the home, it is evident that the Constitution envisages that, ideally, a mother should devote all her time and attention to her duties in the home, and that it is desirable that she ought not to engage in gainful occupation elsewhere, unless compelled to do so by economic necessity. It follows that if the Article is to be given flesh and meaning in practical terms, a mother who adopts that concept and devotes herself entirely to the family after marriage, has a special place in society which should be buttressed and preserved by the State in its laws. In my view the judiciary has a positive obligation to interpret and develop the law in a way which is in harmony with the philosophy of Article 41 as to the status of woman in the home. It is also in harmony with that philosophy to regard marriage as an equal partnership in which a woman who elects to adopt the full-time role of wife and mother in the home may be obliged to make a sacrifice, both economic and emotional, in doing so. In return for that voluntary sacrifice, which the Constitution recognises as being in the interest of the common good, she should receive some reasonable economic security within the marriage. That concept can be achieved, at least in part, by recognising that as her role as full-time wife and mother precludes her from contributing, directly or indirectly, in money or money’s worth from independent employment or avocation towards the acquisition by the husband of the family home and contents, her work as home maker and in caring for the family should be taken into account in calculating her contribution towards that acquisition – particularly, as such work is of real monetary value. In this regard, I draw no distinction between the purchase of the family home entirely or substantially by the husband out of his independent assets and the more usual case where the home is acquired by him subject to a mortgage repayable over a term of years.”
In brief, the husband’s appeal against that finding consisted of an assertion that the remedy of granting to a wife and mother in the position of the plaintiff a share in the beneficial ownership of the family home, in addition to other rights she might have for maintenance or to her occupation in the family home, was unknown to the law and that it was not possible from the provisions of Article 41 of the Constitution to identify that particular remedy as a constitutional right which the courts could protect and grant to the wife.
The wife did not enter any cross-appeal or notice to vary, and does not contest the finding by the learned trial judge that on the authorities concerning the acquisition of a share in the family home by way of constructive or resulting trust arising from contributions, direct or indirect, towards that home by a spouse, that the plaintiff on the facts of the case cannot be entitled to a share.
Relevant constitutional provisions
The relevant constitutional provisions are Article 41 ss 1 and 2. They read as follows:
Article 41
1.
1°.
The State recognises the family as the natural primary and fundamental unit group of society, and as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law.
2.°
The State, therefore, guarantees to protect the family in its constitution and authority, as the necessary basis of social order and as indispensable to the welfare of the nation and the State.
2.
1°.
In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.
2°.
The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.
The conclusion reached by Barr J in this case, as set out in his judgment which I have quoted, receives support from a judgment which appears to be ex tempore and which was delivered on the 20th June 1989 by Barrington J, but is not reported, in H v H. In the course of that judgment, though clearly obiter to the question which he had to decide, the learned judge stated as follows:
I am quite satisfied that this house was held by the husband in trust for himself and his wife, jointly, in equal shares, if I may use that phrase, of a joint tenancy, and there is the additional factor I think I feel entitled to add, that I can resolve the principal issue of the case on the basis of the traditional approach, but it does appear to me that this is a classic example of the situation which Barr J had to deal with in L v L, and it appears to me the issue in the case in relation to financial contribution of the wife, in relation to the purchase of the matrimonial home belongs to a legal approach which is quite foreign to the legal approach contained in Article 41 of our Constitution. They start from the wrong point in the law, equity, and the proper starting point is the one taken by Barr J, and on that interpretation it would appear that the courts should recognise the contribution the wife makes by her work as a carer and rearer of the family within the home, because it appears to be quite inconsistent with the values in Article 41 of the Constitution that the wife who leaves the home and has an independent income and is therefore able to make a financial contribution towards the repayment of the family mortgage, might at the end of the day be in a very much better position than the wife who fulfils the constitutionally preferred role and remains at home to rear the children. That seems to me to be an inconsistent conclusion and inconsistent with the principles of Article 41. My judgment does not turn on that.
I would accept the inconsistency pointed out by Barrington J in this extract from his judgment, and pointed out by Barr J in the instant case, between the position of a wife who leaves the home for the purpose of carrying out remunerated work and contributes either directly to the repayment of a mortgage or, indirectly, to the repayment of the mortgage by a contribution to the family pool, and the less advantageous position with regard to ownership of an interest in the family home of the wife who appears to follow the preferred constitutional activity of staying at home to look after the family.
I would have little difficulty in appreciating the very significant social and other values which are attached to what experience would indicate is a very common modern habit, whereby the parties to a marriage and the parents of a family, by agreement between them, become joint owners of the family home. It is difficult to deny the fact that anything that would help to encourage that basis of full sharing in property values as well as in every other way between the partners of a marriage, must directly contribute to the stability of the marriage, the institution of the family, and the common good.
However, the problem which appears to me to arise is a simple question as to whether if this Court were to follow the reasoning contained in the judgment of Barr J it would in truth, as he suggests, and as the comments of Barrington J suggest, be developing an existing law within the permissible limits of judicial interpretation, or whether in fact it would be legislating.
After careful consideration and with a reluctance arising from the desirable objective which the principle outlined in the judgment of Barr J would achieve, I conclude that to identify this right in the circumstances set out in this case is not to develop any known principle of the common law, but is rather to identify a brand new right and to secure it to the plaintiff. Unless that is something clearly and unambiguously warranted by the Constitution or made necessary for the protection of either a specified or unspecified right under it, it must constitute legislation and be a usurpation by the courts of the function of the legislature.
The doctrine of a constructive or resulting trust applied towards the situation where a spouse makes contributions towards the acquisition of a family home, which was first elaborated by Kenny J in the High Court in C v C [1976] IR 254, which was eventually considered by this Court in the case of McC v McC [1986] ILRM 1, had as its basic requirements a contribution of money towards the acquisition of a family home. To an extent the development of that doctrine in its application to the position of husband and wife, as distinct from the principles which would apply to persons jointly involved in the purchase of property who were not so related, has not been more extensive than this. In addition to the direct contribution towards purchase price, whether the cash price of an actual purchase of a home, or the acquisition of the equity of redemption by contribution to the clearing off of a mortgage, a trust could, having regard to the particular features of dealings between husband and wife in a marriage which was amicable, arise from what are described as indirect contributions by the provision through earnings of monies into the family pool.
To extend or develop such a doctrine so as to provide that a person who did not make any monied contribution either towards the acquisition of a family home or towards the clearing off of a mortgage to it, whether of either a direct or indirect nature, but who by carrying out the constitutionally endorsed activities of a wife and mother within the home saved her husband from the possibility of having to hire outside help to carry out those functions or who, by the ordinary maintenance of a house, kept the house in good order, would be not to develop a doctrine, in my view, but to introduce a new one.
The provisions of Article 41 of the Constitution can, in my view, be separated in their purpose and object in two ways. Section 1, sub-ss 1 and 2, clearly represent the recognition by the State of the existing fundamental rights of the family and the undertaking by the State to protect those rights. Neither Article 41.1.1° or 2° purports to create any particular right within the family, or to grant to any individual member of the family rights, whether of property or otherwise, against other members of the family, but rather deals with the protection of the family from external forces.
With regard to Article 41.2, on the other hand, the State by subs 1 clearly recognises the value to the common good of the activities of the wife within the home, and by subs 2 accepts an obligation to ensure that if the wife is a mother as well she shall not be obliged by economic necessity to engage in labour to the neglect of her duties in the home.
It is this last subsection which was particular relied upon by the plaintiff in this case, both in the High Court and in this Court. I accept the contention made that the judiciary is one of the organs of the State and that, therefore, the obligation taken by the State to endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour outside the home to the neglect of their duties is an obligation imposed on the judiciary as well as on the legislature and the executive.
There is, however, I am satisfied, no warrant for interpreting that duty on the judiciary as granting to it jurisdiction to award to a wife and mother any particular interest in the family home, where that would be unrelated to the question of her being obliged by economic necessity to engage in labour to the neglect of her duties. If a court is assessing the alimony or maintenance payable by a husband to a wife and mother, either pursuant to a petition for separation or to a claim under the Family Law (Maintenance of Spouses and Children) Act 1976, it should, in my view, have regard to and exercise its duty under this subsection of the Constitution in a case where the husband was capable of making proper provision for his wife within the home by refusing to have any regard to a capacity of the wife to earn herself, if she was in addition to a wife a mother also, and if the obligation so to earn could lead to the neglect of her duties in the home. In other words, maintenance or alimony could and must be set by a court so as to avoid forcing by an economic necessity the wife and mother to labour out of the home to the neglect of her duties in it. Beyond that capacity of the judiciary to take part in the endeavour to comply with the provisions of Article 41.2.2° of the Constitution, I do not consider that the transfer of any particular property right could be a general jurisdiction capable of being exercised in pursuance of that sub-article of the Constitution.
It is, of course, clear that if the legislature decides, as in fact it has done, by virtue of the provisions of the Judicial Separation and Family Law Reform Act 1989, to give to the court powers to declare a right in a spouse to a beneficial interest in the family home as part of the general jurisdiction of the court upon the granting of a separation, to make monetary provisions arising from it, the court may exercise that expressed statutory power in obedience to and furtherance of the provisions of this sub-article of the Constitution.
For these reasons, I would allow this appeal.
Hederman J:
I agree.
McCarthy J: In his judgment in the High Court, Barr J correctly concludes at p 542 that:
“it is evident that the Constitution envisages that, ideally, a mother should devote all her time and attention to her duties in the home, and that it is desirable that she ought not to engage in gainful occupation elsewhere unless compelled to do so by economic necessity. It follows that if the Article is to be given flesh and meaning in practical terms, a mother who adopts that concept and devotes herself entirely to the family after marriage, has a special place in society which should be buttressed and preserved by the State in its laws.”
Following that ringing declaration, the learned trial judge held that the concept of reasonable economic security within the marriage could be achieved, at least in part, then her work as home-maker and in caring for the family should be taken into account. In H v H (High Court, 20th June 1989) Barrington J in an ex tempore judgment, having referred to the decision in the instant case, expressed the result in negative form:
“it appears to be quite inconsistent with the values in Article 41 in the Constitution that the wife who leaves the home and has an independent income and is therefore able to make a financial contribution towards the repayment of the family mortgage, might at the end of the day be in a very much better position than the wife who fulfils the constitutionally preferred role and remains at home to rear the children. And that seems to me to be an inconsistent conclusion and inconsistent with the principles of Article 41”.
This inconsistency, in his judgment just read, the Chief Justice accepts, and thus identifies the problem arising on the appeal: Would the declaration of an equitable share in the mother be judicial interpretation or judicial legislation? The Chief Justice concludes that to identify this right in the circumstances set out in this case is not to develop any known principle of the common law, but is rather to identify a brand new right and to secure it to the plaintiff and, thereby, is a usurpation by the courts of the function of the legislature.
In C v C [1976] IR 254, there does not appear to have been any reference to Article 41 and Kenny J held the wife/mother entitled to a share in proportion to the amount of the contribution she had made towards the purchase or the repayment of the mortgage. So also in McC v McC [1986] ILRM 1 the decision is entirely related to monetary contribution, whether direct by way of payment towards purchase or repayment of the mortgage, or indirect by contribution into the family pool. This is a true development of the law in a common law framework. That common law, like all statute law, must conform to or not be inconsistent with the Constitution. Barr J and the Chief Justice have eloquently identified the social valued involved. It is not too extreme a case to posit – is the wife/mother who leaves her children in the care of others in order to earn more than that particular cost and contributes thereby, directly or indirectly, to the acquisition of a family home to be awarded an equitable share in the property while the wife/mother who stays at home gets none? If it be not inconsistent with the Constitution so to enact by statue law, although such statute must interfere with property rights, is the remedy solely in the hands of the legislature?
The doctrine of the separation of powers precludes interference by the judicial power with what is the role of the legislature; but the foremost duty of the judicial power is to uphold the Constitution. Apart from the President, it is only the judiciary who are expressly bound by the Constitution to make a public declaration of commitment to that duty. Article 41.2 proclaims the State’s recognition that by her life within the home woman gives to the State support without which the common good cannot be achieved and guarantees “therefore (emphasis added) endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home”. The question does not arise in this appeal or in that of EN v RN [1992] 2 IR 116 but I am not to be taken as holding that these guarantees are restricted to mothers of families based upon the institution of marriage. It is because of the importance of her life within the home that the State shall endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home. It is common case that many mothers, in order to devote themselves to their duties in the home, sacrifice material and emotional rewards that might follow from being gainfully employed outside the home.
It is not in contest that Barr J was correct in holding that the common law concerning the acquisition of a share in the family home by way of constructive or resulting trust arising from contributions, direct or indirect, towards that home, does not entitle the instant plaintiff, the wife, to such a declaration. It would be making a quantum leap in constitutional law to hold that by her life within the home the mother acquires a beneficial interest in it. This would be in recognition of the support that the mother gives by her life within the home in carrying out her constitutional role as a mother. No complementary role is accorded a father, although such a role reversal is, nowadays, by no means uncommon. That does not, necessarily, dispose of the matter. It may be that in another instance circumstances may arise whereby, on the true interpretation of the relevant article, it would prove necessary to accord to the mother some proprietary interest in the home. Such is not the case here, and, for that reason, I would allow the appeal.
The Oireachtas has, already, by the Act of 1989, made statutory provision for property adjustment orders on the granting of a decree of judicial separation or at any time thereafter. That Act did not come into operation until six months after the 19th April 1989 and, accordingly, does not apply to the instant case.
O’Flaherty J: I agree that the extension of the law as proposed by Barr J cannot be sustained.
For my part, however, I would make a further point. While Article 41 of the Constitution is headed “The Family”, s 2 of the article is clearly referring to ‘mothers’ only: not wives, nor wives and mothers, but mothers. This makes clear that it cannot be called in aid to govern the division of property rights between spouses. What it does do is to require the State to endeavour to ensure that mothers with children to rear or to be cared for are given economic aid by the State. If a mother in dire economic straits were to invoke this section it would be no answer for the State to say that it did not have to make any effort in her regard at all, though it would be open for it to say that it was doing its best having regard to the State’s overall budgetary situation.
I am confirmed in my belief that Article 41 is not confined exclusively to the family just as Article 42 is not confined exclusively to “Education”: see In re Adoption (No 2) Bill 1987 [1989] IR 656 at 663.
Egan J: The plaintiff (“the wife”) and the defendant (“the husband”) were married in Germany in 1968. Early in the following year they came to reside and cohabit in Ireland. There were two children of the marriage. In 1970 the husband purchased in his own name what became the family home and adjoining farmland. The total purchase price was £40,000. £30,000 of this sum came from a gift which the husband had received from his father and the balance was paid to the vendor over a period of years out of farm profits.
The marital relationship deteriorated some years ago and proceedings were instituted by the wife in July 1987. The proceedings included a claim pursuant to s 12 of the Married Women’s Status Act 1957 which provides for the determination of any question arising between husband and wife as to the title or possession of any property. The section states that the court may make such order with respect to the property in dispute as the court thinks proper. The family home and farm in this case were, as stated, bought in the husband’s name and it was not suggested that the wife made any financial contribution to the purchase. The learned trial judge found that such assistance as she may have given her husband in his farming activity had not relieved him directly or indirectly of the financial burden relating to the acquisition of the property. He was satisfied that she had been a “full-time wife and mother” during a long period of years and that this precluded her from contributing directly or indirectly in money or money’s worth from independent employment or avocation towards the acquisition of the family home and contents.
I do not find it necessary to review the long line of authorities in regard to the consequences in law where the legal title to the family home is held in the name of one spouse and the other spouse has directly or indirectly contributed to its acquisition. In those circumstances the contributing spouse, in the absence of any arrangement or understanding to the contrary, is entitled to a beneficial interest in the property having regard to the extent and value of the contribution. That was the effect of the case law in the matter prior to the coming into operation of the Judicial Separation and Family Law Reform Act 1989, which by virtue of s 20(2)(f) obliges the court when making a property adjustment order on the granting of a decree for judicial separation to have regard inter alia to “the contribution which each of the spouses has made or is likely in the foreseeable future to make to the welfare of the family, including the contribution made by each spouse to the income, earning capacity, property and financial resources of the other and any contribution by looking after the home or caring for the family”.
Prior to the coming into operation of the Act of 1989 (which does not apply to the problem in this case) the authorities were to the effect that looking after the home or caring for the family were not of themselves regarded as entitling the spouse who did so to claim any title to the family home. In the case of McC v McC [1986] ILRM 1 the Supreme Court per Henchy J stated the law as follows:
“Where the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contributions towards the purchase price towards the discharge of mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify a conclusion that the acquisition of the house was achieved by the joint efforts of the spouses.
Where the wife’s contribution has been indirect (such as by contributing, by means of her earnings, to a general family fund) the courts will, in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the ground that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.”
The learned trial judge commented on the above and other authorities when in the course of his judgment he stated as follows at p 541:
“Reviewed in the light of the formidable line of judicial authority on this topic since 1976, the conclusion is inescapable that the wife is not entitled to a beneficial interest in the family home or farm because she has made no contribution in money or money’s worth, directly or indirectly, towards the acquisition of either property. Her claim in that regard must fail unless she can rely on other rights not previously considered by the courts.”
He then went on to consider a wife’s interest in matrimonial property in the context of her rights under Article 41 of the Constitution and, having done so, made a declaration that the wife was entitled to a beneficial interest in the family dwelling and the contents therein. Having regard to all the circumstances of the case he assessed her interest at 50%. The husband now appeals against this finding and declaration. The relevant portion of Article 41 which must be considered is s 2 thereof which provides as follows:
2.
1°
In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.
2°
The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.
Despite the reasoning of the learned trial judge, I find it impossible to hold that the wording of subs (1) is such as would confer on a woman such as the plaintiff any right to a beneficial interest in the family home. The subsection gives a recognition of the support which woman, by her life within the home, gives to the State. The following subsection is the one which imposes an obligation on the State (including, of course, the judicial arm thereof) to endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home. I do not think that subs (1) contains anything which imposes a positive obligation. It voices a ‘recognition’ and, in my opinion, is really a prelude to explain the positive obligation in the following subsection which provides that the State shall, therefore, endeavour etc. The obligation imposed by the subsection has nothing to do with the family home so far as the ownership thereof is concerned.
Apart from the arguments based specifically on the Constitution, it was argued that this is a matter where new principles can be established on a case law basis. The Oireachtas has not said that a woman who contributes financially to the acquisition of the family home is entitled to share in the ownership. It is judge-made law which says so and it is argued that present case law can be extended. I do not think it would be proper to extend it. Present case law is based on long-standing equitable principles as a result of which trusts are implied in favour of a contributing spouse. These principles have been extended to their permissible limit. The Oireachtas was perfectly entitled to alter existing law in this regard but the fact that it has done so by virtue of the provisions of s 20 of the 1989 Act (and, in particular, subs (2)(f) and (2)(g)) is not relevant to this case.
I would allow the appeal.
Catherine Power v Sean P. Conroy
High Court
22 February 1980
[1980] I.L.R.M. 31
(McWilliam J)
22 February 1980
Subject: Trusts
Keywords: Purchase of land; Resulting trusts; Unmarried couples
Trust—Purchase of house by unmarried couple—Conveyance solely in man’s name—Joint contribution to purchase price—Whether resulting trust to be inferred
Facts
The plaintiff, a spinster, cohabited with the defendant, a married man estranged from his lawful spouse, and in 1975 bore his child. In 1976 the couple decided to buy a house costing £10,760. The purchase was effected with funds of some £2,000 contributed by the plaintiff and with a mortgage contracted by the defendant. The conveyance was taken in the defendant’s name only. The relationship broke up after a year, by which time the defendant had made mortgage repayments of some £1,700. The plaintiff sought a declaration that she was part-owner of the house.
Held, by McWilliam J finding for the plaintiff:
(1) that the defendant held the house in trust for the plaintiff as to 11/20ths; and
(2) that it is proper to ascertain what sums have been paid by the parties towards the acquisition of the house, in doing so taking into account such contributions towards the household living expenses made by either party as enabled the other party to make payments.
Cases referred to in judgment
C v C [1976] IR 254; 111 ILTR 133
L v L High Court 1979 No. 378 Sp. (Finlay P) 21 December 1979
Representation
Frederick Morris SC and Liam Reidy for the plaintiff
The defendant appeared in person.
McWILLIAM J
delivered his judgment on 22 February 1980 saying: The defendant is and was at all relevant dates a married man with five children. The plaintiff was at all material dates a spinster. In November 1971 the plaintiff and the defendant formed an association and lived together from August 1972 until November 1977. For the first three and a half years the parties lived in rented accommodation in various parts of Dublin. During the greater part of this time the plaintiff was in employment. In October 1975 a child was born to them.
In the summer of 1975 they had decided to purchase a house and No. 19, Scholarstown Road, Rathfarnham, was purchased in February 1976, for the sum of £10,760. The conveyance was taken in the name of the defendant. The parties separated in 1977 and the plaintiff now claims to be entitled to a share in the house on the basis that she contributed substantially towards its purchase in one way or another.
Before the birth of her child the plaintiff gave up her employment but she received £12 per week from social security benefits. She had at all times an income of about £17 per week from lettings of a house in Tramore to which she returned to live when the parties separated.
*32
The defendant has not been represented on this hearing and has been put to some disadvantage because the plaintiff took his papers with her when they separated and she went to live in Tramore.
At the time of the purchase the plaintiff had some capital and contributed £1,000 by way of deposit on the house. She later contributed a further sum of £1,000 to pay the builders who were pressing for money. She also paid a sum of £750 to a building society for the purpose of obtaining a loan but there is a conflict of evidence as to whether this money was withdrawn and repaid to her in variour sums from time to time. The defendant obtained a loan of 90% of the purchase price from the building society which he took up in full, and this left him with a balance of £1,000 which was spent on furnishings, etc. Such repayments as were made were made by the defendant. These appear to have amounted to about £1,700 in all but there are considerable arrears now due, approximately £3,350.
The defendant in his defence has alleged that the sum of £2,000 paid by the plaintiff was paid by way of loan, but I am satisfied that the house was bought as a residence for the three members of the household and that there was no agreement or even any discussion about how it was to be held or owned. Subsequently the defendant signed what appears to have been intended as a form of testamentary document dated 28 September 1976, but I do not attach any importance to the statements in it in so far as they purpose to relate to the interests of the parties inter se, as the document was clearly intended merely to deprive the defendant’s wife and family of any interest in the house in the event of his death.
There was a considerable amount of evidence as to the contributions of the parties towards the household expenses prior to the purchase of the house but, apart from giving me some insight as to the financial arrangements generally between the parties, these matters appear to me to be irrelevant to the issues now before me. I am satisfied that each contributed to the upkeep of the household after the purchase of the house.
I have also been given a considerable amount of evidence as to the contributions by the parties to the furnishings and fittings in the house. Again, this does not, under the circumstances, appear to me to be relevant and the parties, on separation, seem more or less to have appropriated to each what each provided, although this was not investigated very closely.
I have been referred to a number of cases including the case of C v C [1976] IR 254, in which the other cases were mentioned by Kenny J, in his judgment. I have also read the judgment of the President of the High Court dated 21 December 1979, in the case of L v L.
From these cases it appears to me that the correct approach is to try to ascertain what sums have been paid by the parties towards the acquisition of the house and that, in doing this, I must take into account such conributions towards the household living expenses made by either party as enabled the other party to make such payments as were made by him or her. Having done this, I should treat the house as being held by the defendant on trust for the parties in the shares which they contributed either directly or indirectly towards its purchase.
On the evidence before me, I have found it impossible to make an accurate *33 estimate along these lines but it seems to me that I would not be far out in estimating the contributions of the plaintiff at 55% and those of the defendant at 45% and I will declare that the defendant holds the house as to 11/20ths thereof on trust for the plaintiff.
UK Cases
Vandervell v IRC
[1966] Ch 261
LORD UPJOHN:…The question is whether, notwithstanding the plainly expressed intention of the tax payer by himself or his agents, the absence of writing prevented any equitable or beneficial interest in the shares passing to the college so that contrary to his wishes and understanding they remained bare trustees for him. This depends entirely on the true construction of s. 53(1)(c) of the Law of Property Act 1925, which the Crown maintain makes writing necessary to pass the beneficial interest …
. . . the object of the section, as was the object of the old Statute of Frauds, is to prevent hidden oral transactions in equitable interests in fraud of those truly entitled, and making it difficult, if not impos sible, for the trustees to ascertain who are in truth his beneficiaries.When the beneficial owner, however, owns the whole beneficial estate and is in a position to give directions to his bare trustee with regard to the legal as well as the equitable estate there can be no possible ground for invoking the section where the beneficial owner wants to deal with the legal estate as well as the equitable estate.
I cannot agree with Diplock LJthat prima facie a transfer of the legal estate carries with it the absolute beneficial interest in the property transferred; this plainly is not so,e.g.the transfer may be on a change of trustee; it is a matter of intention in each case. If, however, the intention of the beneficial owner in directing the trustee to transfer the legal estate to Xis that X should be the beneficial owner, I can see no reason for any further document or further words in the document assigning the legal estate also expressly transferring the beneficial interest; the greater includes the less. X may be wise to secure some evidence that the beneficial owner intended him to take the beneficial interest in case his benefi cial title is challenged at a later date but it certainly cannot, in my opinion, be a statutory requirement that to effect its passing there must be some writing under s. 53(1)(c) .
LORD WILBERFORCE:… The Court of Appeal, starting from the fact that the trustee company took the option as a volunteer, thought that this was a case where the presumption of a resulting trust arose and was not displaced. For my part, I prefer a slightly different and simpler approach. The transaction has been investigated on the evidence of the settler and his agent and the facts have been found. There is no need, or room, as I see it, to invokea presumption.The conclusion, on the facts found, is simply that the option was vested in the trustee company as a trustee on trusts, not defined at the time, possibly to be defined later. But the equitable, or beneficial interest, cannot remain in the air: the consequence in law must be that it remains in the settler. There is no need to consider some of the more refined intel lectualities of the doctrine of resulting trust, nor to speculate whether, in possible circumstances, the shares might be applicable for Mr. Vandervell’s benefit: he had, as the direct result of the option and of the failure to place the beneficial interest in it securely away from him, not divested himself absolutely of the shares which it controlled.
Westdeutsche v Islington BC
[1996] AC 669,
LORD MILLET:Prima facie the surplus is held on a resulting tnust for those who provided it.This sometimes creates a problem of some perplexity. In the present case, however, it does not. Contributions were payable by the members with matching contributions by the company.In the absence of any evidence that this is not what happened inpractice, the surplus must be treated as provided as to one half by the company and as to one half by the members.
In In re ABC Television Ltd Pension Scheme (unreported), 22 May 1973Foster J held that a clause simi lar to clause 4 of the present trust deed ‘negatives the possibility of implying a resulting trust.’ This is wrong in principle. Like a constructive trust, a resulting trust arises by operation of law, though unlike a constructive trust it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest-he almost always does not-since it responds to the absence of any inten tion on his part to pass a beneficial interest to the recipient. It may arise even where the transferor posi tively wished to part with the beneficial interest, as in Vanderve/1 v Inland Revenue Commissioners [1967] 2 AC 291.
The House of Lords affirmed the principle that a resulting trust is not defeated by evidence that the transferor intended to part with the beneficial interest if he has not in fact succeeded in doing so … Lord Upjohn [1967] 2 AC 291, 314.
Consequently their Lordships think that clauses of this kind in a pension scheme should generally be construed as forbidding the repayment of contributions under the terms of the scheme, and not as a pre-emptive but misguided attempt to rebut a resulting trust which would arise dehors [i.e. outside] the scheme.
Edge and Others v Pensions Ombudsman and Another
[(2000] Ch. 602, 622-3
CHADWICK LJ
In examining the contention that, in exercising their power to amend the rules, the trustees were sub ject to a duty to act impartially as between individual or classes of beneficiaries-in the sense relied upon by the ombudsman-it is important to have in mind the circumstances in which the need for amendments arose and the nature of those amendments. A convenient starting point is rule 3:
“The main purpose of the scheme is the provision of retirement and other benefits for employ ees of training boards and successor bodies who are members of the scheme. The trust fund is to be constituted and maintained by means of periodical and other contributions to be made by the members and by the employers in accordance with the rules.”
At the risk of stating the obvious, that “main purpose” rule embodies three concepts which are funda mental to a pension scheme of this nature. First, the purpose of the scheme is to provide the retirement and other benefits to which the members, pensioners and dependants are entitled under the rules. The scheme is a “defined benefits” scheme: the benefits are fixed by the rules. The scheme is not set up as a unit trust, under which the members would be entitled to a proportionate share in the fund. Second, the fund out of which the benefits are to be provided is constituted and maintained by means of peri odic payments. The amount of those payments will depend not only on the rate of contributions but also on the number of members in service from time to time who are contributors and on the number of employers who continue to participate. In that sense the fund is dynamic. Although it will be pos sible, at any given time, to measure the value of the assets then held in the fund, and to measure the liabilities which then have to be met out of those assets (on the basis of termination), that is not a particularly useful exercise unless termination is seen to be imminent. What is required is an actuarial valuation of the assets, present and future, taking into account the contributions which are to be made by employers and members over the remaining life of the fund; and an actuarial valuation of the liabil ities which will have to be met as employees in service retire and become pensioners (or die and leave dependants). Third, the task of the trustees is to maintain a balance between assets and liabilities valued on that actuarial basis; so that, so far as the future can be foreseen, they will be in a position to provide pensions and other benefits in accordance with the rules throughout the life of the scheme.
LORD BROWNE-WILKINSON
The bank submitted that, since the contract was void, title did not pass at the date of payment either at law or in equity. The legal title of the bank was extinguished as soon as the money was paid into the mixed account, whereupon the legal title became vested in the local authority. But, it was argued, this did not affect the equitable interest, which remained vested in the bank (‘the retention of title point’).It was submitted that whenever the legal interest in property is vested in one person and the equitable interest in another, the owner of the legal interest holds it on trust for the owner of the equitable title: ‘the separation of the legal from the equitable interest necessarily imports a trust.’ For this latter prop osition (‘the separation of title point’) the bank, of course, relies on Sinclair v Brougham [1914] AC 398 and Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105.[Both these cases are further considered in Chapter 14.]
It is to be noted that the bank did not found any argument on the basis that the local authority was liable to repay either as a constructive trustee or under the in personam liability of the wrongful recipi ent of the estate of a deceased person established by In re Diplock, Oiplock v Wintle [1948] Ch 465. I therefore do not further consider those points.
Although the actual question in issue on the appeal is a narrow one, on the arguments presented it is necessary to consider fundamental principles of trust law. Does the recipient of money under a con tract subsequently found to be void for mistake or as being ultra vires hold the moneys received on trust even where he had no knowledge at any relevant time that the contract was void? If he does hold on trust, such trust must arise at the date of receipt or, at the latest, at the date the legal title of the payer is extinguished by mixing moneys in a bank account: in the present case it does not matter at which of those dates the legal title was extinguished. If there is a trust two consequences follow:
(a) the recipient will be personally liable, regardless of fault, for any subsequent payment away of the moneys to third parties even though, at the date of such payment, the ‘trustee’ was still ignorant of the existence of any trust: see BurrowsSwaps and the Friction between Common Law and Equity [1995) RLR 15;
(b) as from the date of the establishment of the trust (i.e., receipt or mixing of the moneys by the ‘trustee’) the original payer will have an equitable proprietary interest in the moneys so long as they are traceable into whomsoever’s hands they come other than a purchaser for value of the legal interest without notice.
Therefore, although in the present case the only question directly in issue is the personal liability of the local authority as a trustee, it is not possible to hold the local authority liable without imposing a trust which, in other cases, will create property rights affecting third parties because moneys received under a void contract are ‘trust property’.
Before considering the legal merits of the submission, it is important to appreciate the practical conse quences which ensue if the bank’s arguments are correct. Those who suggest that a resulting trust should arise in these circumstances accept that the creation of an equitable proprietary interest under the trust can have unfortunate, and adverse, effects if the original recipient of the moneys becomes insolvent: the moneys, if traceable in the hands of the recipient, are trust moneys and not available for the creditors of the recipient. However, the creation of an equitable proprietary interest in moneys received under a void contract is capable of having adverse effects quite apart from insolvency. The proprietary interest under the unknown trust will, quite apart from insolvency, be enforceable against any recipient of the property other than the purchaser for value of a legal interest without notice.
Take the following example. T (the transferor) has entered into a commercial contract with R1 (the first recipient). Both parties believe the contract to be valid but it is in fact void. Pursuant to that contract:
(i) T pays £1m to R1 who pays it into a mixed bank account;
(ii) T transfers 100 shares in X company to R1, who is registered as a shareholder. Thereafter R1 deals with the money and shares as follows:
(iii) R1 pays £50,000 out of the mixed account to R2 otherwise than for value; R2 then becomes insol vent, having trade creditors who have paid for goods not delivered at the time of the insolvency.
(iv) R1 charges the shares in X company to R3 by way of equitable security for a loan from R3.
If the bank’s arguments are correct, R1 holds the £1m on trust for T once the money has become mixed in R1’s bank account. Similarly R1 becomes the legal owner of the shares in X company as from the date of his registration as a shareholder but holds such shares on a resulting trust for T. T therefore has an equitable proprietary interest in the moneys in the mixed account and in the shares.
T’s equitable interest will enjoy absolute priority as against the creditors in the insolvency of R2 (who was not a purchaser for value) provided that the £50,000 can be traced in the assets of R2 at the date of its insolvency. Moreover, if the separation of title argument is correct, since the equitable interest is in T and the legal interest is vested in R2, R2 also holds as trustee forT. In tracing the £50,000 in the bank account of R2, R2 as trustee will be treated as having drawn out his own moneys first, thereby benefit ing Tat the expense of the secured and unsecured creditors of R2. Therefore in practice one may well reach the position where the moneys in the bank account of R2 in reality reflect the price paid by cred itors for goods not delivered by R2: yet, under the tracing rules, those moneys are to be treated as belonging in equity to T.
So far as the shares in the X company are concerned, T can trace his equitable interest into the shares and will take inpriority to R3, whose equitable charge to secure his loan even though granted for value will pro tanto be defeated.
All this will have occurred when no one was aware, or could have been aware, of the supposed trust
because no one knew that the contract was void.
I can see no moral or legal justification for giving such priority to the right of T to obtain restitution over third parties who have themselves not been enriched, in any real sense, at T’s expense and indeed have had no dealings with T. T paid over his money and transferred the shares under a supposed valid contract. If the contract had been valid, he would have had purely personal rights against R1. Why should he be better off because the contract is void?
My Lords, wise judges have often warned against the wholesale importation into commercial law of equitable principles inconsistent with the certainty and speed which are essential requirements for the orderly conduct of business affairs: see Barnes v Addy (1874) LR 9 Ch App 244, 251 and 255; Scandinavian Trading Tanker Co. AB v Flota Petro/era Ecuatoriana (1983] 2 AC 694, 703-704. If the bank’s arguments are correct, a businessman who has entered into transactions relating to or depend ent upon property rights could find that assets which apparently belong to one person in fact belong to another; that there are ‘off balance sheet’ liabilities of which he cannot be aware; that these property rights and liabilities arise from circumstances unknown not only to himself but also to anyone else who has been involved in the transactions. A new area of unmanageable risk will be introduced into commercial dealings. If the due application of equitable principles forced a conclusion leading to these results, your Lordships would be presented with a formidable task in reconciling legal principle with commercial common sense. But in my judgment no such conflict occurs. The resulting trust for which the bank contends is inconsistent not only with the law as it stands but with any principled develop ment of it.
(i) Equity operates on the conscience of the owner of the legal interest. In the case of a trust, the conscience of the legal owner requires him to carry out the purposes for which the property was vested in him (express or implied trust) or which the law imposes on him by reason of his uncon scionable conduct (constructive trust).
(ii) Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of the legal interest being affected, he cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience, i.e. until he is aware that he is intended to hold the property for the benefit of others in the case of an express or implied trust, or, in the case of a constructive trust, of the factors which are alleged to affect his conscience.
(iii) In order to establish a trust there must be identifiable trust property. The only apparent exception
to this rule is a constructive trust imposed on a person who dishonestly assists in a breach of trust who may come under fiduciary duties even if he does not receive identifiable trust property.
(iv) Once a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforce able in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice.
These propositions are fundamental to the law of trusts and I would have thought uncontroversial. However, proposition (ii) may call for some expansion. There are cases where property has been put into the name of X without X’s knowledge but in circumstances where no gift to X was intended.It has been held that such property is recoverable under a resulting trust … These cases are explicable on the ground that, by the time action was brought, X or his successors in title have become aware of the facts which gave rise to a resulting trust; his conscience was affected as from the time of such discov ery and thereafter he held on a resulting trust under which the property was recovered from him. There is, so far as I am aware, no authority which decides that X was a trustee, and therefore account able for his deeds, at any time before he was aware of the circumstances which gave rise to a resulting trust.
Those basic principles are inconsistent with the case being advanced by the bank. The latest time at which there was any possibility of identifying the ‘trust property’ was the date on which the moneys in the mixed bank account of the local authority ceased to be traceable when the local authority’s account went into overdraft in June 1987. At that date, the local authority had no knowledge of the invalidity of the contract but regarded the moneys as its own to spend as it thought fit. There was therefore never
a time at which both (a) there was defined trust property and (b) the conscience of the local authority inrela tion to such defined trust property was affected. The basic requirements of a trust were never satisfied.
I turn then to consider the bank’s arguments in detail. They were based primarily on principle rather than on authority. I will deal first with the bank’s argument from principle and then turn to the main authorities relied upon by the bank, Sinclair v Brougham [1914] AC 398 and Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105.
The retention of title point
It is said that, since the bank only intended to part with its beneficial ownership of the moneys in per formance of a valid contract, neither the legal nor the equitable title passed to the local authority at the date of payment. The legal title vested in the local authority by operation of law when the moneys became mixed in the bank account but, it is said, the bank ‘retained’ its equitable title.
I think this argument is fallacious. A person solely entitled to the full beneficial ownership of money or property, both at law and in equity, does not enjoy an equitable interest in that property. The legal title carries with it all rights. Unless and until there is a separation of the legal and equitable estates, there is no separate equitable title. Therefore to talk about the bank ‘retaining’ its equitable interest is meaningless. The only question is whether the circumstances under which the money was paid were such as, in equity, to impose a trust on the local authority. If so, an equitable interest arose for the first time under that trust.
….
This is not a case where the bank had any equitable interest which pre-dated receipt by the local authority of the upfront payment. Therefore, in order to show that the local authority became a trustee, the bank must demonstrate circumstances which raised a trust for the first time either at the date on which the local authority received the money or at the date on which payment into the mixed account was made. Counsel for the bank specifically disavowed any claim based on a constructive trust. This was plainly right because the local authority had no relevant knowledge sufficient to raise a construct ive trust at any time before the moneys, upon the bank account going into overdraft, became untrace able. Once there ceased to be an identifiable trust fund, the local authority could not become a trustee: Re Goldcorp Exchange Ltd [1995] 1 AC 74.Therefore, as the argument for the bank recognised, the only possible trust which could be established was a resulting trust arising from the circumstances in which the local authority received the upfront payment.
Under existing law a resulting trust arises in two sets of circumstances:
(A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and Bin shares proportionate to their contributions.It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer: see Underhill and Hayton, Laws of Trusts and Trustees, 15th ed., pp. 317 et seq.; Vanderve/1 v /RC [1967] 2 AC 291, 312 et seq.; Re Vandervell’s Trusts /No. 2) [1974] Ch 269,288 et seq.
(B) Where A transfers property to Bon express trusts, but the trusts declared do notexhaustthe whole beneficial interest: ibid. and Quistclose Investments Ltdv Rolls Razor Ltd (In liq.) [1970] AC 567.
Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention. Megarry J in Re Vandervel/’s Trusts /No. 2) suggests that a resulting trust of type (B) does not depend on intention but operates automatically.I am not convinced that this is right. If the settlor has expressly, or by necessary
implication, abandoned any beneficial interest in the trust property, there is in my view no resulting trust: the undisposed-of equitable interest vests in the Crown as bona vacantia: see Re West Sussex Constabulary’s Widows, Children and Benevolent (1930/ Fund Trusts (1971] Ch 1
Applying these conventional principles of resulting trust to the present case, the bank’s claim must fail. There was no transfer of money to the local authority on express trusts: therefore a resulting trust of type (B) above could not arise. As to type (A) above, any presumption of resulting trust is rebutted since it is demonstrated that the bank paid, and the local authority received, the upfront payment with the intention that the moneys so paid should become the absolute property of the local authority. It is true that the parties were under a misapprehension that the payment was made in pursuance of a valid contract. But that does not alter the actual intentions of the parties at the date the payment was made or the moneys were mixed in the bank account …
LORD BROWNE-WILKINSON (on Re Ames): In this case the father of the intended husband, in consider ation of the son’s intended marriage with Miss H, made a marriage settlement under which the income was payable to the husband for life and after his death to the wife for life or until her remarriage, with remainder to the issue of the intended marriage.There was an ultimate trust, introduced by the words ‘If there should not be any child of the said intended marriage who attains a vested interest …,’for an artificial class of the husband’s next of kin. The marriage took place. Many years later a decree of nullity on the grounds of non-consummation had the effect of rendering the marriage void ab initio. The income was paid to the husband until his death which occurred 19 years after the decree of nullity. The question was whether the trust capital was held under the ultimate trust for the husband’s next of kin or was payable to the settlor’s estate. It was held that the settlor’s estate was entitled.
The judgment is very confused. It is not clear whether the judge was holding (as I think correctly) that in any event the ultimate trust failed because it was only expressed to take effect in the event of the fail ure of the issue of a non-existent marriage (an impossible condition precedent) or whether he held that all the trusts of the settlement failed because the beneficial interests were conferred in consideration of the intended marriage and that there had been a total failure of consideration. In either event, the decision has no bearing on the present case. On either view, the fund was vested in trustees on trusts which had failed. Therefore the moneys were held on a resulting trust of type (B) above. The decision casts no light on the question whether, there being no express trust, moneys paid on a consideration which wholly fails are held on a resulting trust.
In Re Vandervell’s Trusts
Megarry J
(a) The first class of case is where the transfer to Bis not made on any trust …there is a rebuttable presumption that B holds on resulting trust for A. The question is not one of the automatic con sequences of a dispositive failure by A, but one of presumption: the property has been carried to B, and from the absence of consideration and any presumption of advancement Bis presumed not only to hold the entire interest on trust, but also to hold the beneficial interest for A absolutely. The presumption thus establishes both that B is to take on trust and also what that trust is. Such resulting trusts may be called ‘presumed resulting trusts’.
(b) The second class of case is where the transfer to B is made on trusts which leave some or all of the beneficial interest undisposed of. Here B automatically holds on resulting trust for A to the extent that the beneficial interest has not been carried to him or others. The resulting trust here does not depend on any intentions or presumptions, but is the automatic conse quence of A’s failure to dispose of what is vested in him. Since ex hypothesi the transfer is on trust, the resulting trust does not establish the trust but merely carries back to A the beneficial interest that has not been disposed of. Such resulting trusts may be called ‘automatic resulting trusts’.
Bennett v Bennett
(1879) 10 ChD 474
JESSEL MR: …The doctrine of equity as regards presumption of gifts is this, that where one person stands in such a relation to another that there is an obligation on that person to make a provision for the other, and we find either a purchase or investment in the name of the other, or in the joint names of the person and the other, of an amount which would constitute a provision for the other, the presumption arises of an intention on the part of the person to discharge the obligation to the other; and therefore, in the absence of evidence to the contrary, that purchase or investment is held to be in itself evidence of a gift.
In other words, the presumption of gift arises from the moral obligation to give.
. . . The father [of a child] is under that obligation from the mere fact of his being the father, and there fore no evidence is necessary to shew the obligation to provide for his child, because that is part of his duty. In the case of a father, you have only to prove the fact that he is the father, and when you have done that the obligation at once arises; but in the case of a person in loco parentis you must prove that he took upon himself the obligation. We then arrive at this conclusion, that in the case of a mother … it is easier to prove a gift than in the case of a stranger: in the case of a mother very little evidence beyond the relationship is wanted, there being very little additional motive required to induce a mother to make a gift to her child.
Tinsley v Milligan
[1994] 1 AC 340,
LORD JAUNCEY OF TULLICHETTLE: At the outset it seems to me to be important to distinguish between the enforcement of executory provisions arising under an illegal contract or other transaction and the enforcement of rights already acquired under the completed provisions of such a contract or transac tion. Your Lordships were referred to a very considerable number of authorities, both ancient and mod ern, from which certain propositions may be derived.
First: it is trite law that the court will not give its assistance to the enforcement of executory provi sions of an unlawful contract whether the illegality is apparent ex facie the document or whether the illegality of purpose of what would otherwise be a lawful contract emerges during the course of the trial …
Second: it is well established that a party is not entitled to rely on his own fraud or illegality in order to assist a claim or rebut a presumption. Thus when money or property has been transferred by a man to his wife or children for the purpose of defrauding creditors and the transferee resists his claim for recovery he cannot be heard to rely on his illegal purpose in order to rebut the presumption of advance ment (see … Tinkerv Tinker [1970] P 136 at 143perSalmon LJ [and further below]).
Third: it has, however, for some years been recognised that a completely executed transfer of prop erty or of an interest in property made in pursuance of an unlawful agreement is valid and the court will assist the transferee in the protection of his interest provided that he does not require to found on the unlawful agreement.
The ultimate question in this appeal is, in my view, whether the respondent in claiming the existence of a resulting trust in her favour is seeking to enforce unperformed provisions of an unlawful transac tion or whether she is simply relying on an equitable proprietary interest that she has already acquired under such a transaction. The nature of a resulting trust was described by Lord Diplock in Gissing v Gissing [1971] AC 886 at 905 [see Chapter 8] …
I find this a very narrow question but I have come to the conclusion that the transaction whereby the claimed resulting trust in favour of the respondent was created was the agreement between the par ties that, although funds were to be provided by both of them, nevertheless the title to the house was to be in the sole name of the appellant for the unlawful purpose of defrauding the Department of Social Security. So long as that agreement remained unperformed neither party could have enforced it against the other. However, as soon as the agreement was implemented by the sale to the appellant alone she became trustee for the respondent who can now rely on the equitable proprietary interest which has thereby been presumed to have been created in her favour and has no need to rely on the illegal transaction which led to its creation.
My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend Lord Browne-Wilkinson. I agree with it and for the reasons contained therein as well as for the reasons in this speech I would dismiss the appeal.
Tribe v Tribe
[1996] Ch 107
MILLETT LJ:Mr David Tribe transferred his shareholding in his family company to his son for a pretended consideration which was not paid and was not intended to be paid. The transfer was, therefore, made for no consideration.If the transferee had been a nephew or a trusted stranger, the transaction would have given rise to a resulting trust. In such a case equity places the burden of proving that the transfer was intended to be by way of gift upon the transferee. If he cannot discharge that burden, he holds the shares as nominee and in trust for the transferor. Mr Tribe, however, transferred the shares to his son, and accordingly the transaction gave rise to the presumption of advancement. In such a case the trans fer is presumed to have been intended by way of gift. The burden of proving that it was not intended as a gift lies upon the transferor.
The judge found that Mr Tribe did not intend to make a gift of the shares to his son. The company
represented his life’s work, and his shareholding in the company was his largest asset. He had other children besides the son to whom in the ordinary course of things he would wish to leave his property. But he faced substantial claims for dilapidations in respect of two leasehold properties which were occupied by the company but of which he was the tenant, and he was concerned that he could lose the shares.The judge accepted his evidence that he transferred the shares to his son as a nominee in order to conceal them from his creditors, and specifically from his two landlords, by creating the appearance that he no longer owned any shares in the company. That, of course, was an illegal purpose. Ordinarily a man who makes a gratuitous transfer of property to another for an illegal purpose is not allowed to rely on his purpose in making the transfer in order to rebut the presumption of advancement: see Tinsley v Milligan [1994} 1 AC 340 [Millett LJ referred to the same passage quoted in 3.above, and con tinued:…] The question in the present case is whether there is an exception to this principle where the transferor withdraws from the transaction before any part of the illegal purpose has been carried into effect. Unless that exception applies, Mr Tribe’s claim to recover his own shares from the son whom he trusted to hold them as his nominee must fail.
The necessary consequence of this is that where he can rely on a resulting trust the transferor will normally be able to recover his property if the illegal purpose has not been carried out. In Tinsley v Milligan she recovered even though the illegal purpose had been carried out ..
The question in the present case is the converse: whether the transferor can rebut the presumption of advancement by giving evidence of his illegal purpose so long as the illegal purpose has not been carried into effect …
In my opinion the
following propositions represent the present state of the law.
(3) .. the transferor can recover the property if he can do so without relying on the illegal purpose. This will normally be the case where the property was transferred without consideration in circum stances where the transferor can rely on an express declaration of trust or a resulting trust in his favour.
(4) It will almost invariably be so where the illegal purpose has not been carried out. It may be
otherwise where the illegal purpose has been carried out and the transferee can rely on the transferor’s conduct as inconsistent with his retention of a beneficial interest.
(5) The transferor can lead evidence of the illegal purpose whenever it is necessary for him to do so provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly carried into effect. It will be necessary for him to do so (i) if he brings an action at law or (ii) if he brings proceedings in equity and needs to rebut the presumption of advancement.
(6) The only way in which a man can protect his property from his creditors is by divesting himself of all beneficial interest in it. Evidence that he transferred the property in order to protect it from its creditors, therefore, does nothing by itself to rebut the presumption of advancement; it reinforces it. To rebut the presumption it is necessary to show that he intended to retain a beneficial interest and con ceal it from his creditors.
(7) The court should not conclude that this was his intention without compelling circumstantial
evidence to this effect. The identity of the transferee and the circumstances in which the transfer was made would be highly relevant. It is unlikely that the court would reach such a conclusion where the transfer was made in the absence of an imminent and perceived threat from known creditors.
Tinker v Tinker
[1970] 2 WLR331, [1970) 1 All ER 540, Court of Appeal
LORD DENNING MR: … Accepting that in the present case the husband was honest-he acted, he said, on the advice of his solicitor-nevertheless I do not think that he can claim that the house belongs to him. The solicitor did not give evidence. But the only proper advice that he could give was: ‘In order to avoid the house being taken by your creditors, you can put it into your wife’s name; but remember that, if you do, it is your wife’s and you cannot go back on it.’
But, whether the solicitor gave that advice or not, I am quite clear that the husband cannot have it both ways. So he is on the horns of a dilemma. He cannot say that the house is his own and, at one and the same time, say that it is his wife’s. As against his wife, he wants to say that it belongs to him. As against his creditors, that it belongs to her. That simply will not do. Either it was conveyed to her for her own use absolutely; or it was conveyed to her as trustee for her husband. It must be one or other. The presumption is that it was conveyed to her for her own use; and he does not rebut that presumption by saying that he only did it to defeat his creditors. I think that it belongs to her.
SALMON LJ: … A house … was bought with money supplied by the husband. The wife did not put up a penny. The contract to purchase, however, was in her name and the house was conveyed into her name. The burden of displacing the presumption of advancement is therefore on the husband. This burden can in many cases be displaced without much effort. It seems to me, however, that in his case the husband’s evidence, far from displacing the presumption, has done much to reinforce it. His explan ation when he was giving evidence as to why the house was put in his wife’s name was as follows:
I was advised that should the business fail the house would be taken as part of the assets of the business. Recommended therefore house should be put in wife’s name.
Now, of course, if a house is made over to a wife, it is protected against the husband’s creditors.No criti cism can be made of a transaction such as that, providing that it is genuine; the essence of the trans action is that the husband puts the house in his wife’s name, intending to convey and in reality conveying the whole interest in the house to his wife. The husband was advised by a reputable solicitor in Bodmin. For my part I have no doubt that the solicitor must have explained to him the effect of what he was doing; it would mean, therefore, that if he failed in business and his creditors came down on him and sought to take his assets, he would be able truthfully to say to them: ‘You cannot touch this house; it is not mine. Look-you can see the documents; they are all in my wife’s name. It has always been hers.’ And this would give him and her complete protection so far as the house was concerned against the creditors. There would be nothing wrong or dishonest in doing what I have described. It seems to me to follow from the learned registrar’s finding that he was an honest man and that the husband must have intended that the house should belong to the wife. That is why I say that his evidence strengthens the presumption of advancement .
Re Ames’ Settlement
[1946] Ch 217, Chancery Division
VAISEY J: … It seems to me that the claim of the executors of the settlor must succeed. Having regard to the wording of the settlement, I think that this is a simple case of money paid upon a consideration which failed. I do not think that that hypothetical class of next of kin (who were only brought in so to speak, and given an interest in the fund upon the basis and footing that there was going to be a valid marriage between John Ames and Miss Hamilton) have really any merits in equity, and I do not see how they can claim under the express terms of a document which, so far as regards the persons with whom the marriage consideration was concerned, has utterly and completely failed. If their claim be good, it is difficult to see at what precise period of time their interest became an interest in possession. But I hold that their claim is not good, and that they have not been able to establish it.
Re Welsh Hospital (Netley) Fund
[1921] 1 Ch 655, Chancery Division
P.O. LAWRENCE J: In this case the question is whether the plaintiffs, who are the trustees of a fund raised during the war for the establishment and support of the Welsh Hospital at Netley, are at liberty to apply the surplus of such fund now in their hands for the purpose of founding scholarships in the University of Wales for the encouragement of the study of medicine and surgery by persons of Welsh nationality. In order to determine this question the Court must first of all ascertain whether the fund is devoted permanently to charity and can be applied under the doctrine of cy-pres. This is turn depends upon what the Court ought in the circumstances to infer to have been the true intention of the subscribers to the fund when they made their contributions. The fund was started in September, 1914. On the first day of that month the Lord Mayor of Cardiff issued an appeal to the inhabitants of Wales for subscriptions towards a Welsh hospital for service with the Expeditionary Force.The appeal shows that the first idea was that the hospital should be one serving with the Expeditionary Force at the Front in France.It also shows that six months’ service in France was estimated to cost 15,000/.,and it continues: ‘But the sum subscribed is not limited to this amount, as further subscriptions can be used for pro longing the service or increasing the accommodation of the hospital,’ and it winds up with this expres sion: ‘We believe that Wales will rise to the full height of its responsibilities in this great national crisis, and by subscribing the necessary sum within a few days prove that it is foremost in seeking to relieve and comfort by the hands of their own fellow countrymen our sick and wounded across the seas.’…
The first question to be determined is whether there is a resulting trust in favour of the subscribers to the fund. Mr Greene has argued on behalf of the subscribers that there is a resulting trust for them, and that the surplus ought to be paid back to the various subscribers. All the other parties to the sum mons have argued that in the circumstances it must be inferred that there was a general charitable intent and that the Court is at liberty to apply the surplus cy-pres.In my judgment this latter contention is well founded. The fund was created by contributions from various sources and in varying amounts, partly by donations from private individualsof more or less substantial amounts,and partly by the pro ceeds resulting from concerts and other entertainments given and from collections in streets and at churches made in most of the towns and villages of Wales. So far as regards the contributors to enter tainments, street collections, etc., I have no hesitation in holding that they must be taken to have parted with their money out and out. It is inconceivable that any person paying for a concert ticket or placing a coin in a collecting box presented to him in the street should have intended that any part of the money so contributed should be returned to him when the immediate object for which the concert was given or the collection made had come to an end. To draw such an inference would be absurd on the face of it. So far as regards individual subscribers of substantial amounts, the proper inference to be drawn is not quite so plain.In my opinion, however, these subscribers must be taken to have known that they were contributing to a general fund which was beingraised inthe manner I have described, and that their contributions would be aggregated with the proceeds of entertainments, street collections, etc., and would not in any way be ear-marked. They must, I think, also be taken to have known that the total funds collected from every source would be applied for the purpose of the charity without discriminat ing between the moneys derived from any particular source. In these circumstances I am of opinion that the true inference to be drawn is that these subscribers intended to part with their contributions out and out, and that they did not intend that the surplus, if any, of their contributions should be returned to them when the immediate object of the charity should have come to an end. In the result I hold that although all the contributions were in the first instance made for the particular purpose of building, equipping and maintaining the Welsh Hospital at Netley, the main underlying object of the contributors was to provide money for the comfort of sick and wounded Welshmen, and that all the subscribers intended to devote their contributions not only to the particular object, but generally to the benefit of their sick and wounded countrymen. That being so, the Court is, in my judgment, at liberty to apply the surplus of the fund cy-pres..
Re North Devon and West Somerset Relief Fund Trusts
, Hylton v Wright
[1953] 1 WLR 1260, [1953] 2 All ER 1032, Chancery Division
WYNN-PARRY J: I confess that I do not find this question altogether easy to answer. I take as the state ment of the principles on which the court should proceed the opening passage from the judgment of Parker J, in Re Wilson, where he says ([1913] 1 Ch 320): For the purposes of this case I think the authorities must be divided into two classes. First of all, we have a class of cases where, in form, the gift is given for a particular charitable purpose, but it is possible, taking the will as a whole, to say that, notwithstanding the form of the gift, the paramount intention, according to the true construction of the will, is to give the property in the first instance for a general charitable purpose rather than a particular charitable purpose, and to graft on to the general gift a direction as to the desires or intentions of the testator as to the manner in which the general gift is to be carried into effect. In that case, though it is impossible to carry out the precise directions, on ordinary principles the gift for the general charitable pur pose will remain and be perfectly good, and the court, by virtue of its administrative jurisdiction, can direct a scheme as to how it is to be carried out. In fact the will will be read as though the par ticular direction had not been in the will at all, but there had been simply a general direction as to the application of the fund for the general charitable purpose in question. Then there is the second class of cases, where, on the true construction of the will, no such paramount general intention can be inferred, and where the gift, being in form a particular gift-a gift for a particu lar purpose-and it being impossible to carry out that particular purpose, the whole gift is held to fail. In my opinion, the question whether a particular case falls within one of those classes of cases or within the other is simply a question of the construction of a particular instrument.
It is to be observed that in that case the court had to construe a will, the instrument by which a single donor had made the disposition which gave rise to the question. A number of authorities were cited to me, and most of them, I think it is true to say, arose substantially in that way. I have to deal with a very different type of case, a case in which I have to discover the intention of many hundreds-it may be thousands-of donors, and the only document that I have to assist me is not a document brought into existence by any one of those donors, but by those who invited them to become donors.
The nearest case to be found in the reports to the present case is Re Welsh Hospital (Netley/ Fund [1921] 1 Ch 655. That was a decision of P. 0. Lawrence J. The facts were that on the outbreak of the war in 1914 a hospital was erected at Netley, and equipped and run during the war, for the benefit of sick and wounded Welsh soldiers by means of large voluntary subscriptions raised in Wales. In 1919 the hospital was closed, the staff disbanded, and the property sold to the War Office, and, after winding-up the affairs of the hospital, there was a surplus of some £9,000. It was held, on the evidence, that there was not a resulting trust of the surplus for the subscribers to the hospital, but a general charitable intention for sick and wounded Welshmen which enabled the court to apply the fund cy-pres. In the judgment of P. 0. Lawrence J, reference is made to the terms of the appeal by which the subscriptions were invited. He says [Wynn-Parry J set out parts of the judgment above and continued]:
… It appears to me, on careful consideration, that it is impossible to draw a distinction of any substance between the facts of that case and the facts of the present case. It appears to me not in the least decisive that there is a reference in the appeal to persons other than local residents who suffered distress by the disaster. The main underlying object of that appeal was to benefit the people of the dis trict in question. The appeal proceeds in this case, as it did in the case of the Welsh hospital, by empha sising what in the Welsh case was called the immediate object, but which might quite easily in either case have been treated, on a strict construction of the appeal, as the only object. In Re Welsh Hospital (Netley) Fund, P. 0. Lawrence J found no difficulty in drawing the conclusion, for the reasons which he gives, that there was a more extended object than might be said at first sight to appear on the face of the appeal; and when I apply his reasoning to the appeal in question in this case, I feel driven to exactly the same conclusion,namely, that there was a general charitable intent. All the reasons which militated in the mind of P. 0.Lawrence J, to the conclusion to which he came are present in this case, I, therefore, find it impossible to distinguish that case from this case. In those circumstances, it appears to me to be unnecessary to travel through the rest of the authorities. I need only say that I find nothing in the judg ment of P. 0.Lawrence J, which is in any way inconsistent with the passage from the judgment of Parker J, in Re Wilson which I have read. It is true that the latter case was not apparently cited to P. 0. Lawrence J, but, no doubt, that learned judge was well aware of its existence. Indeed, the judgment of Parker J, in Re Wilson did no more than state the effect of the authorities as it then existed;nor do I find anything in the later cases which carries the matter further. So far as I am aware, no adverse comment has ever been passed on the decision or judgment of P. 0. Lawrence J, in Re Welsh Hospital (Netley) Fund. I regard it as authority binding on me and as covering this case.
Re Gillingham Bus Disaster Fund
[1958] Ch 300, Chancery Division
HARMAN J: In December, 1951, there occurred an accident with tragic consequences, in Dock Road, Gillingham, in the county of Kent, when a motor-vehicle ran into a column of cadets marching along the road, killing 24 of them and injuring a further number.There was, of course, widespread concern at so shocking an event, and the three plaintiffs, then mayors of the surrounding areas, namely, Gillingham, Rochester and Chatham, determined to open a memorial fund. According to the evidence of the town clerk of Gillingham before me at the hearing, this was done by making a statement to the press, and the press accounts of the statement were relied upon as constituting the foundations of the so-called char ity. I questioned this at the time, and it now turns out that the town clerk of Gillingham wrote a letter to the editor of the ‘Daily Telegraph,’ and I dare say to some other papers as well. At any rate, this letter appeared in the columns of the ‘Daily Telegraph’ on 13 December 1951: ‘Cadets’ Memorial. To the Editor of the ‘Daily Telegraph.’ Sir,-The Mayors of Gillingham, Rochester and Chatham have decided to promote a Royal Marine Cadet Corps Memorial Fund to be devoted, among other things, to defray ing the funeral expenses, caring for the boys who may be disabled, and then to such worthy cause or causes inmemory of the boys who lost their lives, as the Mayors may determine.’ There follows another observation by the town clerk, which is not relevant, and then are given the addresses of the mayors to which donations may be sent. It was signed ‘Yours faithfully, Frank Hill, Town Clerk, Gillingham.’ Mr Hill had entirely forgotten the terms of the letter as written, but there it is. This appeal evoked a generous response from the public, whose subscriptions amounted to nearly £9,000, contributed partly in sub stantial sums by known persons, but mainly anonymously as a result of street collections,and so forth. The result has shown that emotion is a bad foundation for such an activity. Each of the dead or injured cadets had at common law legal rights against the bus company, which were in due course asserted, with the result that compensation has been paid in full in accordance with the law. The plaintiffs admin istering the fund for the benefit of the victims have spent £2,368 14s. 9d., and are at a loss what to do with the balance-hence this summons. There are three claimants: first, the donors, who are repre sented by the Official Solicitor; second, the Crown, represented by the Treasury Solicitor, claiming the unwanted surplus of the fund as bona vacantia; and, third, the Attorney-General, claiming it for charity.
It was agreed at the hearing that I should try the issue as to charity first.
Taking the town clerk’s letter as the instrument constituting the trusts applicable to this money, I am constrained to say at the outset that it is most unfortunately worded. It begins by saying that the fund is to be devoted, ‘among other things,’ to certain objects. On the face of it, this would enable the fund to be devoted to any object in the world. I think this cannot be the true meaning, and that the words must be read so as to confine the objects to such worthy causes as shall keep green the memory of the boy victims. The money is to be spent primarily in defraying the funeral expenses of the dead and car ing for the disabled, and secondarily on such other worthy causes as the mayors may determine. It was admitted at the Bar that the primary objects, namely, the funeral expenses and care of the boys, were not themselves charitable objects, there being no element of poverty involved, nor any section of the public. Further ‘worthy’ objects, while no doubt it would include charitable purposes, must include many others. It is perhaps a wider word even than ‘benevolent.’ It follows that the trust must fail for uncertainty unless the Charitable Trusts (Validation) Act, 1954, can be invoked to support it.
Ihave already decided that the surplus of this fund now in the hands of the plaintiffs as trustees ought not to be devoted to charitable purposes under a cy-pres scheme. There arises now a further question, namely, whether, as the Treasury Solicitor claims, this surplus should be paid to the Crown as bona vacantia, or whether there is a resulting trust in favour of the subscribers, who are here represented by the Official Solicitor. The general principle must be that where money is held upon trust and the trusts declared do not exhaust the fund it will revert to the donor or settlor under what is called a resulting trust. The reasoning behind this is that the settler or donor did not part with his money absolutely out and out but only sub modo to the intent that his wishes as declared by the declaration of trust should be carried into effect. When, therefore, this has been done any surplus still belongs to him. This doc trine does not, in my judgment, rest on any evidence of the state of mind of the settler, for in the vast majority of cases no doubt he does not expect to see his money back: he has created a trust which so far as he can see will absorb the whole of it. The resulting trust arises where that expectation is for some unforeseen reason cheated of fruition, and is an inference of law based on after-knowledge of the event.
Counsel for the Crown admitted that it was for him to show that this principle did not apply to the present case. Counsel for the subscribers cited to me In re Abbott [1900] 2 Ch 326. In that case a fund had been subscribed for the relief of two distressed ladies who had been defrauded of their patrimony. There was no instrument of trust. When the survivor of them died the trustees had not expended the whole of the moneys subscribed and the summons asked whether this surplus resulted to the subscribers or whether it was payable to the personal representatives of the two ladies. Stirling J had no difficulty in coming to the conclusion that the ladies were not intended to become the absolute owners of the fund and therefore their personal representatives had no claim. It was never suggested in this case that any claim by the Crown to bona vacantia might arise. A similar result was reached in In re Hobourn Aero Components Air Raid Distress Fund [1946] Ch 86, where the judge found that the objects of the fund were charitable no general charitable intent was shown in the absence of any ele ment of public benefit and decided that the money belonged to the subscribers upon a resulting trust. Here again no claim was made on behalf of the Crown that the surplus constituted bona vacantia.
I was referred to two cases where a claim was made to bona vacantia and succeeded. The first of these was Cunnack v Edwards [1896] 2 Ch 679. This was a case of a society formed to raise a fund by subscriptions and so forth from the members to provide for widows of deceased members. Upon the death of the last widow of a member it was found that there was a surplus. It was held by the Court of Appeal that no question of charity arose, that there was no resulting trust in favour of the subscribers, but that the surplus passed to the Crown as bona vacantia. A. L. Smith LJ said this [at p. 683]:
But it was argued that the proper implication is that when the society itself came to an end, as it has done, there was then a resulting trust of what might happen to be in the coffers of the soci ety in favour of all the personal representatives of those who had been members since the year 1810, and Chitty J has so held. Now it was never contemplated that the society would come to an end; but, on the contrary, provision was made for the introduction of new members for its perpetual existence; and the existing members had power to alter and revise the rules, so that, if it was found that the society was too affluent, provision might be made as to what was to be done with that money might not be wanted. As the member paid his money to the society, so he divested himself of all interest in this money for ever, with this one reservation, that if the member left a widow she was to be provided for during her widowhood. Except as to this he abandoned and gave up the money for ever …
In my opinion there was no resulting trust in favour of all those members who had ever sub scribed to the fund.
Rigby LJ said ([1896] 2 Ch 679, 689):
The members were not cestuis que trust of the funds or of any part thereof, but persons who, under contracts or quasi-contracts with the society, secured for valuable consideration certain contingent benefits for their widows which could be enforced by the widows in manner pro vided by the Acts. Any surplus would,according to the scheme of the rules, be properly used up (under appropriate amendments of the rules) either in payment of larger annuities or in reduc tion of contributions. It is true that no such alterations were made, and it is now too late so to distributethefunds;but I do not think that such omissioncan give to the contracting parties any benefit which they did not bargain for.
The ratio decidendi seems to have been that having regard to the constitution of the fund no interest could possibly be held to remain in the contributor who had parted with his money once and for all under a contract for the benefit of his widow. When this contract had been carried into effect the con tributor had received all that he had contracted to get for his money and could not ask for any more.
In addition there were cited to me the three hospital cases: In re Welsh Hospital /Netley) Fund [1921] 1 Ch 655, In re Hiller’s Trusts [1954] 2 All ER 59, and In re Ulverston and District New Hospital Building Trusts [1956] 3 All ER 164. In the first of these cases P. 0. Lawrence J held that all subscribers to the hos pital must be taken to have parted with their money with a general intention in favour of charity. This was the only contest in the case, between the subscribers on the one hand and charity on the other. In Hiller’s case Upjohn J, at first instance, found that certain categories of subscribers were entitled to have their money back but that others, namely, those who had contributed to collections at entertain ments and so forth, had no such right. The Court of Appeal varied this order and declared that the whole fund should go to charity but without prejudice to the right of any individual to prove that he had no general intention but only the particular intention in favour of one hospital. In the Ulverston case the Court of Appeal decided that the whole fund had been collected with only one object and not for gen eral charitable purposes and that, so far as money had been received from identifiable sources, there was a resulting trust. No claim to bona vacantia was there made, and Jenkins U, in explaining the pos ition in In re Hillier’s Trusts, said this [[1956] Ch 622, 633]:
I appreciate that anonymous contributors cannot expect their contributions back in any cir cumstances, at all events so long as they remain anonymous. I appreciate also the justice of the conclusion that anonymous contributors must be regarded as having parted with their money out-and-out, though I would make a reservation in the case of an anonymous contributor who was able to prove conclusively that he had in fact subscribed some specified amount to the fund. If the organisers of a fund designed exclusively and solely for some particular charitable purpose send round a collecting box on behalf of the fund, I fail to see why a person who had put
£5 into the box, and could prove to the satisfaction of the court he had done so, should not be entitled to have his money back in the event of the failure of the sole and exclusive charitable purpose for which his donation was solicited and made.
Jenkins U, in the course of his judgment, threw out the suggestion that donations from unidentifiable donors might in such a case be treated as bona vacantia.
It was argued for the Crown that the subscribers to this fund must be taken to have parted with their money out and out, and that there was here, as in Cunnack v Edwards [1896] 2 Ch 679 … no room for a resulting trust. But there is a difference between [that case] and this in that [that was a case] of con tract and this is not. Further, it seems to me that the hospital cases are not of great help because the argument centred round general charitable intent, a point which cannot arise unless the immediate object be a charity. I have already held there is no such question here. In my judgment the nearest case is the Hobourn case, which, however, is no authority for the present because no claim for bona vacan tia was made.
In my judgment the Crown has failed to show that this case should not follow the ordinary rule merely because there was a number of donors who, I will assume, are unascertainable. I see no reason myself to suppose that the small giver who is anonymous has any wider intention than the large giver who can be named. They all give for the one object. If they can be found by inquiry the resulting trust can be exe cuted in their favour. If they cannot I do not see how the money could then, with all respect to Jenkins U, change its destination and become bona vacantia. It will be merely money held upon a trust for which no beneficiary can be found. Such cases are common and where it is known that there are bene ficiaries the fact that they cannot be ascertained does not entitle the Crown to come in and claim. The trustees must pay the money into court like any other trustee who cannot find his beneficiary. I con clude, therefore, that there must be an inquiry for the subscribers to this fund.
Re West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund
[1971] 1 Ch
GOFF J … Then counsel divided the outside moneys into three cat egories, first, the proceeds of entertainments, raffles and sweepstakes; secondly, the proceeds of collecting-boxes; and thirdly, donations, including legacies if any, and he took particular objections to each.
I agree that there cannot be any resulting trust with respect to the first category. I am not certain whether Harman J in Re Gillingham Bus Disaster Fund [1958] Ch 300 meant to decide otherwise. In starting the facts at p. 304 he referred to ‘street collections and so forth’. In the further argument at
p. 309 there is mention of whist drives and concerts but the judge himself did not speak of anything other than gifts. If, however, he did, I must respectfully decline to follow his judgment in that regard, for whatever may be the true position with regard to collecting-boxes,it appears to me to be impossible to apply the doctrine of resulting trust to the proceeds of entertainments and sweepstakes and such-like money-raising operations for two reasons: first, the relationship is one of contract and not of trust; the purchaser of a ticket may have the motive of aiding the cause or he may not; he may purchase a ticket merely because he wishes to attend the particular entertainment or to try for the prize, but whichever it be, he pays his money as the price of what is offered and what he receives; secondly, there is in such cases no direct contribution to the fund at all; it is only the profit, if any, which is ultimately received and there may even be none.
In any event, the first category cannot be any more susceptible to the doctrine than the second to which I now turn. Here one starts with the well-known dictum of P. O. Lawrence Jin Re Welsh Hospital (Netley/ Fund [1921] 1 Ch 655, 660 where he said:
So far as regards the contributors to entertainments, street collections etc., I have no hesitation in holding that they must be taken to have parted with their money out-and-out. It is inconceiv able that any person paying for a concert ticket or placing a coin in a collecting-box presented to him in the street should have intended that any part of the money so contributed should be returned to him when the immediate object for which the concert was given or the collection made had come to an end. To draw such an inference would be absurd on the face of it.
In Re Ulverston and District New Hospital Building Trusts (1956] Ch 622, 633,Jenkins U threw out a sug gestion that there might be a distinction in the case of a person who could prove that he put a specified sum in a collecting-box, and, in the Gillingham case [1958] Ch 300 Harman J, after noting this, decided that there was a resulting trust with respect to the proceeds of collections. He said at p.314:
In my judgment the Crown has failed to show that this case should not follow the ordinary rule merely because there was a number of donors who, I will assume, are unascertainable. I see no reason myself to suppose that the small giver who is anonymous has any wider intention than the large giver who can be named. They all give for one object. If they can be found by enquiry the resulting trust can be executed in their favour. If they cannot I do not see how the money could then, with all respect to Jenkins LJ change its destination and become bona vacantia. It will be merely money held upon a trust for which no beneficiary can be found. Such cases are common and where it is known that there are beneficiaries the fact that they cannot be ascer tained does not entitle the Crown to come in and claim. The trustees must pay the money into court like any other trustee who cannot find his beneficiary. I conclude, therefore, that there must be an enquiry for the subscribers to this fund.
It will be observed that Harman J considered that Re Welsh Hospital (Netley/ Fund [1921] 1 Ch 655; Re Hiller’s Trusts [1954] 1 WLR 9 and Re Ulverston and District New Hospital Building Trusts [1956] Ch 622 did not help him greatly because they were charity cases. It is true that they were, and, as will presently appear, that is in my view very significant in relation to the third category, but I do not think it was a valid objection with respect to the second, and for my part I cannot reconcile the decision of Upjohn J in Re Hillier’s Trusts with that of Harman J in the Gillingham case [1958] Ch 300. As I see it, therefore, I have to choose between them. On the one hand it may be said that Harman J had the advantage, which Upjohn J had not, of considering the suggestion made by Jenkins U. On the other hand that suggestion with all respect, seems to me somewhat fanciful and unreal. I agree that all who put their money into collecting boxes should be taken to have the same intention, but why should they not all be regarded as intend ing to part with their money out and out absolutely in all circumstances? I observe that P. 0. Lawrence Jin Re Welsh Hospital (1921] 1 Ch 655,661, used very strong words. He said that any other view was inconceivable and absurd on the face of it. That commends itself to my humble judgment, and I therefore prefer and follow the judgment of Upjohn Jin Re Hillier’s Trusts. This does not appear to me to transgress the principle which Harman J laid down in the Gillingham case where he said, at p. 310:
This doctrine does not, in my judgment, rest on any evidence of the state of mind of the settlor, for in the vast majority of cases no doubt he does not expect to see his money back; he has cre ated a trust which so far as he can see will absorb the whole of it. The resulting trust arises when that expectation is for some unforeseen reason cheated of fruition, and is an inference of law based on after-knowledge of the event.
I accept that fully but I also accept the submission of counsel for the Treasury Solicitor that equity will not impute an intention which it considers would be absurd on the face of it.
O’Malley v Breen & Anor
[2019] IEHC 645
Page 1 ⇓THE HIGH COURT[2019] IEHC 645[2018 No. 515 SP]BETWEENGERARD O’MALLEYANDPLAINTIFFKAY BREEN AND MARY BREENDEFENDANTSJUDGMENT of Mr. Justice Tony O’Connor delivered on the 13th of September 2019Introduction1. This judgment considers whether and how:-(i) the presumption of a resulting trust,(ii) the presumption of advancement and(iii) the severance of a joint tenancyare applied when determining the beneficial ownership of a buy-to-let property at Distillery Mews,Dundalk (“Dundalk property”). In 2000, the Dundalk property was purchased jointly with amortgage in the joint names of the first named defendant (“Kay Breen”) and her late estrangedhusband (“the deceased”) that was discharged in 2008 by the deceased.2. In addition to undisputed facts supported by public records, the parties identified ontwo sheets of paper prepared during the hearing of these proceedings other facts which areagreed. After taking instructions, counsel for the plaintiff, who is the executor to the estate ofthe deceased (“the estate”), accepted that the discharge in 2008, which was effected withoutnotice to Kay Breen until recently, could not affect whatever interest Kay Breen had in theDundalk property in 2008. It was also acknowledged that the estate could not benefit fromPage 2 ⇓the discharge in 2008 if it was undertaken to prejudice Kay Breen. The parties furtheropted to rely on evidence of belief adduced on affidavit, which in many instances cause aconflict of interpretation which this Court cannot resolve.3. In order to avoid calling witnesses about events in 2008 and so that this Court couldmake a final determination in these proceedings, counsel for the plaintiff informed theCourt that the plaintiff was willing to accept the worst possible interpretation from thedischarge in 2008, which may affect the interest of the estate.Background facts4. The deceased was married to Kay Breen in 1986. The deceased called regularly tothe family home in Dundalk after moving out in 1996 and was involved in the activities ofthe two children of the marriage. Relations with the deceased following his departure weredescribed by Kay Breen as “cordial”. Kay Breen owns and resides in the family homewhere the two children grew up. The deceased did not enter into a separation agreementand did not provide maintenance to Kay Breen. However, Kay Breen accepts that thedeceased “did fund the education of the two children”. She further explains her recentdiscovery that the deceased had furnished his address in County Down to the Irish Revenuefor them as a married couple and had used any of her “unused tax allowances” in returns.5. The second named defendant (“Mary Breen”) averred in her affidavit sworn onthe 29th January, 2019, (without contradiction from Kay Breen) that she was “in acommitted co-habiting relationship” with the deceased in 2000. Mary Breen furtheraverred that she was not aware when the mortgage in 2008 was discharged that theDundalk property had been purchased by the deceased and Kay Breen in 2000. At the timeof his death on 22nd February, 2017, the deceased and Mary Breen had lived together formany years in Co. Down with their four dependent children, the eldest of which wasPage 3 ⇓sixteen in February 2017. Mary Breen owns that home where she and her four childrennow reside.6. A petition to the High Court of Northern Ireland for divorce resulted in a “decreenisi absolute (Divorce)” on the 6th January, 2017, in respect of the marriage of thedeceased to Kay Breen. Kay Breen averred in her affidavit sworn on 26th November,2018, that “[h]ad the deceased not been in his last illness the matter of ancillary orders forfinancial settlement would have been pursued”.7. The deceased and Mary Breen subsequently married in Newry on 24th January,2017. The deceased, by his last will and testament made on that day, bequeathed theDundalk property to Kay Breen in addition to their former family home in Dundalk.Included in his bequests to Mary Breen was their jointly-owned holiday home inKincasslagh, Co. Donegal (“Donegal property”).8. The plaintiff, who is a brother of Mary Breen, initially renounced his entitlement toadminister the estate. After obtaining leave of the court to revoke his renouncement, theplaintiff obtained a grant of probate on 21st June, 2018, which referred to a nil value for netassets. The plaintiff, in his grounding affidavit sworn in October 2018, elaborates bystating “that the estate is in all likelihood insolvent”.The Crux9. The Dundalk property was purchased for IR£190,000 in May 2000 with aIR£160,000 mortgage loan from AIB plc (“AIB”) in the joint names of the deceased andKay Breen. The deceased paid the balance of IR£30,000 from his own funds. “Byagreement of [the deceased] and Kay Breen the entire rental income from [the Dundalkproperty] was taken by [the deceased], and was to be used to pay the mortgage over the[Dundalk] property”.Page 4 ⇓10. Following his death, Kay Breen avers that she has received the rent “incircumstances where I am entitled to the entire legal and beneficial interest in thatproperty, it having passed by survivorship, and, in so far as needed to, having beenbequeathed to me in the last will of the deceased”. Kay Breen accepts that she did notdirectly contribute financially to the purchase of the Dundalk property. The Court has notbeen furnished with accounts or records for the management of the Dundalk property.11. The twenty-year policy to secure IR£160,000 on the death of either the deceased orKay Breen was arranged by the deceased and it was a condition of the mortgage to havesame in place. The deceased discharged the monthly premium of IR£42.83 (€54.38) forthat policy until his death despite the redemption of the AIB mortgage in 2008. Kay Breenwas paid the proceeds of that policy in July 2017 following notification that the deceasedhad died and that AIB had no right to receive the proceeds.The Donegal property and Bank of Ireland loan12. In October 2008, the deceased and Mary Breen purchased the Donegal property for€480,000 in their joint names. They received a loan from Bank of Ireland Mortgage Bank(“Bank of Ireland”) on the 10th October, 2008, in the sum of €750,000. The loan wasused to fund the purchase of the Donegal property and to discharge another outstandingloan. €143,741.32 of the loan was used to redeem the AIB mortgage on the Dundalkproperty.13. The Bank of Ireland loan required a charge over both the Dundalk property and theDonegal property which were purportedly created. Kay Breen was not informed of theredemption nor of the newly created charge in favour of Bank of Ireland. Mary Breenasserts that “she was asked to sign and agreed to sign the mortgage of both properties” andthat she was not aware in 2008 that Kay Breen was registered as joint owner of theDundalk property.Page 5 ⇓14. Mary Breen acknowledges that a life policy for her benefit taken out in 2008,which was not assigned to Bank of Ireland, led to her receipt of the proceeds of that policyin August 2017.15. The plaintiff, when commencing these proceedings, expressed a belief on affidavitthat it was the intention of the deceased and Bank of Ireland that the Dundalk propertywould be conveyed to the deceased and Mary Breen subject to the mortgage. This beliefof the plaintiff executor, who was not privy to the 2008 transactions and who cannotadduce any supporting evidence, is one of those beliefs expressed on affidavit that theCourt cannot rely upon.16. In October 2018, solicitors for the plaintiff advised Bank of Ireland that it would“issue these proceedings without including the Bank” if they did not hear from the Bank ofIreland within fourteen days. Bank of Ireland was not joined and has not sought to join inthese proceedings.Disputed intentions17. There is no agreement as to the intention of the deceased and Kay Breen at the timeof the acquisition of the Dundalk property in 2000. The plaintiff agrees that he has noevidence to support his “understanding that the purpose of the deceased in acquiring theproperty was to provide an income from the [Dundalk] property to fund the education ofthe two children from the marriage with [Kay Breen]”. Mary Breen avers that “the idea”of purchasing the Dundalk property “was to secure” the education costs of the twochildren. Kay Breen in her affidavit mentions her assumption that the purchase of thejointly held Dundalk property “was an effort to take account of his responsibilities to [KayBreen] and his two children.”18. In short, this Court cannot determine a common intention of the deceased and KayBreen when the Dundalk property was purchased in joint names. Further the Court cannotPage 6 ⇓determine the intention of the deceased when he redeemed the mortgage in 2008. Heconsciously did not inform Kay Breen of the redemption, who believed that the jointmortgage continued to be served by the rental income. Both the deceased and Kay Breenhad been jointly liable to AIB in respect of the joint mortgage.Effect of bequeathing Dundalk property to Kay Breen19. The plaintiff argues that the bequest of the Dundalk property to Kay Breendemonstrates that the deceased (who had been a practising solicitor) identified that KayBreen did not have a right of survivorship. Counsel for Kay Breen replied that the bequestshows that the deceased always intended for Kay Breen to own the property.20. During the hearing, the Court expressed concern about inferring intentions withouthaving oral evidence and cross-examination when a contest arose.Liabilities of the estate21. As of September 2018, the existing balance due to Bank of Ireland was €567,834,with interest continuing to accrue. The plaintiff avers that the Donegal property is nowvalued at €300,000 and is therefore insufficient to discharge the debt. The Dundalkproperty is valued at around €220,000. Counsel for the plaintiff informed the Court thatthe proceeds of sale from both properties could, with negotiation, allow the plaintiff todischarge or settle most debts of the deceased. While Mary Breen agrees to the sale of theDonegal property, Kay Breen declines to accept that her interest in the Dundalk propertyshould be available to the Bank of Ireland or to the estate.Page 7 ⇓Alternatives posed on behalf of the plaintiff and Mary Breen22. The plaintiff submits, with the agreement of Mary Breen who was separatelyrepresented by counsel, that there are four alternative possibilities arising from thesituation:-(i) Kay Breen holds her interest in the Dundalk property under a resulting trustfor the deceased, and hence in trust for the estate. To the extent that theDundalk property was bequeathed to Kay Breen, that is an issue to beaddressed by the plaintiff executor after the debts of the deceased have beensatisfied.(ii) The payment of €143,741.32 by the deceased to AIB in 2008 re-acquiredthe Dundalk property from AIB by the release of that mortgage and causeda severance of the joint tenancy such that the parties then held in unequalshares. Consequently, Kay Breen holds her interest in the property subjectto the deceased’s equitable interest created by the repayment of the loan.(iii) The Bank of Ireland mortgage on the Dundalk property caused a severanceof the joint tenancy and thus the estate is entitled to a half share subject tothe Bank of Ireland mortgage. Counsel submitted that bad faith is notrelevant in that instance because the deceased was entitled to at least a halfshare in 2008. In the absence of evidence that the deceased acted todisadvantage Kay Breen in 2008, the Court, according to counsel, shouldnot make a finding adverse to the interests of the deceased. In 2008, thedeceased could not further encumber the interests of Kay Breen in theDundalk property and was therefore not in breach of the maxim requiringclean hands when coming to equity(iv) Kay Breen is correct and the deceased’s interest in the property terminatedon his death, meaning that Bank of Ireland has no security in the property.Page 8 ⇓Submissions for Kay Breen23. The following submissions were made in response to the said four alternatives:-(i) The Dundalk property was acquired by the deceased and Kay Breen as jointtenants in equal shares. No presumption of advancement could arise as thedeceased did not gift the property to Kay Breen. The purchase wasprimarily funded by way of a mortgage for which both Kay Breen and thedeceased had equal liability and obligations.(ii) The 2008 transaction “was knowingly and fraudulently entered into by thedeceased and Mary Breen … and to argue that the same could haveadversely impacted on the original 2000 arrangement or the existence of ajoint tenancy whether at law or in equity is under the circumstancesunsustainable, as it would compensate [the deceased] and indeed [MaryBreen], for significant wrongdoing.” The deceased and Mary Breenunlawfully purported to create a further mortgage over the Dundalkproperty in 2008. In addition, the Bank of Ireland mortgage cannot affectKay Breen’s interest in the Dundalk property.(iii) There should be no severance of the joint tenancy in equity. The deceasedcontinued to take all the rental income from the Dundalk property after2008, with the consent of Kay Breen, on the basis that it was being appliedin the same way since 2000. As such, the deceased and his estate areestopped in equity from claiming a severance of the joint tenancy.(iv) The Dundalk property is held by Kay Breen as surviving joint tenant andBank of Ireland has no valid mortgage over the Dundalk property.Page 9 ⇓The law of co-ownership24. Co-ownership often involves a split in the ownership of the property into the legalownership and the equitable or beneficial ownership. As Wylie notes:-“… it will frequently be the case that the co-owners will hold the legal estate or interestin the property as joint tenants, so that the right of survivorship applies, but that thelegal estate or interest is held by the joint tenants for themselves in equity as tenants incommon. In this case, on the death of one co-owner his legal estate or interest passesto the surviving co-owner, but that survivor must hold the legal estate or interest intrust for the deceased co-owner’s estate and his beneficial share under the tenancy incommon will pass according to the terms of his will or on intestacy.” (Wylie, Irish LandLaw, 5th ed., Bloomsbury Professional, 2013, at para. 8.15).Presumption of resulting trusts25. In Dyer v. Dyer (1788) 2 Cox Eq Cas 92; (1788) 30 ER 42, Eyre CB said “… thetrust of a legal estate … results to the man who advances the purchase money” irrespectiveof who takes the legal title (p. 93). This gives rise to the presumption of a resulting trustwhich Biehler suggests as resting on the principle that equity intends bargains not gifts(Biehler, Equity and the Law of Trusts in Ireland, 6th ed., Roundhall, 2016, p. 159).26. Denham J. in Stanley v. Kieran [2011] IESC 19 (unreported, Supreme Court, 7thJune, 2011), at para. 28 stated “[t]here is a presumption that the provider of funds for thepurchase of the property is the beneficial owner.” In that case, the appellant plaintiff hadadvanced all of the monies for the purchase of the relevant property. Further, there was noevidence adduced to rebut the presumption.Unequal contributions27. In Laskar v. Laskar [2008] EWCA Civ 347 (“Laskar”) a mother exercised herright to purchase a council property at a discount. The mother and her daughter borrowedPage 10 ⇓money and contributed different sums but less than 5% each in order to acquire theproperty in their joint names. The rent from the property discharged the repayments andoutgoings.28. In the Court of Appeal, it was argued on behalf of the daughter appellant “thatthere is a presumption that the beneficial interests were the same as the legal interests, andthat the presumption was not rebutted in this case.” (para. 12). In the alternative, it wassubmitted that the discount of some £29,000 should have apportioned equally between theparties and that the joint liability for the mortgage should be treated as a contributiontowards the purchase price.29. At para. 15, Neuberger L.J. distinguished the facts from those in Stack v. Dowden[2007] UKHL 17; [2007] 2 AC 432; [2007] 2 All ER 929, by identifying that the latterinvolved a property purchased by a couple with children whereas Laskar related to aninvestment property. At para. 19, Neuberger J. mentioned that the mother in Laskar hadother children who were dependent and the appellant daughter had been brought in as a co-purchaser primarily because the mother could not afford the purchase on her own.30. Ultimately, he saw “… no reason not [to] fall back on the resulting trust analysis,namely that in the absence of any relevant discussion between the parties, their respectivebeneficial shares should reflect the size of their contributions to the purchase price …”(para. 21).31. Having determined that the discount should be attributed to the mother, NeubergerL.J. concluded that in the absence of an agreement or understanding “… it would be rightto treat the mortgage loan of £43,000 as representing a contribution of £21,500 by each ofthe parties as the two joint purchasers of the property.” (para. 28). After calculating asdescribed in para. 32, he decided that the daughter had a 33% interest in the property.32. Rightly, he thought it “sensible to stand back and see whether that looks a fairresult” and determined that it “seems not unreasonable.” (para. 33).Page 11 ⇓Intention to benefit33. The presumption of a resulting trust can be rebutted where there is evidence that thepurchaser intended the property as a gift. As made clear by the Court of Appeal inStanding v. Bowring (1885) 31 Ch D 282, the relevant time for establishing evidence ofintention to make a gift is the time of the transfer. The onus is also on the person seekingto rebut the presumption of a resulting trust to produce evidence that the purchaser didintend to benefit the donee.34. The Court cannot determine the intentions of the deceased when he paid theIR£30,000 in 2000 and purchased the Dundalk property in joint names. The deceased,who was at all relevant times a practising solicitor, unfortunately engaged in a series ofuntidy transactions relating to the Dundalk property. Kay Breen believed that she was thejoint owner with a right of survivorship. There is no evidence of a gift of the Dundalkproperty in 2000.35. The presumption has therefore not been rebutted. Further, both parties remainedliable to AIB for the mortgage repayments and thereby both contributed to the purchase.Doctrine of advancement36. The plaintiff submitted that the limited, antiquated and dubious presumption ofadvancement, whereby a husband is presumed to make a gift to his wife, ought not apply incircumstances where an investment property was purchased between an estranged husbandand wife. Counsel for Kay Breen submitted originally that “there is no presumption ofadvancement because there was no gift …”. However, supplemental written submissionswere filed in July 2019 to the effect that if the Court found that there was a resulting trust,then the presumption of advancement would apply unless there was evidence to rebut suchpresumption. Counsel for Kay Breen argued that no such evidence was before the Court.Page 12 ⇓37. The doctrine of advancement has been the subject of debate as to its repugnancy tothe Constitution and more particularly the guarantee of equality under Article 40. It hasbeen weakened greatly in England and Wales (see Stack v. Dowden). The claim beforethis Court now does not permit or require a ruling on the constitutionality of thepresumption. Nevertheless, it is accepted that the presumption harks back to a different eraand the Court recognises the need to modernise the application of the doctrine toaccommodate changes in society and the make-up of family units.38. In this case, the deceased and Kay Breen were living apart at the time of thepurchase of the Dundalk property. In fact, the deceased was in “a committed co-habitingrelationship” with Mary Breen and had children with her. Most significantly, the Dundalkproperty was an investment property and was not a family home. In those circumstances,the Court declines to apply the doctrine of advancement.Learned contributions39. This Court acknowledges the following valuable contributions referred to insubmissions with a view to future modern consideration of similar circumstances havingsubstantially more evidence:-(i) Professor Biehler’s note that the principle of proportionate interest derivingfrom the rationale behind the resulting trust “has ensured a degree ofconsistency in decision-making” but that this has “perhaps been at theexpense of an element of flexibility which might in certain circumstances bedesirable.” (Biehler, Equity and the Law of Trusts in Ireland, 6th ed.,Roundhall, 2016, p. 210).(ii) Professor Mee’s argument that the category of presumed resulting trustsappears to be “indefensible in modern times” (“The Past, Present and Futureof Resulting Trusts” (2017) 70(1) Current Legal Problems 189 at p. 191).Page 13 ⇓This Court acknowledges that “[i]t is hard to reconcile with modernsensibilities this emphasis on the separate intentions of the individualcontributions and the assumption that each person’s intention isdeterminative in respect of the portion of the ownership that she hasbrought with her contribution to the purchase price.” (p. 213).40. The necessity to use concepts or principles of constructive trust, unjust enrichment,unconscionability of transactions and reasonable expectations, as used in otherjurisdictions, does not arise here:-(i) due to the state of the evidence;(ii) because these are not family law proceedings; and(iii) because this claim is confined to a jointly-owned investment property.Conclusion on resulting trusts41. A resulting trust arises because of the unequal contributions to the purchase price ofthe Dundalk property and because both parties remained equally liable for the mortgagerepayments. While Kay Breen holds the legal interest to the property, she holds a portionof the beneficial interest on trust for the estate of the deceased.42. The plaintiff is seeking equitable relief and the Court is informed by the maximsthat “he who comes to equity must come with clean hands” and “equality is equity”. The2008 transactions had the intended effect of allowing the deceased and Mary Breen topurchase a holiday home and to redeem other loans. They purported to encumber theentire interest in the Dundalk property and the Donegal property with this increased loan.It remains to be established what Bank of Ireland will do to enforce its security over theinterest of the deceased in the Dundalk property. Kay Breen did not consent to the 2008transactions and should not be disadvantaged by the untidy if not wrongful conduct of thedeceased. The deceased, as a practising solicitor, did not come with clean hands and failedPage 14 ⇓to acknowledge the tenancy in common which he had created. He redeemed the AIBmortgage for his own benefit and it is coincidental that Kay Breen no longer has a liabilitypursuant to a mortgage of the Dundalk property. Although Kay Breen does not now havethis liability, she lost the opportunity to have the mortgage with AIB repaid from the rent.Until 2017, Kay Breen acted on the basis that the rent would service the mortgagerepayments and she was unaware that the rent was purportedly secured in fact for otherloans advanced by Bank of Ireland.Severance43. The approach adopted in Laskar is commendable and practical. The orders to bemade in these proceedings are supported by also considering the law relating to severanceof a joint tenancy.44. The conversion of a joint tenancy into a tenancy in common by severance mayoccur by law or in equity. The redemption and replacement of the mortgage on theDundalk property in 2008 resulted at a minimum in an alienation of the deceased’s interestin the Dundalk property. It is noted that s. 30 of the Land and Conveyancing Law ReformAct 2009, which now requires consent for alienation, did not apply to the re-mortgaging in2008.45. Therefore, the deceased, in alienating his interest in 2008, severed the unity ofinterest in the ownership of the Dundalk property. The estate of the deceased and KayBreen own the beneficial interest in the Dundalk property as tenants in common.46. The Court will hear the parties if requested about the precise terms of anydeclaration or other order which may be sought in addition to the reliefs sought in theSpecial Summons.Page 15 ⇓Proposed orders47. Subject to hearing counsel on a convenient day, the Court proposes to make thefollowing orders which track the issues identified in para. 15 of the Special Summons:-(i) Kay Breen has a legal and beneficial interest in the Dundalk property;(ii) Kay Breen holds a beneficial interest in the Dundalk property for the estateof the deceased;(iii) Kay Breen does not hold her interest in the Dundalk property subject to themortgage with Bank of Ireland;(iv) The 2008 mortgage over the Dundalk property severed any joint tenancy inthe Dundalk property;(v) The bequest of the deceased’s interest in the Dundalk property to Kay Breenunder the will of the deceased is subject to any enforceable mortgage of theinterest of the deceased in the Dundalk property;(vi) Liberty to apply on notice to all other parties.
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