Wehi v Sua [1999] WSSC 42; CP 375-98 (23 February 1999)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

C.P. 375/98

BETWEEN:

ALOMA MARJORIE TIPESA WEHI
of Auckland, New Zealand, Married Woman:
Plaintiff

AND:

LUPI MANO SUA
of Tufuiopa, Domestic Duties:
Defendant

Counsel: T S Apa for plaintiff
K M Sapolu for defendant

Hearing: 25 January 1999 & 2 February 1999
Judgment: 23 February 1999

JUDGMENT OF SAPOLU, CJ

The plaintiff, Aloma Majorie Tipesa Wehi, is the donee of a gift of land from her late grandmother, Jane Ah Mu, the donor. The land is the one sixth (1/6) share of the donor in land at Tufuiopa which the donor had held as tenant in common with others. The land was subdivided and the parcel allocated to the donor as a tenant in common was gifted by her to the plaintiff, the donee. The gift was made by a deed executed by the donor in Auckland, New Zealand, on 7 September 1983 before a Justice of the Peace. At the time these proceedings were commenced on 25 January 1999 the deed of gift had not been registered but when proceedings were resumed on 2 February 1999 the deed had been registered. It appears from the deed that it was registered on that same day, 2 February.

The defendant is a relative of the plaintiff. The defendant's parents were permitted to live 'on the land by an aunt of the plaintiff. The defendant's father died in 1987 and her mother died in 1995. However, the defendant has continued to live on the land despite requests by the plaintiff that she leaves the land. The plaintiff is now seeking an order to evict the defendant from the land. Those are the essential facts shown from the pleadings filed by the plaintiff.

The defendant's counsel has now moved to strike out the plaintiff's action for an eviction order against the defendant on the ground that the plaintiff has no standing to bring her present action. The reason being the intended gift of the disputed land by the donor to the plaintiff, the donee, has not been registered and, therefore, is not complete. As a matter of principle, it was further submitted for the defendant that equity will not render its assistance to perfect an imperfect gift or complete the title to an incomplete gift. In consequence, it was said that the land is still part of the donor's estate and the plaintiff, as donee, has no standing to bring her present action against, the defendant. Only a personal representative of the donor can bring an action to evict the defendant.

In support of her submissions that non-registration of the deed makes the gift imperfect or incomplete, defendant's counsel also referred to section 16 of the Land Registration Act 1992/1993 which provides:

"No instrument of title shall in any manner affect the legal title to land until 'and unless such instrument is registered in the land register in accordance with this Act".

It must be pointed out that the submissions by the defendant's counsel were presented on 25 January and because of those submissions the deed of gift was registered on 2 February before the plaintiff's counsel made his submissions in reply to the submissions for the defendant.

However, counsel for the defendant further submitted that unless the intended gift by the donor to the donee is perfected by the donor appointing the donee to be his executor or the donee being appointed the donor's administrator or one of his administrators, equity should not intervene to perfect the imperfect gift. The land must, therefore, still be part of the donor's estate. As the donee in this case is neither the executor nor the administrator of the donor's estate, she has no standing to sue the defendant. In support of this submission, counsel relied on the rule in the English case of Strong v Bird [1874] UKLawRpEq 112; (1874) LR 18 Eq. 315 as applied by Farwell J in Re James [1935] Ch 449 at 451.

I must say that, on the limited facts before the Court, the submissions by defendant's counsel do touch upon some difficult issues of law relating to gifts inter vivos. I turn to those issues now.

To begin with, there are two related maxims of equity which are prima facie applicable in the present context. These are 'equity will not assist a volunteer' and 'equity will not perfect an imperfect gift'. These maxims provide the foundation for the general principle that equity will not perfect an imperfect gift or assist a volunteer to complete a title that is incomplete. The rationale for this principle is that a donor should be at liberty to recall a gift before it is complete and he should not be compelled to continue with a gift if he wants to recall it: see the joint judgment of Mason CJ and McHugh J (with which Deane J concurred) in Corin v Patton (1990) 169 CLR 540 at 556 to 558.

There are, however, established exceptions in English law to the general principle as just stated. The first is the rule in Strong v Bird [1874] UKLawRpEq 112; (1874) LR 18 Eq. 315 and the second is the doctrine of proprietary or equitable estoppel: Dillwyn v Llewelyn [1862] EWHC Ch J67; (1862) 45 ER 1285 and Ramsden v Dyson [1866] UKLawRpHL 7; (1865) LR 1 HL 129. This second exception based on the doctrine of proprietary or equitable estoppel does not apply in this case.

I will therefore consider only the exception provided by the rule in Strong v Bird [1874] UKLawRpEq 112; (1874) LR 18 Eq. 315. The application of the rule to gifts inter vivos is arguably of doubtful validity. What was involved in Strong v Bird was not a gift but a release of a debt at Jaw which was owed by a Stepson to his stepmother forgiven by the stepmother during her lifetime. When she died she left a will in which she appointed her stepson sole executor. The stepson proved the will.

The question then arose after the testrarix's death whether the release of the debt to her by her stepson was an effective release. Sir George Jessol MR held that the appointment of the stepson as executor of the testratrix's will operated as a release of the debt at law and any claim in equity was rebutted by evidence of the testratrix's intention to forgive the debt. It is therefore clear that what was in issue in that case was the release of a debt at law and not a gift.

The rule came to be recognised at common law that where a testator or testratrix appoints a debtor as executor under a will any cause of action against the debtor is extinguished because an executor cannot sue himself. The rule and its rationale was stated by the Privy Council in Commissioner of Stamp Duties v Bone [1977] AC 511 at 518 as follows:

"The appointment of a debtor as executor has undoubtedly the effect at law that the cause of action in debt is extinguished: the liability of the debtor as such is extinguished, granted that the executor proves the will, with effect from the death. The reason is that at law the executor cannot sue himself".

Now equity applied a different rule to that of the common law: see the judgment of Mason J in Commissioner of Stamp Duties v Bone [1974] HCA 29; (1974) 132 CLR 38 at 52-53 and that of the Privy Council in [1977] AC 511 at 518.

Even though the facts of Strong v Bird show that what was in issue was a release of a debt at law the rule which has been associated with that case has been developed by a series of English decisions to the point where it is now established under English law as an exception to the principle that equity will not perfect an imperfect gift or assist a volunteer to complete a title that is incomplete. In Re Stewart [1908] UKLawRpCh 77; [1908] 2 Ch 251 at 254 Neville J extended the application of the rule to a gift of personal estate by saying:

"The decision [in Strong v Bird] is, as I understand it, to the following effect: that where a testator has expressed the intention of making a gift of personal estate belonging to him to one who upon his death becomes his executor, the intention continuing unchanged, the executor is entitled to hold the property for his own benefit".

This is a clear statement that the rule in Strong v Bird applies to a gift of personal property made by a donor during his life time to a donee who is appointed the executor of the donor's will.

The next significant development under English law of the rule in Strong v Bird was in the case of Re James (1935) Ch 449. In that case the testator during his life time made a gift to his housekeeper who was later appointed as administratrix of his estate. In a short judgment Farwell J held that the rule in Strong v Bird applies to a donee of a gift who is appointed as administrator as it does to a donee who is an executor. Prior to this case the rule applied only to an executor. This extension of the rule to an administrator has been criticised in the English case of Re Conin [1977] 2 All ER 720. In that case Walton J expressed serious doubts about the extension of the rule to an administrator. In his Lordship's opinion the appointment of a donee by a donor to be his executor is a personal act of choice by the donor. The effect of such act is to make it impossible for a donee, as executor, to sue himself. And that is consistent with the intention on the part of the donor to make a gift to the donee. The appointment of an administrator, on the other hand, is not the act or choice of the donor but of the law. And often it is a matter of pure chance which of the many persons who are entitled to a grant of letters of administration will be appointed as the administrator. In my respectful view the reservations of Walton J are quite convincing.

In the High Court of Australia, Kitto J in Cope v Keene (1968) 118 CLR 1 at 8 set out the conditions which in his opinion attract the rule in Strong v Bird. His Honour stated:

"The other contention was that the case falls within the principle of Strong v Bird. The conditions for the application of the principle are (1) that at some time in his lifetime the testator made a purported immediate gift of specific property to another person (or in the case of a debt a purported immediately operative voluntary release of it); (2) that though the testators intention at the time was that what he did should take effect by way of present gift, it failed to do so for want of compliance with the legal requisites for a complete divesting of the title from the intending donor in favour of the intended donee; (3) that the testator still had when he died the intention that the property should be treated as having been effectually given to the intended donee; (4) that the testator left a will appointing the intended donee as the executor or one of the executors of the testator. Where these conditions are satisfied the purported donee takes the property free from the dispositions of the will, as the testator intended it to be, and therefore holds it (as against the beneficiaries under the will) for his own benefit".

It is clear from this passage that as far as Australian law is concerned the rule in Strong v Bird applies only to where a donor appoints the donee as his executor or one of his executors. There is no mention by Kitto J of an administrator and the inference must be that insofar as Australian law is concerned, the extension of the rule to an administrator does not apply, or is yet to apply, in Australia. In fact my own research has not discovered any Australian case where the rule has been applied to where a donee of a gift has been appointed as administrator.

After consideration of the matter, I would suggest that the extension of the rule in Strong v Bird to an administrator as held in Re James [1935] 1 Ch. 449 should not be applied in this country. That, however, does not assist the plaintiff. There is no mention in the plaintiff's pleadings whether the donor of the gift had a will or died intestate. It is also not clear whether the plaintiff is an executor of any will by the donor if there is one. If there is a will then perhaps the rule in Strong v Bird may apply in this case if the other conditions are also present. If on the other hand the plaintiff is not an executor under a will then the rule cannot apply to him. In other words it is not clear from the pleadings whether the exception provided in the rule in Strong v Bird applies to this case to assist the plaintiff. More facts need to be pleaded.

That brings me back to the decision in Corin v Patton (1990) 169 CLR 540. In that case the High Court of Australia explained when a gift made by a donor to a donee is complete so that equity's assistance is no longer required to complete or perfect the gift. The essential facts of that case are that the respondent and his wife were registered joint tenants of land. Five or six days before she died, the wife by a memorandum of transfer in registrable form transferred to her brother, the appellant, her interest in the land subject to a mortgage to a bank which held the certificate of title. She died before the transfer was registered. The appellant then lodged a caveat claiming an interest under the transfer. The respondent also lodged a caveat claiming an interest as surviving joint tenant and sought a declaration that he was entitled to be registered as sole proprietor of the land and for removal of the appellant's caveat. The appellant counterclaimed seeking a declaration that he held a one half interest in the land as tenant in common and for removal of the respondent's caveat. The case was argued on the basis that the transfer by the deceased wife to her brother, the appellant, was a gift. The respondent succeeded in the Supreme Court and Court of Appeal of New South Wales.

When the case came before the High Court of Australia, Mason CJ and McHugh J in a joint judgment (with which Deane J concurred) analysed the relevant authorities and stated at p.558:

"The rationale for refusing to complete an incomplete gift is that a donor should not be compelled to make a gift, the decision to give being a personal one for the donor to make. However, that rationale cannot justify continued refusal to recognise any interest in the donee after the point when the donor has done all that is necessary to be done on his part to complete the gift, especially when the instrument of transfer has been delivered to the donee. Just as a manifestation of intention plus sufficient acts of delivery are enough to complete a gift of chattels at common law, so should the doing of all necessary acts by the donor be sufficient to complete a gift in equity. The need for compliance with subsequent procedures such as registration, procedures which the donee is able to satisfy, should not permit the donor to resile from the gift. Once the transaction is complete so far as the donor is concerned, he has no locus poenitentiae. Viewed in this light, Griffith CJ's approach has the advantage that it gives effect to the clear intention and actions of the donor rather than insisting upon strict compliance with legal forms. It is a reflection of the maxim 'equity looks to the intent rather than the form'. By avoiding unnecessarily rigid adherence to the general rule and endeavouring to give effect to the donors intention, the law avoids unjust and arbitrary results".

It would appear from this passage that the rationale for the principle that equity will not perfect an imperfect gift is the refusal to compel an owner to make a gift. The act of making a gift being a personal and voluntary act of the owner he should be at liberty to recall the gift if he wants to. However Mason CJ and McHugh J were of the view that if in the circumstances the owner, as donor of the gift, has done all that is necessary to be done on his part to complete the gift, then the gift is complete in equity and beyond recall by the donor. Any actions which remain to be done by the donee himself will not alter the efficacy of the gift which has been completed by the donor having done all that is necessary to be done on his part. Thus the need for compliance with subsequent procedures such as registration which the donee himself can do would not permit the donor to recall the gift.

Further on at p.559 of their joint judgment, their Honours stated:

"Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognise the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. 'Necessary' used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.

Although Griffith CJ did not explicitly say so, his proposition implicitly recognises that the donee acquires an equitable estate or interest in the subject matter of the gift once the transaction is complete so far as the donor is concerned. So much was acknowledged by the English Court of Appeal in In re Rose".

Again it would appear to me from this passage that once the donor of a gift has done everything that is necessary to be done on his part to transfer the title in the property which is the subject matter of the gift to the donee, then equity will recognise the gift as complete. This means that the donee, at that point in time, acquires an equitable estate or interest in the subject matter of the gift. The gift is then beyond recall by the donor and he should not be allowed to invoke the assistance of the Court to prevent registration of the instrument which conveys the subject matter of the gift to the donee.

In the present case before the Court, it is not clear whether the plaintiff's grandmother, as donee, had done all that was necessary to be done on her part to complete the gift to the plaintiff, as donee, before she died. These proceedings were not argued on that basis. One matter which is clear is that the donor executed the deed of gift in 1983 and when she died the deed had not been registered; it was only registered on 2 February 1999. But that is not sufficient to answer the question whether the donor had done all that was necessary to be done on her part to complete the gift to the donee. More facts are required.

Having reached this stage of the judgment, there still remains the issue of how a gift which is complete in equity but not registered can be accommodated within the provisions of section 16 of the Land Registration Act 1992/1993. That provision, if I may quote it again, states:

"No instrument of title shall in any manner affect the legal title to land until and unless such instrument is registered in the land register in accordance with this Act".

This very issue was also dealt with by Mason CJ and McHugh J in their joint judgment in Corin v Patton at p.560 where their Honours stated:

"However, if we accept that In re Rose correctly states the consequences of the approach taken by Griffith CJ in Anning v Anning, there remains the problem of accommodating that approach to the injunction contained in s.41 of the Real Property Act to the effect that, until registration, an instrument of transfer shall be ineffectual to pass an estate or interest in the land. Although that injunction applies to equitable as well as legal estates, it does not touch whatever rights are behind the instrument, as Isaacs J pointed out in Barry v Heider (1914) 19 CLR at p.216; see also Chan v Cresdon Pty. Ltd [1989] HCA 63; (1989) 168 CLR 242 at pp 256-258. Where a donor, with the intention of making a gift, delivers to the donee an instrument of transfer in registrable form with the certificate of title so as to enable him to obtain registration, an equity arises, not from the transfer itself, but from the execution and delivery of the transfer and the delivery of the certificate of title in such circumstances as will enable the donee to procure the vesting of the legal title in himself. Accordingly, s.41 does not prevent the passing of an equitable estate to the donee under a completed transaction".

Section 41 of the Real Property Act 1900 (NSW) which is mentioned in their Honours judgment is in terms similar to section 16 of our Land Registration Act 1992/1993.

Brennan J in the same case expressed a similar view where he states at p.563:

"Although a proposed transferee of land has no legal estate or interest in the land to be transferred prior to registration of the transfer, he may acquire an equitable estate or interest by reason of some fact or circumstance which a court of equity regards as binding the legal owner in conscience to hold the "property upon trust for the [transferee]: Olsson v Dyson [1969] HCA 3; (1969) 120 CLR 365 at p.375, per Kitto J. Section 41, in denying effect to an instrument until registration, does not touch whatever rights are behind it: Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 at p.216, per Isaacs J. It is for this reason that a purchaser under a contract of sale of land under the Real Property Act has an equitable estate or interest in the land corresponding with the protection which equity gives to rights acquired under the contract: Bahr v Nicolay [No.2] [1988] HCA 16; (1988) 164 CLR 604 at pp 612, 645-646; Chan v Cresdon Pty. Ltd [1989] HCA 63; (1989) 168 CLR 242 at pp 256-258. The source of that estate or interest is the contract, not the transfer".

Deane J also expressed a similar view at p.582 where he states:

"In my view, Dixon 1s judgment in Brunker should be accepted not as establishing a new kind of statutory right but as identifying the test for determining whether the stage has been reached when a gift of Real Property Act land under an unregistered memorandum of transfer is complete and effective in equity. That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. In that regard, it is not a matter of equity ignoring the provisions of s.41 of the Act and treating the unregistered transfer as effective of itself to assign the beneficial interest in the land. It is simply that equity, acting upon the fact or circumstance that the donor has placed the vesting of the legal title within the control of the donee and beyond the donors recall or intervention, looks at the substantial effect of what has been done and regards the gift as complete".

It would appear to me from these passages, if the donor has done all that is necessary on his part to complete the gift to the donee and all that remains to be done are acts which the donee himself can do then the gift is complete in equity. The donee acquires an equitable estate or interest in the subject matter of the gift. In such a situation, section 16 of the Land Registration Act 1992/1993 cannot prevent the passing of an equitable estate or interest to the donee.

This must mean that in the present case, if the gift from the donor to the plaintiff as donee was complete in equity so that an equitable estate or interest in the subject matter of the gift is passed to or vested in the donee, then section 16 of the Land Registration Act 1992/1993 cannot prevent the passing of an equitable estate or interest in the subject matter of the gift to the donee, notwithstanding that the deed conveying the gift to the donee has not been registered. This must further mean that the donee with a complete but unregistered gift would have standing to bring an action to protect or enforce the equitable estate or interest which has passed to or vested in her.

It should be clear from what has been said in this judgment that there are relevant issues which were not addressed in the cause of the argument in this case which both counsel may wish to consider. These are issues relating to the rule in Strong v Bird and in particular the principles enunciated in Corin v Patton. I will therefore make no final decision on the motion to strike out the plaintiff's statement of claim on the basis that she has no standing to bring her present action. I will adjourn this matter to 1 March 1999 for both counsel to advise the Court as to their respective positions with regard to the strike out motion in the light of what has been said in this judgment.

CHIEF JUSTICE

Solicitors:
Apa of Apia, for plaintiff
Sapolu of Tamaligi, for defendant