Citation: Williams v Davis [2003] NSWSC 453
Court: Supreme Court of New South Wales, Equity Division
Date: 3 June 2003
Judge(s): Davies AJ
Background
The plaintiff was the widow of the late Malcolm Clarence Williams. The couple had purchased a Housing Commission property in 1956 as joint tenants, paying it off over several decades. After the property was fully paid off, the Corporation executed a transfer in both names as joint tenants and sent it to the solicitor acting for the husband.
The husband had separately instructed his solicitor to sever the joint tenancy by transferring his half-share to himself, creating a tenancy in common. Both transfers were sent to a lodgements clerk for stamping and registration. The clerk, apparently to save stamp duty on the severance transfer, instead altered the original transfer from the Corporation by crossing out "as joint tenants" and substituting "tenants in common in equal shares." Only that altered transfer was registered. The severance transfer was never lodged.
The husband died in 2002. The plaintiff, believing she held the property as a joint tenant, discovered on searching the title that the Register recorded her and the deceased as tenants in common. She brought proceedings seeking rectification of both the transfer document and the Register. The executor of the estate and the couple's daughter, as a beneficiary, opposed the claim and cross-claimed on the basis that the plaintiff held her interest on constructive trust.
Legal Issues
- Whether the lodgements clerk's alteration of the transfer document constituted fraud within the meaning of section 42 of the Real Property Act 1900, so as to defeat the indefeasibility ordinarily attaching to registered title
- Whether the Register should be rectified to reflect the original joint tenancy
- Whether the unregistered unilateral transfer by the husband had been effective to sever the joint tenancy prior to his death
- Whether the plaintiff held any interest in the property on constructive trust for the husband's estate, given his substantially greater financial contributions
Decision
Davies AJ found that the clerk's alteration of the transfer document amounted to fraud under section 42 of the Real Property Act 1900. The clerk had no authority to alter the document and had done so unilaterally in order to avoid stamp duty. Because the registration was obtained by fraud, the indefeasibility provisions of the Act did not protect the registered interest that arose from the altered transfer.
The Court accepted that rectification of both the transfer and the Register was appropriate. Restoring the Register to its correct state would simply reflect what the position should have been at the time of registration: a transfer from the Corporation to both parties as joint tenants. The Court noted that the clerk's alteration was the kind of conduct that falls within the established meaning of fraud in Torrens title jurisprudence, being more than mere carelessness or mistake.
On the question of the unregistered severance transfer, Davies AJ held it had never been effective. Because it was not lodged or registered before the husband's death, it could not sever the joint tenancy. The consequence was that on the husband's death the surviving joint tenant, the plaintiff, became entitled to the whole of the property.
The cross-claim for constructive trust was dismissed. The Court found no evidentiary basis for it, noting the presumption of advancement operating in the wife's favour and observing that the husband's own choice to pursue severance rather than Family Court proceedings suggested he accepted that each party held an equal interest.
Orders Made
- Claim for rectification of the transfer and Register allowed
- Cross-claim dismissed
- Defendants to pay the plaintiff's costs
- Counsel directed to bring in short minutes of proposed orders within 7 days
Key Takeaways
- A lodgements clerk's unauthorised alteration of a transfer document to avoid stamp duty constituted fraud under section 42 of the Real Property Act 1900, displacing the indefeasibility that would otherwise protect a registered dealing.
- Rectification of the Register is available where registration was procured by fraud; the remedy operates to restore the Register to the state it should have been in at the time of the fraudulent registration.
- An unregistered unilateral transfer purporting to sever a joint tenancy has no effect if it is never lodged for registration, and it cannot operate after the transferring joint tenant has died.
- Under the Real Property Act 1900, section 97, a joint tenant may sever a joint tenancy by executing and registering a transfer of their interest to themselves, without the consent of the other joint tenant, though the Registrar-General may notify the other tenants.
- The presumption of advancement applies in the context of matrimonial property, and a husband's election to pursue severance rather than Family Court proceedings may be treated as evidence that he accepted an equal beneficial interest with his wife.
Legislation and Cases Referenced
Legislation:
- Real Property Act 1900 (NSW), ss 42, 97
- Housing Act 1985, Schedule 1
Cases:
- Assets Co Limited v Mere Roihi [1905] AC 176
- Australian Guarantee Corporation Limited v De Jager [1984] VR 483
- Bahr v Nicholay (No 2) (1988) 164 CLR 604
- Beatty v Australian and New Zealand Banking Group Limited [1995] 2 VR 301
- Butler v Fairclough (1917) 23 CLR 78
- Grgic v Australian and New Zealand Banking Group Limited (1994) 33 NSWLR 202
- Lloyd v Grace Smith & Co [1912] AC 716
- Morris v CW Martin & Sons Limited [1966] 1 QB 716
- National Commercial Banking Corporation of Australia Limited v Hedley (1994) 3 BPR 9477
- Pyramid Building Society (in liq) v Scorpion Hotels Pty Limited (1996) 136 ALR 166
- Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt 1) (NSW) 529
- State of New South Wales v Lepore [2003] HCA 4
- Waimiha Sawmilling Co v Waiole Timber Co [1926] AC 101
- Westpac Banking Corporation v Sansom (1994) 6 BPR 13,790
- Wicks v Bennett (1921) 30 CLR 80