Wolfson v Registrar-General (NSW) [1934] HCA 29; (1934) 51 CLR 300 (7 August 1934)

HIGH COURT OF AUSTRALIA

Wolfson Applicant, Appellant; and The Registrar-General of New South Wales Respondent, Respondent.

H C of A

On appeal from the Supreme Court of New South Wales.

7 August 1934

Rich, Starke and Evatt JJ.

Flannery K.C. (with him Barwick), for the appellant.

E. F. McDonald, for the respondent.

Flannery K.C., in reply.

The following written judgments were delivered:—

Aug. 7

Rich and Evatt JJ.

This appeal is from an order of Davidson J. dismissing with costs an application under sec. 101 of the Real Property Act 1900 calling upon the Registrar-General to substantiate and uphold his grounds for refusing, in substance, a transmission, except subject to the notification of an encumbrance to which the applicant, who is a transmittee, objected.

The transmittee is one, Jacob Wolfson. He seeks the registration of a transmission from his late father, Harris Wolfson, who died 8th October 1927. On 5th August 1926, he and his father had entered into articles of partnership. The partnership assets included three parcels of land, of one of which the father was sole registered proprietor, and of two of which he was registered as proprietor as a tenant in common with his son. These are the interests of which the transmission is claimed. It is claimed under a provision by which, upon the death of one partner, the surviving partner became entitled to the business and the whole of the assets thereof. The provision is contained in clauses 17 and 18 of the partnership deed, which are as follows:—

17.

If during the continuance of the partnership either partner shall die become bankrupt or by mutual agreement retire the remaining partner shall take over the said business and the whole of the assets thereof and shall be absolutely entitled to the same and shall be liable for all the debts contracts and engagements thereof and in case the surviving or continuing partner shall be the said Harris Wolfson he shall pay to Rebecca Wolfson (the wife or widow of the other partner as the case may be) the sum of Thirty Pounds (£30) per week during her lifetime and also in addition pay to the other partner or his legal representatives Twenty thousand pounds (£20,000) without interest within five years from the date of either of the aforesaid occurrences and in case the surviving or continuing partner shall be the said Jacob Wolfson he shall pay to Dora Wolfson (the wife or widow of the other partner as the case may be) the sum of Fifteen pounds (£15) per week during her lifetime and also in addition pay to the other partner or his legal representatives the sum of Twenty thousand pounds (£20,000) without interest within five years from the date of either of the aforesaid occurrences.

18.

It is hereby agreed that the properties situated in George Street Sydney and King Street Newtown described in the Schedule hereto shall not be sold during the lifetime of the said Dora and Rebecca Wolfson without the consents of the said Dora and Rebecca Wolfson and the consent of the survivor of the said Harris and Jacob Wolfson.

The Registrar-General had no difficulty in treating the surviving partner as a person entitled to the land by transmission, and raised no question that he was a transmittee whom he should register as proprietor. In adopting this attitude he was following the settled practice of the office. In the Supreme Court neither he nor the applicant contested the correctness of this practice, and merely insisted that there should be entered upon the applicant's certificate of title a notification that it was held subject to the provisions of clauses 17 and 18 of the partnership agreement. He says: "My reason for refusing to register the applicant as proprietor of the land comprised in the application, without entering on the relative certificates of title a notification referring to the provisions of clauses Nos. 17 and 18 of the Partnership Agreement, dated 5th August 1926 between Harris Wolfson and Jacob Wolfson, is that I am not satisfied (1) that clause No. 17 did not create interests in the land included in the application in favour of the legal representatives and the widow of Harris Wolfson, deceased, or either of them, and (2) that the applicant can sell such land during the lifetime of Dora Wolfson and Rebecca Wolfson without their consent."

The applicant contends that no equitable rights in the land subsist as a result of these clauses, and that no such encumbrance should be notified. He has obtained the consent of his father's executor to the transmission, and also of the two ladies mentioned in clauses 17 and 18, who agreed to the omission of any notification in respect of those clauses.

Davidson J. decided that the surviving partner took the assets under clauses 17 and 18 subject to an equity affecting them in the nature of a lien to secure fulfilment of his obligations thereunder. In this we do not disagree with him. He considered also that the consents did not amount to an abandonment of this lien sufficient to destroy it. Perhaps not; but, apart from the question whether, as between himself and his beneficiaries, the executor's consent to the transmission was justified, the consents would, we think, be warrant enough for the Registrar-General to ignore the lien.

In our opinion, however, such an encumbrance has no place on the register. When land is brought under the Act, and is then subject to equities, other considerations apply. But the declared policy of the system is to keep trusts off the register, and it appears to us that the notification of such special and elaborate equities as those involved in the present case as encumbrances is within the very evil to which the Act was directed. The register was not to present a picture of legal ownership trammelled by all sorts of equitable rights in others, which those who dealt with the registered proprietor must take into account. Sec. 95 (4) affords no justification for putting them upon the register. Such rights must be protected by caveat, not by notification.

We therefore think the Registrar-General was wrong in the direction which he gave, and that it cannot be substantiated and upheld within the meaning of sec. 101. We are not called upon to consider whether an application by way of transmission is appropriate to the present case. All we are asked to decide is whether, when a transmission is registered, it should be subject to a notification.

We think we should allow the appeal, set aside the order of Davidson J., and declare that the Registrar-General ought not to enter upon any certificate of title he issues to the applicant a notification referring to the provisions of clauses 17 and 18 of the partnership agreement dated 5th August 1926. The costs in the Supreme Court and of this appeal should be paid by the respondent.

Starke J.

This was a summons calling upon the Registrar-General of New South Wales to substantiate and uphold the grounds of his refusal to register Jacob Wolfson as proprietor in fee simple of certain lands, on a transmission application, and for an order that the Registrar-General be directed to pass the application according to the tenor thereof, and to register Jacob Wolfson as proprietor in fee simple of the said lands. The transmission application was an application to be registered under the Real Property Act 1900 of New South Wales, sec. 94, as proprietor by transmission, and claimed that Jacob Wolfson was entitled to an estate in fee simple in the land described in certificates of title vol. 4011, fol. 79; vol. 2857, fol. 26; and vol. 2522, fol. 202, and had become so entitled as the surviving partner pursuant to the terms of a partnership agreement dated 5th August 1926, made between Jacob Wolfson and his father Harris Wolfson, who had died in 1927. The summons refers to sec. 101 of the Act, but this seems due to some mistake. Harris Wolfson was registered as the proprietor of an estate in fee simple in an undivided moiety or half share in the lands described in the certificates of title, vol. 4011, fol. 79; and vol. 2857, fol. 26, subject to the reservations and conditions (if any) contained in the Crown Grant, and subject also to the encumbrances, liens and interests notified on the certificates. Both these certificates are marked "Tenancy in Common." Harris Wolfson was also registered as the proprietor of an estate in fee simple in the land comprised in the certificate of title, vol. 2522, fol. 202, subject to similar reservations, conditions, encumbrances, liens and interests. It appeared that Jacob Wolfson and his father Harris Wolfson entered into partnership as fancy goods warehousemen and general importers, and that the assets of the partnership included the lands already mentioned. Clause 17 of the partnership agreement, already referred to, was as follows:

17.

If during the continuance of the partnership either partner shall die become bankrupt or by mutual agreement retire the remaining partner shall take over the said business and the whole of the assets thereof and shall be absolutely entitled to the same and shall be liable for all the debts contracts and engagements thereof and in case the surviving or continuing partner shall be the said Harris Wolfson he shall pay to Rebecca Wolfson (the wife or widow of the other partner as the case may be) the sum of Thirty Pounds (£30) per week during her lifetime and also in addition pay to the other partner or his legal representatives Twenty Thousand Pounds (£20,000) without interest within five years from the date of either of the aforesaid occurrences and in case the surviving or continuing partner shall be the said Jacob Wolfson he shall pay to Dora Wolfson (the wife or widow of the other partner as the case may be) the sum of Fifteen Pounds (£15) per week during her lifetime and also in addition pay to the other partner or his legal representatives the sum of Twenty Thousand Pounds (£20,000) without interest within five years from the date of either of the aforesaid occurrences.

Clause 18 was as follows:

18.

It is hereby agreed that the properties situated in George Street Sydney and King Street Newtown described in the Schedule hereto shall not be sold during the lifetime of the said Dora and Rebecca Wolfson without the consents of the said Dora and Rebecca Wolfson and the consent of the survivor of the said Harris and Jacob Wolfson.

Harris Wolfson died on the 8th October 1927, and probate of his will was granted on the 8th March 1928 to Emanuel Berkman, one of the executors named therein, who consented to the transmission application. But the Registrar-General refused to register Jacob Wolfson as the proprietor of the lands mentioned in his transmission application, without entering on the relative certificates of title a notification referring to the provisions of clauses 17 and 18 of the partnership agreement, because he was not satisfied (a) that clause 17 did not create interests in the land included in the application in favour of the legal representatives and the widow of Harris Wolfson deceased or either of them; and (b) that the applicant could sell the land during the lifetime of Dora Wolfson and Rebecca Wolfson without their consent. Whereupon both Dora and Rebecca Wolfson consented to the transmission application, and requested and directed the Registrar-General to issue certificates of title to the applicant without any notification or reference to clause 18, and they further consented to Jacob Wolfson selling or disposing of the lands as he thought fit. But the Registrar-General still refused the application, and Davidson J., who heard the summons, dismissed it. The learned Judge said[1]: "In my opinion ... when it appeared to the Registrar-General that the applicant for transmission, who based his claim on the agreement of partnership, had not the whole estate thereunder, but was or might be subject to the equitable estate or mortgage in the form of the vendor's lien, he was bound to notify on the certificate the relevant provisions of the agreement." The formal order declared that the attitude adopted by the Registrar-General in connection with the transmission application was correct, and ordered that the summons be dismissed. Special leave to appeal from that decision was given by this Court.

In my opinion, the applicant, the Registrar-General, and the learned Judge all misconceived the true position, and the summons should have been dismissed without any declaration.

The Real Property Act 1900 of New South Wales provides for transfers and transmissions. A transfer is the passing of any estate or interest in land under the Act, whether for valuable consideration or otherwise, by means of an instrument called a transfer (sec. 3, and Part VII.). A transmission is the acquirement of title to, or interest in land, consequent on the death, will, intestacy, bankruptcy, insolvency or marriage of a proprietor (sec. 3, and Part XI.). Transmission in its strictest sense is the devolution of property upon some person by operation of law, unconnected with any direct act of the party to whom the property is transmitted—as, by death, bankruptcy, insolvency or marriage (Chasteauneuf v. Capeyron[2]; Holt v. Deputy Federal Commissioner of Land Tax (N.S.W.)[3]). But the Real Property Act is not quite so restricted. (See sec. 101, Part XI.) By sec. 94 it is enacted that executors or administrators or other person claiming any estate of freehold in the land of a deceased proprietor, or any person having a power of disposition over the fee simple of any such land, may apply in writing to the Registrar-General, in the form of the seventeenth schedule thereto, to be registered as the proprietor of such estate. The form in the seventeenth schedule is described as an "Application to be registered under the Real Property Act, 1900 (section ninety-four) as proprietor by transmission." All real and personal property which any person dies seised or possessed of or entitled to in New South Wales passes to and becomes vested in his executor for all his estate and interest therein (Wills, Probate and Administration Act 1898, sec. 44). The devolution of real estate upon an executor or administrator is thus a true instance of transmission. "Any person having a power of disposition over the fee simple of any such land" is not a true instance of transmission. But the Act treats the land which is the subject of a power of disposition over the fee simple as property passing to or vested in the donee of the power. "Or other person claiming any estate of freehold in the land of a deceased proprietor." This is a true instance of transmission. Heirs at law and devisees whose claims arise prior to the Act vesting the real estate of a deceased person in his executor or administrator, might no doubt avail themselves of this provision. But, since that Act, devises in wills are given effect to by the executor or administrator becoming the registered proprietor, and then transferring to the devisees the land devised by the will (Guest on the Transfer of Land Act, 1890 Vict., sec. 225, p. 208). Transmissions by virtue of testamentary dispositions or intestacy are practically gone, for the real estate of a deceased person devolves upon and vests by force of law in his executor or administrator. The provision is, however, still effective, I apprehend, in the case of a transmission arising on the death of a registered proprietor by virtue of a succession of estates or interests created by and coming into effect on the death of such proprietor, under some settlement or other instrument. But in all cases the estate or interest in the land must pass, devolve and be transmitted upon the death of the proprietor, unconnected with any direct act of the party to whom the estate is transmitted. Registration merely records the estate or interest that has devolved upon or been transmitted to the applicant. This brings me to the present case.

The legal estate in the land, and in the undivided moiety of the lands of which Harris Wolfson was registered as proprietor, devolved upon his executor. The partners were not jointly seised, so the legal estate did not devolve upon the surviving partner, Jacob Wolfson (Partnership Act 1892 of New South Wales, sec. 20; Lindley on Partnership, 7th ed. (1905), pp. 378, 379; 9th ed. (1924), pp. 428, 429). The land devolved upon the executor in trust so far as necessary for the persons beneficially interested therein, and was applicable exclusively for the purposes of the partnership. The surviving partner had authority to get in and realize the assets of the partnership, pay its debts, and wind up the affairs of the partnership. Apart from special provisions in the partnership agreement, the partnership assets should be converted into money, and after payment of debts, the balance is divisible among the partners, or their representatives, in the shares in which they may be entitled to it. But there is no transmission of estate or interest in land from the deceased to the surviving partner; all that either is entitled to, upon the death of the other or at any time, is his proportion of the existing assets to which he would be entitled if the whole were realized and converted into money, and after all the then existing debts and liabilities of the partnership had been discharged (Lindley on Partnership, 7th ed. (1905), p. 377; 9th ed. (1924), p. 427; Pollock's Digest of the Law of Partnership, 11th ed. (1920), p. 77).

Turning now to the special provisions contained in clauses 17 and 18 of the partnership agreement. A contract, it must be remembered, is not a conveyance or grant of an estate in land; it does not operate directly on the land, but creates contractual rights and obligations. And clauses 17 and 18 of the partnership agreement are plainly matters of contract, not of conveyance or grant of land or other property taking effect as such upon the death of Harris Wolfson. In other words, no estate or interest in land is transmitted to or devolves upon Jacob Wolfson on the death of Harris Wolfson by force of these clauses. It follows that an application on the part of Jacob Wolfson to be registered as the proprietor of the lands in question here, as on a transmission, is misconceived and should be dismissed. As well might a person who purchased land under a contract of sale, and who had paid his purchase money, apply to be registered as a proprietor of land as on a transmission: a transfer of the land from the registered proprietor to the purchaser is the method of giving effect to such a contract. It is the executor of Harris Wolfson to whom is transmitted the estate or interest in the land and in the undivided moiety of the lands registered in the name of Harris Wolfson, and Jacob Wolfson must obtain a transfer of the lands from the executor if he is to become registered as their proprietor. His right to such a transfer depends upon the proper construction and effect of the partnership agreement, but the case seems to present no difficulty in this connection, for both Rebecca and Dora Wolfson are content that Jacob Wolfson should be registered as the proprietor of the land and the undivided moiety of the lands standing in the Register Book in the name of Harris Wolfson. It would not be the function or duty of the Registrar-General to question or challenge an act of the executor regular and proper on its face. (See Templeton v. The Leviathan Pty. Ltd.[4].) It could not be said with any show of reason that the executor and Rebecca and Dora Wolfson are not capable of protecting their own rights and interests. That the Registrar-General should interfere for any such purpose is therefore undesirable; it is "not only not required by any apparent necessity" but would be "apparently inexpedient in its character, and possibly in its effects." (See Ex parte Wisewould[5].)

The declaration of Davidson J.[6], "that the attitude adopted by the Registrar-General" in connection with this above-mentioned transmission application "was correct" should be deleted, but otherwise the judgment should be affirmed, and this appeal dismissed with costs.

Appeal allowed. Order of Davidson J. set aside. Declaration that the Registrar-General ought not to enter upon any certificate of title he issues to the applicant a notification referring to the provisions of clauses 17 and 18 of the partnership agreement dated 5th August 1926. Respondent to pay the costs of this appeal and in the Supreme Court.

Solicitor for the appellant, C. M. P. Horan.

Solicitor for the respondent, J. E. Clark, Crown Solicitor for New South Wales.

[1] (1933) 51 W.N. (N.S.W.), at p. 34.

[2] (1882) 7 App. Cas. 127, at p. 134.

[3] [1914] HCA 26; (1914) 17 C.L.R. 720.

[4] [1921] HCA 55; (1921) 30 C.L.R. 34, per Higgins J., at p. 64.

[5] (1890) 16 V.L.R., at p. 152; 11 A.L.T., at p. 183.

[6] (1933) 51 W.N. (N.S.W.), at p. 35.