(A)    Dealings with Legal Property
Legal Property

When does the common law recognise a transfer of the ownership of personal property?

•    Distinguish between choses in possession (chattels) and choses in action

•    A chose in possession can be transferred by
o    Gift, accompanied by delivery. There has to be a statement of conveyance that the property is being transferred with that act (i.e. You say “I immediately and irrevocably give this book to you” and then you deliver it)
o    Deed. A deed has to be signed, sealed and delivered. A deed is a formal document, and you can actually give your property away by making a deed without actually delivering the property itself. You may do this when you want to continue to enjoy the property but do not want to own the legal title (e.g. to satisfy creditor’s debts).
o    Sale. You can sell the property. The time when title passes will be determined by the contract of sale. Title usually passes on payment of the purchase price. There is no need for delivery.

•    What about choses in action? (i.e. the debt owed – “I own you $100”)
•    Here, you have the benefit of the debt, and you decide to sell that debt to someone else (factoring) to allow you to obtain ready cash
•    Historically, the common law refused to recognise assignments of choses in action.
•    Equity would, however, recognise an unequivocal statement of irrevocable assignment. Equity said that so long as we can prove that there was in fact an immediate and irrevocable intention to assign the debt, then we will enforce that assignment in equity (equity steps in to bind the conscience)
•    Laws were passed to recognise the legal chose in action. The Judicature Act 1873 s 25(6) enabled legal assignment of choses in action. A chose in action can be transferred (or assigned) by compliance with s 12 of the Conveyancing Act 1919 (NSW) (unless special legislation applies, eg company shares are assignable under the Corporations Act 2001; copyright is assignable according to the Copyright Act 1968).

Conveyancing Act 1919 (NSW):
Section 12 – Assignments of debts and choses in action

Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees.

•    There are four conditions for a valid assignment of a chose in action at law
(a)    Intention to assign, and not merely authorise the debtor to pay another
(b)    Assignment must be absolute (not by way of a charge). An assignment means “I convey the property (debt) from me to you”
(c)    It must be in writing signed by the assignor
(d)    Express notice in writing must be given to the debtor

•    Suppose that B borrows money from L, and now L wishes to assign that debt to a third party. As long as the four conditions for a valid assignment of a chose in action at law have been complied with, that debt can been transferred (assigned) to the third party. L does not own it anymore, and B only has obligations to the third party (not to L)

Note:
1)    Section 12 does not permit the assignment of part only of a chose in action (however part of a chose in action may be assigned in equity): See Norman v FCT
•    E.g. If I am owed $100, and I say to my sister, “I assign half of that debt to you”, that assignment is not effective at law (it is not covered by s 12 of the Conveyancing Act)
•    However, Norman v FCT says that equity will still recognise the assignment of part of a chose in action

2)    Also, section 12 does not permit the assignment of future property, which is only capable of assignment in equity, for value.

Incomplete or ineffective legal assignments

•    What if the requirements of section 12 (or other applicable formalities) have not been fully observed? (e.g. I put my intentions in writing, but no notice is given to the debtor) When will equity recognise an assignment which is incomplete at law?

•    NOTE:    Distinguish between assignments for value and gifts. Equity treats an assignment for value as if a contract
has been made to assign the property. That contract is enforceable, because “equity regards as done that which ought to be done”

(i) Voluntary assignments

•    There is a tension between not wanting to complete imperfect gifts and giving effect to intention rather than form
Milroy v Lord
Facts: The assignor, M, executed a deed voluntarily assigning shares in a bank for no consideration. The shares were never registered and M died. Was the assignee entitled to the shares?
Held: There was no effective gift: “In order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him…There is no equity in this court to perfect an imperfect gift” – per Turner LJ  
•    Not clear after this case whether the transferor personally had to do everything that was necessary, or whether they had to take all the steps they could take.

Anning v Anning (1907) HCA
Facts: Mr A, in an attempt to avoid succession duties, makes a death-bed transfer of all his property in deed form. However, A’s deed did not meet the formalities needed to assign the debts he was owed, which are ‘choses in action’. Will equity allow this imperfect gift?
Held:
•    Isaacs J:    If property is assignable at law, equity will not enforce a gift of that property unless all the legal requirements for assignment have been completed.

•    Griffiths CJ*:    Equity will enforce a gift if and when the donor has done all those things which the donor alone must do (i.e. the donee may complete the gift by undertaking tasks which need not necessarily fall to the donor)

•    Higgins J:    Equity will enforce a gift if and when the donor has done all that it is within the donor’s power to do, even those things which the donee may do.

Corin v Patton (1990) HCA
Facts: Mrs P was dying and wanted to sever a joint tenancy agreement with her husband and ensure that the interest did not go to her husband. She signed 3 documents:
1.    Voluntary transfer of interest in land to her brother C, subject to a mortgage
2.    Deed by which C declared he had an interest in the land as tenant in common with Mr P on trust for Mrs P.
3.    Mrs P’s will leaving her estate to her children in equal shares
Mrs P died before the transfer was registered and the mortgagee still held the Certificate of Title (not C). Therefore legal title was not transferred.

Issue: Had Mrs P successfully alienated her interest in the land (severing the joint tenancy) by passing an equitable interest to C, or was Mr P entitled to the land by survivorship?

HCA adopted the Griffith CJ view from Anning.
Held: No equitable interest was passed. “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.” - per Mason CJ and McHugh J.
Deane J:    Ask: Has the donor put the gift beyond recall? A gift is effective in equity when the donor has done all that is necessary to place the vesting of legal title within the control of the donee and beyond the recall of the donor. (similar to Griffith CJ view also)

Assignment of part only of a chose in action
•    Is a gift of part of a chose in action enforceable in equity?
Norman v Federal Commissioner of Taxation (1963) HCA
Facts:    Related to equitable assignment of part of a debt or other choses in action. Windeyer J dissented in the overall result but the majority agreed with his statements of principle.

Held: Windeyer J: “As an assignment of part of a debt is still necessarily an equitable assignment, the question arises, can it be made by way of a gift and if so, how?”
“The whole of the debt now being voluntarily assignable under the statute…it would be a strange anomaly if a part could not be subject of a voluntary equitable assignment. To say “You can give away the whole, but you cannot give away a part, for a part you must get a price would seem to contradict common sense.”

How can part of a chose in action be assigned?
“It is of course necessary that the transaction should take the form of, and be intended as, an immediate transfer of the beneficial interest of the assignor, as distinct from an agreement to assign it. The distinction is critical, for consideration is always necessary to attract the support of equity to a transaction that is a contract rather than a conveyance.”

Is a deed necessary?
“It seems to me that, in principle, so far as a deed has any efficacy in connexion with equitable assignments, it is not that the deed takes the place of valuable consideration where that is needed to attract the aid of equity. Rather it is that, in a case where value is not required but a clear expression of intention is, the delivery of a deed couched in terms of a present gift manifests, in the best possible way, the intention of the assignor to make an immediate and irrevocable transfer”
- This was a presently existing right to a future
Majority: The debt was a mere expectancy (not a presently existing right) which could not be assigned as a gift but only assigned for value.

Continued on page 2