Supreme Court

Mary Lynch
(Plaintiff)

v.

Moira Burke and Allied Irish Banks Plc.
(Defendants)

Nos. 81 & 86 of 1990 
[7th November, 1995]

Status: Reported at [1995] 2 IR 159; [1996] 1 ILRM 114

Hamilton C.J.	
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 granting the plaintiff declarations in her favour in respect of monies held on a deposit account with A.I.B. Bank plc in the joint names of Frances McFadden, deceased, and her niece, the first defendant, Moira Burke.
Frances McFadden, a widow, died on the 10th January, 1986. She had made her last will on the 20th July, 1983, whereby she gave all the property of which she died possessed 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, 1983, a deposit account was opened with the Falcarragh branch of the A.I.B. 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 former Supreme Court in Owens v. Greene and Freeley v. Greene  [1932] I.R. 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. He instead submits 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 L.J. said in Gason v. Rich (1887) 19 L.R. (Ir.) 391 at p. 402, a case relied upon as one which, together with 0‘Flaherty v. Browne  [1907] 2 I.R. 416, is said to provide a basis for the decision in Owens v. Greene and Freeley v. Greene [1932] I.R. 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 a 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. The Belfast Banking Company  [1935] A.C. 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 C.L.R. 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:-
“The contract between the bank and the customers constituted them joint creditor. 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, i.e., 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] I.R. 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] I.R. 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 L.J. said in Standing v. Bowring (1886)31 Ch.D. 282 at 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] I.R. 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 and 246 of the report. This concept appears to be implicit, also, in the judgment of Kennedy C.J. (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] I.R. 255, 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. (Hay v. O’Grady  [1992] 1 I.R. 210). But since no report of the judgment of the trial judge (Meredith J.) is existant, 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 are 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, thus 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 and Freeley v. Greene  [1932] I.R. 225 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. (The Attorney General v. Ryan’s Car Hire Ltd. [1965] I.R. 642; Mogul of Ireland v. Tipperary (N.R.) County Council [1976]  I.R. 260 and Finucane v. McMahon [1990] 1 I.R. 165).
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 to 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.