Gemini Energy And Minerals Pty Ltd -V- Luff [No 2] - [2018] WASC 341

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GEMINI ENERGY AND MINERALS PTY LTD -v- LUFF [No 2] [2018] WASC 341
CORAM:   LE MIERE J
HEARD:   15 OCTOBER 2018
DELIVERED          :   9 NOVEMBER 2018
FILE NO/S:   CIV 2607 of 2015
BETWEEN:   GEMINI ENERGY AND MINERALS PTY LTD
Plaintiff

AND

RICHARD GEOFFREY LUFF
Defendant

Catchwords:

Procedure - Property sale and seizure order - Application to cancel - Assertion of ownership on the grounds of right of survivorship - Whether joint tenancy severed prior to death of judgment debtor - Whether Sheriff is entitled to sell defendant's interest in the property

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 80

Result:

PSSO to be amended to remove references to the property

Category: A

Representation:

Counsel:

Plaintiff	:	Mr T J Palmer
Defendant	:	No appearance
Interested party	:	Mr G D Cobby

Solicitors:

Plaintiff	:	Hotchkin Hanly Lawyers
Defendant	:	No appearance
Interested party	:	Kershaw Legal

Case(s) referred to in decision(s):

Canadian Imperial Bank of Commerce v Muntain [1985] 4 WWR 90
Corin v Patton (1990) 169 CLR 540
Lord Abergavenny's case (1607) 77 ER 373
Mitrovic v Koren [1971] VR 479
Power v Grace [1932] 2 DLR 793
Royal & SunAlliance Insurance Company v Muir, 2011 ONSC 2273

LE MIERE J:

Summary

The plaintiff, Gemini, obtained a money judgment against the defendant. The court issued a property (seizure and sale) order (PSSO) authorising the sheriff to seize and sell the property of the judgment debtor, the defendant, to wholly or partially satisfy the judgment debt. On the application of the judgment creditor, the Registrar registered the order in respect of the plaintiff judgment debtor's interest as joint tenant together with Pamela Stevenson of 18A Orchard Street, Joondanna (the Property). The defendant died. Ms Stevenson has applied for an order that cancels the PSSO property seizure and sale order. For the reasons which follow the PSSO should be amended to remove references to the Property.

The PSSO

On 19 July 2017 I ordered judgment for the plaintiff against the defendant in the sum of $820,000 together with interest. On 23 November 2017 the Court issued a property (seizure and sale order) for the amount of $820,000 plus interest (the PSSO). On 24 November 2017 the PSSO was registered on the certificate of title of the Property. The Sheriff found an error in the PSSO. The PSSO was amended and a copy of the amended PSSO was delivered to the Sheriff's office.
On 22 January 2018 the Deputy Sheriff sent to the judgment creditor's solicitors a copy of his report. The report stated that he had visited the Property on a number of occasions without making contact with anyone. On 9 January 2018 the judgment debtor contacted the Sheriff's office. The judgment debtor's solicitor contacted the Sheriff's office on 12 January 2018 and was advised of the debt. The solicitor advised that he would contact the Sheriff's office to further discuss the debt. At the date of the report that had not occurred. The report concluded that it may be prudent to proceed against the real estate of the debtor. In a letter to the judgment creditor's solicitors, the Deputy Sheriff said that he intended to proceed to sale of the debtor's interest in the Property and asked the judgment creditor to provide a written valuation of the Property, or authorise the Sheriff to obtain a valuation and guarantee his costs of doing so.
On 13 February 2018 the judgment creditor asked the judgment debtor's solicitors for their client to agree to allow a licensed real estate agent access to the Property to carry out a valuation. The judgment debtor's solicitors stated that the judgment debtor did not consent to a licensed real estate agent having access to the Property.
The judgment debtor died on a date between 14 and 18 February 2018.

The issues

On 31 May 2018, Ms Stevenson filed an application for an order cancelling the PSSO on the ground that she holds the whole of the right title and interest in the Property by operation of the right of survivorship. Ms Stevenson asserts that the judgment debtor has no interest in the Property.
The plaintiff says the application should be refused for three reasons. First, Ms Stevenson's assertion of ownership of the judgment debtor's interest in the Property is not a sufficient reason to cancel the PSSO. Any question about ownership of the Property should be resolved by interpleader proceedings. Secondly, execution on a judgment debt severs a joint tenancy. Execution on the judgment debt had commenced before the defendant died. That was sufficient to sever the joint tenancy prior to the judgment debtor's death. Thirdly, the provisions of the Civil Judgments Enforcement Act 2004 (WA) (CJE Act) provide that a PSSO applies to, and entitles the Sheriff to seize and sell, a saleable interest which the judgment debtor had in the land at the time that the PSSO was registered under s 133 of the Transfer of Land Act 1893 (WA) (TLA). The CJE Act and the TLA permit the judgment creditor to continue with enforcement and precludes the registration of any instrument by which Ms Stevenson can acquire the judgment debtor's interest in the Property. The judgment debtor's death is not sufficient reason to interfere with the course of the statutory execution process.

Severance

At common law a judgment creditor has the right to seize the interest of a joint tenant. That is confirmed by CJE Act s 80(3).
On the death of one of the joint tenants his share automatically and immediately vests in the remaining joint tenant. It does not pass through the estate of the deceased joint tenant.
A joint tenancy can be severed, converting it into a tenancy in common. Seizure of the property by a judgment creditor is one of the ways to effect a severance. The issue is when that seizure has taken place. The time at which the severance occurs is critical. If the joint tenancy was not severed before the judgment debtor's death, his share automatically vested in Ms Stevenson and nothing remains for the Sheriff to seize.
The author of the seventh edition of Butt's Land Law at [6.530] makes two points. The first point is that merely obtaining or registering a judgment over a joint tenant's interest does not sever the joint tenancy. The second point is that taking the joint tenant's interest in execution under the judgment does. The authority cited for the first point is Canadian Imperial Bank of Commerce v Muntain [1985] 4 WWR 90. The authority given for the second point is Mitrovic v Koren [1971] VR 479.
In Canadian Imperial Bank of Commerce v Muntain the plaintiff had obtained a judgment against the defendant and two others. The plaintiff applied for an order pursuant to s 88 of the Court Order Enforcement Act, RSBC 1996, c 78 that the interest of the defendant in property held in joint tenancy with his wife be sold, and an order was made requiring the registrar to hold an inquiry. That was done. The judge decided he would defer the sale because he thought it appropriate. The plaintiff applied ex parte for an order that the property be sold to satisfy the claims of the judgment creditor. At about that time the plaintiff filed a lis pendens in the lands title office, that is a notice that informs those involved in a real estate transaction that a pending court proceeding could affect the title to the designated property. The defendant died on 2 June 1984. The registrar of titles transmitted the property to Mrs Muntain as the surviving joint tenant and discharged the lis pendens. Cashman LJSC, in the British Colombia Supreme Court, dismissed the application and held that the registration of a judgment against the title of a joint tenant does not sever the joint tenancy. Cashman LJSC referred to Power v Grace [1932] 2 DLR 793 where it was held that the mere delivery of a writ of fieri facias (fi fa) to the Sheriff is not execution which severs a joint tenancy, but once the Sheriff proceeded to execute the writ the joint tenancy is severed. Cashman LJSC held that no steps had been taken to execute the judgment. No order for the sale of land had been made. In those circumstances. Cashman LJSC concluded that the joint tenancy had not been severed.
Power v Grace was referred to by counsel at the hearing of this matter. In that case the defendant and her mother were joint tenants in certain lands in Ontario. Judgment was recovered by the plaintiff against the mother and a writ of fi fa placed in the hands of the Sheriff. Before anything was done by the Sheriff under the writ the mother died. The question was whether the daughter, the defendant, took the whole estate or whether the interest of the mother during her lifetime continued notwithstanding her death and was subject to be sold under the writ of fi fa. Riddell JA, with whom Hodgins JA agreed, stated the following considerations. First, it has been undoubted law for centuries that where a writ under which an interest in land may be taken by the Sheriff has been placed in his hands against a joint tenant and the joint tenant dies before execution, the other joint tenant surviving holds a discharge of the execution: Lord Abergavenny's case (1607) 77 ER 373. The sole question was whether the delivery of the writ to the Sheriff is 'execution'. Secondly, that delivery of the writ to the Sheriff is not the equivalent of seizure by him is plain from the provisions of the Sale of Land Under Execution Act, RSNS 1989, c 409 ‑ it would be absurd to say that a Sheriff 'to whom a writ of execution against lands is delivered for execution may seize and sell thereunder' if the delivery itself was equivalent to seizure. Further, the relevant rule states that the advertisement in the Ontario Gazette of any lands for sale under a writ of fi fa, during the currency of the writ, shall be deemed a sufficient commencement of the execution. That would be nonsense if delivery of the writ to the Sheriff itself was the commencement of execution.
Riddell JA stated the following three principles:
1.At the common law, a joint tenancy is not affected by the delivery of a writ which may be executed against land, to the Sheriff.
2.Even after such delivery, the death of the joint tenant before the 'execution' of the writ at once terminates the joint tenancy in favour of the other joint tenant; delivery is not any part of 'execution'.
3.The British Columbia statute does not expressly or by necessary implication change the common law in that regard - the implication, if any, being the other way.
The result was that the common law is still in force, and the joint tenancy was dissolved on the death of the mother.
In Power v Grace, Grant JA also found that the joint tenancy had not been severed. Grant JA analysed the statutory provisions. Execution Act s 9 provided that a writ of execution shall bind the lands against which it is issued from the time of the delivery to the Sheriff for execution. Grant JA noted that the delivery of the writ to the Sheriff was 'for execution', the mere delivery is not execution but empowers the Sheriff to take the steps necessary to obtain or effect execution. The writ is said to 'bind' the property. Until execution against the lands is actually commenced by advertisement or probably by an actual seizure upon the lands themselves the joint tenancy is not severed. The filing of the writ of fi fa with the Sheriff merely gives the right to seize the lands and until the withdrawal, discharge or expiry of the writ the lands continue 'bound' in that sense. The change which may subsequently be made in 'title and interest' is potential only, contingent upon the lands being placed in execution by seizure with a view to sale as by law provided.
The issue was considered by Perell J in a decision of the Ontario Superior Court of Justice in Royal & SunAlliance Insurance Company v Muir, 2011 ONSC 2273. Mr and Mrs Muir owned a condominium as joint tenants. The insurance company (Royal) obtained a judgment against Mr Muir. Royal obtained a writ of seizure and sale from the Sheriff. The Enforcement Office wrote to Mr Muir stating that he had been instructed by the plaintiff to commence sale proceedings of Mr Muir's equity in the property. The Sheriff's sale of the property was advertised in the Ontario Gazette. The condominium was not sold and Royal was charged fees for the aborted sale. Mrs Muir died on 9 November 2008. Royal sought an order deleting Mrs Muir's name as an owner of the condominium and an order directing the Land Registrar to show Mr Muir as the sole surviving joint tenant. Perell J said that severance may occur when an execution creditor takes sufficient steps to execute the judgment against the debtor's interest in the property, although the filing of a writ of execution does not by itself result in a severance. The actions of Royal severed Mr and Mrs Muir's joint tenancy. The actions of Royal were not the mere filing of a writ of execution. The execution creditor took sufficient steps to execute the judgment against the debtor's interest in the property and this severed the joint tenancy. In Power v Grace the issue was whether the mere delivery of the writ to the Sheriff brought about the severance. The Court of Appeal held that something more than lodging the writ with the Sheriff was required; that something more was the commencement of the execution process. Perell J concluded that the execution process was well past being commenced and there was a severance of the joint tenancy.
The second point made by the author of Butt's Land Law is that taking the joint tenants interest in execution under the judgment severs the joint tenancy. The author cites Mitrovic v Koren as authority for that proposition. In Mitrovic v Koren the plaintiff obtained a judgment against the first defendant and a writ of fi fa was issued in execution of the judgment on 18 May 1970. The first defendant was one of two joint tenants of certain land. The Registrar of Titles was served with a copy of the writ of fi fa and a memorandum of service was noted in the register on 21 May 1970. On 17 July 1970 pursuant to the writ of fi fa the Sheriff by public auction sold all the right title and interest of the first defendant in the land. On 22 September 1970 the defendants lodged in the Office of Titles an instrument of transfer dated 26 April 1970 from the first and second defendants to the second and third defendants. Gowans J held that the interest in the land having been sold under the writ of fi fa and a transfer having been lodged within the period of three months of service on the Registrar of a copy of the writ, the plaintiff became entitled, in the absence of a caveat to registration of his transfer in priority to any other instrument dealing with the interest, lodged after the time of such service, by force of s 52(3) of the Transfer of Land Act 1958 (Vic). The effect of the Sheriff's sale and transfer was to bring about a severance of the joint interests, at all events in equity.
In my opinion the effect of the authorities is that the issue of a writ of execution including a property (seizure and sale) order or its registration against the title of the Property, does not sever the joint tenancy unless there are statutory provisions that bring about that effect.

Civil Judgments Enforcement Act

CJE Act s 59 provides that a judgment creditor may apply to the court for an order authorising the Sheriff to seize and sell the judgment debtor's property to wholly or partially satisfy the judgment debt. Section 80 deals with the effect of a property seizure and sale order. Section 80(2)(b) provides that a property seizure and sale order entitles the Sheriff to seize the land and sell the saleable interest, that is the legal or equitable estate or interest in the property of the judgment debtor. Section 80(3) provides that the Sheriff's entitlement applies even if the judgment debtor's saleable interest is held jointly or in common with another.
Section 80(4) provides that actual seizure of real property by physical occupation or other means before any saleable interest in it is sold under a property (seizure and sale) order is not necessary. That statutory provision does not effect a seizure of the land, nor does it deem the issue of a property (seizure and sale) order to effect a seizure of the land.
Section 80(5) provides that a monetary judgment does not create a charge over or an interest in any real property. Section 80(6) provides that irrespective of whether it is registered under the TLA or the Registration of Deeds Act 1856 (WA), a property (seizure and sale) order does not create a charge over or an interest in any real property. The logical conclusion from that provision is that the registration of a property (seizure and sale) order under the TLA does not effect a severance of the joint tenancy.
Section 80(8) provides that if, after the Sheriff receives a property (seizure and sale) order, a person acquires an interest in any real property to which the order applies, the person does so subject to the share of its entitlement in s 80(2) unless, at the time of acquiring the interest certain conditions are met. A surviving joint tenant does not acquire an interest in the land on the death of the first joint tenant. The right of survivorship is not a 'right' in any legal sense. It does not involve a vesting by survivorship because there is no shift in ownership. When one joint tenant dies, his interest ceases to exist. In Corin v Patton (1990) 169 CLR 540 at 575 Deane J said:
When one joint tenant dies during the subsistence of the joint tenancy, his interest ceases; the interests of the remaining joint tenants expand by accretion. When there is but one survivor, the joint tenancy has run its course and the survivor becomes the full owner of the whole property.
There is no devolution of property upon the death of the first joint tenant. On the death of the first joint tenant, the interest of the deceased joint tenant no longer exists and there is nothing that can pass by transfer. In Lord Abergavenny's case the Court of Common Pleas drew a distinction between where one joint tenant releases his interest to the other and where one joint tenant dies:
When judgment is given against one of two joint tenants for life, in an action of debt, and afterwards that one releases to the other before execution, such release shall not bar the execution of the plaintiff. But if such joint tenant had died before execution, the survivor should hold the land discharged of any execution. And where the joint tenant for life, to whom the release is made, dies, and the reversioner enters, the estate of the other who is yet living has continuance as to the plaintiff.
It follows that s 80(8) of the CJE Act does not have the effect that the surviving joint tenant takes the interest in the Property of the deceased joint tenant subject to the share of its entitlement in s 80(2). That is because the surviving joint tenant does not 'acquire an interest in any real property'.
In my opinion the provisions of the TLA do not alter that position.
It follows that the joint tenancy was not severed before the defendant died. Ms Stevenson did not acquire the defendant's interest in the Property; his interest ceased.

Form of order

The plaintiff submits that the defendant's interest in the Property having ceased is not a sufficient reason to cancel the PSSO. The plaintiff says that any question about ownership of the Property should properly be resolved through interpleader proceedings.
I have found that on the death of the defendant his interest in the Property ceased. The Sheriff is not authorised to sell the defendant's interest in the Property because it has ceased. That is the question of substance in this case. It would be an arid exercise in procedure to require some new process to be commenced to determine that question.

Counsel for the interested party submitted that I should make an order to the effect that the PSSO is cancelled in relation to the Property. I find that I have power to make an order to that effect. CJE Act s 95(2) provides that the court may make a property (seizure and delivery) order and may do so on terms as to costs or otherwise. The PSSO as amended contains a description of the Property in the box labelled 'seizeable Property Address'. The PSSO also contains the sentence 'the land believed by the judgment creditor to be effected by this property (seizure and sale) order is all that land described as' and there follows a description of the Property. The PSSO should be amended so that the references to the Property are removed. The amendment will take effect from the date of the order made to give effect to these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO THE HONOURABLE JUSTICE LE MIERE
9 NOVEMBER 2018