Cowan v Cowan
[2021] NZCA 31
•24 February 2021
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA75/2021 [2021] NZCA 31 |
| BETWEEN | CHRISTINA MARAMA COWAN |
| AND | JOHN ARTHUR COWAN |
| Hearing: | 24 February 2021 |
Court: | Miller and Goddard JJ |
Counsel: | J Mason and S H Roper for Applicants |
Judgment: | 24 February 2021 |
JUDGMENT OF THE COURT
(On application for interim relief)
AThe Court orders under s 146 of the Land Transfer Act that the applicants may lodge a second caveat over the Lyall Bay property protecting their claim to beneficial ownership of that property. This order will lapse at 1.00pm on 25 February 2021 if by that time the applicants have not both filed an undertaking as to damages in this Court.
BIt is a condition of the order that John be permitted to enjoy sole occupancy of the Carterton property and that it be made available to him by Thursday, 4 March 2021. It is also a condition of the order that by 4 March 2021 the applicants file proceedings in the High Court to establish their claim to the Lyall Bay property.
C Costs are reserved.
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REASONS OF THE COURT
(Given by Miller J)
Before us is what is described as an application for an interim stay of execution pending appeal. It concerns a caveat that was lodged over properties at 170 Queens Drive in Lyall Bay, Wellington, and at 11 Nobel Street, Carterton, claiming an interest in the land under an “implied” trust.
The appeal has been brought urgently, and the stay sought, because the respondent, John Cowan, has entered into an agreement to sell the Lyall Bay property to a developer, and the transaction is to settle on 25 February 2021. He intends to use the proceeds for his own benefit.
In the judgment under appeal, delivered on 19 February 2021, Associate Judge Johnston refused an order that the caveat not lapse. With that order (at the latest), the caveat lapsed. Before us Ms Mason accordingly sought the Court’s leave under s 146 of the Land Transfer Act 2017 to lodge a second caveat; in the alternative, an injunction restraining John from transferring the property.
Contrary to the view taken by the Associate Judge, it seems to us arguable that the first applicant, Christine Cowan, has a caveatable interest in the Lyall Bay property.
John Cowan is the father of the applicants and the registered owner of both properties. He acquired sole legal title by survivorship after his late wife, and the mother of the applicants, Marama Cowan, died on 19 March 2019.
In an agreement dated 21 May 2002 between John and his wife he agreed that he would “sells and gifts his share” of the “joint family home” at Lyall Bay to Christine. The agreement is in evidence. He admits it but says it was entered at an unhappy time and without legal advice and no steps were ever taken to sell the property to Christine. She has long lived at the property with her family, and she still does. He admits she has made financial contributions but says he has paid most of the outgoings, and still does, and her payments do not outweigh the benefits of occupancy.
There is also evidence that Mr and Mrs Cowan agreed to a relationship property settlement in March 2019, four days before her death. In the intervening years the couple had acquired the Carterton property from their son, the second applicant Te Rahui Cowan, who lived in it. The marriage had been difficult and Marama was plainly looking to secure the interests of the children. The agreement provided for a distribution of property between John and the children. It recites that notwithstanding that their properties at Carterton and Lyall Bay were jointly owned and would pass to his sole ownership under the doctrine of survivorship, the parties had agreed that the Lyall Bay property would be her separate property immediately, and was to be held on trust by the parties, and by John, for the benefit of their two younger children (one of whom is Christine). He would retain a lifetime right to live in the property. The Carterton property would become John’s separate property.
Marama signed the agreement and had it certified by a solicitor as the Property (Relationships) Act 1976 requires, but John did not. There is evidence that he agreed orally to its terms, in the presence of Marama and witnesses.
The Associate Judge considered that the 2002 agreement may have evidenced an intention to sever the joint tenancy at Lyall Bay. We agree. If so, Marama’s estate would retain an equitable interest in the property.[1] There is evidence that Christine is executor and residuary beneficiary under Marama’s will.
[1]Harvey v Gateshead Investments Ltd [2013] NZHC 2253.
The Associate Judge took the view, however, that given the passage of time and the 2019 agreement the parties must have abandoned the 2002 agreement, which he saw as inconsistent with the later one. That may be so, but it seems to us arguable rather that Marama long saw the 2002 agreement as sufficient protection for Christine and it continued in effect unless and until the 2019 agreement replaced it. The 2019 agreement is also consistent with the 2002 agreement to the extent that it secures the property for Christine and a younger sibling, in return for John getting the Carterton property. The record generally evidences Marama’s continuing intention, and John’s agreement, that the Lyall Bay property should go to Christine.
The status in law of the 2019 agreement as between John and the children, or Marama’s estate, is plainly contestable, but what matters for present purposes is that we think it arguable that the 2002 agreement subsisted unless and until replaced by the 2019 one, and both envisage that John will hold the Lyall Bay property in trust for Christine. That would suffice to give her a caveatable interest as beneficial owner.
It is plainly arguable that Christine is the beneficial owner; further, that John knew that when he agreed to sell the property to a developer. It is not clear whether the developer is fixed with knowledge of the trust, though there is evidence that the developer knows of the dispute.
In the circumstances, we think the interests of justice require that the applicants be given leave to lodge a second caveat over the Lyall Bay property.
It will be a condition of the order that the applicants must both give an undertaking as to damages, to protect John should their claim fail. There is evidence that the developer may suffer loss if denied access to the property, which the developer apparently intends to demolish to make way for townhouses.
There is on the record before us nothing to show that either applicant has a caveatable interest in the Carterton property and the relief we intend to give will not extend to it. On the record, Te Rahui has no more than an expectation that he would be the residuary beneficiary of John’s estate. We were advised by Ms Mason that Te Rahui is now living at Lyall Bay and he and Christine are willing to have John occupy the Carterton property.
I will now record the Court’s formal order. The Court orders under s 146 of the Land Transfer Act that the applicants may lodge a second caveat over the Lyall Bay property protecting their claim to beneficial ownership of that property. This order will lapse at 1.00pm on 25 February 2021 if by that time the applicants have not both filed an undertaking as to damages in this Court.
It is a condition of the order that John be permitted to enjoy sole occupancy of the Carterton property and that it be made available to him by Thursday, 4 March 2021. It is also a condition of the order that by 4 March 2021 the applicants file proceedings in the High Court to establish their claim to the Lyall Bay property.
The proceeding must be brought on with urgency. To secure that, we direct that any party, including the developer, may apply to the High Court on notice to discharge the caveat.
Costs are reserved.
Solicitors:
Phoenix Law Limited, Wellington for Applicants
Batt Law, Masterton for Respondent
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