Dunn v Dunn

[2024] NZHC 2612

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2024-488-71

[2024] NZHC 2612

IN THE MATTER

AND

of Section 14 of the Wills Act 2007

IN THE MATTER

of an application for an interim injunction preventing the exercise of an eviction notice

BETWEEN

MELANIE JOY DUNN and SAVANA MARIE DUNN

Plaintiffs

AND

ANTHONY JOHN DUNN

Defendant

Hearing:	29 August 2024
Counsel:	R J Bowden for Plaintiffs DRC Grimes for Defendant
Judgment:	11 September 2024

JUDGMENT OF BLANCHARD J

This judgment was delivered by me on Wednesday, 11 September 2024 at 2:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

Solicitors:           Savage Law (Whangārei) for Plaintiffs

Thomson Wilson (Whangārei) for Defendants

DUNN v DUNN [2024] NZHC 2612 [11 September 2024]

[1]    The first plaintiff, Melanie Dunn, applies for an interlocutory injunction preventing the defendant, Anthony Dunn,1 from enforcing an order of the District Court of 2 August 2024 requiring her to vacate a property in Tikipunga, Whangārei.

How Anthony became the registered proprietor of the property

[2]    The property was owned by John and Mary Dunn. It was the location of their home.

[3]    Melanie is the youngest daughter of John and Mary. Anthony is John and Mary’s oldest grandson. His mother is John and Mary’s oldest child.

[4]    Melanie and the second plaintiff, her daughter Savana, both live at the property. Anthony lives in Perth, Australia.

[5]    In December 2015, John and Mary met with Nicole Dreadon, a legal executive. They explained that they had six children but they wanted to leave the property to Anthony. Ms Dreadon says she explained to them that leaving the property to Anthony had the potential for a Family Protection Act 1955 claim from their children. The result of these discussions was that:

(a)On 11 February 2016, John and Mary executed a deed under which they sold a one-third joint tenancy interest in the property to Anthony. The purchase price of $91,666.67 was paid by way of an interest free loan from John and Mary to Anthony. The result of the sale was that John, Mary, and Anthony each had a one-third joint tenancy interest in the property. The transfer was registered on 12 February 2016.

(b)Also on 11 February 2016, John and Mary executed wills under which, if one survived the other by 14 days, they gifted all their estate to the other, but if one did not survive the other by 14 days, they gave the residue of their estates to Anthony. Anthony was appointed as executor under both wills.

1      Where surnames are common, I will for convenience, and meaning no disrespect, refer to parties by their given names.

[6]    A feature of a joint tenancy is the existence of the four unities, namely unity of possession, unity of interest, unity of title and unity of time. The four unities reflect the concept that joint tenants have interests in the property that are equal in all respects.2

[7]    Another feature of a joint tenancy is the right of survivorship. On the death of one joint tenant, his or her interest accrues by operation of law to the survivor or survivors. There is no vesting or transfer of the deceased joint tenant’s interest. When a joint tenant dies during the subsistence of the joint tenancy, his or her interest simply ceases to exist, and the interests of the remaining joint tenants expand by accretion. Where there is one survivor, the joint tenancy has run its course and the survivor becomes the full owner of the whole of the property.3

[8]    The concept of survivorship was the idea behind Ms Dreadon’s proposals. The intention was that ownership of the property would pass to Anthony on the deaths of John and Mary through survivorship, rather than under their wills. It was thought that this would eliminate the possibility of a Family Protection Act claim.

[9]    On 7 July 2017, Mary passed away. Consequently, through survivorship, John and Anthony became 50 per cent joint tenants, although the title to the property was not updated to reflect the change.

[10]   In May 2019, John had a change of mind. Ms Dreadon says that on 3 May 2019 John told her he had fallen out with Anthony and he no longer wished for Anthony to have the property. Ms Dreadon explained to him that, as Mary had passed away, through survivorship Anthony now owned half the property. She also recommended that he sever the joint tenancy as soon as possible and complete a new will.

[11]   Severance is the process by which either unity of interest or unity of title is destroyed. It results in the conversion of the joint tenancy into a tenancy in common and destroys the right of survivorship.4

2      Gateshead Investments Ltd v Harvey [2014] NZCA 361, [2014] 3 NZLR 516 at [12].

3 At [13].

4 At [15].

[12]   Later the same day, Ms Dreadon emailed Anthony to ask him to transfer his interest in the property to John.

[13]   On 6 May 2019, Ms Dreadon met with John again. She says he was adamant that he wanted a new will, and he wanted her to “rip up” his existing will. She told him she would not destroy the will, but at his insistence and after she had explained the intestacy rules and he had signed an acknowledgement, she gave him the will to take away. Ms Dreadon also took instructions from John on the preparation of a new will.

[14]   The acknowledgement signed by John said that he acknowledged receipt of his will. It also said, “I intend to rip this will up and I am aware of the rules of intestacy” and “I will make a new will at a later date”.

[15]   Melanie says that when John returned home on 6 May 2019, he ripped his will into pieces.

[16]   Anthony agreed to transfer his interest in the property to John on the conditions that his legal fees were paid, that he was discharged from liability under a mortgage to ANZ, and that it was agreed by John and by Mary’s estate that his debt was repaid in full. On 9 May 2019 he signed and returned the necessary documentation, but ANZ did not agree to release him from his liability under the mortgage, so the transfer did not proceed.

[17]   On 10 May 2019, Ms Dreadon sent a draft of a new will to John (via an email to Melanie’s email address). Under the new will, the executors were to be the plaintiffs and they were to have a right to occupy the property for as long as they wished, and when the occupation came to an end, the property was to be transferred to John and Mary’s six children as tenants in common in equal shares.

[18]   Ms Dreadon and a colleague of hers followed up with John twice regarding the new will but received no response.

[19]   John died on 27 July 2022. At the time of his death, over three years had passed since his new will was drafted but he had not executed it. Whether John severed the joint tenancy before he died, and therefore whether survivorship applied, is a matter in dispute. Had the transfer been registered, there would be no doubt that severance occurred. The issue is whether the joint tenancy was severed by some other means.

[20]   On 30 March 2023, John and Mary’s interests in the property were transferred to Anthony. His solicitors transferred these interests to him on the basis he was entitled to them as the survivor. Anthony therefore became the sole registered proprietor of the property.

The Tenancy Tribunal proceedings and appeal to the District Court

[21]   Anthony brought proceedings in the Tenancy Tribunal to obtain an order against Melanie requiring her to vacate the property. This was unsuccessful. The adjudicator, Mr J R Smith, concluded in a decision dated 15 July 2023 that the Tribunal did not have jurisdiction because there was no residential tenancy.5

[22]   However, Anthony successfully appealed this decision to the District Court. Judge P R Rzepecky concluded, in a decision dated 4 April 2024, that the Tribunal was correct that there was no residential tenancy, but nevertheless it had jurisdiction under s 65 of the Residential Tenancies Act 1986.6 Section 65 allows the Tribunal to evict squatters or trespassers or other people not having any lawful right of occupation of the property. The Judge considered that, as the registered proprietor, Anthony was entitled to possession of the property and the requirements of s 65 were met. The Court therefore made an order requiring Melanie to vacate the property.

[23]   Under s 119 of the Residential Tenancies Act, a District Court decision can be appealed to the High Court on a question of law. If Melanie had appealed to this Court, she could have applied for a stay of enforcement under r 20.10 of the High Court Rules 2016. Instead of adopting that course, however, the plaintiffs commenced these

5      [Redacted].

6      Dunn v Dunn [2024] NZDC 6480.

ordinary proceedings in the High Court and applied for the interlocutory injunction that I must now resolve.

Interlocutory injunction legal principles

[24]   There are three stages to the consideration of an application for an interlocutory injunction:7

(a)The applicant must establish that there is a serious question to be tried or, put another way, that the claim is not frivolous or vexatious.

(b)Next, the balance of convenience must be considered, which requires consideration of the impact on the parties of the granting of, and the refusal to grant, an order.

(c)Finally, an assessment of the overall justice of the position is required as a check.

Serious question to be tried

[25]   Melanie claims that she has a lawful right to occupy the property on two alternative bases. First, she says that an oral agreement was reached in December 2015 that she and her daughters would have a life tenancy, the result being that they could live at the property for as long as they wished. She says this agreement was made when Ms Dreadon met with John and Mary at the property in December 2015. She says that she and Anthony were present when the agreement was made and that Anthony also agreed. Melanie says that this agreement was part of the overall agreement regarding the property that resulted in the 11 February 2016 sale of a one-third joint tenancy to Anthony and the wills of the same date.

[26]   Second, she says that she and her daughters have a life tenancy under cl 5 of John’s unsigned 2019 will. Under cl 5 they are given the right to occupy the property for as long as they wish. In return they must pay the rates, insurance premiums, taxes, mortgage interest and principal repayments, and outgoings and keep the property in

7      NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90, (2013) 13 TCLR 531 at [12].

the same condition it was in at John’s death. As John did not execute the will, it does not meet the requirements for validity in s 11 of the Wills Act 2007. However, in these proceedings, the plaintiffs seek a declaration from the High Court that the will is valid under s 14 of the Act.

[27]   Anthony challenges both claims on the ground that they are subject to res judicata or issue estoppel or they are an abuse of process of the kind in Henderson v Henderson.8 I agree that the first claim is an abuse of process. Melanie did not make the first claim in the Tenancy Tribunal. The claim could and should have been made in the Tribunal. It would be an abuse of process for her to make the claim now in fresh proceedings.9

[28]   I do not accept Anthony’s challenge in relation to the second claim. Melanie made that claim in the Tribunal, but ultimately the District Court Judge concluded that s 65 did not have a wide enough ambit to allow the claim to be taken into account. The Judge considered that the claim would have to be determined in another jurisdiction, namely the High Court.10 This was on the basis that the High Court has said that the Tribunal cannot consider the fact of a claim or the contents of a claim in another proceeding that has not yet been resolved in deciding whether a claimant is entitled to possession of a property.11 Melanie’s claim turns on the 2019 draft will being validated by the High Court under s 14 of the Wills Act. Such an order can only be made in this Court. As it was not possible for Melanie to make the claim in the Tribunal, her claim comes within a recognised exception to res judicata and issue estoppel and it is not an abuse of process.12

[29]   Anthony also says that, even if the 2019 draft will is validated, it does not assist Melanie because John’s interest in the property passed to Anthony by survivorship and does not form part of his estate. He says that survivorship applies because, despite being advised to sever the joint tenancy, John never did so.

8      Henderson v Henderson (1843) 3 Hare 100, 67 ER 313.

9      Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 (HL) approved in Commissioner of Inland Revenue v Bhanabhai [2007] 2 NZLR 478 (CA) at [60].

10     Duun v Dunn, above n 6, at [35].

11 At [35]. See Sergeant v Nigro [2019] NZHC 328 at [94].

12     Attorney-General for Trinidad and Tobago v Eriché [1893] AC 518 (PC) at 522–523 as quoted by

SK Foods LP v SK Foods Australia Pty Ltd (in liq) [2013] FCA 526, (2013) 214 FCR 543 at [40].

[30]   Melanie disputes that there was no severance of the joint tenancy. She says that severance occurred when John (via Ms Dreadon) asked Anthony to transfer his interest in the property to John, and Anthony agreed to do so, and signed the necessary documentation for the transfer to take place.

[31]   This agreement clearly did not result in severance at law. Registration of a transfer was necessary for legal severance, and that did not occur because ANZ did not agree to release Anthony from liability. However, a joint tenancy can be ended by equitable severance,13 and Melanie submits that, although settlement did not occur, the mere fact the agreement was reached was sufficient for equitable severance to result.

[32]   In my view, it is reasonably arguable that equitable severance occurred. John was never able to obtain specific performance because, as the condition could not be satisfied, at no time was he ever ready, willing, and able to perform his part of the agreement.14 But it appears that it is not necessary that an agreement is capable of specific performance for equitable severance to occur.15 This is because:16

The significance of an agreement is not that it binds the parties; but that it serves as an indication of a common intention to sever, something which it was indisputably within their power to do.

[33]   If severance did occur, then when John died his estate received his 50 per cent interest in the property. Two further issues then arise.

[34]   The first is whether the Court should validate John’s 2019 draft will. If it does, then cl 5 of the will applies. If it does not, John died intestate. His 50 per cent interest in the property will not go to Anthony. It will go to his family under the rules of intestacy. Melanie’s claim based on cl 5 of the will must fail.

13 Gateshead Investments Ltd v Harvey, above n 2, at [16].

14 Gurney v Gurney (No 2) [1967] NZLR 922 (CA) at 925, Hurrell v Townend [1982] 1 NZLR 536 (CA) at 550, and DW McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at [12.32].

15 DW McMorland and others Hinde McMorland & Sim Land Law in New Zealand (online ed, LexisNexis) at [13.013(g)]; and Harvey v Gateshead Investments Ltd [2013] NZHC 2253, [2014] 2 NZLR 79 at [30]–[50], aff’d Gateshead Investments Ltd v Harvey, above n 2.

16 Burgess v Rawnsley [1975] Ch 429 at 446 as quoted by: McMorland, above n 15, at [13.013(g)]; and Harvey v Gateshead Investments Ltd, above n 15, at [31]. But compare Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, 2017) at [6.4.13].

[35]   The submissions of the parties did not directly address whether the Court is likely to validate the draft will. However, based on Melanie’s and Ms Dreadon’s evidence of how the draft will came to be, I accept that it is reasonably arguable that it should be validated.

[36]   The second issue is whether cl 5 of the draft will was effective to give Melanie and her daughters a life tenancy in the property when John’s estate only had a 50 per cent interest in the property and the other 50 per cent owner did not agree to the life tenancy. Again, this was not an issue that was addressed in submissions. But, again, my view is that it is reasonably arguable that it did. This is because it appears that a tenant in common can unilaterally grant a lease over the property (although the lessee will have to share possession with the other tenant in common).17

[37]   Melanie  makes  an  alternative  argument  that  relies  on  the  deed  dated   11 February 2016 under which Anthony was sold his original one-third joint tenancy in the property. Clause 3 of the deed gave John and Mary the right to buy back the property, the purchase price being their forgiveness of the $91,666.67 debt. If the buyback power is exercised Anthony must be indemnified and released from his liability under the ANZ mortgage. Melanie says that, by virtue of cl 5 of the deed, this buy back right survives the deaths of both John and Mary and can be exercised by the representatives of their estates.

[38]   Anthony says that the buyback right only continued as long as one of John or Mary remained alive, and, as they are both dead, it no longer exists. This argument turns on interpretation of the words of cl 5. Melanie disputes Anthony’s interpretation.

[39]   If Melanie’s interpretation is correct, a further issue is whether the representatives of both estates must exercise the buyback right or whether one of them can do so. This is an issue because there is no dispute that Anthony is the executor of Mary’s estate, and clearly, he would not support the invocation of the buyback right. The answer to this issue turns on interpretation of cls 3 and 5.

17     U-Needa Laundry Ltd v Hill [2000] 2 NZLR 308 (HC) at [24].

[40]   However, I do not need to address these interpretation issues. Whether the buyback right can be exercised is a matter for the future. If the plaintiffs are successful in having John’s 2019 draft will validated in these proceedings, they will be the executors of John’s estate and they may wish to try to exercise the buyback right. However, that is something that will only arise later if the plaintiffs are able to have the will validated. It is not relevant to whether an interlocutory injunction should be ordered now.

[41]   I conclude there is a serious question to be tried. It is reasonably arguable that the right of survivorship was terminated by equitable severance of the joint tenancy, that the 2019 draft will should be validated by the Court under s 14 of the Wills Act, and that John was able to unilaterally grant Melanie and her daughters a life tenancy in the property under cl 5 of the draft will.

Balance of convenience

[42]   Mr Bowden advised me that Melanie is prepared to pay market rent for the property pending resolution of the plaintiffs’ claims. Provided she pays market rent, the balance of convenience clearly favours her.

Overall justice

[43]   Subject to one remaining issue which I discuss below, I am satisfied that I should grant the injunction. Melanie has established there is a serious question to be tried and the balance of convenience is clearly in her favour, provided she pays market rent. I can see no reason why an injunction should not be ordered in all the circumstances of the case.

[44]   The remaining issue is whether it is appropriate for one court to grant an injunction that would prevent the enforcement of another court’s order. This issue has arisen without being decided in recent decisions of this Court involving situations similar to the present one.18 It may seem surprising that a court would grant an injunction in this circumstance, but, in view of my conclusion above that Melanie’s

18     Sergeant v Nigro, above n 11, at [74]–[82]; and Davis v Gwilliam [2022] NZHC 2228.

claim under cl 3 is not subject to res judicata or issue estoppel or an abuse of process, I consider it to be the correct course.

Result

[45]   The application for an interlocutory injunction is granted. This is subject to the condition that Melanie pays market rent pending resolution of the plaintiffs’ claims.

[46]   Counsel advised that market rent is roughly $500 to $600 per week. I reserve leave for the parties to apply for directions if they cannot agree on a suitable figure.

[47]If the parties cannot agree on costs, then I direct as follows:

(a)Anthony is to file and serve a memorandum of no more than two pages within 20 working days of this judgment; and

(b)Melanie is to file and serve a memorandum in response of no more than two pages within a further 10 working days.

[48]I will then deal with the issue of costs on the papers.

Blanchard J