Gateshead Investments Ltd v Harvey - [2014] NZCA 361

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA622/2013
[2014] NZCA 361

BETWEEN	GATESHEAD INVESTMENTS LIMITED First Appellant
PARANUI PROPERTIES LIMITED Second Appellant
AND	CHRISTOPHER MICHAEL HARVEY AS EXECUTOR OF THE ESTATE OF MICHAEL GEORGE HARVEY (DECEASED) Respondent

Hearing:	3 June 2014
Court:	Randerson, Harrison and French JJ
Counsel:	G J Toebes for Appellants L A Kemp for Respondent
Judgment:	30 July 2014 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the respondent’s costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

Joint tenancy is a form of co-ownership of property. This appeal concerns the circumstances in which a joint tenancy may be severed.
Mr and Mrs Harvey owned their family home (the Coatesville property) as joint tenants.
Mr Harvey died and Mrs Harvey was subsequently adjudicated bankrupt.
Following Mr Harvey’s death, a dispute arose between his estate and Mrs Harvey’s creditors over ownership of the Coatesville property. The creditors contended that Mr Harvey’s interest had passed on his death to Mrs Harvey by survivorship, leaving her the sole owner of the entire property. Mr Harvey’s executor, however, claimed that prior to Mr Harvey’s death the joint tenancy had been severed, with the result that Mr Harvey and Mrs Harvey each owned a half share as tenants in common.
If the creditors were correct, the entire property would vest in the Official Assignee for the benefit of the creditors. If the estate were correct and the joint tenancy had been severed, then only a one half share would vest in the Official Assignee and the other half would be part of Mr Harvey’s estate.
The case was heard in the High Court by Katz J. The Judge upheld the executor’s claim.[1] She found on the facts that the joint tenancy had been severed in equity either by mutual agreement or by a course of conduct.
[1]Harvey v Gateshead Investments Ltd [2013] NZHC 2253, [2014] 2 NZLR 79.
Mrs Harvey’s creditors now appeal that decision.
The key issues raised by the appeal are:
(a)whether Mr and Mrs Harvey agreed to sever the joint tenancy under a relationship property agreement executed prior to Mr Harvey’s death; and
(b)whether s 47 of the Property (Relationships) Act 1976 voids any severance of the joint tenancy.

Background

Joint tenancies

We turn first to explain the concept of joint tenancy and the distinction between joint tenancy and another form of co-ownership called tenancy in common.
As noted in the decision under appeal, joint tenancy arises where a parcel of land is vested in two or more persons without any indication they are to take distinct and separate shares.[2] Each has a right to the whole property but not to any particular share in it. Joint tenancy regards co-owners as, in effect, a single entity.
[2]At [14].
In contrast, where co-owners hold…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZCA 361
Decision Date: 30 July 2014 at 2.30 pm

CaseChat Overview and Summary

The appeal concerns the severance of a joint tenancy in a family home owned by Mr and Mrs Harvey. Following Mr Harvey's death, a dispute arose between his estate and Mrs Harvey's creditors over the ownership of the Coatesville property. The creditors argued that Mr Harvey's interest passed to Mrs Harvey by survivorship, making her the sole owner, while the executor claimed that the joint tenancy had been severed before Mr Harvey's death, resulting in each owning a half share as tenants in common. The High Court Judge, Katz J, found that the joint tenancy had been severed in equity, either by mutual agreement or by a course of conduct, leading to the creditors' appeal. The key issues were whether the joint tenancy was severed by a relationship property agreement and whether section 47 of the Property (Relationships) Act 1976 voids any severance of the joint tenancy.

The Court of Appeal found that the relationship property agreement did not only seek to transfer the entire property to Mr Harvey but also intended to sever the joint tenancy. They rejected the argument that the agreement was void due to section 47 of the Property (Relationships) Act, stating that the voiding should only extend to the transfer of Mrs Harvey's half share in the property, not the mutual intention to sever the joint tenancy. The Court held that voiding the transaction to the extent necessary to meet the creditors' claim meant voiding the agreement in so far as it provided for a transfer of Mrs Harvey's half share in the property but not insofar as it evinced a mutual intention to sever the joint tenancy. The purpose of section 47 is not to improve the position of the creditors, only to preserve it.

The appeal was dismissed, and the appellants were ordered to pay the respondent's costs for a standard appeal on a band A basis and usual disbursements.

Orders