Harvey v Gateshead Investments Ltd - [2013] NZHC 2253

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5909 [2013] NZHC 2253

BETWEEN CHRISTOPHER MICHAEL HARVEY First Plaintiff/Counterclaim Defendant

ANDRACHEL SUSAN HARVEY Second Plaintiff

ANDRICHARD JAMES PARKER Third Plaintiff

ANDGATESHEAD INVESTMENTS LIMITED
First Defendant/First Counterclaim
Plaintiff

ANDPARANUI PROPERTIES LIMITED Second Defendant/Second Counterclaim Plaintiff

ANDBETA PACIFIC CORPORATION LIMITED
Third Defendant/Third Counterclaim
Plaintiff

Hearing: 6 May 2013

Counsel: J Toebes for Counterclaim Plaintiffs
LAB Kemp for Counterclaim Defendant

Judgment: 30 August 2013

JUDGMENT OF KATZ J

This judgment was delivered by me on 30 August 2013 at 4:30 pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:
J Toebes, JT Law, Wellington
L Kemp, Kemp Barristers & Solicitors, Auckland

HARVEY & ORS v GATESHEAD INVESTMENTS LIMITED & ORS [2013] NZHC 2253 [30 August 2013]

Introduction

[1] Mrs Rachel Harvey and her late husband Mr Michael Harvey owned, as joint

tenants, a family home in Coatesville (“Property”). Mr Harvey died in February

2011 and Mrs Harvey was subsequently adjudicated bankrupt, on 19 December

2012.

[2] The issue in these proceedings is whether, prior to Mr Harvey’s death, their joint tenancy of the Property was severed. If it was, then Mr Harvey’s half interest in the Property will pass beneficially to his two children under the terms of his will. If it was not, then Mr Harvey’s interest in the Property will vest in Mrs Harvey by survivorship. In that event, the entire Property will vest in the Official Assignee for the bankrupt estate of Mrs Harvey.

[3] The competing interests in this case are accordingly those of Mr Harvey’s two children and Mrs Harvey’s creditors.

Factual background

[4] Mrs Harvey is a nurse. She also had interests in three rest home businesses and personally guaranteed the debts of those businesses. Defaults occurred under the relevant loan agreements. Demand was served on the guarantors, including Mrs Harvey, on 18 November 2009.

[5] Summary judgment proceedings were issued against Mrs Harvey on

26 November 2009. Those proceedings were not defended. On 28 January 2010 judgment was entered against Mrs Harvey for $1,442,800, plus interest and costs. On 9 February 2010 a charging order in favour of the judgment creditors was registered against the title to the Property.

[6] Meanwhile, in an attempt to remove the matrimonial home from the reach of Mrs Harvey’s creditors, Mr and Mrs Harvey entered into an agreement (“Agreement”) under the Property (Relationships) Act 1976 (“PRA”) on
16 December 2009.

[7] Clause 1.1 of the Agreement provided as follows:

The parties agree that they shall own any Property separately or jointly or in the shares indicated and described or valued or categorised in the schedule on and from the agreement date under the respective name of each party.

[8] Pursuant to the Agreement, Mrs Harvey agreed to transfer her interest in the Property to Mr Harvey as his separate property. In exchange Mr Harvey gave up any interest in the rest home businesses. Any property purchased from the sale proceeds of any separate property would remain separate property,…

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: [2013] NZHC 2253
Decision Date: 30 August 2013

CaseChat Overview and Summary

The case involved a dispute between the late Mr Harvey's children and Mrs Harvey over the ownership of a family home in Coatesville. The issue was whether the joint tenancy between Mr and Mrs Harvey was severed prior to Mr Harvey's death. If it was, then Mr Harvey's half interest in the Property would pass beneficially to his two children under the terms of his will. If it was not, then Mr Harvey's interest in the Property would vest in Mrs Harvey by survivorship and the entire Property would vest in the Official Assignee for the bankrupt estate of Mrs Harvey. The court had to determine whether there was an equitable severance of the joint tenancy prior to Mr Harvey's death. The court found that the joint tenancy was severed by mutual agreement. The evidence indicated that both parties had a common intention to sever their joint tenancy and its associated right of survivorship. The court also found that the Agreement being void against creditors pursuant to s 47(2) of the PRA did not effectively void or reverse any severance that would otherwise have occurred. The application by the judgment creditors for an order that the entire estate in fee simple in the Property be vested in the Official Assignee for the bankrupt estate of Mrs Susan Harvey was dismissed. The executor was entitled to costs on a category 2B basis.

Orders