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Harvey v Beveridge [2014] NZCA 72 (20 March 2014)

Last Updated: 27 March 2014

     
IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 Appellant
AND
 Respondent
Hearing:
25 February 2014
Court:
Randerson, White and French JJ
Counsel:
A R Armstrong for Appellant R E Murphy and C R Becker for Respondent
Judgment:


JUDGMENT OF THE COURT

  1. The appeal is allowed.
  2. Summary judgment is entered for the appellant.
  1. The respondent is ordered to give up possession of Unit 4, 35 Division Street, Riccarton, Christchurch (Land Registration number CB35B/1148) to the appellant within 28 days of the date of this judgment.
  1. The appellant is entitled to mesne profits from the respondent in respect of the Unit from 24 January 2012 to the date on which possession of the Unit is given to the appellant.
  2. The quantum of the mesne profits is to be determined, if necessary, by the High Court.

  1. There is an order pursuant to s 143 of the Land Transfer Act 1952 that Caveat 9255862 lodged by the respondent against dealings in the Unit be removed.
  2. The respondent is to pay the appellant costs for a standard appeal on a band A basis and usual disbursements.
  3. Costs in the High Court, which were reserved, are to be fixed by the High Court in light of this judgment.

____________________________________________________________________

REASONS OF THE COURT

(Given by White J)

Introduction

[1] The appellant, the Reverend Megan Harvey, is the executrix and trustee under the will of the late Dr Mark Byrd who died on 24 January 2012.
[2] The respondent, Mr Ijan Beveridge, is the occupier of Unit 4, 35 Division Street, Riccarton, Christchurch. The Unit was owned by Dr Byrd and has been occupied by Mr Beveridge rent free since about 2008.
[3] There was evidence that Dr Byrd intended that the Unit should belong to Mr Beveridge, but it was not transferred to him during Dr Byrd’s lifetime and there was no provision in Dr Byrd’s last will, which was dated 3 September 1999, relating to the Unit or to Mr Beveridge.
[4] Following the death of Dr Byrd, notice was given on behalf of his estate to Mr Beveridge to vacate the Unit. Mr Beveridge declined to do so on the ground that he was in lawful possession of the Unit as the beneficiary of a constructive trust based on the common intention of Dr Byrd and Mr Beveridge. Mr Beveridge lodged a caveat against dealings in the Unit.
[5] The Reverend Harvey issued proceedings against Mr Beveridge in the High Court at Christchurch seeking by way of summary judgment an order that he give up possession of the Unit and that he pay mesne profits at the rate of $350 per week from 24 January 2012 and costs. An order for the removal of the caveat was also sought.
[6] Mr Beveridge issued a separate proceeding claiming a declaration that the Reverend Harvey holds the Unit on constructive trust for him and an order that she transfer the Unit to him.
[7] The Reverend Harvey’s application for summary judgment was dismissed by Associate Judge Osborne on the ground that she had failed to establish that Mr Beveridge had no defence to the claim.[1] The Associate Judge reached this conclusion because, on a review of the elements of a “common intention” constructive trust, he did not find any element which Mr Beveridge must establish “to be indisputably missing on the evidence available at summary judgment.”[2]
[8] The Reverend Harvey appeals against the Associate Judge’s decision on the ground that Mr Beveridge has no defence to the claim because:
[9] Mr Beveridge supports the decision of the Associate Judge.

Factual background

[10] Bearing in mind that in terms of the summary judgment rules the onus of satisfying the court that a defendant has no defence rests on the plaintiff,[3] we propose to treat the evidence and pleadings for Mr Beveridge as establishing the relevant factual background for the purpose of determining whether he has a defence to the claim for possession of the Unit.
[11] The Unit was initially purchased by Dr Byrd in 1992 as a residence for his mother. After her death, he made the Unit available to friends and acquaintances in need of accommodation.
[12] Mr Beveridge met Dr Byrd in about 1992 through their mutual employment at the University of Canterbury. Dr Byrd was a lecturer in the Psychology Department and Mr Beveridge worked as a technician.
[13] They became close friends after Mr Beveridge was sentenced to a term of imprisonment in 2000. Dr Byrd was supportive of Mr Beveridge and visited him frequently in prison, on a weekly basis from 2003 to June 2008.
[14] Following Mr Beveridge’s release from prison in June 2008, Dr Byrd offered him the use of the Unit as his home. Mr Beveridge initially occupied the Unit as a guest, but within a few weeks, in about July 2008, Dr Byrd and Mr Beveridge formed “a common and unequivocal intention” that the Unit was held on trust by Dr Byrd for Mr Beveridge. Dr Byrd stated to Mr Beveridge on numerous occasions that the Unit was the property of Mr Beveridge. According to Mr Beveridge, Dr Byrd repeated statements to the effect that the Unit “is yours”.
[15] During the period from 2008 to 2012 Dr Byrd did not require Mr Beveridge to pay any rent or outgoings. Mr Beveridge offered payment to Dr Byrd on occasions, but this was refused in strong terms.
[16] At no stage did Dr Byrd inspect the Unit or undertake any duties that would be expected of an owner or a landlord of a property. Mr Beveridge undertook and paid for some improvements to the Unit. When he sought permission from Dr Byrd to do so, Dr Byrd said that he did not need to know the details and that it was Mr Beveridge’s property so he could do as he chose.
[17] Mr Beveridge ceased offering payment and seeking permission to make improvements to the Unit as he had formed the intention that he was “the beneficial owner” of the Unit.
[18] In November 2008 Dr Byrd had an accident which caused him to become a paraplegic. Dr Byrd was admitted to the Burwood Spinal Injuries Unit of Christchurch Hospital and subsequently the St John of God Hospital in Halswell, Christchurch.
[19] During Dr Byrd’s time at the Spinal Injuries Unit and in hospital Mr Beveridge visited him daily. Dr Byrd asked Mr Beveridge to be his advocate in health and personal matters. Mr Beveridge also undertook all of the help and support that Dr Byrd needed.
[20] As Dr Byrd’s own residence was unsuitable for a paraplegic person, Mr Beveridge arranged for it to be renovated to accommodate Dr Byrd, but he then died on 24 January 2012.
[21] After the Canterbury earthquakes beginning in September 2010, Dr Byrd took no proprietorial interest in the damage to the property and Mr Beveridge organised all insurance claims.[4]
[22] In about June 2008 Dr Byrd arranged for Mr Beveridge to have the use, by way of a loan, of a motor vehicle owned by Dr Byrd. In contrast to the arrangements in respect of the Unit, Dr Byrd was explicit in directing the terms on which the motor vehicle was lent and remained his property.
[23] At no time during his life did Dr Byrd revoke his intention for Mr Beveridge to be “the beneficial owner” of the Unit.
[24] Following the death of Dr Byrd, it was found that his last will, which had been made on 3 September 1999 with Young Hunter, lawyers in Christchurch, made no reference to the Unit or Mr Beveridge. Other persons, including the Reverend Harvey, were named as the beneficiaries under the will.
[25] There is also undisputed evidence from the Reverend Harvey that Mr Beveridge and another friend of Dr Byrd both separately searched Dr Byrd’s residence for a later will, but were unable to find one. Mr Beveridge also advertised twice seeking a response from any lawyer who held a will made by Dr Byrd, but there was no response. Dr Byrd did not make another will through Young Hunter and he did not give any instructions to or have any discussions with Young Hunter regarding making a new will. Dr Byrd did not give any instructions to Young Hunter regarding Mr Beveridge.
[26] In addition there is undisputed evidence that Mr Beveridge initially considered making a claim under the Law Reform (Testamentary Promises) Act 1949, but ultimately decided not to pursue such a claim.

High Court judgment

[27] After referring to the nature of the proceeding, a chronology of key events and what Mr Beveridge did not assert,[5] Associate Judge Osborne comprehensively analysed the legal concept and the ingredients of a “common intention” constructive trust by reference to the relevant authorities and commentaries.[6] He then summarised his conclusions as to the relevant elements:[7]
[28] Applying these principles to this case, the Associate Judge found that Mr Beveridge had an arguable claim because there was evidence of an unequivocal common intention.[8] On the question of the need for any contribution, detriment, reliance or alteration of position or unconscionability, the Associate Judge said:[9]

As I have explained, I view the state of the law in New Zealand in relation to any requirement of detriment as to a common intention constructive trust as not settled. If, as indicated by Fisher J in Cossey v Bach and by Mallon J in SM v MH, contribution is not necessarily required to create a trust by express intention, the lack of any alteration of position by Mr Beveridge in this case is not necessarily fatal to success at trial. The Court at trial may have to embark upon a broader consideration as to whether there would be unconscionability if the executor is free to deal with the property as an asset of the estate.

Does Mr Beveridge have a defence?

[29] As with any case involving a trust, it is essential to articulate precisely the relevant terms of the trust at issue. Here Mr Beveridge’s defence to the claim for summary judgment is based on the existence of a “common intention” constructive trust. The terms of this trust are said to be that Dr Byrd, as the legal owner of the Unit, was from about mid 2008 under legal obligations:
[30] The issue is whether the Associate Judge was right to decide that the questions whether a trust on these terms existed and obliged Dr Byrd on his death to leave legal ownership of the Unit to Mr Beveridge needed to go to trial for determination.
[31] There are a number of difficulties for Mr Beveridge. The first is that on his own evidence Dr Byrd’s expressed intention was to give him the Unit rather than to hold it on trust for him. Dr Byrd might have given him the Unit during his lifetime by transferring legal ownership of the Unit to him, but he did not do so. There is no evidence or suggestion of an incomplete gift in this case. Dr Byrd took no steps during his lifetime to execute any document necessary to implement the gift by transferring legal ownership of the Unit to Mr Beveridge.[10] No question of the Court perfecting an incomplete gift therefore arises.[11]

[32] Second, it is well established that an incomplete gift may be revoked by the donor at any time.[12] No question of conscience enters into the matter, for there is no consideration and there is nothing dishonest on the part of an intending donor who chooses to change his or her mind at any time before the gift is complete.[13] As Ms Murphy acknowledged in the course of argument, there would therefore have been nothing unconscionable about Dr Byrd resiling from any intention to give legal ownership of the Unit to Mr Beveridge during his lifetime.
[33] Third, an intention to make a gift is not an intention to create a trust.[14] Mr Beveridge’s evidence does not go so far as to suggest that Dr Byrd held the beneficial ownership of the Unit on trust for him in the ordinary way pending transfer of the ultimate legal ownership of the Unit to him. There is no evidence or suggestion of an express trust, particularly not one created in writing and signed by Dr Byrd as required by s 25(2) of the Property Law Act. Under this provision a trust that relates to land and is to take effect in the lifetime of the settlor must comply with these requirements which are designed to prevent the disposition of interests in land without written evidence of the settlor’s intentions.[15]
[34] While by s 25(4)(a) of the Property Law Act the requirements of s 25(2) do not affect the creation or operation of a resulting, implied or constructive trust, there is no suggestion that any such trust had been created in this case other than the claimed “common intention” constructive trust. As the Associate Judge recognised,[16] an orthodox constructive trust would have required Mr Beveridge to establish that his contributions to the Unit supported a claim for a 100 per cent ownership interest in the property.[17]
[35] Fourth, the absence of any significant contributions made by Mr Beveridge to the Unit during Dr Byrd’s lifetime also explains why Mr Beveridge does not claim in estoppel for a remedy based on his reliance on Dr Byrd’s expressed intention and his alteration of position by reason of a contribution to the value of the Unit. As the Associate Judge recognised,[18] any such claim would have been weak given an absence of significant contribution.
[36] Finally, in the absence of a perfected gift of the legal ownership of the Unit to Mr Beveridge or evidence that Dr Byrd during his lifetime intended to hold the property on trust for Mr Beveridge in the ordinary way, pending transfer of the legal ownership of the Unit to him, it was always open to Dr Byrd during his lifetime to resile from any intention to transfer legal ownership of the Unit to Mr Beveridge. There was nothing that Mr Beveridge could have done to prevent Dr Byrd from doing so. There was no question of any legally enforceable gift or trust in respect of the ultimate legal ownership of the Unit.
[37] In order to overcome these difficulties, Ms Murphy seeks to support the Associate Judge’s decision by submitting that:
[38] Ms Murphy submits that the required “unconscionable act” is the denial by the Reverend Harvey, as the executrix of Dr Byrd’s estate, of Dr Byrd’s intention that Mr Beveridge should have legal ownership of the Unit. According to Ms Murphy, while Dr Byrd himself would be entitled to resile from his intention, the Reverend Harvey was not entitled to do so on his behalf. She had therefore acted unconscionably. No other “unconscionable act” is, or could be, identified.
[39] As Ms Murphy acknowledged, however, Dr Byrd was entitled to resile from any intention to transfer legal ownership of the Unit to Mr Beveridge by making no provision in his will for that purpose. Again there was nothing that Mr Beveridge could do to prevent him from doing so. The only way Mr Beveridge could have challenged Dr Byrd’s will and obtained an order vesting legal ownership of the Unit in him was by bringing a successful claim under the Law Reform (Testamentary Promises) Act.[19] As the Associate Judge recognised,[20] however, Mr Beveridge would not be able to do so because he would not be able to establish that his services to, or performance of work for, Dr Byrd were sufficient for that purpose or that Dr Byrd had promised to reward him by way of testamentary provision for such services or work. Mr Beveridge’s decision not to pursue a testamentary promises claim confirms that he does not dispute this assessment.
[40] Consequently, as Ms Murphy accepted, if Dr Byrd exercised his entitlement to make no testamentary disposition in favour of Mr Beveridge, this would not constitute an “unconscionable act” on his part.
[41] The absence of any provision in Dr Byrd’s will relating to the Unit or Mr Beveridge is therefore fatal to Mr Beveridge’s defence because it establishes that Dr Byrd had no intention of making any testamentary disposition in favour of Mr Beveridge. By his will, Dr Byrd resiled from any intention he may have had to transfer ultimate legal ownership of the Unit to Mr Beveridge.
[42] The fact that Dr Byrd’s last will was made in 1999 well before Mr Beveridge began his occupation of the Unit does not alter this conclusion. It is well-established that a will:
[43] Once it is accepted that Dr Byrd was entitled to resile in his will from any intention to transfer legal ownership of the Unit to Mr Beveridge, no question of an unconscionable act on the part of the Reverend Harvey arises. As Dr Byrd’s executrix under his will, she is obliged to implement his testamentary instructions by getting in the assets of his estate.[25] If, as we have found, Dr Byrd was entitled to resile from any intention without that being an unconscionable act, then the Reverend Harvey cannot be acting unconscionably by taking steps to implement Dr Byrd’s testamentary instructions.
[44] This means that Mr Beveridge has no defence to the claim for possession of the Unit. Contrary to the view of the Associate Judge,[26] in the absence of an unconscionable act on the part of Dr Byrd, it is not necessary for the trial Court to embark on any consideration of alleged unconscionability on the part of the Reverend Harvey as executrix.
[45] None of the authorities relied on by the Associate Judge and Ms Murphy supports the proposition that there is any basis for a “common intention” constructive trust which entitles Mr Beveridge to ultimate legal ownership of the Unit.[27] None of the authorities involved a claim based on the alleged unconscionability of an executrix in implementing the instructions of a will-maker who it is accepted was entitled to resile in his will from unimplemented intentions expressed during his lifetime. The authorities were all concerned with the requirements for resulting or constructive trusts in the context of relationships that are now covered by the Property (Relationships) Act 1976.[28] It is therefore unnecessary for us to decide in the present case whether in New Zealand a “common intention” constructive trust should be recognised in the context of a different relationship and in the absence of any significant contributions to the value of the property concerned or any detriment, that is, any alteration of position in reliance on the expressed intention.
[46] It is well-established that constructive trusts based on the “reasonable expectations” of the parties do require evidence of some contribution, direct or indirect, to the property at issue.[29] We are not at all sure that in this context the Associate Judge was right to suggest that a distinction should be drawn between constructive trusts based on “reasonable expectations” and “common intention” constructive trusts in order to avoid the need for evidence of contribution justifying an order for the transfer of ownership of the Unit to Mr Beveridge.[30] The question whether the distinction should be drawn may, however, be left to another day given the acknowledgment that at least an element of unconscionability is required for both. We observe that, in the absence of any evidence of contribution or any other factor, there would appear to be no element of unconscionability sufficient to support the creation of a “common intention” constructive trust.
[47] Our conclusion that in the circumstances of the present case Mr Beveridge has no defence to the claim for possession of the Unit is reinforced by the following further considerations:
[48] Accordingly, Mr Beveridge has no defence to the claim by the Reverend Harvey for possession of the Unit in her capacity as executrix and trustee under the will of the late Dr Byrd.

Result

[49] For the reasons given, the appeal is allowed and summary judgment is entered for the Reverend Harvey.
[50] We also make the following orders:

(a) Mr Beveridge is ordered to give up possession of Unit 4, 35 Division Street, Riccarton, Christchurch (Land Registration number CB35B/1148) to the Reverend Harvey within 28 days of the date of this judgment.

(b) The Reverend Harvey is entitled to mesne profits from Mr Beveridge in respect of the Unit from 24 January 2012 to the date on which possession of the Unit is given to the Reverend Harvey.

(c) The quantum of the mesne profits is to be determined, if necessary, by the High Court.

(d) There is an order pursuant to s 143 of the Land Transfer Act 1952 that Caveat 9255862 lodged by Mr Beveridge against dealings in the Unit be removed.

(e) Mr Beveridge is to pay the Reverend Harvey costs for a standard appeal on a band A basis and usual disbursements.

(f) Costs in the High Court, which were reserved, are to be fixed by the High Court in light of this judgment.




Solicitors:
Young Hunter, Christchurch for Appellant
Geddes & Maciaszek, Christchurch for Respondent

[1] Harvey v Beveridge [2013] NZHC 1718, [2013] NZAR 1364 at [87].

[2] At [86].

[3] High Court Rules, r 12.2(1); Pemberton v Chappell [1987] 1 NZLR 1 (CA); and MacLean v Stewart (1997) 11 PRNZ 66 (CA).

[4] There was no suggestion, however, that the formal claims referred to Mr Beveridge’s alleged beneficial interest in the Unit.

[5] Harvey v Beveridge, above n 1, at [2]–[6].

[6] At [8]–[58].

[7] At [59].

[8] At [60]–[82] and [84].

[9] At [83] (footnotes omitted).

[10] Contrast Macedo v Stroud [1922] 2 AC 330 (PC) and Scoones v Galvin [1934] NZLR 1004 (CA). See also Laws of New Zealand Gifts (online ed) at [63].

[11] Re McArdle [1951] Ch 669 (CA) 677 and Pennington v Waine [2002] EWCA Civ 227, [2002] 1 WLR 2075. See also Laws of New Zealand Gifts (online ed) at [63].

[12] Standing v Bowring (1885) 31 Ch D 282 (CA) at 290 and Laws of New Zealand Gifts (online ed) at [63].

[13] Re McArdle, above n 11 and Laws of New Zealand Gifts (online ed) at [63].

[14] Jones v Lock (1865) LR 1 Ch App 25 (CA); Andrew Butler “Creation of an Express Trust” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [4.2.2(5)]; and Laws of New Zealand Gifts (online ed) at [65].

[15] Laws of New Zealand Trusts (online ed) at [43].

[16] See [27] above, final bullet point.

[17] Jessica Palmer “Constructive Trusts” in Andrew Butler (ed) Equity and Trusts in New Zealand, above n 14, at [13.2.4].

[18] Harvey v Beveridge, above n 1, at [6].

[19] Law Reform (Testamentary Promises) Act 1949, s 31(1) and Bill Paterson Law of Family Protection and Testamentary Promises (4th ed, LexisNexis, Wellington, 2013) at [13.8].

[20] Harvey v Beveridge, above n 1, at [5].

[21] Wills Act 2007, ss 15 and 16.

[22] McCormack v Foley [1983] NZLR 57 (CA) at 69; Corbett v Newey [1998] Ch 57 (CA) at 65; Re Berger (Deceased) [1990] Ch 118 (CA) at 131–132; and Raymond Jennings and John Harper Jarman on Wills (8th ed, Sweet & Maxwell, London, 1951) at 26.

[23] Wills Act, s 20(1); N Richardson Nevill’s Law of Trusts, Wills and Administration (11th ed, LexisNexis, Wellington 2013) at [14.1.2]; and Laws of New Zealand Wills (online ed) at [3].

[24] N Richardson, above n 23, at [14.1.2] and Glass v Anthony HC Christchurch CIV-2008-409-455, 9 July 2008.

[25] N Richardson, above n 23, at [20.3] and Laws of New Zealand Administration of Estates Vol II (online ed) at [293].

[26] See [27] above.

[27] Cossey v Bach [1992] 3 NZLR 612 (HC) (claim under the (then) Matrimonial Property Act 1976 by one party to a de facto relationship against the other party); Boys v Calderwood HC Auckland, CIV2004404-290, 14 June 2005 (claim by one party to a de facto marriage against the other party – the High Court found promissory estoppel made out based on detriment suffered and that a common intention trust did not fit the circumstances); SM v MH HC New Plymouth CIV-2007-443-656, 1 July 2008 (claim by wife against husband’s estate under the Law Reform (Testamentary Promises) Act 1949; and Clark v Clark [2012] NZHC 3159, [2013] NZFLR 534 (claim by wife against husband under the Property (Relationships) Act 1976).

[28] See Property (Relationships) Amendment Act 2001, renaming the principal Act and extending the property division regime to de facto couples who have lived together for more than three years. The case law principles accordingly apply only to de facto relationships of less than three years (see Property (Relationships) Act, s 4).

[29] Lankow v Rose [1995] NZLR 277 (CA) at 289 per McKay J and at 294 per Tipping J (in that case the de facto partner had put “her all” into a relationship, making significant direct and indirect contributions to the property held in her partner’s name); Nuthall v Heslop (1995) 13 FRNZ 518 at 525 (HC) and Gillies v Keogh [1989] 2 NZLR 327 (CA) at 332. Contributions in respect of a home were also central to the two most recent “common intention” constructive trust cases in the United Kingdom Supreme Court and House of Lords: Jones v Kernott [2011] UKSC 53, [2011] 2 WLR 1121 and Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432; and Nicola S Peart “Equity in Family Law” in Andrew Butler (ed) Equity and Trusts in New Zealand, above n 14, at [41.4.1(4)].

[30] Harvey v Beveridge, above n 1, at [9].

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