Sprott v Harper [2000] QCA 391

[1] THE COURT: The issue in this case is whether a joint tenancy has been severed. If it has the deceased wife's estate will be entitled to a half interest in the property as tenant-in-common; if it has not, the husband will be sole owner of the property by survivorship.

[2] The property is a house property at Morayfield. It was formerly owned by the appellant Mr Harper and his wife as joint tenants. His wife died on 29 July 1999 apparently having fallen out with the appellant some time previously. Her will made in June 1998 appoints her daughter, who is the respondent in these proceedings, as executrix and trustee of her estate. The appellant was left no benefit under that will.

[3] The learned District Court judge held that the former joint tenancy had been severed and that as a consequence the respondent (on behalf of the estate) is entitled to an equal share in the property as tenant-in-common with the appellant.

[4] The appellant and Mrs Harper had married in 1989 and purchased the property as joint tenants in 1991. Mrs Harper by October 1998 had ceased to reside at the property and had commenced living apart from the appellant. The solicitors for Mrs Harper and the solicitors for the appellant then commenced negotiations in writing with a view to reaching a property settlement. On 1 April 1999 the appellant and Mrs Harper met in the absence of their solicitors and executed a handwritten document entitled "Agreement for Settlement of Property and Assets between Janice A Harper and Laurence V Harper". It was in these terms:

"We do both agree to the value of the house which is $160,000 less the amount of approximately $30,000 still owing to the Commonwealth Bank.

We do both agree to the value of the trailer which is $8,000. We do both agree that the difference in price, between the Range Rover and the Falcon is $3,000. As Laurie is keeping the furniture and the ride-on mower he has agreed to pay me the $3,000 without splitting the amount.

We do both agree that I do not touch Laurie's AMP Life Insurance and he does not touch my superannuation as the amounts are similar. Copies enclosed.

I do agree to not request any money for the value of Laurie's tools and equipment or any part of the Mack truck and drott.

We do both agree that the property be sold if Laurie cannot afford to pay me out."

[5] It was duly signed by the parties at the foot of the document. On its face it seems to be a concluded agreement, although it was obviously intended that further events should occur before it was completed. For example, it was contemplated that the appellant should ascertain whether he could afford to pay the agreed $72,000 or whether it would be necessary for "the property" to be sold in order for this to happen. The appellant's solicitors fairly promptly indicated that they were instructed that a property settlement agreement had resulted, and they purported to summarise it in six numbered paragraphs in a letter of 16 April.

[6] Over the ensuing months the appellant and Mrs Harper's solicitors continued to negotiate regarding the terms of a possible Family Court consent order in the broad terms of the agreement. In the course of these negotiations Mrs Harper requested a slightly greater share of the common property than that stated in the agreement in that at one stage she sought to be paid $75,000. A consent order had not been achieved when Mrs Harper died on 29 July 1999.

[7] It is contended on behalf of the appellant that the parties were still in a state of negotiation when Mrs Harper died, and that severance of the joint tenancy had not been effected. Counsel for the appellant submitted that the question ought to have been decided by reference to the question whether a binding agreement had been reached on 1 April 1999. That however is not necessarily the case. The tests for determining whether parties have by their conduct severed a joint tenancy are wider than this. The classical statement is that of Page Wood VC in Williams v Hensman[1] which was identified by Mason CJ and McHugh J in Corin v Patton[2] as the starting point in such an exercise. The relevant statement recognises that a joint tenancy may be severed in three ways. The first of these is by an act on the part of one of the persons interested such as, for example, disposing of his or her own interest. The second is severance by mutual agreement; and the third is by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy-in-common. Obviously then, it is not a pre-condition of effecting a severance that a binding agreement be made between the relevant parties.

[8] The second contention on behalf of the appellant is that the tenancy cannot have been severed because the parties had not even turned their mind to that question. That again is irrelevant. A severance may occur under the first or third ways described by Page Wood VC independently of any intention to achieve such a specific result. The question is whether one or both of the parties have acted in such a manner as to require an inference of severance to be drawn. Owners may sever a joint tenancy without knowing what a "joint tenancy" or "severance" is. The real question is whether the parties have acted in a way that the law regards as inconsistent with the maintenance of the joint tenancy.

[9] It was further contended that Mrs Harper repudiated the agreement on 1 April 1999 by trying to obtain more than she was entitled to under it. However the appellant's advisers continued to adhere to the terms of the agreement and refused to increase the amount. In these circumstances Mrs Harper's request for the allowance of an additional $3,000 could be regarded as an unsuccessful attempt on her part to vary the agreement. It is true that statements may be found in letters from her solicitors which do not treat the agreement as binding, but it was never asserted by the appellant that this amounted to a breach or a repudiation. On the contrary, he continued to rely on the terms of the agreement, at least until after Mrs Harper died.

[10] The dominant factors in the agreement are that the parties were splitting up their property and designating the entitlements of each. It was a parting of the ways, at least so far as their property interests were concerned. The major item in the division of assets was the house property to which a value was ascribed. Sixty-five thousand dollars of Mrs Harper's entitlement is ascribed to it, which was exactly half its agreed net value. The agreement contemplates that the appellant will simply pay Mrs Harper out, but that if he cannot afford to do so the property will have to be sold. Whichever happened, the joint tenancy was over and was intended to be ended. The fact that some time might elapse before the appellant decided which way it would happen is not to the point.

[11] The agreement of 1 April was in our view clear evidence of an intention on the part of both parties to sever the joint tenancy. Counsel for the appellant however submitted that there was an additional intention that "nothing would occur" until that agreement was registered in the Family Court. But there would be no need for such registration unless proceedings were commenced in that court, and, if the parties by their own agreement were able to agree upon the division of their property there would be no need for such proceedings. We can see no legal or factual basis for inferring a mutual intention that the agreement had to be registered in the Family Court.

[12] It may be mentioned in passing that an agreement of this kind may have some force between the parties inter se notwithstanding a statutory requirement that such an agreement be approved by a court. Such a view was taken by the Full Court of the Family Court of Australia in Bourke v Bourke (No 2)[3] where effect was given to an agreement made between the husband and the wife notwithstanding that the wife died before the court had approved it. The following statements of Lord Denning in Smallman v Smallman[4] were cited with apparent approval:

"... If the parties have reached an agreement on all essential matters, then the clause 'subject to the approval of the court' does not mean there is no agreement at all. There is an agreement, but the operation of it is suspended until the court approves it ... Pending the application to the court, it remains a binding agreement which neither party can disavow."

"We hold that the agreement to set aside the consent orders of 2 March 1990 was valid and binding upon the husband and wife once it was concluded by the signing of the minutes of proposed consent orders by their solicitors, notwithstanding that that agreement had not been made effective by the court's making an order pursuant to the agreement."

This is consistent with the observation in Calabrese v Miuccio (No 2)[5]:

"I conclude that the agreement made by the solicitors in November 1982 was valid unless and until its effect was disturbed by proceedings properly brought before the Family Court."

[13] It is significant that when Mrs Harper endeavoured to obtain a little more money from the appellant she adverted to other items of property as to which she thought the appellant might have obtained an advantage. There was never any attempt to disturb the central plank of the arrangement namely, the acquisition of the property by the appellant or its sale.

[14] It is not necessary to deal with a number of points which were taken below but which were not relied upon on appeal. In our view the learned trial judge was plainly right in concluding that the document of 1 April shows that it was clearly intended by the parties to bring about a final settlement of property matters; that the document clearly implied an equal division of the land; and that the appellant was either to buy out the deceased's share or the property was to be sold. Nor is it necessary to go in greater detail to the cases dealing with severance[6]. Plainly the agreement shows a mutual intention to sever and was inconsistent with the continued status of the property as jointly owned. In our view the parties made a binding agreement and no statutory requirement or court order ever intruded to defeat it. That agreement, on its proper construction, contains a necessary implication that the joint tenancy be severed and accordingly it satisfies the second test stated in Williams v Hensman. We also consider that the third test is satisfied namely, that there was a "course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy-in-common."[7]

[1] [1861] EngR 701; [1861] 1 J & H 546; (1861) 70 ER 862.

[2] (1990) 169 CLR 540, 546-547.

[3] [1994] FamCA 61; (1994) FLC 92-479; (1994) 121 FLR 124.

[4] [1972] Fam 25 at 31.

[5] [1985] 1 Qd R 17 at 25 per Thomas J.

[6] Including Corin v Patten (1990) 169 CLR 540; Abela v Public Trustee [1983] 1 NSWLR 308.

[7] Williams v Hensman [1861] EngR 701; [1861] 1 J & H 546, (1861) 70 ER 862.