A v B
[2019] NZHC 371
•7 March 2019
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2018-412-90
[2019] NZHC 371
UNDER the Property Law Act 2007 BETWEEN
A
Plaintiff
AND
B
Defendant
Hearing: 6 March 2019 Appearances:
L Anderson for plaintiff D More for defendant
Judgment:
7 March 2019
Reissued:
9 April 2019
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] This case is primarily concerned with a residential property in Dunedin jointly owned by the plaintiff, Ms A, and the defendant, Mr B, and currently occupied by the latter. There is a secondary question relating to certain chattels in the property which Ms A says are hers. The case raises issues concerning the relationship between general property law on the one hand and the Property (Relationships) Act 1976 on the other hand, and the jurisdictions of this Court and the Family Court.
[2] First, the factual background. The parties began co-habiting in May 2015. They separated in July 2017. It is unnecessary to canvass the reasons for the break-up in this judgment. During the relationship, in December 2016, they bought the property that they were renting at , Dunedin. Having received careful and accurate advice from the firm of solicitors that acted for them on the
A v B [2019] NZHC 371 [7 March 2019]
purchase as to the difference between acquiring the property as joint tenants on the one hand and as tenants in common (in equal or unequal shares) on the other hand, they elected to do so as joint tenants. This, despite the fact that they did not make equal contributions to its acquisition. They paid $330,000 for the property. Mr B contributed $57,828.45 and Ms A contributed $15,419.33. The balance, the difference between the sum of their cash contributions and the purchase price (together with the usual costs of acquisition), was funded by a $254,000 loan from their bankers, Westpac, for which they agreed to become jointly and severally liable. The loan was secured by way of a first ranking mortgage over the property. It still is. The evidence is that, throughout their relationship, Mr B earned significantly more than Ms A. Their domestic arrangements were that each of them took a small amount of their salary for personal spending and the balance of their salaries were paid into a joint account from which principal and interest payments on the loan and their other living expenses were paid. Since the break-up of the relationship in July 2017, Mr B has lived in the property and assumed sole responsibility for the payments of principal and interest on the loan.
[3] It will be evident from what I have already said that Mr B contributed more than Ms A in cash to the original acquisition of the property and has also funded a larger proportion of principal and interest payments on the loan, both before and after the break-up. On the other hand, he has also lived in the property since the break-up without paying rent to Ms A. If it becomes necessary to untangle the precise values of their contributions to this will not be the easiest of exercises.
[4] It would seem that both parties came to the relationship with chattels, both acquired chattels from their own funds during the course of the relationship, and, as a couple, they acquired chattels jointly.
[5] Ms A now sues Mr B. In her first cause of action she seeks an order pursuant to s 339 of the Property Law Act 2007 for the sale of and the equal division of the net proceeds of the sale. In her second cause of action she seeks an order for the possession of certain chattels which she says are her property, and $5,000 damages for their alleged unlawful retention by the defendant.
[6] Ms A seeks summary judgment in respect of both causes of action. This is opposed by Mr B.
[7] The principles governing applications for summary judgment are now well settled. It is necessary only to refer to the Court of Appeal’s judgment in Krukziener v Hanover Finance1 where the Court summarised the essential issues in any application by a plaintiff for summary judgment in these terms:
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: Maclean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
[8] Accordingly, the issue is whether, in relation to each of Ms A’s causes of action, she can establish that Mr B has no defence.
[9] As already said, in her first cause of action, Ms A seeks an order under s 339 of the Property Law Act for the sale of the property and the equal division of the net proceeds of sale between the parties.
[10] The defence put up by Mr B in relation to this component of the claim is essentially that, although the parties’ relationship was a de facto relationship of short duration as defined in s 2(E) of the Property (Relationships) Act, and therefore prima facie outside the scope of that Act, nevertheless, there is the potential for it to apply
1 Krukziener v Hanover Finance [2008] NZCA 187 at [26]–[27].
by reason of s 14A. Whether or not the Property (Relationships) Act applies involves the exercise of a discretion under s 14A(2) which provides:
(2)If this section applies, an order cannot be made under this Act for the division of relationship property unless—
(a)the court is satisfied—
(i)that there is a child of the de facto relationship; or
(ii)that the applicant has made a substantial contribution to the de facto relationship; and
(b)the court is satisfied that failure to make the order would result in serious injustice.
[11] It appears to be beyond serious debate that the first limb of that test is met because both parties made substantial contributions to the relationship. The second limb calls for a judgment as to the justice or otherwise of the parties’ relationship property being divided other than by reference to the Property (Relationships) Act.
[12] The critical point is that that judgment, and any subsequent assessment of the parties’ rights and obligations under the Property (Relationships) Act, are matters within the exclusive jurisdiction on the Family Court. See s 22(1) of the Act and this Court’s judgment in Shirtliff v Albert.2
[13] On that basis alone, it appears to me that Ms A cannot establish that Mr B has no arguable defence to her first cause of action. As submitted on his behalf, he is entitled to the opportunity to argue that the Property (Relationships) Act should apply. If it were to apply then that would — in terms of s 14A(3) — call for an examination of the contributions of each of the parties to the relationship (not just the former family home) and a determination, on the basis of their relative contributions, of the shares (in whatever form) that each should take of the relationship property.
[14] For Ms A, Mr Anderson originally contended that it was not open to Mr B to raise a potential defence based on the Property (Relationships) Act because no proceedings had been commenced by him under that Act. As it happens, Mr B has now commenced a proceeding in the Family Court. He has done so, not under
2 Shirtliff v Albert (2011) 12 NZCPR 551 at 553.
s 14A(2), but under s 25(3), which I am not convinced is an available route. However, it remains open to him to make an application under s 14A(2). It seems to me that the situation here is not materially different from the situation in more conventional applications for summary judgment where the plaintiff/applicant seeks to recover a debt and the defendant/respondent pleads a related claim which it is said should be set off against any debt owed by him to the plaintiff/applicant. Often, in such cases, the defendant/respondent will not have commenced a separate proceeding or entered a defence and counterclaim.
[15] There is a second point. Even if the Property Law Act were to be applied in this situation, s 339(2)(d) provides that the court hearing the case may only determine whether the property should be sold and the proceeds divided, or make any other determination relating to the property, after having had regard to the matters specified in s 342. Section 342 is headed “Relevant considerations” and provides that a court considering whether to make an order under s 339(1) and any related orders must have regard to:
(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made;
(b)the nature and location of the property;
(c)the number of other co-owners and the extent of their shares;
(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order;
(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property;
(f)any other matters the court considers relevant.
[16] Mr Anderson submitted that the only matters calling for consideration in this case are the post separation contributions to the payment of the principal and interest on the parties’ loan, and that this was easily resolved by setting off Mr B’s payment of these against the rental not paid by him for the use of Ms A’s half interest in the property. His submission was that the different cash contributions to the acquisition of the property are irrelevant because the parties elected to take joint ownership, and that any different contributions to the payment of principal and interest on the loan
should also be disregarded because they were made from a joint account. In my view, that is too simplistic an approach. Mr B is at least entitled to the opportunity to contend that he should be compensated (as provided for in s 343(1) of the Act) for his greater contributions to the original acquisition of the property and his greater contribution to the payment of principal and interest on the loan. In my judgment, a proper assessment of such matters cannot be carried out in the context of a summary judgment application on the evidence before the Court here.
[17] In the course of argument, Mr Anderson contended on Ms A’s behalf that unless this Court determined her first cause of action this would present a difficulty for the Family Court in the event of that Court having to determine any application under s 14A(2) of the Property (Relationships) Act. As I understood the point, it was that, if Ms A’s first cause of action were left unresolved, then the Family Court would be hampered in making an assessment of the justice or otherwise of the parties’ relationship property division not be determined under the Property (Relationships) Act, as it would not know what the position would be if the division of the net equity in the former family home were divided without reference to that Act. I accept of course that in the absence of any determination by this Court it would leave the position at general law to be assessed by the Family Court on any such application. But, the Family Court is perfectly well equipped to make such an assessment, and does so all the time.
[18] For those reasons, in my judgment, Ms A’s application for summary judgment in respect of her first cause of action cannot succeed.
[19] The basis for Ms A’s second cause of action, in which she seeks an order for the possession of a number of chattels that she believes still to be in the former family home, is that these are her separate property and outside the scope of any proceeding under the Property (Relationships) Act.
[20] In relation to a large number of the chattels in question, Mr B does not oppose the order sought. Insofar as the remaining chattels are concerned, there is a dispute.
[21] Before me, Ms A sensibly limited her summary judgment application to those chattels which are not in dispute and Mr Anderson made it clear that she does not propose to pursue the disputed chattels.
[22] With respect to those chattels, I can see no impediment to this Court granting Ms A summary judgment in the form that she claims for possession of the same. I do not see that such an order would impinge on the exclusive jurisdiction of the Family Court if it were ultimately to be determined that s 14A of the Property (Relationships) Act applies because the order would do no more than confer on Ms A a right to immediate possession of the chattels in question and would not prevent their status or any other issue relating to them being brought to account in subsequent proceedings under that legislation in the Family Court.
[23] The related claim for damages is, as far as I can see, unsupported by any evidence of loss, and cannot succeed.
[24]On those bases I make the following orders:
(a)The plaintiff’s application for summary judgment in respect of her first cause of action is dismissed;
(b)In relation to the plaintiff’s second cause of action, I make an order entitling her to immediate possession of the chattels referred to in sub-paras (a), (b), (c), (d), (e), (f), (h), (k), (l), (m), (n), (o), (q), (v), (aa), (kk), and (oo) of the statement of claim;
(c)The plaintiff’s application for summary judgment in respect of her
$5,000 damages claim is dismissed.
[25] This matter needs to be resolved, and what follows is intended to assist the parties in bringing it to a conclusion.
[26] In the end, the only issue between these two parties is the value to be attributed to Ms A’s interest in . Mr B says that he will buy out Ms A’s interest. The issue is the value to be placed on Ms A’s interest for that purpose. In order to
resolve that it seems to me that what is required is a current valuation of the property; a determination as to whether the value of Ms A’s interest is to be assessed pursuant to the Property Law Act or the Property (Relationships) Act); and a determination under one or either of those Acts.
[27] If the determination is to be made pursuant to the Property Law Act, then it would be sensible for this case to be set down for trial in this Court as quickly as possible and I would be quite prepared to make appropriate timetabling orders.
[28] However, if either party wishes to apply to the Family Court for an order that the division of the parties’ relationship property should be determined pursuant to the Property (Relationships) Act , and expand the scope of the debate so as to include an assessment of their overall contributions to the relationship — as opposed to the former home — then it would appear to me to be a waste of the parties’ time and resources to litigate the matter in this Court, and the obvious course is for one of the parties to make the necessary application to the Family Court. If the Family Court determines that the circumstances warrant the application of the Property (Relationships) Act, then all matters can and should be resolved in that Court. If the Family Court does not so determine, then this proceeding can be used as a vehicle for resolving the division of the t property in this Court.
[29] Costs are reserved. If counsel cannot resolve these — as I would expect them to do — then they may come back to me by memorandum and I will deal with them on the papers.
Associate Judge Johnston
Solicitors:
Clearwater & Associates, Auckland for plaintiff Solomans Solicitors, Dunedin for defendant
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