Ahuriri v Etheredge

[2014] NZHC 3031

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-000514 [2014] NZHC 3031

UNDER	the Property Law Act 2007
IN THE MATTER OF	an application for a division of property in kind among co-owners
BETWEEN	FRANCES ANN AHURIRI and JOSEPH ISAAC TAHITAHI and JACOB WIREMU TAHITAHI Applicants
AND	ARINA FRANCES ETHEREDGE Respondent

Hearing:

18-19 November 2013

[Further submissions filed on 22, 26 and 27 November 2013],
18 August and 2 October 2014

Counsel:

M J Koppens for the Applicants
D J Taylor for the Respondent

Judgment:

1 December 2014

JUDGMENT (NO 2) OF DUFFY J

This judgment was delivered by Justice Duffy on 1 December 2014 at 2.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel:     M J Koppens, Warkworth

D J Taylor, Hamilton

Solicitors:    Dyson Smythe and Gladwell Lawyers (B J Lupton), Warkworth

A N McAllen, Hamilton

AHURIRI and ORS v ETHEREDGE [2014] NZHC 3031 [1 December 2014]

[1]      This is the second judgment in the substantial hearing of this proceeding.  It should  be  read  together  with  the  first  such  judgment  which  was  delivered  on

2 December   2013:   see   Ahuriri   v   Etheredge   [2013] NZHC 3190 (“the first judgment”).

[2]      In the first judgment, I refer to the hearing being adjourned to enable the parties to explore a third option for the partition of the two subject blocks of land (“the land”).  They did so and they were able to reach a measure of agreement on how the land should be partitioned as between them.  This level of agreement meant that neither the applicants nor the respondent wanted to proceed with their original proposals for partition.   But regrettably, they could not agree on all aspects of the third option.  Accordingly, they returned to Court for a decision on the unresolved aspects.

[3]      The  third  option  is  shown  on  a  plan,  which  has  become  known  as  the

Buckton plan, drawing CP01, which was produced as exhibit number 113F.

[4]      Under  the  Buckton  plan,  the  boundary  between  the  original  blocks  is realigned, with one block being known as K3A and the other being known as K3B. Under this option, the applicants will be joint owners of K3A, and the respondent the owner of K3B.

[5]      There are two houses on the land.   One is the original homestead (“the homestead”), and the other is a house that the applicant, Joseph Tahitahi, placed on the land at a time when the former owner was still alive (“the Tahitahi house”).  This house does not have a building consent.   On the present configuration of the boundaries of the land, both houses are on the one title.  The parties are agreed that the boundary between each block of land should be realigned in such a way that each block has a house on it.  Thus, under the Buckton plan, the homestead is on K3B, and the Tahitahi house is K3A.   Along with the homestead, there is an area of curtilage that  becomes  part  of K3B.    Everyone is  agreed  on  this  aspect  of the Buckton plan, and so it can be dealt with by consent.

[6]      For the applicants to get access to the Tahitahi house, they need an easement over part of K3B.  The idea is that they will use part of the existing driveway, which, once the realignment takes place, will be on K3B.  Then their driveway will veer off in a way that bypasses the homestead, and eventually the driveway will form part of K3A.  This is all drawn on the Buckton plan, but the actual position of the proposed part of the driveway that is adjacent to the homestead has not been plotted on the plan. The parties are agreed that this will have to be surveyed.

[7]      There  remains  room  for  conflict  regarding  the  actual  positioning  of  the driveway to the Tahitahi house as it passes the homestead.  The respondent wants this portion of the driveway to be sited furthest from the homestead and at the foot of a slope.  The applicants consider that this will place the driveway in an area of boggy ground, and that the better path for it to follow is on the higher ground some way up, if not at the top of the slope.

[8]      The respondent wants to protect the privacy of the homestead as much as possible.  The tensions that the proceedings have caused within this family make it desirable for them to avoid daily contact with each other.  On the other hand, siting a portion of the driveway at the foot of the slope may be unrealistic in the sense that it is likely to make the creation of the driveway much more expensive owing to the nature of the ground.   Each group recognises the difficulties; though each would prefer the solution that best suits them.

[9]      I have been to the site and from what I could see, there seemed to me to be ample room to site the relevant portion of the driveway that bypasses the homestead on the higher ground without unreasonably compromising the privacy of the homestead’s occupants.   However, for the moment, the parties are agreed that the actual positioning of this portion of the driveway should be left open.  The intention is to have persons with the relevant qualifications look at the site to see where the path of the driveway might reasonably be placed.   If the parties, once properly advised, are unable to resolve the issue as between themselves, they will need to return to Court for a determination on this issue. Leave is reserved to them to do so.

[10]     The issue for resolution at present is the boundary realignment relating to an area of land near to the Tahitahi house that is proposed should become part of block K3A.  This realignment is marked on the Buckton plan.  The applicants agree with it. The respondent does not.

[11]     The applicants are siblings: two brothers and one sister.  Joseph Tahitahi and his family presently live in the Tahitahi house.  The other two siblings want to ensure that  they  have  available  to  them  potential  building  sites  on  K3A.    They  gave evidence of a desire to retire to this land and build their own homes on it.  The area marked  on  the  Buckton  plan to  be transferred  to  block K3A contains  potential building sites (“the building sites”).   The building sites are relatively close to the existing driveway to the Tahitahi house, so that it could be used to gain ready and inexpensive access to homes that were built on the building sites.  All that would then be required is the installation of a new driveway that branches off the existing driveway where it comes close to the building sites.

[12]     Whilst there may be other parts of K3A that provide suitable building sites, they are further away from the Tahitahi house and so are less attractive in terms of not allowing shared use of the existing driveway.   No one gave evidence about whether existing electricity and telephone facilities to the Tahitahi house could be tapped into for houses that were located on the building sites, but if that were so, it would make them even more attractive to the applicants.

[13]     The respondent objects to the building sites being transferred to K3A.  Her objections are that she wants access to this area of land in order to gain access to the bush beyond it.  Secondly, she wants to ensure that some allowance is made for other building sites, apart from the homestead, on K3B.  As a fall-back position, she has suggested that the area of the building sites be reduced.

[14]     The applicants do not want the building sites area reduced with a portion of it being part of K3B.  Their concern is that the privacy of the remaining portion of the building sites on K3B will be compromised.  They have a similar attitude to privacy concerns as does the respondent regarding the driveway to K3A coming close to the homestead on K3B.

[15]     As matters stand, the boundary realignment as shown on the Buckton plan leads to K3A having a value of $600,000, and K3B having a value of $621,000.  The valuers are agreed on the capital value to be attributed to each block. The respondent will, therefore, be getting a block that has a higher value.  If the building sites’ area were to be excluded from K3A, or reduced in size, that suggests to me that the respondent would be receiving a block with an even higher value.   This in turn would  suggest  that  a  higher  amount  of  compensation  should  be  paid  to  the applicants.

[16]     The respondent led no evidence to the effect that other members of her family wanted to build on K3B and reside there.  This is in contrast to evidence from the applicants.

[17]     There is no evidence that the local territorial authority would allow additional houses to be built on K3A or K3B.  This is rural land and the numbers of houses that can be built on either block are likely to be controlled.  No one sought to address this issue.

[18]     It seems to me that the applicants’ idea of ensuring that there are suitable building sites on K3A that enable shared use of access with the Tahitahi house is no more than a desire to keep that option open to them.  K3A will have three owners and it is understandable that each would like to have a house of his or her own on the property.  The desire to allow for this eventuality by making allowance for suitable building sites is understandable.

[19]     The respondent’s objection is based on her wish to access bush beyond the building sites, and perhaps a desire to ensure that the value of the block of land that she receives is enhanced by including potential building sites.  It is apparent to me from the map of the land underlying the Buckton plan that the bush sited on K3B beyond the building sites is accessible from K3B without the respondent having to cross the building sites.   Whilst I can understand her wish to have land that has potential for building on being included in K3B, the reality is that under the Buckton plan, she is already receiving the more valuable block of land.  She will have use of the homestead which is now to be on K3B.   No other member of her family has

evinced a desire to build on the block of land that she receives.  Further, since they have no legal ownership interest in the land, their wish to build on the land should be given weaker recognition than the wishes of Frances Ahuriri and Jacob Tahitahi, who are joint owners of the land at present, and the intended owners (along with their brother) of K3A.

[20]     Here, two legal owners of the land have expressed a desire to live on the block of land that they are to receive, together with their sibling.   Their wish to ensure that this block of land at least has the potential for them to achieve their dreams is reasonable.  In all the circumstances, I consider that the equitable and just solution is for the building sites to be included on K3A as is proposed in the Buckton plan.

[21]     It follows that I find the realignment of the boundary between the present blocks of land should be that as is shown on the Buckton plan, with the applicants having ownership of the block known as K3A, and the respondent having ownership of K3B.

[22]     At the end of the hearing when counsel were making closing submissions, the respondent attempted to change what had been an agreed stance regarding the valuation of K3A.  The parties had been agreed that the value of the Tahitahi house should not be included in the valuation of K3A, and so it was not.

[23]     It is hard to see how the respondent can change her stance on the treatment of the Tahitahi house at the very end of the hearing of this application, and after the admission of evidence has closed.

[24]     First,  the  parties’  valuers  were  directed  to  confer  under  r  9.44  of  the High Court  Rules  and  following  two  such  conferences,  they  prepared  a  joint statement, dated 12 August 2014.  This statement records that the Tahitahi house was not included in any of the valuations. As the valuers have not addressed the question of attributing any value to the Taihitahi house, to raise this matter now would require the substantial hearing of the proceeding to be re-opened for the purpose of receiving further  evidence  from  the  valuers.    As  the  substantial  hearing  commenced  in

November 2013, was then adjourned and resumed in August 2014, the respondent had ample opportunity to change her stance regarding valuation of the Tahitahi house well before the end of the hearing.  Further, the house would be hard to value as it does not have a final code compliance certificate, and there was no evidence regarding what it would cost to bring the house up to current building code requirements.

[25]     Secondly, any value that the Tahitahi house has added to block K3A has come from Mr Tahitahi.  He is the one who paid for the house, had it moved on to the land, and carried out work on it.  If the Tahitahi house were to be given a value in relation to K3A, in return this would require recognition of the efforts of Mr Tahitahi: see s 342(e) of the Property Law Act 2007.  He has taken no steps in this regard because up until the final stage of the hearing, there was no suggestion from the respondent that the Tahitahi house should be taken into account.

[26]     Given the circumstances, I consider that it is now too late for the respondent to change her stance on this issue.  My view in this regard is confirmed by the lack of any proper explanation from the respondent for the change of stance.

[27]     It is hard not to be cynical about the respondent’s late change of stance.   It was after the respondent saw that the valuers’ joint statement resulted in the prospect of her paying compensation to equalise the value of each block that she first raised the prospect of the Tahitahi house being included in the valuation of block K3A. This suggests to me that her late change of stance has been driven by her desire to avoid a compensation payment to the applicants.  A further factor pointing this way follows from her abandonment of a claim for compensation for the loss of an occupancy right relating to the homestead.

[28]     The respondent now accepts that the occupation interest in the homestead that was given to her under the will has been lost. The background to how the occupancy right came to be lost is described in Ahuriri v Etheredge [2014] NZHC 2137 at [4] and [5]. Since that judgment was delivered, the respondent has abandoned any idea of arguing that the occupancy right might survive the effect of merger. The respondent’s valuer had attributed an actuarial value to the occupancy right that

supported her having a claim for compensation from the applicants.  This was one of the narrow areas in which the parties’ valuers were still in disagreement.  Having lost the occupancy right by way of merger, she now has nothing of value with which she can argue for a set-off against the applicants’ legal entitlement to compensation as a consequence of them receiving a block of land of lesser value than the block that the respondent will receive.

[29]     The circumstances that appear to me to be the drivers behind the respondent’s late change of stance on the approach to the valuation of K3A cannot support her being permitted to make this change.  She could have approached her oppostion to the application differently.  There was nothing to stop her, when the option under the Buckton plan was first proposed, from arguing that the Tahitahi house should have been included in the valuation of K3A. As to the impact of the doctrine of merger on her occupancy right of the homestead, a more careful analysis of her position would have brought this to light earlier.

[30]     Moreover,  I  consider  that,  irrespective  of  the  impact  of  the  doctrine  of merger, the claim for compensation for the loss of the occupancy right was always flawed.  I can accept that the presence of an occupancy right will detrimentally affect the value of a property if the legal title is to go to someone other than the holder of the occupancy right.  This is because the occupancy right interferes with the legal owner’s right to occupy the property.   But here the proposed partition leaves the respondent with the legal title to a block of land with the building that was subject to the occupancy right.  The benefit of the occupancy right remains with her and, in addition, she gains the benefit of having legal title to K3B.  As the two benefits will be vested in the one person, it is hard to see how the respondent can maintain that by receiving ownership of K3B she will suffer a loss for which she should be compensated.  Thus, I consider that she was never going to be eligible for financial compensation.  So, in this sense, her belated realisation that the occupancy right was lost due to the doctrine of merger has not harmed her case.   It is simply another factor against her receiving the compensation that she believed was due to her.

[31]     The respondent also argued that the Court in its discretion should find that no compensation was payable by the respondent to the applicants.   I see no reasoned basis for making such a finding.

[32]     K3B exceeds the value of K3A by $21,000.   The adjustment by way of compensation that the respondent should pay to the applicants comes to $10,500.  I do not see why the difference in value should not be recognised, and compensation in the sum of $10,500 ordered for payment to the applicants.

[33]     The  alternative,  if  the  respondent  envisages  difficulties  in  making  the payment, would be for an additional area of K3B to the value of $10,500 to become part of K3A.  However, no one suggested this course of action.  Further, it would involve more costs in terms of survey and valuation evidence if the area and location of the land to be transferred to K3A could not be agreed.

[34]     There are also the costs arising from the partition and realignment of the boundary between K3A and K3B.  These should be shared equally as between the applicants on the one hand, and the respondent on the other.

[35]     The discretionary power given to the Court by the Property Law Act is broad: see Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [25]. The conclusions that I have reached on the contentious aspects of the Buckton plan have been guided by ss 339 to 343 as interpreted in Bayly v Hicks.  The conclusions that I have reached are  based  upon  the  relevant  statutory  considerations.    I am  satisfied  that  those conclusions will lead to a just and equitable outcome for all owners of the subject land.

Result

[36]     The boundary between the two blocks of land is to be realigned as shown on the Buckton plan.

[37]     The applicants are to have joint ownership of block K3A. [38]          The respondent is to have ownership of block K3B.

[39]     The respondent is to pay the applicants the sum of $10,500 compensation.

[40]     The costs of the partitioning and the realignment of the boundary between K3A and K3B are to be shared equally as between the applicants on the one hand, and the respondent on the other.

[41]     Leave is reserved to the parties in terms of [9] herein.

[42]     If the parties cannot agree on the costs of this proceeding, they have leave to file memoranda on costs.

Duffy J