Barlow v Barlow

[2018] NZHC 2606

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000405

[2018] NZHC 2606

UNDER

The Property Law Act 2007

IN THE MATTER

of an application under s 339 of the Act for the sale of property and division of sale proceeds among co-owners and for orders under s 343 of the Act

BETWEEN

QUEENIE BARLOW

First Plaintiff
………………………………………/Contd

AND

RONALD RONGO BARLOW

First Defendant

TREVOR BARLOW
Second Defendant

NIKKI TAI (also known as NIKKI NAU- TUPE BARLOW-TAI)

Third Defendant

Hearing:

22 August 2018

Appearances:

K L Wendt for the Plaintiffs

D J Clark for the Second and Third Defendants (Granted leave to withdraw)

Judgment:

5 October 2018

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Friday, 5 October 2018 at 12:00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

BARLOW v BARLOW [2018] NZHC 2606 [5 October 2018]

NGA HAU-E-WHA PIRI-WIRI-TUA BARLOW HAPPI

Second Plaintiff

EDWARD TANETI BARLOW

Third Plaintiff

JOSEPHINE NGAWINI

Fourth Plaintiff

BROWNIE PARONE BARLOW

Fifth Plaintiff

BENJAMIN KAHUI BARLOW

Sixth Plaintiff

MATENGA BARLOW
Seventh Plaintiff

WITAKA WILLIAM BARLOW

Eighth Plaintiff

PATRICK TOKO BARLOW

Ninth Plaintiff

[1]                 This proceeding concerns a residential property situated at 27 Orchard Rise, Papakura. The plaintiffs are nine of the 11 owners. Ten of the owners are siblings. They inherited the property from their parents. The other owner is the executor of the estate of the 11th sibling.

[2]                 The applicants seek, by way of summary judgment, an order for the sale of the property and supplementary orders under the Property Law Act 2007 (the Act). They also seek orders that the second defendant, Mr Trevor Barlow, pay the outstanding Council rates, which as at 2 November 2017 totalled $45,516.88 as well as reimburse the co-owners for rent between 2005 (the date from which a rental valuation has been provided) and 2017, totalling $219,700 on the basis that he or his family have been in occupation of the property, to the exclusion of the co-owners, since 2003.

[3]                 The first defendant, Mr Ronald Rongo Barlow, is an 1/11th share owner. He was served with the proceedings on 12 April 2018, but has taken no steps.

[4]                 The second defendant, Mr Trevor Barlow, is also an 1/11th share owner. He is the only owner who actively opposes the sale of the property. His lawyers filed a notice of opposition and an affidavit in support from him. His lawyers are, however, without instructions and were granted leave to withdraw as solicitor on the record and as counsel at the commencement of this hearing.

[5]                 The third defendant is Mr Trevor Barlow’s daughter. She is not an owner, but is named as a party to the proceeding because she lives at the property and the plaintiffs are seeking an order from the Court that she vacate the property. Ms Tai has filed a brief affidavit in support of Mr Trevor Barlow’s opposition and confirming his affidavit. There was no appearance by or on behalf of Mr Trevor Barlow or Ms Tai.

Opposition

[6]                 The notice of opposition filed on behalf of the second and third defendants stated that the application was opposed on the basis that:

(a)The second defendant wishes to purchase the property from the plaintiffs, but needs time to negotiate and arrange the sale.

(b)The second and third defendants will suffer extreme hardship if forced to vacate the property because they reside at the property together with the second defendant’s son and his family.

[7]                 The notice of opposition is dated 26 April 2018. The hearing was on 21 August 2018. The second defendant has had sufficient time to negotiate and arrange the purchase, but has been unable or unwilling to do so. The evidence filed by the plaintiffs indicates that the second defendant has said on earlier occasions that he wished to purchase the property, but these wishes have also not come to fruition.

[8]                 In his affidavit in opposition, Mr Trevor Barlow refers only briefly to the hardship that may be caused if he was forced to vacate the property. He states:

8. I … confirm that I am currently living at the property with the Third Defendant (Nikki). I say further that the reason for Nikki living at the property is because she has been diagnosed with terminal cancer and was not coping living on her own while supporting her (now) 8 year old daughter.

…

55. … I am living at the property with Nikki who I  have  stated  is terminally ill. Recently my son and his family have also moved into the property due to very serious issues within their family concerning their children. If I am not given the chance to purchase the property my family will be homeless and this will cause extreme hardship.

[9]                 Mr Trevor Barlow’s hardship allegations are not particularised and are unsubstantiated. In particular, he has not provided any evidence of his or his family’s inability to find alternative accommodation. Any hardship also has to be weighed against the benefits of years of rent free accommodation.

[10]              The grounds set out in the notice of opposition filed on behalf of the second and third defendants are not made out.

Discussion

Order for sale

[11]              The first substantive order sought is an order for the sale of the property. Section 339 of the Act enables a court to make, in respect of property owned by co-

owners, an order for the sale of the property and the division of the proceeds among the co-owners. Before making such an order the court must have regard to the relevant considerations in s 342. Section 342 provides:

342     Relevant considerations

A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:

(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.

[12]Looking at each of the relevant considerations in turn:

(a)Nine of the 11 owners support the application and the sale of the property.

(b)The property is a 741 m2 residential section in Papakura with a 1950s house on it. The house is in poor condition and has not been properly maintained. The market value of the property is $540,000.

(c)Only one co-owner opposes the application. The views of another co- owner are not known.

(d)As noted above,  hardship  has  not  been  made  out  on  behalf  of  Mr Trevor Barlow. The mere fact of having to move out of the property is not of itself a hardship without any evidence of his inability to find alternative accommodation. On the other hand, the applicants are not well off financially and do not receive any benefit from ownership of

the property. Instead, they are equally liable, with Mr Trevor Barlow, for Council rates and penalties.

(e)Mr Trevor Barlow has not maintained the property. Nor has he paid rent or rates.

(f)The evidence filed by the applicants indicates that Mr Trevor Barlow has had ample opportunity to purchase the property, but has been unable or unwilling to do so.

[13]              Having regard to all the circumstances, in particular the  impasse between  Mr Trevor Barlow and the co-owners, I am of the view that the only possible order that can be made by the Court is that the property be sold and the proceeds divided among the co-owners.

Payment of rates

[14]              The second substantive order sought is an order that Mr Trevor Barlow pay the outstanding Council rates, which as at 2 November 2017 totalled $45,516.88. Section 343 of the Act enables a Court ordering the sale of a property to make certain further orders. Section 343 provides:

343     Further powers of court

A further order referred to in section 339(4) is an order that is made in addition to an order under section 339(1) and that does all or any of the following:

(a)requires the payment of compensation by 1 or more co- owners of the property to 1 or more other co-owners:

(b)fixes a reserve price on any sale of the property:

(c)directs how the expenses of any sale or division of the property are to be borne:

(d)directs how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied:

(e)allows a co-owner, on a sale of the property, to make an offer for it, on any terms the court considers reasonable concerning—

(i)the non-payment of a deposit; or

(ii)the setting-off or accounting for all or part of the purchase price instead of paying it in cash:

(f)requires the payment by any person of a fair occupation rent for all or any part of the property:

(g)provides for, or requires, any other matters or steps the court considers necessary or desirable as a consequence of the making of the order under section 339(1).

[15]              As to the outstanding council rates, I am of the view that all co-owners are responsible for payment of the rates, even though Mr Trevor Barlow has resided at the property from 2003 (according to the plaintiffs’ evidence) or 2012 (according to his evidence). The standard tenancy agreement provides that a tenant must pay for electricity, gas (supplied to the property), metered water (if provided for in the tenancy agreement) and telephone, but not rates. The rental assessment by Property Valuations Limited dated 14 November 2017 refers to a standard contract. If a tenant was obliged to pay rates, then the rental assessment provided by Property Valuations Limited would require modification to take the payment of rates into account.

[16]              I therefore decline to make an order that Mr Trevor Barlow pay the outstanding Council rates. They are instead to be paid out of the proceeds of sale of the property.

Payment of rent

[17]              The third substantive order sought is an order that Mr Trevor Barlow pay rent totalling $219,700 to the co-owners for his exclusive occupation or control of the property since 2003.

[18]              There remains a dispute as to when and to what extent Mr Trevor Barlow and his family have occupied or exercised control over the property without consent from and to the exclusion of the co-owners. Mr Trevor Barlow says that he moved into the property with his wife, Brenda, only in 2012 and has never denied access to the property to any of the plaintiffs. The plaintiffs say he has been in occupation of the property since 2003 and that his occupation has been to the exclusion of the co-owners. However, as long as he has been in occupation, Mr Trevor Barlow has never paid any rent.

[19]              On a summary judgment application, I can proceed only on substantiated evidence. As Associate Judge Bell said in this context in Ramsey v Mercer:1

The court will not grant summary judgment where it cannot be satisfied that it would be safe to dispense with further interlocutory steps and a full hearing. Cases where further information is required or where the court cannot resolve relevant conflicts as to facts will not be suitable for summary judgment.

[20]              In  the  present  case,  there  is  direct  conflict  between  the  evidence  of   Ms Queenie Barlow and Mr Trevor Barlow. In particular, with respect to the date at which he first moved into the property. I am of the view this conflict cannot be resolved on the basis of the evidence currently before the Court. Rather, I proceed on the basis of Mr Trevor Barlow’s acknowledgement that he moved into the property in 2012.

[21]              Using  the  rental  assessment   by   Property   Valuations   Limited   dated   14 November 2017 and extrapolating that to the present time, the rent foregone by the co-owners over the last six years totals $117,104.2 There remains some uncertainty regarding the rental liability of other family members who may have been living at the property, with or without Mr Trevor Barlow, over the last six years. I am satisfied, however, that Mr Trevor Barlow is primarily responsible for the rental foregone by the co-owners.

[22]              In my view, the absolute minimum for which Mr Trevor Barlow is responsible would exceed his share of the sale proceeds. The property has been valued at

$540,000. Following deduction of rates, legal costs and real estate commission a 1/11th share of the sale proceeds is unlikely to exceed $40,000. However, given the uncertainty regarding his rental liability, I am not going to grant summary judgment for the rental claimed. Rather, on the sale of the property, it is to be divided 10 ways instead of 11. As the Court of Appeal said in Bayly v Hicks:3

The feature of s 140(2) and (3) of the 1952 Act where there was reference to the court making an order “on the request of any party interested …” is not repeated. Under this new broad discretionary regime it is appropriate for a judge to stand back from the submissions and proposals of the parties, and consider what, on an overview, taking into account the relevant

1      Ramsey v Mercer [2013] NZHC 2659 at [18].

2      The assessed weekly rental increased from $325 per week in 2012 to $430 per week in 2017.

3      Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [32].

considerations, is the most just and practical way through the impasse before the court, even if the answer may not reflect the orders sought by the parties. By definition the cases that come before the court arise where parties are locked into an ownership position which they cannot resolve because of the positions they have taken, and where a way out may be by a path neither has to that point contemplated.

[23]              Mr Trevor Barlow has had a substantial benefit at the expense of the co- owners, which undoubtedly exceeds his share in the property. This approach takes account of the years of rent free accommodation afforded to Mr Trevor Barlow and his family over at least the last six years. It is the most just and practical way forward at this time.

Result

(a)The property at 27 Orchard Rise, Papakura (Identifier NA82C/242) is to be sold by auction.

(b)The first plaintiff, Queenie Barlow, is authorised to sign any contracts or documents reasonably necessary to facilitate the marketing and auction of the property for sale.

(c)Queenie Barlow is authorised, following a sale by auction, to sign any documents on behalf of the plaintiffs, Ronald Rongo Barlow and Trevor Barlow, that are reasonably necessary to transfer ownership to the purchaser of the property.

(d)The plaintiffs are granted full possession of the property for the purposes of progressing the marketing and sale of the property.

(e)An order is made that the third defendant or any other of the second and third defendants’ family members or friends occupying the property vacate the property immediately.

(f)Once the property has been sold, Complete Legal will, on behalf of the parties, apply the sale proceeds as follows:

(i)Complete Legal will reimburse Queenie Barlow her costs and expenses as at 16 July 2018 of $43,274.78 together with any further costs and expenses reasonably incurred by Queenie Barlow in connection with the sale of the property.

(ii)Complete Legal may deduct and pay any amounts legally required to be paid in connection with the sale of the property (for example, Council rates).

(iii)After deduction of the amounts listed above, Complete Legal will   distribute   to    each    of    the    plaintiffs    and    Ronald Rongo Barlow a 1/10th share of the sale proceeds.

(g)Leave is reserved to the plaintiffs  to  continue  their  claim  against Mr Trevor Barlow for unpaid rent in excess of his share of the sale process as an ordinary proceeding. Summary judgment in that regard has been declined. If they do not wish to pursue their claim in this way, the plaintiffs are to file a notice of discontinuance.

[24]              Leave is granted to the parties to seek any further orders reasonably necessary in connection with the orders made in this proceeding.

Woolford J