Barwick v Koenen
[2019] NZHC 1341
•13 June 2019
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2018-488-48
[2019] NZHC 1341
BETWEEN SANDRA MAY BARWICK
Plaintiff
AND
JACOBUS KOENEN
Defendant
Hearing: 13 June 2019 Appearances:
F Godinet for the Plaintiff Defendant in person
Judgment:
13 June 2019
ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL
Solicitors:
Duggan & Murphy (V M Mills), Ellerslie, Auckland, for the Plaintiff
Copy for:
C F L Godinet, Auckland, for the PlaintiffJacobus Koenen, 145 Port Marsden Highway, Ruakaka.
BARWICK v KOENEN [2019] NZHC 1341 [13 June 2019]
[1] The plaintiff, Sandra Barwick, seeks orders for specific performance of an agreement dated 22 August 2017. She has applied for summary judgment.
[2] The agreement records that Ms Barwick and Mr Koenen lived in a de facto relationship between 2005 and 2015. After separation, Ms Barwick began a proceeding in the High Court to deal with one aspect of their property, an application to put a company, Koenendale Sands Ltd, into liquidation. They went to mediation and entered into an agreement under s 21A of the Property (Relationships) Act 1976. It dealt not only with property in their own names but also with property which was held through their trusts. The agreement provided that Mr Koenen was to pay Ms Barwick $346,000.00, but that was conditional on his obtaining finance. As he was not able to obtain finance, the agreement provided that a property at 149 Port Marsden Highway was to be sold and that the proceeds of sale were to be divided between them. The part of the agreement dealing with the sale of the property at 149 Port Marsden Highway is at the heart of this proceeding.
[3] Ms Barwick has been represented throughout by Mr Godinet. For most of this proceeding Mr Koenen has been represented by a lawyer. Two days before the hearing, the lawyer acting for Mr Koenen filed written submissions on his behalf but indicated that Mr Koenen would be appearing himself at the hearing without legal representation. That happened. I have taken account of the written submissions filed by the lawyer on behalf of Mr Koenen, and I have also listened to Mr Koenen. While Mr Koenen did not submit on legal issues, he was able to address me competently on factual matters.
[4] In an application for summary judgment, the plaintiff must persuade the court that the defendant does not have any arguable defence to the allegations made in the
statement of claim. The Court of Appeal re-stated the principles in summary judgment applications in Krukziener v Hanover Finance Ltd:1
[26] 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. … 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. … 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: … 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. …
[27] 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.
(Citations omitted)
[5] The agreement of 22 August 2017 between Mr Koenen and Ms Barwick meets the formal requirements for an agreement under s 21A of the Property (Relationships) Act, but it extends more widely because it deals with interests held through trusts. The agreement provides generally for the separation of their interests. It provides for payment of an adjustment sum to Ms Barwick. The sale of the property comes under Condition 5(b):
5 Conditions …
bClauses 2a, and 4a are conditional upon Jack obtaining finance on terms satisfactory to him that allow him to complete his obligations under this agreement. The condition must be satisfied within 6 weeks of this agreement. Should Jack not satisfy that condition then:
(i)The parties will cooperate in their capacities as directors and shareholders of Koenendale Sands Limited to:
1.Do all work necessary to legalise the right of way access to the property at 149 Port Marsden Highway, including complying with any Transit NZ requirements, and paying any necessary legal fees, the costs of which shall be borne equally between the parties; and
1 ` Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.at [26]-[27].
2.Following (1), sell the property at 149 Port Marsden Highway promptly and Sandy shall take half of the net sale proceeds less $26,000, and Jack shall take half of the net sale proceeds plus $26,000.
(ii)In the event of any dispute about the sale process, sale price, or division of sale proceeds, either party may give the other notice that they wish to refer this aspect of the dispute to mediation. The mediator shall be Margaret Casey and the costs of the mediation will be borne equally between the parties.
(iii)In order to equalise the division of relationship and trust property, Jack will pay an Adjustment Payment to Sandy of
$161,000 on the Settlement Date.
Clause 13 of the agreement says:
13 Implementation of Division
Each party shall immediately execute all documents, deliver and give possession of all property and take any other step necessary to secure to themselves or to the other party title to and possession of the property to which either party is entitled under this agreement.
[6] The settlement date has not yet been reached. Both sides accept that the agreement remains in full force and effect. While Ms Barwick considers that Mr Koenen has not complied with the agreement, she has not taken any steps to cancel it.
[7] In submissions prepared for him, Mr Koenen proposes alternative ways of carrying out the agreement. Those proposals would entail a variation of the agreement. While it is open to the parties to consider changing their agreement, the court has to deal with the agreement as the parties have entered into it. It is not for the court to tell the parties to change the agreement or to act in a different way from what they have agreed. I am concerned only with enforcing the agreement as it presently stands, not with proposals to vary it.
[8] The property at 149 Port Marsden Highway is owned by Koenendale Sands Ltd. Both Mr Koenen and Ms Barwick are directors of that company. Each has a family trust which owns an equal number of shares in the company. Port Marsden Highway is a State Highway, and limited access restrictions apply to it. The property is described in identifier NA88A/772. Its legal description is Lot 3, Deposited
Plan 148/164. It is about 4 hectares in size. Apparently, it does not enjoy direct access onto the State Highway but instead it has obtained access through the land of a neighbouring property, Lot 6 DP148264. That property, 145 Port Marsden Highway, is owned by another company, Koenendale Sands 2010 Ltd. Under the agreement, Mr Koenen is to take all of the shares in Koenendale Sands 2010 Ltd.
[9] There is a house and barn on 149 Port Marsden Highway. Mr Koenen is a building contractor. He moved the house onto the land. That required a building consent under the Building Act 2004. While a building consent was obtained, so far a code compliance certificate has not been issued. The house is let out. Mr Koenen points out that under the changes to the Residential Tenancies Act 1986, insulation will need to be provided imminently.
[10] In November 2018, the Whangarei District Council checked the building at 149 Port Marsden Highway to see whether a code compliance certificate could be issued. It issued a field advice notice, which set out a number of requisitions. Mr Koenen told me today, although not in evidence, that he has attended to some of those matters. Both parties agree that the matters needing attention are not extensive, but there remain outstanding matters.
[11] Ms Barwick began this proceeding in May 2018. Her concern was that she considered that Mr Koenen had been dragging the chain. The first step in selling the property was legalising their right-of-way access. Her case was that shortly after the agreement of 22 August 2017, she contacted the New Zealand Transport Agency and obtained the required notice authorising a crossing place under s 91 of the Government Roading Powers Act 1989, but she could not progress the matter further. In February 2018, Mr Koenen, through another lawyer who was then acting for him, sent an email to NZTA proposing that the access onto the property ought to be upgraded. She also complained that Mr Koenen had not yet engaged lawyers to act for the couple in arranging the legalisation of the highway access.
[12] The legalisation involved not just obtaining the consent of the New Zealand Transport Agency under s 91 of the Government Roading Powers Act, but also registering an easement against the title to lot 3 of DP148/164 and obtaining a consent
by the Whangarei District Council under s 348 of the Local Government Act 1974. Ms Barwick considered that Mr Koenen was not co-operating with this. She started the proceeding to obtain orders directing him to take steps that would ensure that the right-of-way was legalised.
[13] The matter was called a number of times during 2018 and was adjourned while steps were taken. In December 2018, Mr Koenen’s lawyer filed a memorandum advising that steps were about to be taken. By February 2019, the right-of-way had been legalised.
[14] That, however, is not the end of the matter because fresh difficulties have arisen. The property has been listed for sale. Mr Koenen and Ms Barwick could not agree on a common real estate agent, so they agreed that each of them would list the property separately with land agents. At least one offer has been received, but that matter seems to have petered out. One issue making the sale of the property more difficult is the absence of a code compliance certificate for the work on the house moved onto 149 Port Marsden Highway. The parties appointed a law firm in Whangarei to act for them both on the sale of the property. That law firm has pointed out to the parties the difficulties arising from the absence of a code compliance certificate.
[15] In submissions prepared for Mr Koenen, it was argued that there was no need for a code compliance certificate. The argument was made that the agreement is silent on the question of requiring a code compliance certificate and that the property can be sold without a code compliance certificate. I do not accept that. That is because of the way in which the land is conventionally sold in Northland. Almost all agreements for sale and purchase of land in Northland use the form of the New Zealand Real Estate Institute and the Auckland District Law Society. That form contains warranties by a vendor. McMorland’s Sale of Land, describes one of the warranties as follows:2
8.19(c) Work done on property by vendor
Under clause 6.2(5), where the vendor has done, or caused or permitted to be done, on the property any works, the vendor warrants that, at the giving and taking of possession: (i) any permit, resource consent or building consent
2 D W McMorland Sale of Land (3rd ed,Cathcart Trust, Auckland, 2011) at 349.
required by law was obtained, (ii) the works were completed in compliance with those permits or consents, and (iii) where appropriate, a code compliance certificate was issued for those works.
I note that there is a general obligation under the Building Act 2004 to obtain a code compliance certificate for any work which had been carried out under a building consent and that obligation lies on Koenen Sands Ltd. When it comes to selling the property, Koenen Sands Ltd will need to demonstrate to any purchaser that the code compliance certificate has been issued. Unless it can do that, it will be in breach of the warranty under cl 6.25(c). Accordingly, it is simply a matter of common sense that to sell the property at 149 Port Marsden Highway, the parties need to obtain a code compliance certificate for the building. While the written submissions made on his behalf objected to the need for a code compliance certificate, at the hearing today, Mr Koenen, accepted the need for a certificate.
[16] The question, then, is what steps should be taken to obtain a code compliance certificate? To move matters forward, Ms Barwick has approached a local contractor and obtained a quote to carry out the work. The contractor has provided a quote for
$8,500.00 exclusive of GST - with GST that comes to $9,775.00. The quote is to carry out all the work on the field advice notice to obtain a code compliance certificate. The quote says that there is an assumption that the house is still originally wired, and would require a full re-wire to meet today’s standards for a code compliance certificate. Mr Koenen says that in fact, at least some electrical work has been carried out. He acknowledges, however, that not all the requirements in the field advice notice have been met and that further work is required.
[17] I have reached the point where Mr Koenen does not have any defence to the claim that a code compliance certificate is required to sell the property at 149 Port Marsden Highway. As to implementation, I accept for Ms Barwick that her proposal for obtaining an independent contractor is the optimal way of ensuring that work is carried out which will result in the issue of a code compliance certificate. In short, I accept her proposal that Percival Builders Limited should be retained to do the work. I accept that the quote of $8,500 plus GST may be able to be re-negotiated if work has been carried out as Mr Koenen says. To move the matters forward, I will make orders requiring both Ms Barwick and Mr Koenen to engage Percival Builders Ltd to carry
out the work. They are each to pay half of the $9,775.00 into the trust account of Henderson Reeves, the lawyers acting on the sale, so that funds are available to pay Percival Builders Ltd once the work is carried out. That is, each of them will pay
$4,887.50. Those payments must be made before the end of June 2019.
[18] Ms Barwick may liaise with Percival Builders Ltd to arrange for the work to be carried out. I direct that Mr Koenen is to co-operate in the work being carried out. As guidance, that means that he can simply stand clear and allow the work to be carried out. He is not to interfere in Percival Buildings Ltd coming onto the property to carry out the work.
[19] Mr Koenen proposed that other work could be carried out on the property. He said that the barn could be tidied up. There was rubbish lying about the property. Northpower had come onto the property and felled trees but they had not been removed. None of that work needs to be carried out for the code compliance certificate. He may have a case that it would be useful to carry out that work, but I do not see it as necessary to enable the sale of the property in the same way that obtaining a code compliance certificate is. That is, of course, something that the parties may agree to arrange but it is not something I can require by way of compelling performance of the agreement. I make the same comments in relation to bringing the house into compliance with the Residential Tenancies Act. While it is desirable that the house can be put into a letable condition, the property can be used without that.
[20] One matter remains. Henderson Reeves say that Mr Koenen has not paid his share of the bill for legalising the access. They say that the amount payable under the bill is $924.45 plus interest at 14 per cent. Mr Koenen’s response is that Ms Barwick removed funds from Koenendale Sands 2010 Ltd and because she has taken that money he need not pay Henderson Reeves. He contends that Ms Barwick has used the funds she removed to pay her share of the bill for Henderson Reeves and therefore he has already paid his share and she should pay instead.
[21] Ms Barwick has responded that while she took funds from Koenendale Sands 2010 Ltd, she used those funds to meet the costs of legalising access – that is, fees payable to the Whangarei District Council and the New Zealand Transport Agency. If
she has applied the funds in that way, that means that the funds have not been applied to paying Mr Koenen’s bill at Henderson Reeves. Mr Koenen should pay it. He agreed to pay the legal fees under the agreement. He may have a claim against Ms Barwick if she has removed funds from the company without authority, and there may need to be adjustments on final settlement to take that into account. That is a matter for future attention. I am not giving a final ruling on that now. Mr Koenen should nevertheless pay the $924.45 to Henderson Reeves. That is required to ensure that Henderson Reeves remain engaged and able to carry on to complete the sale of 149 Port Marsden Highway.
[22] In summary then, I have made orders requiring both parties to engage Percival Builders Ltd to carry out the work to obtain a code compliance certificate. That requires them to pay funds to Henderson Reeves to pay the contractor. That does not stand in the way of the parties renegotiating with Percival Builders Ltd, if it can be established that some of the work has been carried out and the work can be carried out at a reduced price. I also require Mr Koenen to pay Henderson Reeves his unpaid share of the bill. That is without prejudice to any rights to seek a readjustment with Ms Barwick later.
[23] I have given limited orders today. The orders do not deal with everything required to sell the property. I hope that the parties can work with each other to complete the sale of the property. The agreement envisages that the parties will co- operate with each other and I urge them to do so. But even with the best will in the world, there may be legitimate differences of opinion between them as to further steps. It may be that when an offer is made for the property the parties may have different views as to how to respond to the offer – to accept it, to reject it, or to make a counter offer. Those may be legitimate differences, and the court cannot normally resolve those differences on a summary judgment application. Instead, it may be necessary to have a Judge decide the issue – that is, a Judge who will deal with the matter on the merits, not just on a summary judgment basis. To that end, I am going to send a copy of this decision to the List Judge, with a view to a justice being appointed to deal with any future differences that might arise between the parties.
[24] If that position does arise, it will be necessary for the party seeking a ruling from the court to file an appropriate pleading as to the issue. I will be available for case management directions, to direct how the matter should be set down for hearing, but it is unlikely that I will decide the merits of any such differences that should arise in the future.
[25] I reserve leave to apply for further directions. I expect both orders to be complied with by 30 June 2019.
[26] Ms Barwick has costs on the summary judgment application. Mr Godinet is to give Mr Koenen and his lawyers details of the costs sought for Ms Barwick. If the parties cannot agree as to costs, memoranda may be filed.
……………………………….
Associate Judge R M Bell
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