Bayly v Hicks
[2015] NZHC 3248
•16 December 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-488-000547 [2015] NZHC 3248
BETWEEN J D BAYLY
Applicant
AND
M AND J A HICKS Respondents
Hearing: 30 November and 1 and 2 December 2015 Appearances:
R B Stewart QC and J K Goodall for Applicant
K T Glover for RespondentsJudgment:
16 December 2015
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 16 December 2015 at 4.00pm
pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:……………………………….
Solicitors/counsel:
Stafford Klaassen/ R B Stewart/J K Goodall, Auckland
Paul Gallagher/ K T Glover, Auckland
BAYLY v HICKS [2015] NZHC 3248 [16 December 2015]
Introduction
[1] This judgment follows on from my interim judgment dated 19 August 2011.1
It is to be read together with my interim judgment and with the subsequent judgment of the Court of Appeal.2
[2] Briefly, the applicant, Mrs Bayly (“Jocelyn”), and the defendant, Mrs Hicks (“Marion”), are sisters. I set out the family background in my interim judgment and it is not necessary to repeat that detail. Suffice it to say that Jocelyn and Marion have ultimately inherited a coastal farming property of 431.91 hectares known as Paihia following on from their late father’s death. Jocelyn now holds an undivided one half share in the property and Marion and her husband John, as trustees of a family trust, hold the other undivided one half share. All wish to partition the property pursuant to ss 339-343 of the Property Law Act 2007 (“the Act”).
[3] The parties were unable to agree between themselves on the appropriate basis for partition and in August 2009 Jocelyn filed the current proceedings proposing a particular partition proposal she then favoured. Marion and her husband counterclaimed, initially seeking either a sale under s 339(1)(a) or partition based on an alternative option they favoured. They abandoned the sale option at a very early stage and did not pursue it at the first hearing.
[4] As I explain shortly I rejected both proposals. Paihia has been valued at approximately $24 million. It is common ground that neither sister can afford to buy the other out so an order under s 339(1)(c) is not sought. Both agree that the only practicable option is a division of the property in kind pursuant to s 339(1)(b).
The Interim Judgment
[5] In my interim reserved judgment I had regard to the various considerations detailed in s 342 of the Act. I observed/found as follows:3
1 Bayly v Hicks [2011] NZHC 920, (2011) 13 NZCPR 568
2 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401.
3 Bayly v Hicks, above n 1, at [38]-[76].
(a) Jocelyn on the one hand and Marion and her husband on the other, have equal half shares in Paihia. That is an important factor and it forms the basis for any partition of the property.
(b) Paihia is a unique property:
(i) It is in a prime coastal location and it offers a number of superb beaches. The main beach is Onewhero Bay. Onewhero Bay is 1.4 kilometres long. The sand on the beach is a reddish gold colour and the beach is pristine. There is no public access to the beach, or to any of the other beaches on the property other than by sea.
(ii) Some parts of the balance of Paihia are suitable for farming, while other parts are not. Some parts of the land offer significant development opportunities.
(iii) The land breaks down into three main areas –
- Onewhero Bay, land with development potential on a low ridge immediately to the west and on the landward side of the bay, and land, also with development potential, on a higher ridge further to the west;
- productive farming land to the west and south west of the higher ridge; and
- a northern headland, which also has development potential, and which has five private small beaches.
(iv)Marion and her husband have built a bach just back from the seafront at the northern end of Onewhero Bay. They and their family have a very real emotional attachment to that part of the property and they have used it for important family events and recreation over the years. The bach is transportable.
(v)Jocelyn and her husband own the adjoining farm property known as Wairoa immediately to the south of Paihia. Through a farming company owned and operated by them, they have farmed Paihia, in conjunction with Wairoa, for a number of years. Paihia has been used to graze cattle and sheep. There are however no stock handling facilities on the property.
(vi)Jocelyn and her husband have converted some sheds on that part of Wairoa which adjoins the southern end of Onewhero Bay. The sheds provide limited accommodation facilities.
(c) Unless an order for partition is made under s 339(1), the present stalemate between Jocelyn on the one hand and Marion and her husband on the other, will continue and cause further ongoing friction and antagonism. The sisters are estranged and the present situation is unsatisfactory to both. It precludes either from maximising her interest in Paihia and from using or developing her share of the property as she sees fit. Each sister has three adult children, and at present neither can properly plan for her family’s future.
(d)Such contributions to the development and maintenance of the property as have been made by Jocelyn and her husband have been outweighed by the benefits they have received from farming the property. This factor does not affect the partition of the property.
(e) There are other matters which need to be considered – in particular the desire of the Far North District Council (“the Council”) to obtain public access to Onewhero Bay, the Council’s desire to obtain public access to an esplanade reserve it will seek to acquire as part of approving any subdivision, the Council’s district plan, access to any lots created, deferred rates which Jocelyn and her husband’s farming company have had the benefit of and are liable for, and dotterels that nest in Onewhero Bay.
[6] As I have noted, at the first hearing, each party adduced evidence suggesting how the property could be partitioned. Both preferred a two lot subdivision with Jocelyn taking the southern part of Paihia which adjoins Wairoa and Marion and her husband taking the northern headland (and on Marion’s, but not Jocelyn’s, proposal, part of the northern end of Onewhero Bay). The proposals differed in fixing the appropriate boundary between the two lots proposed.
[7] I declined to direct the partition advanced either by Jocelyn or by Marion and her husband. I found that neither proposal was fair or reasonable as between the parties.4
[8] I then went on to observe that there is no single right or ideal partition option, and that a significant part of the problem confronting a partition of Paihia is that the property is not homogeneous. I expressed the view that a fair and reasonable partition needed to take into account the primary land areas as well as the opportunities both for development and farming offered by each of those areas. I noted that any fair and reasonable partition needed to recognise the outstanding natural feature comprising Onewhero Bay as well as the other five beaches to the north of Onewhero Bay. It was my preliminary view that the values attaching to Paihia could be more fairly and reasonably apportioned if a three lot subdivision was undertaken, because this would permit a more nuanced approach. I annexed to my interim judgment an aerial photo setting out how the approach preferred by me might work – appendix E. That appendix is reproduced and annexed to this judgment as appendix “A”. I emphasised that the proposed partition lines shown in the appendix were no more than suggestions. I recorded that I was prepared to consider a partition which broadly adopted the suggestions shown on the appendix and that it was my preliminary view that a division along those lines was workable and would be fair and reasonable as between the parties. I made various directions indicating how the proposal for a three lot subdivision might be advanced and I offered the parties the opportunity to file memoranda setting out their views on the partition suggested by
me and how matters should proceed.5
[9] Jocelyn appealed the interim judgment to the Court of Appeal. She argued that the three lot proposal suggested by me, and the directions which I had given, were either made without jurisdiction or were inappropriate.
[10] The Court of Appeal dismissed the appeal, noting that the adoption of the staged approach as suggested by me to reach a just result was fair. The Court emphasised that in finalising the partition, I should continue to act in accordance with the principles of natural justice and fairness and in accordance with the provisions of the Act.6
[11] In the Court of Appeal, Marion and her husband supported the interim judgment, even though it involved the rejection of their proposal. They considered that the interim judgment afforded a fair means of resolving the family dispute.7
Subsequent developments
[12] Following the release of the Court of Appeal’s decision, counsel agreed that the next step was to determine who should be appointed by the Court to undertake the survey and valuation work necessary as a result of my interim judgment. Counsel agreed to liaise in this regard and also to discuss what instructions and materials should be given to the experts appointed.
[13] In the event, counsel agreed:
(a) on the appointment of the appropriate experts. They proposed that a surveyor previously retained by Jocelyn – a Mr Donaldson – and a valuer – a Mr Stevenson – should be appointed by the Court;
(b)that both experts should have access to all of the evidence given in the case at the initial hearing, to my interim judgment and to the judgment of the Court of Appeal; and
(c) that it was appropriate for either or both experts to consult with the expert witnesses who had already given evidence in the matter if they wished to do so.
Counsel prepared draft instructions which could be forwarded to the experts to be appointed by the Court. I redrafted the same in some relatively minor respects and I forwarded a copy of my redraft to counsel. I requested them to file a memorandum or memoranda if there were any issues in my redraft with which they disagreed. I advised that, if necessary, I would allocate time for a chambers hearing so that I could settle the instructions to be given to the experts after hearing from both parties. In the event counsel filed a joint memorandum. I re-drafted the instructions taking into account their views. I issued a minute sending the re-drafted instructions to counsel and requested confirmation that they were acceptable. Counsel replied with a joint memorandum, requesting two minor additions, both of which were ordered by Heath J in my absence.
[14] On 1 October 2013 I directed the Registrar to sign the finalised instructions and to forward them to Messrs Donaldson and Stevenson, together with copies of the agreed materials which had earlier been supplied to the Court by the parties.
[15] In late November 2013 the Registrar, at my request, contacted both experts to see what progress had been made in relation to the matter. Emails were received from both. Copies of those emails were forwarded to counsel and I convened a telephone conference to discuss the appropriate response. With counsel’s agreement further instructions were sent to the experts in late December 2013.
[16] In May 2014 the experts were requested, with the agreement of counsel, to provide an update.
[17] On 23 June 2014 the Court received a valuation report from Mr Stevenson and a surveying report from Mr Donaldson proposing a 5 lot subdivision. (I further summarise these reports below). The Registrar made copies of those reports, and the accompanying invoices, available to counsel. Counsel were invited to indicate whether or not they required the Court to direct either Mr Stevenson or Mr
Donaldson or both to cover any additional matters and/or whether they wished to discuss the contents of the reports with either Mr Stevenson or Mr Donaldson.
[18] After a series of adjournments at the request of one or other of the parties, I convened a teleconference with counsel on 23 October 2014. Mr Stewart QC – appearing for Jocelyn – advised that Jocelyn would accept the experts’ reports and the proposed subdivision if she was allocated lots 2 and 3 as proposed by Mr Donaldson. Mr Stewart advised that Jocelyn preferred these lots for farming purposes and that she considered they were more valuable than proposed lots 1 and
4. Mr Glover, appearing for Marion and Mr Hicks, advised that his clients favoured the allocation proposed by me in my interim judgement namely – that Jocelyn should take proposed lots 1 and 4 and that Marion and Mr Hicks should take proposed lots 2 and 3.
[19] Mr Stewart also advised that Jocelyn considered that it was appropriate to crosscheck the comparable sales valuation prepared by Mr Stevenson. To this end he proposed that a hypothetical subdivision analysis should be undertaken.
[20] I accepted that a hypothetical subdivision analysis was appropriate, and I issued a minute in this regard. I directed that counsel were to hold a telephone conference with the experts, to clarify their respective estimates for carrying out the additional work, and to clarify what Mr Stevenson required from Mr Donaldson in order to complete a hypothetical subdivision analysis.
[21] In the event, it was relayed to me by counsel that Mr Stevenson thought that a hypothetical subdivision valuation was unnecessary, and that there were difficulties in agreeing the appropriate hypothetical subdivision for the purposes of any analysis. It was suggested that a further hearing was appropriate in these regards, and I ruled that the same should be held.
[22] The hearing into these issues was held on 17 March 2015. I heard from both Mr Donaldson and Mr Stevenson and both were cross examined. Following the hearing I issued a further minute, directing that a hypothetical subdivision analysis be carried out. I ordered that it should be assumed that the hypothetical subdivision
would proceed on a management plan basis. This would produce approximately 28 lots averaging six hectares in size. This was an option available under the Council’s district plan and it was the option that Jocelyn suggested should form the basis of any hypothetical subdivision analysis. I directed counsel to file a joint memorandum annexing a draft set of further instructions to Mr Donaldson and Mr Stevenson
incorporating my orders.8
[23] Draft instructions were filed by counsel by way of joint memorandum dated
26 March 2015. I approved the same and the Registrar forwarded the further instructions to both Mr Donaldson and Mr Stevenson. The experts then provided additional reports on 20 August 2015 in accordance with the further instructions.
[24] The parties could still not agree on an appropriate partition and a further hearing was sought. A date was fixed and counsel agreed on a timetable for the filing of further evidence and submissions.
[25] The matter came back before the Court for hearing on 30 November 2015. The hearing took three days.
[26] At the conclusion of the hearing there were still some factual matters outstanding. Counsel filed memoranda in relation to those issues. Further, Mr Stewart sought leave to file additional submissions to deal with a question I had posed to Mr Goodall in his closing submissions. I granted leave in this regard. The additional submissions were filed. I gave Mr Glover the opportunity to file a reply. He did so.
The Court appointed experts’ reports
[27] In his initial report dated 13 June 2014 (filed with the Court on 23 June 2014) Mr Donaldson proposed a five lot subdivision. A copy of Mr Donaldson’s proposed scheme plan of subdivision is annexed and marked “B”.
[28] A subdivision in accordance with this plan would result in two new principle titles – proposed lots 2 and 3 can be held together in one title, and proposed lots 1
8 Bayly v Hicks HC Whangarei CIV-2009-488-000547, 17 March 2015 (minute).
and 4 can be held together in another title. Mr Donaldson obtained confirmation from Land Information New Zealand that this would be acceptable to it. This feature is also likely to make it easier to obtain the required consents from the Council. As can be seen, proposed lot 1 comprises part of the northern headland. It is 46.5 hectares in area. Proposed lot 4 shares a common boundary with Wairoa, and it comprises 170.8 hectares. Proposed lot 2 comprises the balance of the northern headland and the northern end of Onewhero Bay. It is 96 hectares in area. Proposed lot 3 lies to the west. It comprises 117.6 hectares. There is an access way comprising proposed lot 5. It gives proposed lots 2, 3 and 4 access to Wairau Road, it links proposed lots 1 and 4, and it gives access from Wairoa to proposed lot 1. Mr Donaldson suggested three options for proposed lot 5:
(a) it can be a legal road, affording access to the various adjoining lots.
The advantage of a legal road is that the owners of the lots could carry out development projects or further subdivide without any consultation other than with the Council. The disadvantages are the cost of construction and the costs of surrendering those parts of the existing easements that currently cross the proposed lot. This would be necessary because roads can only vest when they are unencumbered;
(b)it can be a common access lot, owned in four undivided equal shares by the owners of proposed lots 1 to 4. A common access way would be cheaper to construct and the existing easements could remain intact. The disadvantage would be the ongoing costs of maintenance and the need for consultation and cooperation if and when further development is undertaken; or
(c) proposed lot 5 can be removed from the subdivision plan, which would mean proposed lots 2 and 3 could become one title. The advantage of this option would be that there would be no major construction costs other than the upgrading of the existing entrance to Wairau Road. The disadvantage is that proposed lot 4 would not have direct access to Wairau Road.
[29] The lots proposed by Mr Donaldson largely follow existing fence lines.
[30] Mr Stevenson valued both the total property and the various lots proposed by Mr Donaldson. He did so on a comparable value basis, seeking to determine the market value of the property (or proposed lots) by reference to the sales of like land in the same general area. Mr Donaldson set out the various comparable sale/purchase properties used by him in some detail. By reference to this information, he considered that Paihia, if sold as one property, had a total value of
$24,050,000 (exclusive of GST) as at 9 June 2014. He then referred to Mr Donaldson’s proposed subdivision. He valued the esplanade reserve which may be required by the Council as a condition attaching to any subdivision consent and which the Council will have to pay for. He considered that any esplanade reserve around the northern headland will have a value of $420,000 and, adjoining Onewhero Bay, of $2 million. He apportioned this sum between the various proposed lots. He then proceeded to value Mr Donaldson’s proposed lots. He considered that proposed lots 1 and 4 have a total value of $12,027,000, and that proposed lots 2 and 3 have a total value of $12,023,000 – a difference of $4,000.
[31] As noted above, I subsequently ordered that the experts should liaise and undertake a hypothetical subdivision analysis as a crosscheck on the comparable sales valuation.
[32] In a further report dated 18 June 2015 Mr Donaldson set out the assumptions and constraints that he had made in proposing a hypothetical subdivision into 28 six hectare lots of the potential development land fronting Onewhero Bay and on the northern headland. He set out the estimated costs of subdivision for each of the various land types within those areas. As part of this exercise he made a relatively minor adjustment to the boundary between two areas of land, both within proposed lot 4, to allow the hypothetical subdivision to better utilise the available land suitable for development.
[33] Mr Stevenson then undertook the hypothetical subdivision analysis. He considered that proposed lots 1 and 4, on the hypothetical subdivision set out by Mr
Donaldson, were valued at $12,113,500 as at June 2014 and that proposed lots 2 and
3 were valued at $12,063,500 – a difference of $50,000.
Jocelyn’s preferences
[34] As I have noted, Jocelyn’s preference advanced at the first hearing was that Paihia should be partitioned into two lots. In an affidavit filed for the resumed hearing, she advised that she would accept either the partition suggested by her or the partition suggested by Marion, both of which were before the Court when the matter was first heard and both of which were rejected by me in my interim judgment. This initial preference was abandoned by her counsel when the hearing resumed on 30 November 2015.
[35] In the alternative, Jocelyn proposed that Paihia should be subdivided so as to give much of the Onewhero Bay beach frontage and the north western part of the northern headland to Marion and her husband, with her (Jocelyn) taking the balance of the property. As part of this proposal she wanted a 200 metre wide strip of land on the southern boundary to give her access to Onewhero Bay. A copy of this alternative proposal is annexed and marked “C”. This subdivision plan was prepared by a surveyor – a Mr Thomson. As can be seen, if adopted, Jocelyn would take proposed lot 1 adjoining Wairoa and running through to the northern headland. It comprises 328.7 hectares. The Hicks would take proposed lot 2 – 75.9 hectares – and proposed lot 3 – 26.3 hectares – a total of 102.2 hectares.
[36] Using Mr Donaldson’s per hectare figures contained in his initial comparable sales valuation, Jocelyn asserted that her proposal would result in Marion and her husband obtaining land valued at $12,292,966, and that she would obtain land valued at $11,757,844. She was content to allow the difference – $535,082 – to Marion without requiring a compensation payment on the basis that she would be receiving more farmland and because she wanted Marion, as part of the proposal, to agree to share the liability for deferred rates (currently $342,756) which the Council may require Jocelyn and her husband’s farming company to pay when the property is subdivided.
[37] Jocelyn called evidence from a valuer, a Mr Rowsel, who took issue with aspects of Mr Stevenson’s valuation reports. Mr Rowsel’s per hectare figures, applied to Jocelyn’s proposal, suggested that Jocelyn would be receiving land valued at $12,376,244 if her proposal is adopted, and that Marion and Mr Hicks would be receiving land valued at $11,540,316 – a difference of $835,928 in favour of Jocelyn. Jocelyn said in evidence that she would pay Marion and her husband the difference within four weeks of titles issuing.
[38] In the event that the Court preferred Mr Donaldson’s proposed five lot subdivision, then Jocelyn indicated a preference for proposed lots 2 and 3 over proposed lots 1 and 4. She advised that if she were to receive proposed lots 2 and 3, she would agree either to a legal road vesting in the Council, or to a common access lot, or to no lot. She was prepared to allow Marion and her husband to choose whichever option they thought was most appropriate. She indicated that if she was required to take proposed lots 1 and 4, she would seek to have proposed lot 5 created as a common access lot, so that she and her husband could more readily move stock between proposed lots 1 and 4.
[39] Jocelyn also made various other ancillary proposals which will form part of any partition.
Marion and her husband’s preferences
[40] Marion and her husband supported the partition proposed by Mr Donaldson. They considered that Mr Stevenson had made a fair assessment of the values of the different parts of the property, and that a partition in accordance with Mr Donaldson’s proposal would lead to an equitable division of the different land types. They wanted to receive proposed lots 2 and 3. Proposed lot 2 includes the land at the northern end of Onewhero Bay. As I have noted, that is where their family bach is located. Marion gave evidence that she and her husband have been holidaying regularly at that part of the property since they spent their honeymoon there in 1978. Their family has visited that area regularly and various important family occasions, such as weddings and the like, have been held at Onewhero beach. Marion took the view that the land which would be vested in her and her husband consequent on such
a partition could be farmed, either by them, or by others under a lease, and that this would give them an income to help pay the rates on the lots they will take.
[41] Marion and her husband were not prepared to accept Jocelyn’s alternative
partition proposal.
[42] They suggested that the access way should be held in a separate title, albeit not formed as a public road at this stage.
[43] They agreed with Jocelyn’s ancillary proposals.
Matters for the Court
[44] As I have noted, the Court has been requested to divide Paihia in kind between Jocelyn on the one hand, and Marion and her husband on the other hand, pursuant to s 339(1)(b) of the Act.
[45] The proceedings have been served on all persons who have an interest in the property, and who could be affected by the granting of the application, including the owners of Days Point adjoining the northern headland.9 With the exception of the Council, none have taken any interest. The Council appeared at the initial hearing but did not then take an active stance. It was offered the opportunity to appear at the resumed hearing. It declined that opportunity.
[46] Section 342 sets out the relevant considerations the Court must consider when exercising its power under s 339. As I have noted above – paragraph [5] – I took those considerations into account in my interim decision. There was no appeal against those aspects of my decision, and my findings/observations in relation to those various matters remain the same. Where required, I have taken those matters into account when considering the alternative partition proposals now before the Court.
[47] At the final hearing, the issues for the Court were refined as follows:
9 Bayly v Hicks, above n 1, at [28] and [124].
(a) Should the Court order a division based on the equal sharing of land types?
(b)Should the Court order a division based on Jocelyn’s proposal, or on the Court appointed experts’ proposal?
(c) Does a division into the lots proposed by the experts’ result in equal
value, or should compensation be paid by one party to the other?
(d) If there is a division based on the experts’ proposal, to whom should
the proposed lots be allocated?
(e) What form of access should be required in relation to the proposed lots?
[48] I consider each in turn.
Should the Court order a partition based on the equal sharing of land types?
[49] As I noted in my interim judgment there is no single right or ideal partition option for Paihia.10 I there expressed the view that a fair and reasonable partition as between Jocelyn on the one hand, and Marion and her husband on the other, needed to take into account the primary land areas as well as the opportunities for development and farming offered by each of them.11 I also expressed the view that any fair and reasonable partition needed to recognise the outstanding natural feature of Onewhero Bay and the other five beaches to the north of Onewhero Bay.12
[50] There is nothing in the Court of Appeal’s judgment to suggest that there was any challenge to these views in the course of the hearing before that Court. Mr Stewart nevertheless submitted that there is no fixed rule or principle requiring the Court to partition land on the basis that owners should achieve an equal share of land
type.
10 At [98].
11 At [102].
12 At [102].
[51] In a general sense I accept this submission. Much will depend on the nature of the property being partitioned.
[52] As I noted in the interim decision, a partition pursuant to s 339(1)(b)
envisages division and then allocation of the resulting lots between co-owners.13
The overall objective of any partition is to achieve fairness between co-owners when it comes to a division of their common property.
[53] As I found in my interim decision, Paihia comprises three primary land types. This was accepted by all expert witnesses at the resumed hearing and counsel did not take issue with my findings in this regard. Each of the land types comprising Paihia offers different potentialities and constraints. Parts of the property offer significant development potential. Other parts offer productive farmland that can generate an income. Given the particular characteristics of Paihia, a partition based broadly on land type seems to me most likely to achieve fairness between Jocelyn and Marion, and to best recognise their undivided one half shares in the property as a whole. It ensures that the risks and benefits attendant on each land type are shared equally.
[54] I also accept Mr Stewart’s submission that the use the parties to a partition application have made of the land may be a factor which in some cases might be relevant in achieving a fair and equitable partition.14
[55] Here Jocelyn and her husband are and always have been farmers. Marion and her husband are not farmers. They reside in Auckland. I do not however see that this factor compels the conclusion that a fair partition should leave Jocelyn with most of the productive farmland, or that Jocelyn’s interest in farming should be elevated above Marion and her husband’s interests. Any partition will necessarily have an impact on Jocelyn’s farming operations and will result in a change compared to the current position. Jocelyn to date has had the use of the entire property for a modest rental. She is understandably reluctant to relinquish her use of Paihia but the property does not belong to her alone. If her sister’s interests are to be recognised, as
they must be, then inevitably there will be an impact on Jocelyn and her husband’s
13 At [25].
14 Property Law Act, s 342(f); and see Edelsten v Burkinshaw [2011] VSC 362 at [33]; and
Mitchell v Cullington [1997] ANZ Conv R 342 (WASC)
farming operations. Jocelyn and her husband have clearly been good farmers and they have looked after Paihia well. However there is nothing to suggest that Marion and her husband will not make productive use of such farm land as vests in them or that they will not look after the land well. They are intending to either farm it themselves or to lease it for farming purposes. They will be assuming a significant liability for rates when they take ownership of part of Paihia. They will have every incentive to maximise their return from such part of the property as will vest in them to offset the rates burden.
[56] It remains my view that a division based on as near as may be equal shares of land type is the best and most appropriate solution for any partition of Paihia.
Should the Court order a division based on Jocelyn’s proposal or the experts’
proposal
Jocelyn’s proposal
[57] I have considered Jocelyn’s proposal carefully. In my view it is not fair and reasonable to Marion and her husband.
[58] First, while Jocelyn’s proposal would recognise her ongoing interest in farming the property, it would to a significant extent deny Marion and her husband the opportunity to farm part of the property because there is little productive farmland in the lots Jocelyn suggests should vest in Marion and her husband. This would affect their ability to generate income by farming the land themselves, or from leasing it out. As I have already noted they will need that income to offset the rates liability which will fall on them once the land is partitioned.
[59] Secondly, Jocelyn’s proposal is not sensitive to the nature of the property, bearing in mind the three different land types it comprises, or to the parties’ undivided half shares in the land. Jocelyn’s proposal would see her take 328.7 hectares, approximately 76 per cent of the total property. She would take over half of the coastal land and over 80 per cent of the productive farm land. This is simply not a fair and equitable division.
[60] Thirdly, Jocelyn’s proposal would result in a significant discrepancy in values, whether Mr Stevenson’s or Mr Rowsel’s per hectare figures are used. That unfairness could be dealt with by ordering a compensation payment in favour of Marion and her husband but that is not what they want. They want a half share of the land. That is not unreasonable given their present undivided half share interest in the whole property. There is more than sufficient land to accommodate their wishes, and I cannot see that Marion and her husband should be required to take cash rather than land, simply to accommodate Jocelyn’s wishes.
[61] Fourthly, Jocelyn’s proposal would result in Marion and her husband taking only a relatively small part of the northern headland. Mr Thomson’s subdivision plan – appendix “C” – shows that Marion and her husband would take proposed lot
3, comprising 26.3 hectares. As Mr Stevenson observed, a lot of that size would not be subdivisible as of right under the Council’s district plan. Any subdivision of the lot would require resource consent, and access from Wairau Road, while readily achievable, is likely to be expensive to create.
[62] Fifthly, Jocelyn proposes that Marion and her husband should take the beach front block adjoining Onewhero Bay. That land is undoubtedly very valuable. However options for its development would be limited, if Marion and her husband had no other land available for “plottage”. The evidence established that where other less valuable land nearby is available, smaller lots can be created on land of higher value, because those smaller lots can be linked to the land of lesser value, to meet the Council’s minimum subdivision requirements. The various expert witnesses referred to this as “plottage”. If Jocelyn’s proposal were accepted, Marion and her husband would be denied the opportunity to maximise the subdivision potential offered by the land fronting Onewhero Bay.
[63] Sixthly, Jocelyn suggests that her proposal would enable her to make better provision for her children. Mr Stewart could cite no authority for the proposition that the Court should take into account the interests of future generations. I accept that in appropriate cases it could be a relevant consideration under s 342(f), but in my judgment the Court’s primary obligation is to take into account the interests of the owners seeking the partition. Further, to prefer the interests of Jocelyn’s children
over Marion’s children would be unfair. Some of Jocelyn’s children are currently farming, whereas Marion’s children are not currently farming. They may however wish to do so in the future. Marion and her husband should be entitled to provide for their children as they see fit, and without being constrained by the interests of Jocelyn’s children.
[64] Seventhly, a subdivision along the lines proposed by Jocelyn might expose Marion and her husband to risk. They would have most of the land in one of the identified land classes and little of the land in the other identified land classes. If the per hectare valuations which have been undertaken of the respective land classes are in error, this could adversely affect them. Small errors could heavily distort the resulting values of the partitioned land. In contrast, if the land is divided by reference to land type, that risk is largely, if not completely, negated because any error will affect both parties.
[65] Eighthly, Jocelyn seeks to retain 200 metres of land at the southern end of Onewhero Bay giving her direct access to the beach. This proposal would also potentially impact on Marion and her husband, because Jocelyn or her successors in title could then use the whole of the beach. It does not form part of the property to be partitioned and there is public access over it. While Mr Stewart volunteered that Jocelyn would try and limit the use of the beach frontage in front of the area of land which she proposes should vest in Marion and her husband, any undertaking in this regard might be difficult to enforce, and in any event it would not bind future land owners when and if Jocelyn subdivides her land or sells part of it.
[66] Ninthly, Jocelyn suggested as part of her proposal that Marion and her husband should share in paying the deferred rates which could become payable upon subdivision.15 I can see no justification for this suggestion. Jocelyn and her husband, through their farming company, have had the benefit of the rates deferral over the years. They have paid only 50 per cent of the assessed rates in each year. They have had the use of additional moneys as a consequence. Marion has not had any part of this benefit. I cannot see any justification for requiring Marion and her
husband to now share in any liability to repay those rates in the event that such
15 And see Bayly v Hicks, above n 1, at [75].
liability accrues, when they have derived no benefit from the deferment. The lease under which Jocelyn and her husband farm Paihia obliges them to pay the rates, notwithstanding that payment may have been deferred. Jocelyn cannot now seek to resile from that obligation.
[67] Tenthly, Mr Donaldson expressed reservations about the workability of Mr Thomson’s plan. He queried whether proposed lots 2 and 3 could be held in the one title and noted that the location of one of the proposed boundaries appears to be in a wooded gully. These were not however major reservations, and the evidence suggested that they could be overcome. I therefore have not placed much weight on this factor.
[68] Finally, in my view, acceptance of Mrs Bayly’s proposal would exacerbate tension between the sisters. The principle lot it is proposed should vest in Marion and her husband – lot 2 fronting on Onewhero Bay – would be surrounded by proposed lot 1 owned by Jocelyn. It would not be landlocked because it would be serviced by a right of way, but Marion and her husband would understandably feel as though they were surrounded and overlooked by Jocelyn. Marion gave evidence to this effect. Given the family tensions, in my view this is undesirable. Marion and her husband seek half of Paihia, not land representing the assessed value of half of Paihia plus compensation. As Mr Glover submitted, they want a fair share of Onewhero Bay and of the rest of the property so that they can continue to enjoy it in an economically sustainable manner, and provide options for them and their children. Jocelyn’s proposal would deny Marion and her husband their reasonable expectations and elevate Jocelyn’s interests over their interests. While Jocelyn asserted that her proposal is in Marion and her husband’s best interests, with respect that is rather patronising. It is not for Jocelyn to say what is in the best interests of Marion and her husband.
[69] In my judgment Jocelyn’s proposal would not result in a fair and reasonable
partition of Paihia and I reject it.
The Court appointed experts’ proposal
[70] Again, I considered the Court appointed experts’ proposal carefully. In my
view it is fair and reasonable, to both Jocelyn and to Marion and her husband.
[71] First, I note that both experts were independent. The parties agreed on their appointment. They were appointed by the Court, and they were answerable to it. The parties were given the opportunity to have input into the instructions given to them, and those instructions clearly required the experts to try and identify a partition solution which was broadly in accordance with my interim decision, and which was fair and reasonable between the parties. Both experts undertook a detailed inspection of the property. They worked collaboratively. They made changes to their initial recommendations based on their joint discussions. They were not rushed, and they spoke to other experts who had previously been retained by the parties. They had as much knowledge as was reasonably possible on which to make informed recommendations to the Court. The process they adopted was robust. There is no suggestion by either party that they misinterpreted their instructions. Indeed in my judgment, it is clear that they did not do so and that they were scrupulously independent and even handed.
[72] Secondly, the division as proposed by the Court appointed experts gives each party an interest in each of the three identified land areas. The proposal is sensitive to the geography and nature of Paihia.
[73] Thirdly, the experts’ proposal gives roughly equal areas of land to Jocelyn and to Marion and her husband. Proposed lots 1 and 4 comprise in total 217.3 hectares. Proposed lots 2 and 3 comprise in total 213.6 hectares. Each party gets productive farmland, land with development potential on the northern headland, half of the land immediately fronting Onewhero Bay, and approximately half of the high value development land to the west of Onewhero Bay. This recognises the parties’ equal interest in the property and gives each a half share of the whole property and each of its component parts.
[74] Fourthly, if Mr Stevenson’s figures are accepted, there is no significant difference in the value of proposed lots 1 and 4 as opposed to proposed lots 2 and 3. If Mr Rowsel’s figures are accepted, there is a significant difference in value. For the reasons which I set out below, I am not persuaded that Mr Rowsel’s criticisms of Mr Stevenson’s valuations are justified, or that Mr Rowsel’s figures are more appropriate. In my view the fact that the proposed subdivision results in a partition into lots of nearly equal value, and size, compels the conclusion that it is a fair and reasonable partition between the parties.
[75] Fifthly, the Court appointed experts’ proposal creates lots which will be sub- divisible as of right on the northern headland and on the land fronting Onewhero Bay. It preserves to each party other less valuable land which can be used for “plottage” to maximise the value of premium subdivisible land closer to Onewhero Bay. The risks associated with further subdivision are equally shared, as are the benefits.
[76] Sixthly, both parties receive productive farmland. That allows Jocelyn productive farmland which can be used in conjunction with her and her husband’s existing farming operation in Wairoa. It allows Marion and her husband productive farmland which they can either farm or lease out to minimise the rates burden which will fall on them consequent on a partition.
[77] Seventhly, on the evidence it seems likely that the option proposed by Messrs Donaldson and Stevenson can be achieved relatively simply, effectively as a two lot subdivision. The experts anticipate that it should be relatively straightforward to obtain Council consent to the proposed subdivision. While any partition ordered by the Court will have to be subject to the requisite consents under the Resource Management Act 1991 being obtained, it is desirable that the chances of obtaining consent should be realistic.
[78] Eighthly, I note that the subdivision of the proposed lots to a significant extent follows existing fence lines. Again, that is important, because it minimises the cost to the parties of having to put in new fencing if the subdivision is approved.
[79] Finally, and most importantly, the proposal offers a reasonable separation of Jocelyn’s interests from those of Marion and her husband. It offers the chance to reduce family tensions. It could perhaps lead to the restoration of family relationships in the longer term.
[80] The experts’ proposal requires amendment in one respect. In the suggested partition which I annexed to my interim decision, and which is annexed to this judgment as appendix “A”, I proposed a right of way between the beach on proposed lot 1, and the four beaches on proposed lot 2 north of Onewhero Bay. That right of way was not shown by Mr Donaldson in his proposed plan of subdivision.
[81] Both Jocelyn and Marion and her husband suggested that there should be a right of way in the approximate location shown by me, because it would enable both parties to access all of the beaches on the property.
[82] It seems to me that the parties’ joint view is sensible. The beach on proposed lot 1 and the small beaches on proposed lot 2 and in particular on the eastern side of proposed lot 2, are all attractive beaches, and in my view the owner or owners of proposed lots 1 and 2 should have access to those beaches. The amenity the beaches offer can then still be enjoyed by the parties once the land is partitioned.
[83] In my judgment, the independent experts’ proposal (subject to the amendment noted above) is the preferred solution and by a comfortable margin. It provides for a fair and reasonable partition. It recognises the party’s equal ownership of the land, and it enables the land to be divided in a practicable and workable fashion into areas which are of similar size and of more or less equal value.
Does the division into the lots proposed by the experts result in equal value, or should compensation be paid by one party to the other?
[84] On Mr Stevenson’s comparable sales valuation, the difference in value between proposed lots 1 and 4 and proposed lots 2 and 3 is $4,000. In giving evidence, both Jocelyn and Marion accepted that that sum is de minimis, and regardless of the allocation of the lots neither sought compensation from the other in that sum.
[85] If Mr Stevenson’s hypothetical subdivision valuation is considered, it results in a difference in value between proposed lots 1 and 4 and proposed lots 2 and 3 of
$50,000. That is a larger sum, but once again, given the overall value of the property, it is in my view de minimis. Further any hypothetical subdivision analysis is an exercise fraught with difficulty. It involves a large number of inputs, all of which can be difficult to fix with certainty. A hypothetical subdivision analysis is very much a crosscheck against a comparable sales valuation, to show that the comparable sales valuation is “in the right ballpark”. I am not prepared to order the payment of compensation on the basis of the hypothetical subdivision analysis. I note that neither Jocelyn nor Marion had strong views in this regard.
[86] Jocelyn called valuation evidence from Mr Rowsel. He criticised Mr
Stevenson’s valuation in a number of respects.
[87] First, Mr Rowsel submitted that Mr Stevenson erred in using a single rate of
$85,000 per hectare when valuing proposed lot 1 on Mr Donaldson’s subdivision plan. Mr Rowsel asserted that Mr Stevenson did not properly allow for the gullies and scrub on proposed lot 1, or for the contouring of the proposed lot, when attributing a figure of $85,000 per hectare to the land. He also asserted that Mr Stevenson erred by using the same rate for proposed lot 1 and for that part of the northern headland as falls within proposed lot 2 on Mr Donaldson’s plan of subdivision. Mr Rowsel considered that some of the land on proposed lot 1 was inferior to that on the other headland block, and he suggested that a figure of $60,000 per hectare should be adopted for the land which is in gullies and which is covered in scrub. He said that as a result of this error, Mr Stevenson overvalued proposed lot 1 by $500,000.
[88] Neither Mr Stevenson nor the valuer called by Marion and her husband – Mr Scholefield – accepted this. Both took the view that as a matter of methodology, all land in proposed lot 1 should be treated consistently. Both considered that the rate of
$85,000 per hectare, based on comparable sales of like land, was a fair representative per hectare figure for all land on the headland, whether within proposed lots 1 or 2. They took the view that the overall value used is a fair per hectare rate, both for the good land and for the inferior land, and that if the inferior land is to be valued at a
lower rate, then a higher rate should be applied for the remaining land. When this was put to Mr Rowsel in cross examination, he accepted that this was a fair point.
[89] Mr Stevenson said that he adopted the same per hectare rate for all of the headland, because he considered that proposed lot 1 has direct road frontage to Wairau Road and because it has a better beach. He acknowledged that proposed lot
1 is steeper than the headland land in proposed lot 2, but nevertheless concluded that the per hectare rate for both areas should be the same.
[90] Much time was devoted at the hearing to a comparison of the different beaches on the northern side of the headland. I agree with Mr Donaldson’s observations about the desirability of the beach on proposed lot 1. They accord with my own view which I recorded in my interim decision.16 I reached that view after my own inspection of the property and all of the beaches it offers.
[91] I do not accept Mr Rowsel’s comments in regard to the valuation of proposed lot 1. In my view Mr Stevenson’s methodology was appropriate. He used an average rate, across all of the northern headland land. That average rate was derived from and supported by comparable sales evidence. Neither Mr Scholefield nor Mr Rowsel criticised the incomparable sales/purchases referred to by Mr Stevenson in his evidence. There is nothing to suggest that any of the comparable sales/purchases relied on by Mr Stevenson were not strictly comparable or that he left out other comparable sales/purchases. Further, if there were to be an adjustment to recognise the inferior land, then equally there should be an adjustment to recognise the better land. Mr Rowsel’s criticism ignores this.
[92] Having considered the evidence in the round, I prefer Mr Stevenson’s conclusions in relation to the value of the headland land over Mr Rowsel’s conclusions.
[93] The second point of difference related to lots which the parties (and the experts) referred to as proposed lots 4A and 2B. Proposed lot 4A comprises that part
of proposed lot 4 immediately to the west of the southern end of Onewhero Bay, and
16 Bayly v Hicks, above n 1, at [48].
proposed lot 2B is that part of lot 2 adjoining Onewhero Bay at the eastern ridge of the northern headland. A copy of Mr Donaldson’s land use plan showing the location of these sub lots is annexed – appendix “D”.
[94] Mr Stevenson attributed a premium to these sub lots, because of their development potential. He valued the land in the area referred to as proposed lot 2B at $119,500 per hectare, and the land in the area referred to as proposed lot 4A at
$131,000 per hectare.
[95] Mr Rowsel did not consider that the difference in these premiums was justified. It was his evidence that there was no appreciable difference between the areas referred to as proposed lots 2B and 4A, and that the same per hectare rate should have been applied to both. He argued that if his approach is adopted, the value of the area referred to as proposed lot 4A decreases by $476,100.
[96] This is an area which required a “judgment call” from experienced and expert valuers. All of the valuers who gave evidence were experienced and expert. All accepted that reasonable valuers might reasonably disagree on the appropriate per hectare figure in cases of this kind. It cannot be said that Mr Stevenson was wrong to use differential rates for the two sub lots. He explained why he used different per hectare rates. He considered that sub lot 4A is more attractive, that it has a slightly better aspect to the north east, that it offers a slightly better anchorage, and that it has a greater degree of flexibility for the provision of building sites, either close to the beach or further up the hill. In contrast he considered that sub lot 2B has a wetland behind a knoll which separates the wetland from the beach frontage, and that this restricts potential sites. Mr Rowsel responsibly accepted that the two areas have “different characteristics”. It was Mr Rowsel’s view that the “differences and pluses tended to cancel each other”. Mr Stevenson took a different view. He stood by his original conclusions, despite Mr Rowsel’s criticisms. I do consider it significant that Mr Stevenson was the only valuer who set out in detail why he had reached his conclusions. The other valuers appeared to me to be doing little more than “plucking figures out of the air”. Indeed Mr Scholefield accepted this when I put it to him. Again, I prefer Mr Stevenson’s evidence, and I am not persuaded that he was wrong in regard to this issue.
[97] The third area of disagreement related to potential development sites on proposed lot 3 on Mr Donaldson’s subdivision plan - appendix B. Mr Rowsel identified two possible development sites on proposed lot 3 which he suggested had a higher value than the per hectare rate used by Mr Stevenson to value proposed lot
3. He suggested that Mr Stevenson had underestimated the value of lot 3 by
$425,000.
[98] The two identified development sites are adjacent to the proposed right of way/road. They have elevated views, and they could be subdivided with relatively low development and infrastructure costs. There was some disagreement between the valuers as to whether there would be demand for the sites. Mr Stevenson and Mr Scholefield both considered that while the site could be subdivided and developed, there would have been little to no demand for them as at the date of valuation – June
2014. Mr Rowsel thought that there would have been demand. Moreover the valuers disagreed on whether or not development of the sites as separate building lots was their highest and best use. It was Mr Stevenson’s view that the highest and best use of the land identified as being suitable for subdivision by Mr Rowsel was as “plottage”, to permit more intensive subdivision of the lower lying land immediately to the west of Onewhero Bay.
[99] Mr Stevenson asserted that the general farmland contained within proposed lot 3 has a value of approximately $10,000 per hectare. He assessed this figure by reference to comparable sales/purchases. Mr Stevenson took a value of $15,000 per hectare for the whole of the land in proposed lot 3, to recognise the fact that it was more valuable than ordinary farmland, because it could be used to provide plottage for a higher intensity development of the land in Onewhero Bay. Further if the two development sites identified by Mr Rowsel were to be taken out of proposed lot 3 for valuation purposes, and attributed a higher per hectare value, then the balance of the land in lot 3 would have to be given a lower per hectare value, to recognise that the prime part of that land had been removed. The situation is similar to that applying in proposed lot 1 discussed above at [91]. It would be wrong in principle to leave the per hectare value of the balance of proposed lot 3 at $15,000 when the comparable sales evidence does not support that figure, and at the same time to re-value part of
proposed lot 3 at a higher per hectare rate because that part of the proposed lot has some additional features making it more valuable.
[100] On balance, I am satisfied that Mr Stevenson’s per hectare rate for the whole of proposed lot 3 is appropriate and that it recognises the potential of proposed lot 3 for its highest and best use.
[101] Fourthly, Mr Rowsel suggested that a premium should attach for the “contiguity” of proposed lots 2 and 3. He suggested that a premium would be paid by a purchaser to recognise the fact that these lots are contiguous.
[102] I do not accept that the lots are contiguous. Rather proposed lots 2 and 3 are both adjacent to and separated by the right of way which serves the lots as well as proposed lot 4. That right of way could potentially become a public road.
[103] Further, neither Mr Stevenson nor Mr Scholefield accepted that any “contiguity” adjustment should be made. Mr Scholefield suggested under cross examination that a hypothetical willing seller of proposed lots 1 and 4 would be unlikely to agree to a discount on the price of the land if they were not contiguous. Mr Stevenson’s evidence was that the development potential of proposed lot 3 in relation to proposed lot 2B shown in the land use plan – appendix D – was taken into account when assessing the value of that land, and to that extent, a premium had been allowed for. He explained that it was the development potential that justified a premium above other farmland. Mr Stevenson also said that he had not seen a premium allocated for this reason in his work as a valuer. I note that Mr Rowsel cited no example to justify his view.
[104] Again, I prefer Mr Stevenson’s evidence to that of Mr Rowsel and I doubt that any buyer would pay a premium for the “contiguity” of proposed lots 2 and 3.
[105] Finally, and in an affidavit in reply, Mr Rowsel raised for the first time a criticism of Mr Stevenson’s hypothetical subdivision analysis. This was not strictly a reply to other affidavits filed, but both Mr Stevenson and Mr Scholefield responded to the issue and I was prepared to allow Mr Rowsel to give the evidence.
[106] Mr Rowsel set out in his affidavit in reply his view of the likely gross realisations on a hypothetical subdivision. His analysis suggested that Mr Stevenson had erred in his hypothetical subdivision analysis. Mr Rowsel did not however set out his workings in relation to this issue. He simply provided a list of figures. Under cross examination he acknowledged that he had not shown his workings as he should have done.
[107] In contrast, Mr Stevenson’s evidence in relation to his hypothetical subdivision analysis was careful, detailed and fully set out. He undertook a detailed review of the available market evidence. His views were supported by Mr Scholefield.
[108] In my view Mr Stevenson’s evidence is entitled to significantly more weight
on this issue.
[109] Ultimately, it seems to me that the most reliable and best evidence the Court had before it in relation to values was Mr Stevenson’s initial comparable sales valuation as at June 2014. As I have noted, Mr Stevenson suggested that the difference in value between proposed lots 1 and 4 and proposed 2 and 3 as at June
2014 was $4,000. It does not matter that the valuation was undertaken as at June
2014, because both parties, under the experts’ proposal, receive relatively equal areas of each land type. Whether the valuation of the property as a whole or of each of the component land types has risen or fallen makes no difference. I cannot see that any compensation is payable by one party to the other, and I decline to make any order requiring the payment of compensation.
If there is a division based on the experts’ proposal, to whom should the
proposed lots be allocated?
[110] To my mind this issue is relatively straightforward and Jocelyn’s claim to
proposed lots 2 and 3 is mischievous.
[111] Prior to the most recent hearing, Jocelyn consistently took the view that she wanted the southern land, adjoining Wairoa. That was understandable given her desire to farm the property in conjunction with Wairoa. Jocelyn’s preference was
sensibly not opposed by Marion or her husband. They wanted the northern land, and in particular the area of land at the northern end of Onewhero Bay. That is where their bach is, and that is the area of land with which they and their family most identify.
[112] At the most recent hearing, Jocelyn suggested that proposed lots 2 and 3 on appendix B should be allocated to her. She gave four reasons for this. Her reasons, and my findings, are as follows:
(a) First, she asserted that there was a significant difference in value between proposed lots 1 and 4 and proposed lots 2 and 3. I do not accept this, for the reasons which I have already set out. Proposed lots 1 and 4 are of nearly equal value to proposed lots 2 and 3.
(b)Secondly, she said that proposed lots 2 and 3 are clearly the superior lots, because they are closer to Wairau Road and because they incorporate Onewhero Beach and the private and attractive beaches around the eastern part of the headland to the north of Onewhero Bay. Based on my own observations of the property, I do not see that proposed lots 2 and 3 are clearly superior. Both lots 2 and 4 share Onewhero Beach. I accept that proposed lot 2 does include the beaches on the eastern side of the headland, to the north of Onewhero Bay, but as I have noted that can be met in large part by providing for a pedestrian right of way which will serve those beaches. Indeed the parties agree to this.
(c) Thirdly, Jocelyn argued that proposed lots 1 and 4 are not contiguous and that that will make stock movements more difficult. I accept that this will be the case, but that is why the road/right of way is proposed. It is a consequence of giving the parties a fair and equal allocation of each land type. If she wants to do so Jocelyn will be able to subdivide proposed lot 1, and at the same time continue farming proposed lot 4.
(d) Finally, Jocelyn asserted that she wanted to set up proposed lots 2 and
3 as a separate farming block for one or more of her children. I have already dealt with this argument above – paragraph [63]. The interests of Jocelyn’s children play little part in the partition analysis, and in any event their interests should not be preferred over the interests of Marion’s children. In any event Jocelyn could set up proposed lots 1 and 4 as a separate farming block for her children if she wants to do so.
[113] At the close of the hearing, Jocelyn suggested, for the first time, that if she were to be allocated proposed lots 2 and 3, then she would require an access way from Wairoa to those lots. This proposal was resisted by Marion and her husband. I cannot see that a right of way would be sensible. It would increase the likelihood of the need for interaction between the parties. It could impact on the future development of proposed lot 4. It has the capacity to exacerbate tension in an already fraught family situation. The fact that Jocelyn would require an access way to get access to proposed lots 2 and 3 suggests that it is not appropriate for her to be allocated those lots.
[114] I can see no sensible rationale for allocating proposed lots 2 and 3 to Jocelyn. Indeed to my mind it is decidedly more sensible to allocate proposed lots 2 and 3 to Marion and her husband. That will maximise the farming potential offered, particularly by proposed lot 4, for Jocelyn, and at the same time enable Marion and her husband to enjoy that part of the property that means most to them, and on which their bach is located.
What form of access should be required in relation to the proposed lots?
[115] Both Jocelyn and Marion and her husband agreed that the access way to proposed lots 2 and 3, and between proposed lots 1 and 4, should be a common access lot, rather than a legal road, but subject to a condition that either party can require the lot to vest as a legal road in the event that they wish to develop one or other or both of their lots.
[116] To my mind this is a sensible option. It minimises the initial cost to the parties, because it will not be necessary for them to create a public road. It will not be necessary for them to disturb the existing easements in favour of the owners of Days Point. They will however retain a mechanism which permits them to call for the common access lot to vest as a legal road should one or other of them want to develop their land. The option is also practicable. Both the surveyor called by Jocelyn – Mr Thomson, and the Court appointed expert Mr Donaldson, confirmed that the Council is likely to accept a common access lot, and that there should be no difficulties from a resource management perspective.
Other matters
[117] Mr Glover submitted that any monies received from the Council consequent upon the creation of esplanade reserves should be allocated to the party losing the benefit of the land affected. He noted that payments made by Councils in respect of esplanade reserves are compensatory in nature and that they are payable when an esplanade reserve vests on a subdivision pursuant to ss 231 and 237F of the Resource Management Act.
[118] In my judgment, this approach is right in resource management terms. Further it is not likely to result in any significant monetary discrepancy between the parties, because both parties will share equally in any compensation payment received in regard to Onewhero Bay, and on Mr Stevenson’s evidence, that is the most valuable part of the land which is likely to be taken. Any compensation payment received in respect of the headland will be split more or less equally, and there should not be any significant difference in value between the amounts received by each party. I note that Mr Stevenson allowed for the compensation likely to be received from the taking of any esplanade reserves in his valuations and that it did not distort the values between the parties.
Resulting orders
[119] I make the following orders:
(a) I approve the five lot subdivision as set out in Mr Donaldson’s scheme plan of subdivision - appendix B to this judgment. This approval is subject to one amendment. There are to be a rights of way in the approximate locations shown on appendix A giving the owner(s) of lot
1 access to the beaches on lot 2 (other than Onewhero Bay) and giving the owner(s) of lot 2 access to the beach on lot 1. The right of way is to be limited to foot access only. It is to be three metres wide or such other width as the parties shall agree or the Council shall require.
(b)I direct that Paihia be partitioned in accordance with appendix B to this judgment, and subject to the amendment noted in (a) above. Such partition is to be subject to the Far North District Council approving the subdivision which will be required in order to create the lots shown on appendix B, and giving such consent(s) as shall be required.
(c) I direct the parties to cooperate with a view to obtaining the requisite consents required to affect the order made in (b) above.
(d)All costs incurred in undertaking the subdivision and in putting in any additional fencing required consequent on the subdivision, are to be met equally between the parties.
(e) Consequent on the subdivision, lots 1 and 4 are to vest in Jocelyn and lots 2 and 3 are to vest in Marion and her husband as trustees of their family trust.
(f) Lot 5 shall be a common access lot vesting in the owners of lots 1, 2,
3 and 4, in undivided equal shares. The owners of the lots shall be jointly liable for the maintenance of the access way. Any owner(s) shall be entitled to require that the access way vest as a public road at any time (subject to the approval of the Far North District Council), and in such event the owners of lots 1, 2, 3 and 4 shall contribute equally to the costs of creating and forming the public road to the
reasonable satisfaction of and as required by the Far North District
Council.
(g)Any compensation payable by the Far North District Council in the event that it requires an esplanade reserve or reserves consequent on approving the subdivision is to be allocated between the parties, in proportion to the land lost by each party to the Council by way of esplanade reserve.
(h)The parties are to share equally the liability under the mortgage which is secured over Paihia for the benefit of Jocelyn and Marion’s sister, Alison. Subject to the agreement of the mortgagee, new mortgages can be registered against the lots to be vested in Jocelyn on the one hand, and in Marion and her husband on the other. Alternatively the principle sum, together with any outstanding interest owing under the mortgage, can be paid off, and the mortgage can be discharged.
(i)Jocelyn and her husband, through their farming company J & J Bayly Limited, are to be responsible for the payment of any deferred rates which the Far North District Council requires to be paid to it, together with accrued interest on the same.
(j)Pending completion of the subdivision and the vesting of the resulting lots, Jocelyn and her husband, through their farming company J & J Bayly Company Limited, are to continue farming the property, pursuant to the lease agreement dated 7 February 2007.
[120] I reserve leave to the parties to come back to the Court in the event that there is any difficulty in implementing these orders, or in the event that further directions or amendments to these directions are required.
Costs
[121] Marion and her husband are the successful parties. They supported the
proposal advanced by the Court appointed experts, and resisted Jocelyn’s alternative
proposal. Prima facia they are entitled to an award of costs and to their reasonable disbursements. In that regard, I make the following directions:
(a) Within 20 working days of the date of this judgment, Marion and her husband are to file a memorandum seeking costs and disbursements;
(b)Within a further 20 working days, Jocelyn is to file a memorandum in reply.
I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.
Wylie J
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