Bool v Hammond
[2021] NZHC 2749
•14 October 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-000331
[2021] NZHC 2749
UNDER the Property Law Act 2007 IN THE MATTER
of the sale of a property
BETWEEN
SUSAN ANGELA BOOL
Applicant
AND
NICHOLA ANNE HAMMOND and KERRY DEAN HAMMOND
Respondents
Hearing: On the papers Counsel:
Z J de Roo for Applicant
Judgment:
14 October 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 14 October 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
BOOL v HAMMOND [2021] NZHC 2749 [14 October 2021]
[1] The applicant (Ms Bool), along with her daughter (Mrs Hammond) and son- in-law (Mr Hammond), are registered as tenants in common in unequal shares in a property at Rangiora. Ms Bool intends to make an application under s 339 of the Property Law Act 2007 (the Act) for an order for the sale of the property or, alternatively, that Mr and Mrs Hammond purchase her share at a “fair and reasonable price”. Ms Bool wishes to bring her proceeding by originating application under pt 19 of the High Court Rules 2016. A proceeding under s 339 is not one that the High Court Rules contemplate will be brought under pt 19. Ms Bool applies under r 19.5(1) for an order that the Court permit the proceeding to be brought under pt 19.
Background
[2] In 2010, Ms Bool, Mrs Hammond and Mrs Hammond’s then husband (Mr Purdom), purchased a property at 380 Rangiora-Leithfield Road, Rangiora. Ms Bool contributed $100,000 to the purchase price. Mrs Hammond and Mr Purdom contributed $20,000 and the balance was financed by way of mortgage. The property was registered in their joint names with Ms Bool owning a 7/40th share and Mrs Hammond and Mr Purdom a 33/40th share.
[3] In 2011, the parties entered into a Property Sharing Agreement. It provided that the parties wished to record their respective interests in the property “in full and final settlement of all property claims which each now or hereafter may have against the other”. The parties were allocated an area defined in a plan attached to the Property Sharing Agreement. Ms Bool’s area comprised a granny flat and some surrounding land. It was provided that upon termination of the Property Sharing Agreement or the sale of the property Ms Bool would receive her initial contribution and any increase in value of her allocated area. Mrs Hammond and Mr Purdom were to be responsible for payment of outgoings including rates, insurance and maintenance costs. Ms Bool was to pay her telephone charges and contribute to power. In the event Mrs Hammond and Mr Purdom separated, that would serve as a termination notice under the Agreement in which case there were provisions for the parties to exercise options to acquire the property failing which it was to be sold. There was also provision for disputes or differences arising between the parties to be resolved by arbitration.
[4] In 2012, Mrs Hammond and Mr Purdom separated. A valuation was obtained in October 2012 of Ms Bool’s allocated area and as to any increase in its value since the property was acquired in 2010. Ms Bool says that Mrs Hammond and Mr Purdom did not have the money to pay her what she was then owed. Mrs Hammond then entered into a relationship and later married Mr Hammond. The share/interest in the property owned by Mrs Hammond and Mr Purdom was transferred to Mrs Hammond and Mr Hammond in September 2017.
[5] Ms Bool says the parties began to market the property for sale. When this occurred is not clear. It then became evident there was a significant issue with the earth bricks used in construction which were failing and needed to be replaced. Ms Bool says this requires the property to be demolished down to its foundations. Mr and Mrs Hammond have attempted to resolve this problem by seeking compensation from the Waimakariri District Council. Ms Bool deposes they have obtained a determination from the Ministry of Business Innovation and Employment that the Waimakariri District Council should not have issued a Certificate of Code Compliance for the property, they have attempted to negotiate a settlement with the Waimakariri District Council without success and sought media coverage of the issue.
[6] There were periods in 2018/2019 when the parties were not living on the property for different reasons, but I understand they have now returned. Ms Bool says that her relationship with Mrs Hammond has broken down and cannot be repaired. She sets out grievances in her affidavit that affect her living conditions. She says that she contributed all the money she had to the property and that on a pension she does not have enough money to move into comfortable accommodation elsewhere.
[7] Mrs Hammond’s present stance is said to be that if the property was sold it would be on an as-is basis and the sale price would not fetch enough to repay the mortgage. Ms Bool considers the property could be sold for more than expected because of the strong market. Ms Bool also complains about the amount that is secured by the mortgage and says this indicates that Mr and Mrs Hammond have either minimised their loan payments or obtained further loans against the security of the property.
[8] Mrs Bool says that she wants to receive the money she is entitled to as a co- owner and leave the property as soon as practically possible and has no preference whether the property is sold on the market or purchased by Mr and Mrs Hammond. Importantly, she says she realises she is entitled under the Property Sharing Agreement to her $100,000 contribution and the increase in value of her share of the property.
The principles
[9]Rule 19.5(1) of the High Court Rules provides:
The court may, in the interests of justice, permit any proceeding not mentioned in rules 19.2 to 19.4 to be commenced by originating application.
[10] Resort to r 19.5 is to be “exceptional rather than so common place that it becomes the rule that leave is granted”.1 The overarching test is whether it is in the interests of justice that a proceeding be allowed to be brought under pt 19. The interests of justice means that the Court must secure the just, speedy and inexpensive determination of the proceeding. However, it is clear that usually it will not be appropriate to grant leave to bring a proceeding under pt 19 when there is an appropriate and efficient alternative available.2
[11]In Hong Kong and Shanghai Banking Corp Ltd v Erceg, Asher J said:3
These cases show that the type of proceeding suited to the originating application procedure is a straightforward application, not requiring detailed pleadings or interlocutory orders for its fair resolution. Such a type of proceeding tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is the possibility of cross claims or counterclaims.
[12] The decisions of the Court dealing with applications to bring proceedings under s 339 by originating application go both ways.4 Close attention must be paid to
1 Solar Bright Ltd v Martin [2019] NZHC 300 at [18].
2 Hong Kong and Shanghai Banking Corp Ltd v Erceg (2010) 20 PRNZ 652 (HC) at [20].
3 Hong Kong and Shanghai Banking Corp Ltd v Erceg, above n 2, at [25].
4 See for instance Casbolt v Harman [2020] NZHC 1354 and Ling v Liu [2021] NZHC 1810 where leave to commence such proceedings under pt 19 was refused and Chiswell v Cunynghame [2020] NZHC 1651 and Gallagher v Grant [2021] NZHC 1907 where leave was granted.
the facts of each case, the issues that may arise, the complexity of the facts and issues, and the course the proceeding is likely to take on its way to a hearing.5 In Clarkson v Clarkson, Cooke J put the matter this way:6
[17] When decisions are made on the most appropriate procedural pathway for a proceeding the Court should focus on what the issues in dispute in the proceedings seem to be, and the most appropriate procedural pathway for determining them ….
Discussion
[13] The issue I must decide is whether, in the circumstances of this case, and despite the expectation in the High Court Rules that a proceeding for orders under s 339 of the Act will be brought as an ordinary proceeding under pt 5, leave should nevertheless be granted in the interests of justice to permit Ms Bool’s proposed proceeding to be commenced as an originating application under pt 19.
[14] Counsel for Ms Bool argues this case is exceptional because, unlike many applications under s 339, the ownership status and contributions of the parties are clearly set out in the Property Sharing Agreement and the substantive dispute between the parties is as to:
(a)whether the property should be sold; and
(b)if not sold, then the amount Mr and Mrs Hammond should pay to
purchase Ms Bool’s share.
[15] It is submitted that the determination sought is straightforward, the issues are limited and there is no requirement for full pleadings for the issues to be understood. Counsel submits that it is unlikely any cross-application will be filed by Mr and Mrs Hammond but if it was to be made it would likely be:
(a)that the property would not fetch a high value if sold due to its construction issues; and
5 Gallagher v Grant, above n 4, at [15].
6 Clarkson v Clarkson [2020] NZHC 2211.
(b)as to the value of Ms Bool’s share.
[16] I do not agree with counsel’s assessment that this is a straightforward case with limited issues. The evidence that has been filed identifies factual issues about which there is likely to be substantial dispute. These include, but are certainly not limited to, the nature of the arrangements agreed between the parties following the separation of Mrs Hammond and Mr Purdom, what was agreed as to the amount (if any) owed to Ms Bool at that time, the reasons why Mr Purdom’s interest was transferred to Mr Hammond and why the property was not sold immediately.
[17] It appears from Ms Bool’s evidence and counsel’s submissions there is an assumption that Ms Bool has an entitlement to payment from Mr and Mrs Hammond under the Property Sharing Agreement. As noted, Ms Bool says she is entitled to her contribution of $100,000 and the increase in value of her 7/40th share “under the Agreement”. It is certainly not clear on what basis Mr Hammond can have any obligation under an agreement to which he is not a party, but whether he has or not may depend upon the arrangements made by the parties following the separation of Mrs Hammond and Mr Purdom. What those arrangements were is unclear. However, more fundamentally, if Ms Bool has an entitlement to payment “under the Agreement”, then she may recover the amount owing in a claim based on breach of contract and has no need to resort to s 339. Furthermore, in that instance, any disputes or differences arising should be resolved by arbitration.
[18] Not only is there the potential for difficult legal issues to arise relating to the application of the Property Sharing Agreement, but it is apparent that there will be much disagreement between the parties as to whether it is appropriate to make orders under s 339 at all and, if so, upon what terms.
[19] There is also the real potential for cross-claims to be made against Ms Bool. For instance, Mrs Hammond has asserted the Property Sharing Agreement is “null and void” with the consequence that Ms Bool is liable for costs incurred in respect of the property which, although unspecified, might include rates and insurance and costs incurred in pursuit of the claim against the Council.
[20] In my view, there is a clear need for the discipline of formal pleadings in this case. As there is likely to be a lively contest between the parties over a range of both factual and legal issues, I consider it is inevitable that discovery will be required and interlocutory applications will be made. I consider, also, that there are likely to be matters arising where it will not be appropriate that evidence be given by affidavit and the cross-examination of witnesses will be required.
[21] I have not disregarded the fact that Ms Bool says she is suffering hardship and the situation between her and Mr and Mrs Hammond needs to be resolved as promptly as possible. In my view, this is a factor in considering where the interests of justice lay. However, adopting a pared procedure in the hope it will lead to a prompt resolution may ultimately prove counter-productive. There are other options to achieve a speedy resolution in appropriate cases. Importantly In Hong Kong and Shanghai Banking Corp Ltd v Erceg, Asher J said:7
While the types of proceedings where the originating application procedure can be used as of right under r 19.2 have been expanded, and can include the determination of substantive personal and property rights, this expansion does not create a carte blanche to commence any urgent matter by way of originating application. If a party wishes to obtain an urgent hearing and a truncated procedure in such a circumstance, it should file a standard proceeding in the usual way and seek priority, or allocation to the Fast Track, or some other step within the ambit of the standard procedure that will reduce time limits. A party should not treat the originating application procedure as a shortcut for urgent cases.
Result
[22] For the reasons set out above, the application to commence this proceeding by way of originating application under pt 19 High Court Rules is refused.
[23]There shall be no order as to costs.
O G Paulsen Associate Judge
7 Hong Kong and Shanghai Banking Corp Ltd v Erceg, above n 2, at [26].
Solicitors:
Weston Ward & Lascelles, Christchurch
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