Boot v Stephens
[2023] NZHC 3863
•21 December 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-002427
[2023] NZHC 3863
IN THE MATTER OF the Property Law Act 2017 AND
IN THE MATTER OF
the Estate of ERIC LESLIE HART
BETWEEN
GAVIN BOOT (as executor and trustee of the Estate of ERIC LESLIE HART)
Plaintiff
AND
MARLEN MOANA STEPHENS and BRIAN MATTHEW STEPHENS
Defendants
Hearing: 13 November 2023 Appearances:
P J Morgan KC & B N Newton for the Plaintiff Defendants in person
Judgment:
21 December 2023
JUDGMENT OF TAHANA J
This judgment was delivered by me on 21 December 2023 at 2.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Thackeray Chambers, Hamilton
BOOT v STEPHENS [2023] NZHC 3863 [21 December 2023]
Application to sell property
[1] In the words of the defendants (the Stephens), “this is a case of parents who helped their daughter and her family get into their first home.” Together with her parents, Ms Stephens and her husband purchased a home at Minerva Terrace, Howick (the Howick Property). The title records that the Stephens own a half share and the parents (the Harts) own a half share as tenants in common.
[2] Sadly, the Harts have now both passed away and their share has been left to their six adult children in equal shares. The executor of the estate (the Executor) applies to have the Howick Property sold so that half of the proceeds of sale can be distributed to the adult children.
[3] The home has been the Stephens family home for 17 years and they wish to remain there and buy out the estate’s share. The Stephens say they contributed more than the Harts to the purchase price and their share is 67 per cent and the estate is therefore only entitled to 33 per cent.
[4] Three of the six adult children support the Stephens’ claim to 67 per cent and the other three maintain that the Stephens are only entitled to 50 per cent as recorded on the title.
[5]I therefore need to determine the following issues:
(a)What are the respective shares of the estate and the Stephens in the Howick Property?
(b)Should the Court order the sale of the Howick Property or require the Stephens to purchase the estate’s share?
(c)If the latter, at what value should the Court order that the Stephens purchase the estate’s share of the Howick Property?
[6] Before considering each of the above issues, I set out the background and relevant law.
Background
[7] Marlene and Brian Stephens lived with Marlene’s parents, Eric and Doreen Hart, at their property at Clydesdale Avenue, Howick (the Clydesdale Property) for approximately six years. Mr Stephens says they paid $300 per week to Marlene’s parents. The Stephens then rented their own property but discussed purchasing a home with the Harts.
[8] In 2006, the Stephens and Harts purchased the Howick Property. The purchase price was $533,000 and associated costs were $7,000 ($540,000 in total).
[9] The Harts and the Stephens borrowed a total of $670,000 which they agreed would be divided into two accounts, with the Harts taking responsibility to repay
$300,000 (plus interest) and the Stephens taking responsibility for repaying $370,000 plus interest. The funds were divided and used for the following purposes:
(a)Harts: the $300,000 was used as follows:
(i)$115,000 was used to repay their existing mortgage on the Clydesdale Property; and
(ii)$185,000, was used to fund the purchase of the Howick Property (including $3,500 legal fees).
(b)Stephens: the $370,000 was used as follows:
(i)$15,000 was used to repay a debt; and
(ii)$355,000 was used to fund the purchase of the Howick Property (including $3,500 legal fees).
[10] Despite the above arrangements, the borrowing was in all parties’ names and all were liable for repayment of the $670,000. The borrowings allocated to the Harts were subject to a variable interest rate and the borrowings allocated to the Stephens were subject to a fixed interest rate.
[11] In 2008, the Stephens increased their borrowings by $20,000 to finance improvements to the Howick Property.
[12] In 2011, the Stephens and the Harts increased their respective borrowings to finance further improvements to the Howick Property:
(a)the Stephens increased their borrowings by $10,000; and
(b)the Harts increased their borrowings by $5,000.
[13] In 2013, the Harts sold the Clydesdale Property and applied the proceeds of sale to repay the borrowings for which they had accepted responsibility.
[14] On 27 November 2016, Mrs Hart passed away and less than six months later, on 22 April 2017, Mr Hart passed away.
[15] Mr Hart, by his will, left his estate to his six children (Leonora Hippolite, Christina Kutia, Jared Hart, Angelique Gilgen, Sharianne Hemi, and Marlene Stephens) in equal shares.
Relevant law
[16] The Executor seeks orders for sale of the Howick Property under s 339(1) of the Property Law Act 2007 (the PLA). Section 339 provides that:
339 Court may order division of property
(1)A court may make, in respect of property owned by co-owners, an order—
(a)for the sale of the property and the division of the proceeds among the co-owners; or
(b)for the division of the property in kind among the co-owners; or
(c)requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.
(2)An order under subsection (1) (and any related order under subsection (4)) may be made—
(a)despite anything to the contrary in the Land Transfer Act 2017; but
(b)only if it does not contravene section 340(1); and
(c)only on an application made and served in the manner required by or under section 341; and
(d)only after having regard to the matters specified in section 342.
(3)Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.
(4)A court making an order under subsection (1) may, in addition, make a further order specified in section 343.
(5)Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).
(6)An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—
(a)the Land Transfer Act 2017; or
(b)the Deeds Registration Act 1908; or
(c)the Crown Minerals Act 1991.
[17]The factors that must be considered under s 342 are as follows:
342 Relevant considerations
A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:
(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:
(b)the nature and location of the property:
(c)the number of other co-owners and the extent of their shares:
(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:
(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:
(f)any other matters the court considers relevant.
What are the respective shares of the estate and the Stephens in the Howick Property?
[18] The legal title records the Stephens’ interest as an undivided half share and the Harts’ interest as an undivided half share as tenants in common.
[19] The Stephens bear the onus of rebutting the presumption of equal ownership as reflected by the legal title to the property.1
[20] In considering whether the presumption has been rebutted, the Court in Cossey v Bach indicated that the first inquiry must be whether the parties have, by their words or conduct, expressed their own proprietary formula. If they have, that is the end of the matter.2 An expressed intention must be unequivocal; expressed by the partner (or partners) who had the power to dispose of the interest in question; and be pertinent to the current circumstances.3 The Court noted that in principle an intention could be expressed by conduct rather than oral or written statement:4
The intention which might otherwise have been inferred from the act of settling the property jointly will not be determinative if it is plain that the intention did not embrace the circumstances which have since occurred. It will be for the party who deliberately chose to place property in joint names to rebut the inference that beneficial joint ownership was intended to be permanent and irrevocable.
[21] There is also a presumption that a person contributing to the purchase price retains an equitable interest to the extent of their contribution unless there is an intention that indicates otherwise:5
The presumption is that a person providing or contributing to the purchase price of real or personal property in respect of which a sole or joint interest is conveyed into the name of another retains an equitable interest in the property conveyed to the extent of his [or their] contribution if there is nothing to indicate that he [or they] intended to confer the beneficial interest upon the legal transferee.
1 Cossey v Bach [1992] NZLR 612.
2 Cossey v Bach [1992] NZLR 612 at 627.
3 At 628.
4 At 629.
5 At 630.
[22] It is therefore necessary to ascertain who provided the purchase price, the proportions of their contribution, and the intentions of the parties. Unless the intentions indicate otherwise, the result will represent the provisional beneficial ownership of the property but will then be subject to the test of reasonable expectations.6
What did the Stephens contribute to the purchase price?
[23] The evidence indicates that the Harts’ and Stephens’ respective contributions to the purchase price were not equal:
Item Stephens Harts Total Purchase price $351,500 $181,500 $533,000 Percentage 66% 34% 100%
[24] Mr Morgan for the Executor argues that the mortgage repayments were roughly the same because the Harts had a variable loan and the Stephens a fixed loan. That submission however, ignores the fact that $130,000 of the Harts’ borrowings were unrelated to the purchase of the house and $10,000 of the Stephens’ borrowings were unrelated to the purchase. While all parties were technically liable, they did not take responsibility for payment of an equal share of the purchase price. That is clear from the table above and was undisputed.
[25] There is no evidence explaining the reason for the variable interest rate for the Harts’ share of the borrowing. The Stephens could not recall why the lending had been structured in this way. It would be speculative to assume that the loans were structured in this way simply to ensure that the parties paid roughly the same amount. It would make no sense to agree to a higher interest rate for the sole reason of ensuring equal payments. The more likely reason is that the Harts wanted flexibility so that they could repay the loan early. In any event, it is speculative for the Court to assume a reason for the variable interest rate, and I do not consider it indicates that the contributions were roughly equal when they were not.
[26] The Executor says that the Stephens also received the benefit of being able to purchase a property by the use of the equity in the Clydesdale Property and by the
6 At 630.
lending, taking into account the income of the Harts. The loan application indicates that the incomes of all parties were taken into account and the Clydesdale Property was also used as security, thereby avoiding the need for a cash deposit. The loan application identifies the following income and security:
Stephens Harts Income Personal income $102,400 $58,491 Rental income $15,600 Total income $102,400 $74,091 Security Clydesdale Property $405,000
[27] In purchasing the Howick Property all together, the Stephens were able to buy a family home without having to save for a deposit and with the benefit of sharing the cost of the purchase price with the Harts.
[28] The Harts were able to live with the Stephens in the Howick Property, rent out the Clydesdale Property and use the rental income to pay their share of the borrowings. When the Clydesdale Property was sold and used to repay the Harts’ share of the borrowings, the Harts had no further loan repayments and continued to live at the Howick Property. Ms Stephens says that they (the Stephens) took responsibility for paying the insurance and rates, with the Harts contributing on occasion. Ms Stephens said she provided all of the relevant bank accounts to the Executor but that they were not included in the documents before the Court. I therefore accept that it is more likely than not that the Stephens did pay all rates and insurances, except for occasional contributions from the Harts.
[29] I consider that there were mutual benefits to both couples in purchasing a house together. They were all whānau (family) and all received benefits by pooling their income and resources and sharing a home. The Harts were clearly parents who cared for their whānau.
[30] I do not consider that the size of the area of the house in which the Harts’ lived is relevant to their respective shares. The caselaw indicates that it is the contribution to the purchase price that is relevant to determining beneficial interests as well as the express intentions of the parties.
What were the intentions of the Stephens and Harts given the unequal contribution to the purchase price?
[31] Ms Stephens’ evidence is that while they all agreed to the title being held in half shares each, she says her parents understood that the Stephens had contributed more to the purchase price. That her father said “many times” that “what you put in, is what you get out” and that they “stuck by that.” She says:
I spoke to my father on a number of occasions addressing that the shares on the land title did not match the financial contributions made to the Property. I expressed my concern that we could have difficulty with some of the siblings which would financially affect Brian and I greatly.
My father always replied not to worry, just show your documents and everything will be ok. I highly doubted that.
[32] Mr Stephens says that when they bought the Howick Property, Mr Hart said, “let’s do 50/50” and that he agreed to that. He said, “[w]e were just lucky that we had that opportunity to own a home.” Mr Stephens says that on the odd occasion when the 50/50 title was mentioned Mr Hart said, “but, Marlene, you’ve contributed more, show your documents.”
[33] Jared’s evidence was that he had been told by his parents that they owned 50 per cent of the Howick Property but that when the issue was raised in Ms Stephens’ presence, she would say “that is not correct” and she would outline some examples. Jared says that his father would say to Marlene “just have your documents ready and it will be all fine.” Jared goes on to say:
I think my father believed that as I was the only son and because of my “work experience” and church experience that I would be able to make a decision that would be right (or morally right in his eyes).
…
It was all very unclear to me and onerous, but I was left to believe that Marlene was owned [sic] something more. …
[34] Leonora’s evidence is that she knew her parents had “gone into partnership with Marlene and her husband in the property,” but she was “not aware of the exact details between them.” After her dad’s passing, she said her brother Jared:
in an effort to resolve the matter of the estate quickly, made a recommendation to all of us which I was happy to support. I had every reason to support my sister Marlene also towards a happy solution, as the matter affected her and her family greatly.
[35] Angelique’s evidence is that she believed, and thought all her brothers and sisters knew, that her parents owned half of the Howick Property. She does not agree to 67 per cent being owned by Marlene as there were “too many grey areas.” She had too many questions and “didn’t really trust Jared’s judgment.”
[36] Sharianne’s evidence is that her father told her that “he wasn’t happy about going into this idea of buying a house with Marlene and Brian.” She says he told her that “he felt pressured by them and mum to do it.”
[37] Sharianne says that while her parents were living in Hamilton for two years, she would see them often and they spoke on multiple occasions about “payments they were making for rates, water rates, power and their mortgage for Minerva Terrace.” She says her mother told her that the house was to be sold on their death and “the money from the sale after payment of the mortgage was to be split 50:50 between mum and dad [the Harts] on the one side and Marlene and Brian [the Stephens] on the other.”
[38] Sharianne says while at the hospital with her father, he told them that the Harts owned 50 per cent of the Howick Property and Marlene interrupted and said, “no that is not right.” Sharianne says he told Marlene to be quiet. Sharianne says the first time she heard that the share was “66/34” was when Jared emailed them all and asked them to agree to an allocation consistent with that.
[39] Christina’s evidence is that her father told her he had a will and that the Howick Property was half owned by him, and that under his will the children were all to share equally. Christina also says that while they were at the hospital with their father, he said he owned a half share in the Howick Property:
It is difficult to describe precisely what happened then, but there was some contention about what he said from Marlene and they briefly argued. Me and the rest of my sisters felt that it just wasn’t the time and place for any sort of discussion like that with our dad, who was unwell and in no condition to argue about the matter, and we simply closed the discussion down.
[40] I am satisfied that it is more likely than not that the Harts were aware that the Stephens had contributed more than 50 per cent of the purchase price and that they were aware that the Stephens had a reasonable expectation that this would be acknowledged. It is clear from the evidence that Marlene had indicated to her father that she considered that the Stephens’ share was greater than 50 per cent and that in response, he indicated to Marlene that if she showed documentation to establish this, it would be resolved accordingly.
[41] Unfortunately, the Harts are not here to express their intentions. I am however, satisfied that the evidence discloses that the Harts and the Stephens were all aware that the Stephens had contributed more to the purchase price. Mr Hart had indicated to Marlene that she only needed to “show her documents” to prove that the contribution was greater and the matter would be settled. Further, the evidence indicates that Marlene has consistently raised the issue of their contribution (including in the presence of some of her sisters and brother) and that from the Stephens’ perspective they never expressed an intention to allow their extra share of the contribution to be held by the Harts, and now the estate.
[42] Applying the principles in Cossey v Bach, I am satisfied that the Stephens have discharged the onus and rebutted the presumption that the legal title reflects their beneficial interest. The undisputed fact is that they contributed more to the purchase price. They have also paid for the insurance and rates with only occasional contributions from the Harts to those costs. They are not seeking to recover those costs from the estate. I am satisfied that the Stephens had a reasonable expectation that their contribution would be recognised. They acted in reliance on that reasonable expectation in contributing more to the purchase price and paying the outgoings for the Howick Property. The Stephens want their contribution to be recognised so that they can buy out the estate’s share and continue living in their family home.
Conclusion – respective shares
[43] For the reasons set out above, I determine that the Stephens are entitled to a 66 per cent share and the estate is entitled to a 34 per cent share of the Howick Property.
Should the Court order the sale of the Howick Property or require that the Stephens purchase the estate’s share?
[44] In determining whether the Howick Property should be sold, I must have regard to:7
(a)the estate’s share in the property;
(b)the nature and location of the property;
(c)the extent of the Stephens’ share in the property;
(d)the hardship that would be caused to the estate by refusing to order a sale in comparison to the hardship that would be caused to the Stephens by ordering a sale;
(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property; and
(f)any other matters the court considers relevant.
[45] I have determined above that the estate is entitled to a 34 per cent interest and the Stephens a 66 per cent interest in the Howick Property.
[46] It is the Stephens’ home and they have lived there for 17 years. If I order a sale, the Stephens will have to leave their family home unless they are able to purchase it. At the hearing the Stephens indicated that they would be happy to purchase the Howick Property for a fair and reasonable value.
[47] If I do not order the sale of the Howick Property, the estate will not be able to distribute any monies to Ms Stephens’ siblings so that they will not be able to benefit from their share in the estate.
7 Property Law Act 2007, s 342.
[48] I therefore consider it is in all parties’ interests that the Stephens purchase the estate’s share of the Howick Property.
[49] In terms of contributions to improvements, the Stephens borrowed $30,000 to finance improvements and the Harts borrowed $5,000. Those respective contributions should be taken into account in determining the amount to be paid by the Stephens to the estate.
At what value should the Court order that the Stephens purchase the estate’s share of the Howick Property?
[50] I have determined that the Stephens should purchase the estate’s share of the Howick Property. Under s 339(1)(c) of the PLA, the Court may make an order requiring a co-owner to purchase the share in the property of the other co-owner at a fair and reasonable price.
[51] I note that in October 2019 counsel for the Stephens informed the estate that the Stephens were prepared to meet half the cost of a valuation of the Howick Property. This however, did not subsequently occur and the estate paid for a valuation which has been provided to the Court. The valuation was issued on 19 January 2022 and concludes that the Howick Property has a market value (including fixed chattels) of
$1,500,000.
[52] The Stephens have not provided an updated valuation or indicated what they consider is a fair and reasonable price. In the absence of any updating valuation, the Court relies on the 19 January 2022 valuation and considers that this provides the only evidence of a fair and reasonable price.
[53] Taking into account the factors in s 342, I consider it is appropriate to order that the Stephens purchase the estate’s share of the Howick Property based on a market valuation of $1,500,000.
[54] The Stephens are also entitled to recover $30,000 and the estate is entitled to recover $5,000. Taking those contributions into account, the respective shares of the
$1,500,000 are as follows:
Stephens Estate Market value $1,500,000 Less contributions $30,000 $5,000 Remaining $1,465,000 Percentage 66:34 $966,900 $498,100 Contribution plus share $996,900 $503,100 Marlene’s interest in estate (1/6) $83,850 -$83,850 Total each $1,080,750 $419,250
[55] Marlene has a 1/6 interest in the estate’s share (total $503,100), one sixth of which is $83,850. If Marlene’s interest is set off against the purchase price, that leaves an amount of $419,250 owing to the estate for the Stephens’ purchase of the estate’s share in the Howick Property.
Result
[56]I order pursuant to s 339(1) of the PLA that:
(a)Marlene and Brian Stephens are required to purchase the estate’s 34 per cent interest in the Howick Property (identifier NA1658/93);
(b)subject to the mortgagee’s consent, by 29 March 2024:
(i)the Stephens are to pay $419,250 to the estate;
(ii)the estate is to be discharged from any liability in relation to the Howick Property; and
(iii)the Howick Property is to be transferred to the Stephens;
(c)subject to payment of $419,250 to the estate, Marlene Stephens has no further interest in the estate’s share of the Howick Property;
(d)Marlene Stephens is liable to the estate for her share of the estate’s costs;
(e)if the Stephens do not make payment in accordance with [56](b) above by 29 March 2024, I grant leave to the estate to apply for orders for the sale of the Howick Property, at which time orders can be made fixing the terms and conditions of any sale; and
(f)leave is granted to the parties to seek any further orders reasonably necessary in connection with the orders made above.
[57] The Stephens are self-represented. It is not therefore appropriate to make any orders as to costs.
[58] Finally, I encourage the whānau to put their differences aside and to move ahead as a whānau in the memory of their parents.
Tahana J
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