Burley v Colson

[2025] NZHC 200

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-002935 [2025] NZHC 200

IN THE MATTER

of an application for an order for sale under s 339 of the Property Law Act 2007 and for ancillary orders

BETWEEN

HEATHER MARY CARLYLE BURLEY and MARK ROLAND WINGER as

TRUSTEES OF THE KAY CEE TRUST

Applicants/Plaintiffs

AND

MARK STEPHEN COLSON and MARKSON TRUSTEE COMPANY LIMITED as TRUSTEES OF THE MARKSON TRUST

Respondents/Defendants

Hearing:

18 February 2025

Appearances:

J E McLennan for Applicants/Plaintiffs

No appearance for Respondents/Defendants

Judgment:

18 February 2025

ORAL JUDGMENT OF VENNING J

Solicitors:           Holmden Horrocks, Auckland

BURLEY and WINGER as TRUSTEES OF THE KAY CEE TRUST v COLSON and MARKSON TRUSTEE COMPANY LIMITED as TRUSTEES OF THE MARKSON TRUST [2025] NZHC 200 [18 February 2025]

[1]    Heather Burley and Mark Winger as trustees of the Kay Cee Trust (the applicants) seek an order for the sale of a property at 235B Tramway Road under s 339 of the Property Law Act 2007, together with related and incidental orders. The respondents, Mark Colson and Markson Trustee Company Limited, are trustees of the Markson Trust and are co-owners of the property as tenants in common in equal shares.

[2]    In the statement of claim issued on 18 November 2024, the applicants also seek further relief. They seek orders to recover costs incurred in relation to the property and damages for breach of an agreement between the applicants and respondents before the division of the net proceeds of sale. For present purposes the current application is limited to an order for sale (and orders relating to the practical details of sale). The applicants intend to seek the further orders from the Court in due course.

Background

[3]    Heather Burley and Mark Colson entered a de facto relationship in 1994 and married on 24 February 1995. They separated on 6 June 2016. To settle matters following separation Mr  Colson and  Ms Burley  entered an agreement  pursuant  to s 21A of the Property (Relationships) Act 1976, together with a Property Sharing Agreement for the property at 235B Tramway Road, both dated 24 April 2018.

[4]    As part of their agreement Ms Burley and Mr Colson agreed to resettle 235B Tramway Road into two new trusts as tenants in common in equal shares. Although the parties made that agreement Mr Colson became difficult to deal with and has not been heard from for some time. Ultimately Ms Burley sought and obtained an order for specific performance and a vesting order from the Manukau Family Court vesting 235B Tramway Road in the two trusts in accordance with the agreement.

[5]    Since obtaining the vesting orders Ms Burley has been responsible for the repair, maintenance and upkeep of the property. She now seeks an order enabling the sale of the property. These proceedings were issued on 15 November 2024 and have come before the Court by way of formal proof. Ms Burley has not had contact with Mr Colson for some time. In her affidavit in support, she says he left New Zealand and found it difficult to return because of the Covid restrictions on travel. She also suggested that there is a possibility Mr Colson may be in prison. While there has been

some correspondence from solicitors on behalf of the other trustee, a legal firm’s trustee company which appears to have been established for the sole purposes of the respondent trust, as the correspondence is ‘without prejudice’ it has not been exhibited to the application. In any event, the applicants have complied with the orders for substituted service and it is appropriate that the application proceed by way of formal proof given that there has been no notice of opposition nor indeed any notice of appearance.

[6]Section 339 of the Property Law Act 2007 provides:

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.

[7]    Neither of the considerations under s 339(2)(a) or (b) apply. The application has been properly brought. In Bayly v Hicks1 the Court of Appeal noted that s 339(1) provides the Court with a broad discretion as to the orders it may make on an application for sale or division. The discretion is to be exercised in accordance with the discretionary factors under s 342 of the Act:

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.

[8]    Relevantly, cl 10 of the Property Sharing Agreement the parties entered on 24 April 2018 provided:

10.If, after the fifth anniversary of this Agreement, 235B Tramway has not been subdivided, sold or otherwise realised, one of the following options shall occur:

(a)Kay Cee Trust and the Markson Trust shall instruct an independent valuer by agreement … to make a recommendation as to an equitable partition of 235B Tramway, which the parties shall action; or

1      Bayly v Hicks [2012] NZCA 589.

(b)Subject to the further agreement of Kay Cee Trust and the Markson Trust as provided in clause 10(d) herein, the parties shall sell 235B Tramway; or

(c)If, following the equitable partition of 235B Tramway pursuant to clause 10(a) above, one party receives an offer from a third party to purchase or acquire that parties’ interest in 235B Tramway (rather than the property as a whole), the provisions in Schedule B hereto shall apply; or

(d)Kay Cee Trust and the Markson Trust may agree to delay the partition or sale of 235B Tramway for a further specified period of time; or

(e)As an alternative to partition or sale of 235B Tramway, either of the parties may give notice of their intention to sell their undivided one-half interest in 235B Tramway to the other party or their desire to purchase the other parties undivided one-half interest in 235B Tramway in accordance with Schedule A hereto, which schedule is subject to clauses 10 (a)–(d) inclusive.

[9]    As counsel Mr McLennan submits, given the applicants wish to sell the property, cls (a), (c), (d) and (e) are not applicable. There has been no agreement and indeed no communication between the parties as to exercising those options.

[10]   More than five years has passed since the Property Sharing Agreement was concluded and as noted, option 10(b) contemplates that the property shall be sold in those circumstances.

[11]   Having regard to the considerations under s 342, I note that the parties are equal owners of the property. On the information before the Court Ms Burley has been responsible for repairing and maintaining the property. That continued burden of maintaining and caring for the property remains on her and she wishes to sell it.

[12]   The Court is satisfied that in the circumstances the applicants are entitled to their share of the property in accordance with the agreement of the parties having regard to the burden of repairing and maintaining the property that has fallen on Ms Burley.

[13]   I am satisfied, on the evidence before me that it is appropriate to grant the formal proof application and make an order under s 339(1)(a) for the sale of the property to facilitate that.

[14]   To give force to that order for sale I make the following additional procedural orders:

(a)appointing John Russell McCracken, a real estate agent of Karaka, as the real estate agent (through City South Investments 2019 Limited trading as Ray White Karaka) to act on the sale of the property;

(b)appointing Holmden Horrocks to act on the sale of the property for both the applicants and the respondents;

(c)the applicants are to decide on the method of sale and the sale price for the property (at an amount not less than a reasonable market value for the property) after having taken professional advice;

(d)the applicants are to decide on all other terms for the sale of the property, again having taken professional advice;

(e)the Registrar of the Court is appointed to sign any documents necessary to facilitate the sale of the property (instead of the respondents);

(f)a vesting order to be made to any third party purchaser should the respondents fail or refuse to sign any documents necessary for the sale or provide information to the solicitor appointed for the conveyance;

(g)leave is reserved to apply to the Court without notice to the respondents for other orders that may be required to facilitate the sale and transfer of the property to the purchaser;

(h)for payment from the proceeds of sale on settlement of the solicitors’ legal costs and such other necessary payments on settlement of the sale

being land rates as apportioned and water rates for the property and other incidental costs;

(i)the applicants’ legal costs of $30,596.75, including disbursements, incurred in obtaining these orders for sale are to be paid from the respondents’ share of the proceeds of the sale of the property on settlement;

(j)otherwise reserving the costs of the general proceedings in relation to the remaining orders sought; and

(k)reserving leave for the applicants/plaintiffs to pursue the remaining causes of action in the substantive proceeding.

Costs

[15]   I have made order [14](i) above as I am satisfied, having regard to the evidence before the Court that the trustee company was on notice about the issue of costs, including that an application was to be made for indemnity or increased costs before the issue of the proceedings. However, as noted, no steps have been taken by the respondents. In the circumstances and given the steps that Ms Burley has been put to, she should not be out of pocket in relation to the costs of bringing these proceedings to obtain the order for sale.

Venning J