Calian v Cassidy

[2021] NZHC 3413

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-587

[2021] NZHC 3413

BETWEEN

ALEXANDRINA DENISA CALIAN

Applicant

AND

RONALD KELVIN CASSIDY

Respondent

Hearing:	13 August 2021, further submissions received 12 November 2021
Appearances:	J M Greally, K R Smith and M E Gardiner-Rodden for Applicant C LaHatte for Respondent
Date:	13 December 2021

JUDGMENT OF ELLIS J

[1]    This judgment follows on from my decision dated 29 May 2020, in which I made a sale order under s 339 of the Property Law Act 2007 (the PLA) in relation to a property co-owned by the applicant and the respondent, situated at 83 Bird Grove, Stokes Valley.1 I did not make orders for the division of proceeds at that time.

[2]    Given the matters recorded in my earlier judgment, it is no surprise that the sale process proved to be an attenuated one.

[3]    In any event, the property has since been sold. The sale price was $630,352. The proceeds are being held, in accordance with my directions, in the trust account of JAG Legal. The issue now requiring determination is how the proceeds should be divided between the parties, after taking into account various related costs and other matters.

1      Calian v Cassidy [2020] NZHC 1159.

CALIAN v CASSIDY [2021] NZHC 3413 [13 December 2021]

[4]    An interim distribution to Ms Calian of $129,830 was ordered immediately after the hearing in August, effectively unopposed, on the basis that she would be entitled to receive at least that amount. I regret the delay in dealing with the remainder.

Background

[5]    In order to determine the question of division, and to understand this judgment, it is necessary to set out the rather complex background, both in terms of the property itself and the history of these proceedings.2

The property

[6]    The Bird Grove property was acquired  by  Ms  Calian’s  former  husband, Mr Darrin Cassidy (Darrin) in 1989. It was initially occupied by Darrin and his then partner, a Ms McLoughlin. In 2001, they separated.

[7]    Darrin and Ms Calian began a relationship in 2005 and married in late 2006. In 2008, they moved into the property and borrowed money for renovations, which included converting the garage into a two-bedroom flat. In 2009, Darrin’s parents, Ronald and Marie Cassidy moved into the flat. At some point, Darrin and Ms Calian had a child.

[8]Darrin and Ms Calian separated in August 2013.

[9]    After her offer to settle relationship property issues for $60,000 was not accepted, Ms Calian commenced Property (Relationships) Act 1976 proceedings against Darrin in March 2014. These were eventually resolved, other than as regards the property.

[10]   In 2015 Ronald and Marie commenced proceedings in the District Court against Darrin and Ms Calian. They claimed that Darrin held 78 per cent of the property on either a resulting or a constructive trust for them.3 The basis for the claim

2      Much of what follows is taken from my earlier judgment (repeated here for convenience).

3      Based on the 2004 valuation of $119,000. See Cassidy v Cassidy [2016] NZDC 26113 at [7].

was that they had provided Darrin with approximately $94,000 to assist in his settlement of relationship property matters with Ms McLoughlin.

[11]   They also claimed that, in consideration for the property being used as security for further borrowing to complete renovations at a later stage, Darrin had granted them a life interest in the bottom floor flat in which they had been living. This life interest was in addition to their claimed equitable interest in the property. Both aspects of their claim were supported by Darrin.

[12]   The two sets of proceedings were consolidated and, in due course, heard by Judge M O’Dwyer. In her subsequent decision, dated 2 February 2017, she held:

(a)Darrin held a 50 per cent share of the property on constructive trust for his parents, Ronald and Marie;

(b)that interest should be reflected in an order vesting 50 per cent of the property in Ronald and Marie;

(c)the other half share was relationship property;

(d)liability for (what was then) the $173,000 mortgage debt was divided as follows:4

(i)Ronald and Marie – $50,000;

(ii)Darrin – $77,000; and

(iii)Ms Calian – $46,000.

[13]   Darrin and his parents then entered into a Deed on 29 December 2017 by which he purported to transfer his 25 per cent share of the property to them, effectively in satisfaction of his ($77,000) share of the mortgage debt.

4      It will be observed that this mortgage debt was some $46,113 less than the mortgage debt owing at the time of sale.

[14]   On 4 March 2018, Judge Black warned Darrin that if Ms Calian was not paid for her share of the relationship property, his interest in the property would be vested in her.

[15]   A month later, counsel for Ronald and Marie filed a memorandum asking that Darrin be allowed three months to raise the money and (again) asking that the court recognise their “life interest” in the flat.

[16]   On 20 June 2018 Judge Black ordered Darrin to pay Ms Calian an amount representing a quarter-share of the value of the property ($101,250) and five years’ occupational rental, totalling $29,380, by 28 July 2018. The Judge said that if that payment was not made, the disposition by Darrin of his quarter interest in the property to his parents would be set aside and a one-half share in the property would vest in Ms Calian as her separate property.

[17]   In Judge Black’s June 2018 “implementation” decision, he ordered that, if Darrin did not pay Ms Calian $148,455—comprising occupational rental totalling

$29,380, $17,825 costs, and $101,250 (the agreed value of Ms Calian’s 25 per cent of the Bird  Grove  property)—by  28  July  2018,  the  purported  disposition  of  his  25 per cent share in the property to his parents would be set aside and would instead be vested in Ms Calian as her separate property. He then said:

I record that [Ms Calian] will need to account to [Darrin] for the difference between her entitlement (which will increase over time, in the event that [Darrin] continues in occupation) and the value of the one half share if the property is sold.

[18]   Judge Black reiterated that the claim by Ronald and Marie for a life interest had been dismissed. He awarded Ms Calian costs.

[19]   After yet another month, Judge Black granted Darrin an extension of time for making payment (until 14 September 2018). But payment was not made by that date or subsequently.

[20]   In November 2018 Darrin’s appeal of the costs aspects of Judge Black’s decision was unsuccessful. Cull J awarded costs against him.5

[21]   On 17 December 2018 the Family Court made an order vesting a 50 per cent share in the house in favour of Ms Calian. Ms Calian’s attempts to seal the order, however, were frustrated by a caveat placed on the title by Marie.

[22]   A revised vesting order (made subject to the caveat) was made on 18 June 2019, by which time Marie had died. In July 2019 Ms Calian’s name was finally registered on the title, but with Darrin (rather than Ronald) remaining named as the other owner.

[23]   Then, on 16 July 2019, Darrin sought simultaneously to have an earlier bankruptcy notice issued by Ms Calian set aside and to have himself adjudicated bankrupt.6 He was, in fact, adjudicated bankrupt on that date. Costs were awarded against him.

[24]   Requests made by Ms Calian to the Cassidys that the property be sold (so she could realise her share) largely went unanswered. But on 21 August 2019, Ronald’s lawyer advised Ms Calian’s lawyer that “the house is being readied for sale and the family anticipate that it will in fact be on the market in one month”.

[25]Nothing happened.

These proceedings

[26]   Due to inaction on the sale front, on 10 October 2019, these proceedings were filed. Darrin was named as a party because his name wrongly remained on the title.

[27]   On 15 November 2019 counsel for Ronald advised the Court that the parties were at an impasse in terms of their respective entitlements. And on 6 December 2019 counsel for Ronald agreed to a timetable requiring him to file an affidavit within  two weeks. No affidavit was filed until almost two years later, on 11 June 2021.

5      Cassidy v Calian [2018] NZHC 3191.

6      Calian v Cassidy [2019] NZHC 1653.

[28]   A notice of change of solicitor (for Ronald) was filed on 23 December 2019. The hearing allocated for 12 February 2020 had to be vacated because Ronald’s new counsel (Mr LaHatte) advised that he had not yet received the file. On that day, I issued a minute in which I noted issues that had been raised as to Ronald’s capacity. I directed that his lawyer was to file:

(a)a notice of opposition and any affidavits in support (by 14 February 2020); and

(b)a memorandum annexing advice from a registered medical practitioner as to Ronald’s capacity to understand and participate in the proceedings (by 21 February).

[29]   In the notice of opposition filed two days later, the sale order was opposed by Ronald on the grounds that it would cause him hardship because he would be rendered homeless and that he had a life interest in the property that was not capable of severance.

[30]   An affidavit in support of Ronald’s opposition was filed on 21 February. The deponent was Mr Craig Grant Nisbet. I say more about that, later.

[31]On 20 February Mr LaHatte filed a memorandum stating:

1.A direction was made on 12 February 2020 to provide medical information about the health of the second respondent.

2.A note from the Stokes Valley Medical Centre is attached with regard to his health.

3.The note does not directly refer to his capacity, as that has been referred to specialists, but there is a formidable list of health issues.

4.Counsel is instructed that Mr Cassidy senior does have some memory issues, although in meeting with him he appeared to have a reasonable understanding of the litigation. But it would be unwise for counsel to speculate on issues of capacity and hopefully by the time the matter comes back to court there will be an appropriate medical opinion.

[32]And on 6 March, Mr LaHatte emailed the Court, advising that:

I have spoken to Mr Cassidy senior and it is very clear that he wants to try and protect his interest in the property. I do not believe his capacity to be so diminished that he cannot give proper instructions.

[33]Then, in my teleconference minute dated 15 May, I said:

Mr LaHatte advised that he met with Mr Ronald Cassidy on Sunday and that (in his view) Mr Cassidy has only a limited understanding of these proceedings.

Possible issues over the capacity of Mr Ronald Cassidy were flagged back in February. The medical advice subsequently provided suggested that the issues raised were groundless.7 No medical advice has been provided since to contradict this and I proceed on that basis.

[34]Ms Calian’s application was set down for hearing on 22 May 2020.

[35]   On 21 April 2020, Clark J ruled that Darrin’s bankruptcy precluded him from being heard in the proceeding.8 She also noted that in the context of his costs appeal (referred to earlier) Darrin had advised he had no interest in the property.9 He was therefore removed as a party.

[36]   There was then a teleconference on 15 May. In my minute of that date, I recorded Mr Smith’s advice that Police told him the property had been tenanted. I directed Mr LaHatte to obtain further information about this. I also recorded a challenge to the evidence of Mr Nisbet, as follows:

[7]        Mr Smith contends that the Nisbet affidavit is inadmissible and should be removed from the file. Put briefly, he purports to give opinion accounting evidence but is not holding himself out as an expert. A number of the premises upon which his evidence is based are demonstrably wrong.

[8]        In general terms I agree with Mr Smith. I also agree that there are grounds for believing that he is little more than an amanuensis for Darrin Cassidy.

[37]   I nonetheless said I was prepared to give Mr LaHatte the opportunity to identify (in advance of any division hearing) any specific passages that he said were relevant

7      I acknowledge that this was not quite correct. It would have been more accurate to say that the Court had received no medical information suggesting or confirming that Ronald had capacity issues.

8      Calian v Cassidy [2020] NZHC 781.

9 At [23].

and admissible, and I directed him to file a memorandum by 20 May 2020. In a memorandum dated 21 May (the day before the hearing) Mr LaHatte advised:

4.There has been some criticism of this affidavit in relation to the qualifications of the deponent and whether he is an expert. He has not signed the expert witness certificate and it is accepted that his evidence is prepared on behalf of Mr Cassidy.

5.The paragraphs which are relevant are paragraphs 9, 10 and 11,  together with the spreadsheet annexed.

[38]   With respect, that advice did not advance matters. In particular, it did not address the point that some of the key premises underlying Mr Nisbet’s analysis were—as Mr Smith had said—demonstrably wrong. Nor did it advance any proper basis on which the evidence said to be relevant was admissible (as I had directed it should).

[39]Mr LaHatte filed a further memorandum that same day, advising:

1.Counsel has been instructed that there have been tenants in the property since 28 December 2019. The tenancy agreement in relation to that was not immediately available. The instructions are that in the absence of contributions from Ms Calian, the tenant was introduced to help pay the mortgage.

2.Mr Darrin Cassidy confirms that the family asked him to leave the property so the tenants could move in.

[40]   This memorandum also annexed a further medical certificate about Ronald, which recorded:

This is to certify that the above named patient who was seen and examined by me today has significant Memory impairment as his MOCA [Montreal Cognitive Assessment] score is 12/30. He was assessed in Hutt hospital as well and as per hospital discharge letter he has likely dementia.

[41]   The attached discharge letter made it clear that (contrary to the position taken in his notice of opposition) Ronald was living with his daughter, not at the property. His daughter was recorded as expressing serious concerns to medical staff about Ronald’s ability to continue caring for himself.

[42]   At the hearing the following day, Mr LaHatte said he was “instructed” by Darrin that:

(a)the tenants occupied the flat only (that is, where Ronald had been living);

(b)it was a periodic tenancy; and

(c)he (Darrin) had moved out of the property at some earlier point in time as a result of an email he had received from counsel for Ms Calian, asking him to do so.

[43]   I invited Darrin to provide more information about his “eviction”. Darrin then provided the Court with an August 2019 email sent to him by Ms Calian’s lawyers. Contrary to his instructions to Mr LaHatte, it did not purport to require him to move out it. Rather, it stated that unless he was living in the house with Ronald’s permission, he would need to be evicted.

[44]   On 29 May 2020, I issued a judgment ordering the sale of the property but leaving division and other ancillary matters for another day.10 I said:

[36]      It is my quite clear view that the property must be sold. To the extent the pleaded bases for Ronald’s opposition ever had merit, they no longer do so. In particular:

(a)It has been finally determined by the Family Court that Ronald has no life interest in the property or any part of it;

(b)Ronald is no longer living in the property and, indeed, it seems tenants are living in the flat formerly occupied by him while the house remains vacant; and

(c)The medical information filed is to the effect that that there is no prospect of him returning to live there.

[37]      It is also my view that these are not matters which are likely to be altered by virtue of the issues about Ronald’s capacity. They are objective facts. As is Darrin’s and Ronald’s refusal for over three years now to co- operate in rectifying the title to reflect the orders made by the Family Court. The fact that the title still records Darrin as an owner speaks for itself.

[38]      The reality is that Ms Calian has been unfairly prejudiced and has suffered undoubted hardship by what has occurred. Her indisputable interest in the property has been ignored for no good or obvious reason. Darrin was given more than one opportunity to buy her out but did not do so. Others have lived in the house with no apparent benefit passing through to the mortgage

10     Calian v Cassidy, above n 1.

debt. The mortgage has recently fallen into arrears. The property has been tenanted without her knowledge. It now appears to be partially unoccupied. She is entitled to realise her interest as soon as possible. The issue of division can be dealt with once sale has occurred.

[39]      By contrast, for the reasons already given, there is nothing to suggest that Ronald will suffer hardship in the event of sale. He can no longer live at the property and the information before the Court suggests that he may well be in need of the proceeds in order to pay for the care he requires. It has never been suggested that he wishes—or is able—to buy Ms Calian out.

[40]      All that being said, the concerns about Ronald’s capacity remain and also need to be resolved. The procedure for doing so is set out in a minute which will be released at the same time as this judgment. By way of summary Ms Marlo Greenhough has been appointed to make the necessary inquiries and report to the Court as soon as possible. She has also indicated her willingness to act as litigation guardian, if necessary.

…

[42]      So while I now make an order for sale of the property, I otherwise adjourn the Ms Calian’s application to Monday 8 June 2020 for a further telephone conference with me, at a time to be advised. Ms Greenhough is to attend that conference and, if possible, file a memorandum prior. It may be by then that, with her assistance, the parties will have reached agreement on how the sale ought to be conducted. If not, the issues can be discussed with a view to my making further directions at that time.

[43]      The sale order I have made is to lie in Court and is not to be sealed until I have heard from Ms Greenhough and issued a further minute.

[45]   As it transpired, Ms Greenhough had a conflict that meant she was unable to take the appointment referred to in my judgment. Mr Rohan Cochrane was appointed in her stead on 3 June 2020.

[46]   Mr Cochrane on 8 June met with Ronald and his doctor, before reporting to the Court a few days later. On the basis of his memorandum (and the medical advice), I concluded that Ronald met the definition of an incapacitated person and (without opposition) appointed Mr Cochrane as his  litigation guardian.   In my minute of     12 June, I set out Mr Cochrane’s role, as follows:

[5] As I see it, Mr Cochrane’s primary role will be: (a) to provide instructions to Mr LaHatte (after appropriate consultation with Mr Cassidy) that will see this matter resolved  in  a  way  that  recognises  and  protects Mr Cassidy’s interests but also recognises the need to bring this matter expeditiously and economically to a final resolution; and to explain matters to Mr Cassidy as and when required and, in particular, to explain matters prior to Mr Cassidy being required to sign any documents in relation to a change in title to the property.

[47]I also recorded that there was now no impediment to the sale of the property:

[6]  Mr Cochrane confirmed that his review of the materials provided to   him and his discussions with Mr Cassidy did not give rise to any realistic possibility that the sale order already made by me (but which is presently lying in Court) could have been resisted by Mr Cassidy. As noted in my judgment there seems no prospect of Mr Cassidy returning to the property to live. The sale order may now be sealed.

The sale process

[48]Also in that minute, I noted:

[7]   No progress has been made resolving the tenancy issue.  It is agreed  that Mr Smith should visit the property tomorrow (Saturday) with a view to speaking with both them and the neighbours (about driveway access). He will, no doubt, report back and leave is reserved to ask for a further teleconference with me in the event of any matter arising that may need the Court's intervention.

[49]I observed that the sale should nonetheless be capable of expedition:

[8]        Subject only to any issues arising as a result of Mr Smith’s weekend visit, the details of the sale process should now be able to be agreed between the parties. Mr Smith has already filed a memorandum setting out some proposed directions in that regard. This has not yet been seen by Mr Cochrane but Mr LaHatte will provide him with a copy as soon as possible.

[9]        Once Mr Cochrane has had the opportunity to  consider  and  instruct Mr LaHatte, counsel are to confer with a view to filing a joint consent memorandum in which the necessary directions are set out. …

[50]   Following a Court-directed visit to the property on 13 June, Mr Smith filed a memorandum updating the Court on the tenancies. He advised that both the bottom and top flats had been tenanted since the previous year. The bottom flat tenant had told him that he had been paying rent of $450 per week to Mr Ronald Cassidy but that this had recently been raised to $500. The upstairs tenants had been paying $650 per week to Ronald Cassidy since at least 1 September 2019, but this had recently been reduced to $600 by agreement with Mr Darrin Cassidy due to them struggling to pay.11 Mr Smith advised that these tenants were in arrears to the tune of around $5,000.

11     This figure is roughly consistent with Mr LaHatte’s advice to the Court (on instructions) that the total rental (house and flat combined) was $1,150 per week.

[51]   After this visit, a further telephone conference was convened, at the request of Mr Smith. I consequently made orders that all future rent paid or payable by the tenants of both flats should no longer be paid into Ronald’s account, but rather into JAG Legal’s trust account. This was because the mortgage had fallen into arrears, despite rent being paid. I specifically directed that a copy of my minute be provided to the tenants and directed that “Any approaches to the tenants made by Darrin Cassidy should be ignored”.

[52]   Mr LaHatte advised he was hopeful that progress with the sale could be made shortly, following a planned meeting between himself, Mr Cochrane (the litigation guardian) and Ronald. He also said there had been agreement about the appointment of an independent lawyer to conduct the conveyancing work on the sale: Mr Basil- Jones of JAG Legal.

[53]   On 3 July the sale order, together with ancillary directions aimed at facilitating the sale process, was finalised. The directions included that:

(a)Ms Calian was to prepare the property for sale, under the supervision of Mr Basil-Jones;

(b)any reasonable expenditure incurred in that process would be a charge on the net proceeds of sale in Ms Calian’s favour;12

(c)Mr Basil-Jones was to give notice to the tenants in accordance with the Residential Tenancies Act and as permitted by the relevant COVID-19 tenancy rules that were then in place;

(d)Ronald was, at his own cost, to remove all family and personal items from the property no later than 26 July 2020 and was to leave all chattels, fixtures and fittings in place;

12     With an upper limit of $500—any expenditure in excess of that amount would require consultation.

(e)Mr Basil-Jones was then to place the property on the market for sale with  the  acceptance  of  any  offer  to  be  approved  by  him  and   Mr Cochrane (Ronald’s litigation guardian);

(f)Mr Basil-Jones was to take the necessary steps to have Darrin’s name removed from the title and Ronald’s placed on it.

[54]   By this point it should come as no surprise that things did not proceed smoothly. There was an apparent absence of any formal or documented tenancy agreements. The insurance on the property had been allowed to lapse. There remained a continued need to rectify the title. Both Ronald and Darrin failed to remove their belongings. And a sizeable quantity of rubbish was also reported to have accumulated at the property.

[55]   As well, the order that the rent be paid by the tenants into JAG Legal’s trust account was largely honoured in the breach; a total of only $5,400 was paid into the Trust account between the date of my order and sale. The mortgage continued to fall into arrears.

[56]   On 12 September notice was served on the upstairs tenants to vacate within three months.

[57]   Then, on 5 November, Mr LaHatte sent an email to the Registry, explaining that Ronald appeared to have recovered from his dementia:

There has been an interesting development in this case in relation to the capacity of the 2nd respondent Ronald Cassidy and that he appears to have recovered from his dementia issues. I have prepared a memorandum in relation to this, attaching a copy of the medical certificate recording his present position. Mr Cochrane and I have been advised that new lawyers will be instructed to act for him, and I would anticipate a notice of change should be filed. The medical information is protected by privacy of course, so this memorandum has not been served on the applicant’s solicitor and counsel. But we are seeking directions in relation to the appointment of Mr Cochrane. I would be grateful if you could place this matter before Justice Ellis for directions accordingly

[58]The memorandum attached by Mr LaHatte advised:

1.This memorandum is filed because of a change in circumstances of the 2nd respondent. Mr Cochrane and counsel were advised of a new medical report which establishes that Mr Ronald Cassidy has greatly improved in his health, and no longer suffers from a lack of capacity.

2.This memorandum attaches a copy of the medical report, but because of privacy concerns, this has not been sent to the applicant. If it is to be provided to the applicant, which may not be necessary, then a direction would be needed as to service. An alternative to providing a copy of the medical report would be simply to give a direction that as a result of the evidence of capacity, that Mr Cochrane’s role has come to an end and that new solicitors are being instructed by Mr Ronald Cassidy.

3.Those new solicitors are Janet Mason and Roger McDonald of Phoenix Law, who will no doubt file an appropriate change in due course.

[59]This memorandum was not served on the applicant’s lawyers.

[60]   No notice of change of solicitor was, in fact, filed. But on 23 November the new solicitors said to have been instructed by Ronald applied for a stay of my sale orders on the grounds that:

… it would be unjust; is an abuse of the Court process; and that sale is currently the subject of an appeal before the Court of Appeal.

[61]In response, I issued a minute that same day, stating:

Before a stay can be entertained the court requires confirmation that the application is made on instructions  from  [Ronald’s]  litigation  guardian  (Mr Cochrane). A copy of the notice of appeal should also be provided.

[62]   On 26 November the Deputy Registrar of the Court of Appeal advised the Registry of this Court that no such appeal had been filed.

[63]On 27 November I issued a further minute stating (among other things):

For the avoidance of doubt, I record that I consider Mr LaHatte remains on the record as counsel for Mr Ronald Cassidy and Mr Cochrane remains [Ronald’s] litigation guardian. In order for there to be a change of status in this latter regard I would first require both the doctor who provided the latest medical certificate and Mr Ronald Cassidy to attend Court and make themselves  available for cross-examination.  If that is the  desired course  Mr LaHatte is to advise and a hearing can be arranged through the Registry in due course. But unless and until this Court removes Mr Cochrane as litigation guardian, Mr Ronald Cassidy does not have the capacity to instruct new counsel.

From my perspective there is no live application for a stay.

…

I direct that this minute be issued to the lawyers on the record (Mr Smith and Mr LaHatte). The Registry may provide a copy to Ms Mason for her information, but not in any formal capacity.

[64]   That same day, Mr Basil-Jones updated the Court in relation to the property’s title and tenants:

1The title has been transferred into the joint names of Ms Calian and Kelvin [sic] Cassidy as tenants-in-common in equal shares and a copy of the title is attached.

2The notices to vacate signed by the registrar of this court have been served upon the upstairs and downstairs tenants. The notices are due to expire on the 9th day of December 2020.

3The downstairs tenant has vacated and we have arranged for a locksmith to change the locks. A set of keys to the tenancy have been provided to Ms Calian to enable her to undertake the preparation for sale.

4The signed insurance proposal form has recently been received by us and has been forwarded to an insurance broker who is arranging cover.

5Presuming that the upstairs tenant vacates on the date in the notice to vacate the property should be placed on the market for sale shortly thereafter.

[65]On 10 December Mr LaHatte filed a memorandum about Ronald’s capacity:

1.This memorandum is filed to update the court on the present position with the capacity of the respondent.

2.Mr Cochrane has advised Mr Ronald Cassidy of the position, and  Mr Cassidy has indicated that he will make himself available for cross examination at any date suitable for that purpose.

3.Mr Cochrane has also spoken to the doctor, Dr Rodwell, who issued the recent medical report as to the capacity of Ronald Cassidy, and enquired as to her availability. She confirmed that her report does not purport to determine whether or not Mr Cassidy has capacity, and commented that she did not consider that she would be able to give any further information as a witness beyond that contained in her report.

4.Dr Rodwell advised that she would not be a private expert, but would attend court if summonsed. She advised that she would not be available in the period 23 January 2021 for 3 weeks. There will need

to be a witness summons issued, which will be filed when a hearing date has allocated.

5.It is submitted that the appropriate step would be to allocate a hearing time of 2 hours (or more as appropriate) to determine the issue of capacity in terms of the direction.

[66]   The Court was advised that the upstairs tenants had not vacated by the end of the three-month notice period, reportedly on the grounds that Darrin Cassidy had told them they could stay.

[67]   So on 17 December there was a teleconference with me to address the question of Ronald’s capacity and the continuing problems with obtaining vacant possession. In relation to the former matter, I recorded in my subsequent minute:

[2]        … on the basis of the material filed in Court and after speaking with Mr Cochrane and counsel, I am satisfied that Mr Cassidy has capacity and that Mr Cochrane’s appointment as Mr Cassidy’s litigation guardian can be revoked without the need for a hearing. I make a direction accordingly.

[3]        If Mr Cassidy wishes now to instruct new counsel, then the appropriate notice must be filed.

[68]   I also made further orders requiring the tenants to give vacant possession within three working days, under threat of a possession order under Part 17 of the High Court Rules 2016. This order was complied with.

[69]   Finally, the property was sold in  January 2021.  Settlement took  place  on  24 March 2021. Ms Calian filed her application for division of the proceeds in April.

[70]   For completeness, I record that Mr LaHatte remained counsel on the record for Ronald. I note also that Ronald was well enough to be able to give evidence at the hearing before me, in August 2021. He did not appear to be mentally disordered in any way, although he plainly either has no understanding of—or simply refuses to accept—the ownership arrangements that resulted from the Family Court proceedings.

Division: the law

[71]   Section 339(1) contemplates that, when making a sale order, an order for the division of proceeds will also be made.13

[72]   Section 339(4) makes it clear that, when making an order under s 339(1), the Court is empowered to make additional orders under s 343. The types of ancillary order that may be made relevantly include an order that:

(a)requires the payment of compensation by 1 or more co-owners of the property to 1 or more other co-owners:

…

(c)directs how the expenses of any sale or division of the property are to be borne:

(d)directs how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied:

…

(f)requires the payment by any person of a fair occupation rent for all or any part of the property:

(g)provides for, or requires, any other matters or steps the court considers necessary or desirable as a consequence of the making of the order under section 339(1).

[73]    Section 342 lists relevant considerations the Court must have regard to in considering whether to make orders under ss 339 and 343:

(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:

13     In the present case, the question of division was deferred due to a number of unknowns and the likelihood of disputes about the relevant calculations.

(f)any other matters the court considers relevant.

[74]   The relevant principles in the case law were recently summarised by this Court in Bunyan v Parish:14

(i)The unity of possession is common to both joint tenancies and to tenancies in common. Both co-owners are entitled equally to enjoy the property, whether that be in occupation or in receipt of a proportional share of the rents or profits resulting from the property’s management.

(ii)If one co-owner takes sole occupation of jointly owned property, he or she is not usually liable to compensate the other simply by being in sole occupation. However, if the co-owner has been excluded and is unable to enjoy their occupation rights they may be entitled to compensation in the form of an occupation rent. Exclusion by way of breakdown of relationship has been recognised as one such category.

(iii)Contributions towards mortgage repayments, both principal and interest as well as to rates and property maintenance and expenditures that have increased the value of the relevant property have all been recognised as relevant to the accounting which is required on sale or purchase by one co-owner of another’s share.

[75]   Muir J also observed that, in light of the fact that “quantification can seldom be precise”, the role of the Court is to “do its best fairly to reflect the value of the respective party’s contributions.”15 The Judge also accepted that an approach focusing on “the fruits of contributions” (rather than arithmetic) is to be preferred.

Discussion

[76]   The applicant, Ms Calian, is a chartered accountant. She has provided calculations (supported by relevant documentation) to assist in determining how the proceeds should be divided. She was cross-examined on her evidence by Mr LaHatte.

[77]   Putting issues about specific inputs to one side for now, Ms Calian’s proposed formula has remained the same throughout:

(a)Ms Calian’s share would be calculated as follows:

14     Bunyan v Parish [2016] NZHC 2225, [2017] NZAR 931 at [32] (footnotes omitted).

15     At [33], citing Lankow v Rose [1995] 1 NZLR 277 (CA) at 295.

Half the net proceeds of sale16

minus her share of the mortgage debt17 (as apportioned by the Family Court)

minus her half share of any extra borrowing18

plus the amount of the repayments made by her to Ronald to meet her share of the original mortgage debt19

plus occupation rental calculated from the date that 50 per cent of the property was relationship property (2 February 2017)20

plus the costs of, and related to, these proceedings.21

(b)Ronald’s share would be calculated as follows:

Half the net proceeds of sale

less his share of the mortgage debt (as apportioned by the Family Court)

less his half share of any extra borrowing less the amount received from Ms Calian in repayment of her original share of the mortgage debt

less occupation rental payable to Ms Calian
less the costs of, and related to, these proceedings.

[78]   Although accounting evidence was also filed on behalf of Ronald Cassidy in the form of a further affidavit from Mr Craig Nisbet, that evidence was—in my clear view—inadmissible. To the extent it was tendered as expert evidence (contrary to  Mr LaHatte’s advice about Mr Nisbet’s earlier affidavit):

(a)Mr Nisbet is no longer practising as an accountant and is no longer a member of any professional accounting body;

(b)Mr Nisbet was not purporting to give evidence as an expert and has neither referred to nor agreed to be bound by the Code of Conduct governing the giving of such evidence;

(c)the evidence is not (in any event) capable of being substantially helpful, because:

16     Namely the sale proceeds minus real estate commission and conveyancing fees.

17     Including the share of the debt originally apportioned to Darrin.

18     Namely any increase in mortgage debt since the Family Court apportionment.

19     Which was not then applied by him to the mortgage.

20 On 2 February 2017 the Family Court ordered that 50 per cent of the property was relationship property, to be shared equally by Ms Calian and Darrin. But the Court’s later decision vesting Darrin’s 25 per cent in Ms Calian should logically be backdated to that date.

21 Because, she says, the proceedings should not have been necessary.

(i)Mr Nisbet has a conviction for perjury; and

(ii)his evidence is predicated on factually and legally incorrect premises, including (in particular) that Ronald Cassidy had a life interest in the Bird Grove property.22

[79] And to the extent Mr Nisbet’s affidavit was somehow tendered on some other basis (I suppose, as evidence of fact), it cannot possibly be probative. Mr Nisbet has no direct knowledge of the facts in this matter. It is clear that any knowledge he has comes from Darrin. The two points made at [78](c) above also apply.

The division

[80]   Subject only to the resolution of certain contentious inputs, my view is that Ms Calian’s formula and calculations are scrupulously fair (as Ms Calian herself has been, throughout these very vexed proceedings). I therefore propose to work through the calculations using her basic formula, dealing with any contested inputs as they arise.

[81]   Ms Calian’s starting point is that the proceeds are to be divided equally. There is no dispute that this is entirely appropriate, as Ms Calian and Ronald Cassidy each owned a 50 per cent share of the property. The property sold for $630,352, which gives an equally divided figure of $315,176.

[82]Next there is the matter of liability for the mortgage. There are three issues.

[83] First, as made clear at [12](d) above, at the time the relationship property proceedings were determined in the Family Court, Darrin still owned a quarter share of the property. Judge O’Dwyer did not, however, apportion liability for the mortgage strictly according to ownership shares. To reiterate, liability for what was then a mortgage of $173,000 was divided as follows:

(a)Ronald (and Marie): $50,000;

22     The existence (or not) of a life interest was material to the occupation rental issue, in particular.

(b)Darrin: $77,000; and

(c)Ms Calian: $46,000.

[84]   Because Ms Calian has subsequently had Darrin’s share in the property transferred to her, she accepts that she should also assume his share of the mortgage debt (as determined by the Family Court).  Thus she becomes liable for $123,000  (71 per cent) of the original $173,000 debt. I did not understand Ronald to take issue with that and it would be surprising if he did so. Secondly, the evidence is that, at an earlier point in time, Ms Calian made payments totalling $7,950 to Mr Ronald Cassidy, in partial satisfaction of her (original) $46,000 mortgage debt. But it is clear that these sums were not then applied to the mortgage by him. Fairness therefore demands that this amount be subtracted from her share of the mortgage debt and added to his, thus giving:

(a)debt figures of $115,050 (Ms Calian) and $57,950 (Ronald); and

(b)“proceeds” figures23 of $200,126 (Ms Calian) and $257,226 (Ronald).

[85]   Thirdly, the mortgage has increased since the time of division in the Family Court by $46,113. This amount appears to reflect both increased borrowing by Darrin and arrears. Ms Calian responsibly agrees that she should assume liability for half that amount. I cannot discern any reasonable basis on which Ronald could argue with that.

[86]   Subtracting liability for this (increased) mortgage debt brings the total shares to $177,069 (Ms Calian) and $234,169 (Ronald).

[87]   There also can be no argument with Ms Calian’s proposal that the routine costs of sale—sales commission and marketing fees of $16,200 and conveyancing fees of

$1,300—should be divided equally. Other sale-related debits and credits that should be divided in the same way are:24

23     The $315,176 amounts from the sale less the debt figures.

24     There can be no argument with any of this; the debits and credits are what would be expected on sale, were properly incurred, and are supported by appropriate documentation.

Rent paid into JAG Legal’s Trust account:25       $5,400 Insurance  ($2,815)

Insurance refund  $1,673

Rates (including arrears)  ($6,839)

Rates credit  $311

Total  ($2,270)

[88]   These equally  shared  debts  reduce  the  respective  shares  to  $167,184  (Ms Calian) and $224,284 (Ronald).

[89]   More contested is the apportionment of a range of other debits and credits, as proposed by Ms Calian:

(a)occupational rental for the period 2017–2021;

(b)costs caused by the obstruction of the sale process (which Ms Calian says should be borne entirely by Ronald); and

(c)legal costs incurred as a result of these proceedings (which Ms Calian says should never have been necessary).26

[90]I address each, in turn.

Occupational rent

[91]   As noted earlier in this judgment, an order requiring the payment of occupational rent is expressly contemplated by s 343. Ms Calian has effectively been excluded from the property for years—first, while Ronald, his wife and Darrin lived there and later, while tenants were in occupation. Apart from the small amount of rent paid by the tenants into JAG Legal’s trust account in late 2020 (and which has already been divided equally in my calculations above), Ms Calian has received no income from her half share in the property. By contrast, the evidence is that Ronald permitted Darrin to live in the property rent-free and also received—but did not apply to the mortgage—the rental stream resulting from the more recent tenancy.

25     In accordance with Court order.

26     Ms Calian accepts, I think, that a claim initially made for the not insignificant costs owed to her by Darrin cannot be pursued in the context of these proceedings (as Darrin is not a party to them).

[92]   The amount of occupational rent between 2 February 2017 (the date on which the Family Court divided the property, with one half as relationship property and the other half vested in Ronald and his wife) and January 2021 (the time of sale) has been calculated by Ms Calian.27 Her final figure is based on the actual rental figure of

$1,000 per week actually charged during the relevant period, which I regard as a good proxy for a market valuation.

[93]   Ms Calian’s rental calculations take account of (subtract) from the total gross amount of $208,000: the $5,400 in rent received by JAG Legal (see above), expenses associated with the rental (rates and insurance), bringing the total to $190,106. Her calculations then take account of the interest payments on the mortgage for the relevant period (which she divides according to the apportionment determined by the Family Court, favouring Ronald).

[94]This results in net occupational rental shares of $63,934 (Ms Calian) and

$80,409 (Ronald). Initially Ms Calian’s calculations then simply added $63,934 to her share and subtracted the same amount from Ronald’s. But in response to further inquiry from me, she later prepared further sums that, in my view, better reflect Judge Black’s intention in June 2018, when he made the observation I have set out at

[17] above.28

[95]              Those new calculations would not attribute to Ronald (or allocate to Ms Calian) the share of occupational rent technically payable by Darrin for the period he was living in the property.  Ronald’s $224,284 share would therefore be reduced only by

$22,800, rather than the full $63,934, and vice versa. The adjusted shares then become

27 Occupation rental owed by Darrin to Ms Calian in relation to the upper storey of the house before that date was dealt with by the Family Court.

28 As noted above at [17], in Judge Black’s “implementation” decision, he indicated that Ms Calian would need to account to Darrin for any increase in the property’s value, relative to the debts he owed her. So if, on sale of the property, the value of Darrin’s 25 per cent share exceeded those debts, Ms Calian would need to pay Darrin the difference. Ms Calian took account of this in her calculations by keeping Darrin’s “entitlements” (25 per cent of the property’s sale value) and his debts to her separate. None of those debts can be disputed—they include the mortgage values already discussed at [83]–[85], the occupational rental just discussed, and unpaid costs awards in Ms Calian’s favour from past court decisions. Even after accounting for capital gain arising between Judge Black’s decision and the date of sale, Darrin’s balance remains negative (by

$56,921) and the value of the 25 per cent share in the property transferred to Ms Calian does not exceed the debts he owes her. So, for completeness, I record that Ms Calian has no obligation to account to Darrin in this regard.

$189,984 (Ms Calian) and $201,484 (Ronald). Making this adjustment also has the effect of ameliorating somewhat an otherwise very harsh outcome for Ronald.29

[96]              Given the absence of any contradictory evidence on this issue, and no specific cross-examination of Ms Calian as to her methodology, there is no proper basis on which I should depart from Ms Calian’s calculations on this point.30

Other costs of sale

[97]              As the background narrative set out earlier in this judgment makes clear, the sale process proved to be neither straightforward nor expeditious. None of the responsibility for the delays and complications can be laid at Ms Calian’s door, and I agree that they should be deducted from Ronald’s share. I accept that the following costs associated with the sale would not have been incurred but for the Cassidys’ obstruction:

LINZ Payments31  $150

JAG Legal court fees32  $1,050
Locksmith33  $805
Locksmith34  $103

Credit to buyer for missing gate 35  $500

WARM loan36  $224
Clean up and repair costs37  $4,931

[98]              Darrin filed an affidavit deposing that he had done considerable work on the property up until 2019 and suggesting that the cost of that work should (now) be shared by Ms Calian. He also refers to personal items belonging to him or to his father that

29 Ms Calian’s original calculations would have him ultimately receive only $15,000.

30 Mr LaHatte’s questioning of Ms Calian on this issue focused on the absence of evidence that rental in those amounts was actually received, which (with respect) largely misses the point of what are, in essence, hypothetical figures, albeit based on the actual rent that was (for a time) charged.

31 These were costs necessary to have Ronald’s name registered on the title.

32 These fees were incurred as a result of Ronald not agreeing to the sale of the property.

33     This locksmith fee was incurred because Ronald failed to undertake the final inspection and obtain keys from the tenants.

34     This locksmith fee was incurred due to locks being changed after Ronald tried to break into the property.

35     This amount was refunded to the buyer because the Cassidys removed the gate before settlement.

36     The WARM loan relates to the installation of a heat pump in the downstairs flat (which was sold with the house). Ms Calian accepts that the cost should be divided equally.

37     These costs have already been paid by Ms Calian; the amount therefore needs to be deducted from Ronald’s share and added to hers.

have been removed and not restored to them. Ronald also says he was unable to retrieve items of personal property.

[99]              By and large, however, I do not accept that evidence. As regards the work claimed to have been done, Darrin has provided nothing by way of corroboration (receipts, photos and the like). Much of the information he has previously provided to the Court has proved to be false or incomplete. Moreover, Ms Calian’s exclusion from the property during the relevant time (despite her being a 50 per cent owner) means that she has no way of knowing whether the work was done, and, in fact, the photos she has taken of the property at the time she was permitted access (December 2020) indicate the opposite. It was clearly in a state of poor repair. As well, it seems plain that the Cassidys permitted (I refrain from saying encouraged) the tenants to leave considerable amounts of rubbish behind them when they left that Ms Calian was required to remove and dispose of prior to sale. So to the extent any maintenance was in fact done by Darrin between 2017 and 2019, I consider it to be largely offset by these matters.

[100]          As for personal items removed, the Cassidys were both directed, and given ample time, to remove whatever chattels/possessions they wished. I have no doubt they could have arranged access to the property while the tenants were in residence; the narrative suggests that Darrin was in regular contact with—and held some sway over—them. And whatever Ronald’s capacity may have been at that time, Darrin’s evidence makes it clear that he was aware of the Court order and that he could easily have helped his father comply with it. Moreover, a final offer of access was made after Ronald’s capacity had returned, but no steps were taken. Lastly, some of the chattels claimed by Ronald (such as a fridge) were sold with the property. It can be assumed that their value is reflected in the purchase price.

[101]          Accordingly, I adjust Ronald’s share downwards by $2,608, reflecting the obstruction-related costs that have yet to be paid. Then, I deduct $112 from both shares for the WARM loan. And lastly, I deduct $4,931 from Ronald’s share and add that same amount to Ms Calian’s share, to reflect the clean-up and repair costs that she has already paid. That brings the totals to:

(a)Ms Calian: $194,803.

(b)       Ronald: $193,833.

Legal costs associated with sale and with these proceedings

[102]          Ms Calian also submits that $36,976 in legal fees to JAG Legal for facilitating the sale38 should be borne solely by Ronald and so deducted from his share. Further, she claims $101,353 in legal costs associated with these proceedings for costs that she has already incurred—that is, she wants this amount deducted from Ronald’s share and added to her own. Overall, that would result in her receiving $296,156 and Ronald receiving $55,504.

[103]          I accept Ms Greally’s submission that it would be open for me to take those costs into account for the purposes of division, under s 343.  I did not understand   Mr LaHatte to contend otherwise.

[104]          Mr LaHatte submitted that Ronald should not be prejudiced in terms of division as a result of any action or inaction by him during the period of his incapacity, namely between 8 June and 17 December 2020.39 But the prior reality is that:

(a)he had capacity when he refused to rectify the title when asked by   Ms Calian three years ago;

(b)he had capacity during the (brief) time he recognised that the property needed to be sold (conveyed by his then lawyer in August 2019);

(c)he had capacity when he nonetheless later filed a notice of opposition to the application for the sale order, on grounds that (as recorded above) were never legally or factually tenable; and

38 This figure does not include the conveyancing fee of $1,300, which has already been split equally.

39 The end date of this period is based on my formal removal of his litigation guardian and is generous, given that the Court was first advised that his capacity had returned on 5 November 2020.

(d)in the considerable periods in which he has had capacity, he has never once proposed an alternative to sale or even acknowledged Ms Calian’s indisputable right to half the property.

[105]          I therefore accept Ms Greally’s submission that these proceedings should never have been necessary, and that Ronald never had grounds for opposing them. As just noted, his notice of opposition to the sale was predicated on grounds that he must have known were factually wrong.

[106]          All that said, I cannot avoid the conclusion that Ronald has been Darrin’s pawn in his ongoing dispute with Ms Calian.40 Given Darrin’s removal as a party and  Clark J’s decision that he had no right to be heard in these proceedings, care is required in attributing blame to him. But there is necessarily a concern that Ronald (who is neither an educated nor a sophisticated man) may have been overly influenced by Darrin (who was once a practising lawyer) in relation to decision-making that has proved highly detrimental to his interests.

[107]          While none of this is the fault of Ms Calian, it is necessarily of some concern when the Court is dealing with the proceeds of what is, almost certainly, Ronald’s only asset of any value. I accept that he does not understand how it is that Ms Calian owns a half share of the property, and I am also inclined to accept that he still genuinely believes that he has, or should have, a life interest in it.

[108]          In any case, the values as indicated by Ms Calian are both appropriate and fair. I adjust Ronald’s share downwards by $36,976 to account for the JAG Legal Fees. I also consider that Ms Calian should effectively be awarded indemnity costs for these wholly unnecessary proceedings. To reflect that, I deduct $101,353 from Ronald’s share and add the same to Ms Calian’s. As noted earlier, the final totals are therefore:

(a)Ms Calian: $296,156.

(b)       Ronald: $55,504.

40     As I understand it, this dispute is not limited to relationship property issues.

Result

[109]          The advice received by the Court is that the JAG Legal Trust Account holds an amount slightly less than would otherwise be totalled,41 due to an insurance refund received after the statement of account was issued. In terms of the final distribution, account  must  also  be taken of the $129,830 that  has already been distributed to  Ms Calian.

[110]So, of the $221,830.05 remaining in the account, I order:

(a)$166,326.32 is to be paid to Ms Calian.

(b)$55,503.73 is to be paid to Mr Ronald Cassidy.

Rebecca Ellis J

Solicitors:

Hutt City Law Ltd for Applicant Ord Legal for Respondent

41     Specifically, $1,673.31 less.