Carey-Venable v Carey
[2016] NZHC 2646
•9 November 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-944 [2016] NZHC 2646
BETWEEN GABRIELLE ANNE CAREY-VENABLE
Plaintiff
AND
BERNARD ANTHONY CAREY Defendant
Hearing: 25 October 2016 Appearances:
G Kohler QC for the Plaintiff
B P Keene QC and M Cole for the DefendantJudgment:
9 November 2016
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 9 November 2016 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………………………………….
Registrar/Deputy Registrar
Solicitors:
Moody & Gulley, Takapuna, Auckland, for the Plaintiff
Christopher Taylor lawyers, Parnell, Auckland, for the Defendant
Copy for:
G Kohler QC, Auckland, for Plaintiff
B P Keene QC, Auckland, for Defendant
CAREY-VENABLE v CAREY [2016] NZHC 2646 [9 November 2016]
[1] The plaintiff, Gabrielle, and the defendant, Bernard, are sister and brother. They own a residential property at 31A Stanley Point Road, Devonport, Auckland as tenants in common in equal shares. They bought it in July 2008 for $3.2m. Since then Bernard has lived in the property. He says that since the purchase he has maintained the property and made improvements. Gabrielle paid for the purchase of the property but has stayed there only occasionally. In 2012 they fell out. Gabrielle has not gone back.
[2] She now wants to realise her interest in the property. In her first cause of action she has applied for orders under Part 6 subpart 5 of the Property Law Act
2007, in particular an order for the sale of the property. For her second cause of action she says that under a deed they made in July 2009, Bernard promised to pay her $900,000 as part reduction of his debt to her for an advance to buy his interest in the property. She seeks judgment against him for that. She has number of chattels in the house. She seeks an order for their return in her third cause of action. She has applied for summary judgment on the first and second causes of action.1 She acknowledges that summary judgment cannot be given for a division of the proceeds of sale, but says that an order for sale can be made.
[3] The principles on which plaintiff’s applications for summary judgment are decided are not in dispute. The Court of Appeal re-stated them in Krukziener v Hanover Finance Ltd:2
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent
1 The summary judgment application sought relief under the chattels cause of action, but
Mr Kohler QC withdrew it in the hearing.
2 Krukziener v Hanover Finance Ltd [2008] NCCA 187, [2010] NZAR 307 at [26].
with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable, Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987)
1 PRNZ 84 (CA).
[4] To give a plaintiff summary judgment the court must be satisfied that judgment can be entered now, without the need for further interlocutory steps such as discovery and interrogatories or for a full hearing with witnesses giving evidence in person and being cross-examined. In a typical summary judgment application the court applies rules of law and considers whether a defendant has an arguable defence on the facts when those rules are applied. Gabrielle’s claim for $900,000 in her second cause of action is an example.
[5] Proceedings under Part 6 subpart 5 of the Property Law Act 2007 are different. An application under s 339 requires the court to exercise a discretion taking into account a variety of factors which may carry different weight according to the circumstances of each case.3 The law has changed markedly from partition proceedings under s 140 of the Property Law Act 1952. In Bayly v Hicks, the Court of Appeal recognised that the court now has a broader discretion and said “… the summary judgment procedure is not so well suited to s 339 applications.”4
[6] Because the court’s powers to grant relief under s 339 require a range of matters to be considered and because there is a range of potential outcomes, to grant summary judgment the court has to be satisfied on the information provided on the summary judgment application that there can be only one possible outcome. If other possible outcomes remain arguable, the court cannot grant summary judgment. The plaintiff must therefore negate all outcomes except that sought in the statement of claim.
Background facts
[7] Gabrielle, a New Zealander, has lived overseas for 50 years and in the United
States for the last 30 years, but has returned to New Zealand from time to time.
3 Property Law Act 2007, s 342.
4 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [31].
Bernard is a builder by trade and a musician. He says that at a family gathering in
2006 Gabrielle proposed that the family together buy a property as a “family compound”. They envisaged it as a place where he and Gabrielle could enjoy their twilight years surrounded by their favourite possessions. It would also be a meeting place for the wider family when they visited Auckland. Gabrielle gave Bernard power of attorney in May 2006 to allow him to act on her behalf in buying a property. He found the property at Stanley Point which met all their requirements. He negotiated the purchase for $3,200,000, a significant reduction on the asking price. He took title in his own name. The purchase settled on 31 July 2008. Gabrielle provided $1,500,000 of the purchase price. Bernard took a $1.7m mortgage. In October 2008 Gabrielle transferred funds to pay off the mortgage -
$1,731,432.19. Gabrielle fully funded the purchase of the property but Bernard was the sole registered proprietor.
[8] Bernard owned a property in Remuera which he put on the market for sale. That sold in July 2009. Bernard received about $900,800 from the sale (deposit of
$66,400 and balance of $832,400).
[9] On 2 July 2009, the date of the settlement of the Remuera property sale, Bernard and Gabrielle made a “Deed of Declaration of Trust”. The deed recited that Bernard was the sole owner of the Stanley Point property, that Gabrielle funded the purchase entirely, that Bernard completed the purchase in July 2008 on his own account as to one half share, and as trustee for Gabrielle as to one half share, and that her payment of the purchase price was made as to $1.6 million on her own behalf and as to $1.6 million as a loan to Bernard. It provided:
1.1Bernard declares that he has purchased the property beneficially as to one half share and is trustee for Gabrielle as to one half share.
1.2 At Gabrielle’s request Bernard will transfer an undivided one half
share to Gabrielle.
2.0 Acknowledgement and repayment of Gabrielle’s advance.
2.1Bernard acknowledges that Gabrielle has advanced to him the sum of $1,600,000 to fund his share of the purchase of the property
2.2Bernard will pay $900,000 to Gabrielle in reduction of that loan from the proceeds of sale of his property at 40 Armadale Road, Remuera.
2.3Bernard will repay the balance of Gabrielle’s loan by expending labour and materials on maintenance and improvements to the property to a total value of not less than $1,400,000 (a half share of which being attributable to Gabrielle’s interest in the property).
[10] Bernard duly transferred a half share in the property to Gabrielle so that they became registered proprietors as tenants in common in equal shares.
[11] Gabrielle shipped a collection of household furniture, ornaments and other household contents to the Stanley Point house. She has stayed there on visits to New Zealand. Bernard, on the other hand, has lived in the property ever since 2008. He has maintained the property and carried out improvements.
[12] Gabrielle has not been back to the property since 2012. On her last visit there was a disagreement. Bernard says it was an argument about the way she behaved towards one of his sons. Whatever the reason, Gabrielle’s position now is that she no longer feels welcome in the Stanley Point property. Bernard, on the other hand, says in this proceeding that she is entitled to come and stay. The only restrictions are those that apply to anyone using the property, such as no smoking.
[13] Gabrielle’s case is that Bernard has not paid her the $900,000 under the deed. While he has carried out some improvements to the Stanley Point property, they are not worth the $1,400,000 required under the deed. As Bernard does not have the funds to buy her out, she requires a sale so that she can obtain her half share of the property.
[14] Bernard says that the value of his work and materials on the Stanley Point property satisfies clause 2.3 of the deed. He is not required to pay the $900,000 because of an agreement he made with Gabrielle under which he transferred his beneficial interest in a property at Miranda to Gabrielle. The Stanley Point property should not be sold because that would defeat the purpose of buying it – to be a family compound.
The Miranda property
[15] A digression from the Stanley Point property is required to explain how the Miranda property fits in. In 1997, Bernard and his wife signed an agreement to buy a 12 hectare lot, which was being subdivided off from a property in Esk Road, Miranda. The purchase price was $145,000 as shown on the sale and purchase agreement - although the parties refer to the purchase price as $165,000. Bernard paid a deposit of $14,500. Settlement was to take place on issue of a new title. Between the purchase and settlement, Bernard and his wife separated. Gabrielle offered to fund the purchase. Bernard and his wife nominated Gabrielle as the purchaser. She paid the balance of the purchase price on settlement and took title in her own name. Bernard maintains that Gabrielle agreed to hold the property on trust for Bernard and his sons, but he has not put in evidence any written documents showing any declaration of trust by her.
[16] In 2008, Bernard put the property on the market, apparently with Gabrielle’s acquiescence, when they were trying to realise assets to buy Stanley Point. It did not sell. Gabrielle has been very much the absentee owner of the Miranda property.
[17] Bernard says that he has done extensive work improving, maintaining and looking after the Miranda property from 1998 onwards. That work includes converting a Nissen barn into a liveable dwelling with mains electricity laid underground, plumbing releasing into a septic tank, a water tank catching water from the barn, a fireplace, concrete flooring, a mezzanine floor and a large deck, establishing ponds, planting fruit trees and shade trees, reclaiming and fencing seven acres from a neighbouring farm, installing gates and a head-bail gate for a cattle yard, controlling gorse and maintaining fences. He has also paid expenses such as rates. He values his contributions to the Miranda property over 18 years at
$300,000.
Wills
[18] Bernard also relies on wills he and Gabrielle made in July 2009 at the same
time as they made the deed for Stanley Point. Gabrielle’s will deals only with her
New Zealand estate. She appointed her accountant and Bernard as executors. She gave both the Stanley Point property and the Miranda property to Bernard and, if he did not survive her, then to his sons. She left the residue of her estate to her other nephews and nieces in equal shares. In his will, Bernard gave a life interest in Stanley Point to Gabrielle, and left the residue to his two sons.
Bernard’s contributions to Stanley Point
[19] The parties differ on how much Bernard has spent and worked on the Stanley Point property. Gabrielle has attached to her affidavit a cheque reconciliation which Bernard gave her. It lists cheques from 15 September 2008 to 28 February 2012 totalling $491,766.88. The expenditure is not only for building materials and contractors, but also for local authority charges such as rates. Gabrielle points out that some of the expenditure is for Environment Waikato and Waikato District Council rates, and that can hardly relate to the Stanley Point property.
[20] Bernard says that his contribution is much more extensive than Gabrielle has allowed. All up, Bernard says that his total contributions to Stanley Point and a yacht come to $1,546,678.20. He says that up until January 2012 when the Auckland Council gave a code of compliance certificate for work on Stanley Point, he wrote cheques and paid credit card debts of $585,972.11. He says that further matters need to be taken into account. He deducts $13,552.75 for payments he made to himself between August 2009 and August 2011. He adds on $30,588.18 for funds paid by his company, Eye for Detail Ltd, for materials at Stanley Point. He claims for his own labour for 5,040 hours (112 weeks) at $55.00 per hour - $277,200.00. He charges a 25 per cent mark-up of $139,614.79 for the cost of staff, materials and sub-contractors. He says that contra work to the property that he has carried out is worth $26,160.00. Converting his sons’ wing to a self-contained flat cost $6,991.99 and he has added on a 20 per cent margin to make $8,390.38. He wants to be paid
$14,000 at $2,000 a year for washing the exterior cladding of the house and the roof, and $6,000 a year for mowing the lawns and maintaining the gardens, a total of
$42,000. He adds $4,500 a year for yacht maintenance as ten per cent of the value of the vessel.
[21] Bernard says that between April 2012 and December 2015 there was further work at Stanley Point. The rear of the garage was converted into a studio flat and the entire property was fenced. There has been landscaping, with retaining walls, paths, fruit trees, gardens, seating and rest areas. The house has been painted, new drapes have been supplied and fitted, and a new orchard has been planted. New exterior lights, security lights, and a new motor for the electric gate have been installed. He has removed and replaced concrete because of damage to the driveway caused by heavy trucks during the renovations of 2009-2012. For that he claims $264,000 for his own labour and $22,247.50 for an employee. He puts the cost of materials for that work at $20,135.
[22] In 2016 he made a new sewerage drain because of blockage of the drainage system. The costs to date come to $8,266.58. The estimated final price will be
$11,000. He has bought equipment for the house; and a yacht for $10,600. He also says that he has ongoing costs of labour. Rates on Stanley Point come to $10,458.61. Annual house insurance and household contents insurance come to $1,485.74.
[23] Mr Kohler submitted that many of Bernard’s contribution claims should be viewed with strong scepticism. He pointed out that Bernard had obtained building consents for the work completed in 2012, when code compliance certificates were issued, but that Bernard had made very exaggerated labour claims for that period after that, even though no building consents were obtained (but should have been if the work had been done). The 25 per cent mark-up was not justifiable. There could be no claim for work on the yacht: Gabrielle did not own it, even if the mooring did go with the house property. Claims for house cleaning and the like were obviously overstated. There are elements of double-counting.
[24] I also am sceptical as to some of Bernard’s claims. It is likely that on a full hearing where Bernard’s claims will be tested the value of his labour and materials for Stanley Point may be much less than he claims. For this decision it is not possible to find conclusively the value of his contributions, but it is possible to identify some parts that are excessive. I do not accept that he can claim a 25 per cent mark-up on labour and materials: this was not a contractor-owner relationship, but between two owners. While mooring charges may go with the house, the yacht is no
more a part of Stanley Point than a car parked in a garage. His labour claims for work done after code compliance certificates in 2012 must be overstated, given the amount claimed for the earlier building work. $100,000 should be sufficient for the work he claims after 2012.
[25] I make deductions from Bernard’s contribution claim on the basis that they
are not reasonably arguable:
Bernard’s value of his work and materials $1,546,678.20
Less deductions
Mark up on staff, material and contractors $139,614.79
Mark up on work on boys’ wing $1,398.39
Work on yacht $31,500.00
Excess labour after 2012 code compliance certificates
$242,247.50
Subtotal $414,760.68
Arguable value of his work and materials $1,131,917.52
[26] The point of this is that it is not arguable for Bernard that he has supplied enough work and materials under clause 2.3 of the deed. The actual value will need to be found in a full hearing.
Gabrielle’s claim for $900,000
[27] The first and second causes of action are independent. Each stands or falls whatever the decision on the other. It is convenient to deal with the claim for
$900,000 first. That is based on the deed of declaration of trust of 2 July 2009. It is agreed that Bernard has not paid Gabrielle under cl 2.2 of the deed.
[28] As to the deed, to a certain extent its label is misleading. No trust is declared, save for that recorded in cl 1.1. But any misnomer is irrelevant.5
[29] Clause 2.1 establishes Bernard’s indebtedness to Gabrielle for $1.6m for having bought his interest in Stanley Point. Clauses 2.2 and 2.3 deal with how that indebtedness is to be discharged. Clause 2.2 provides for payment of a sum of money. Clause 2.3 allows for repayment of the balance by expending labour and material on the Stanley Point property. The allocation of $900,000 to be paid and the balance in labour and materials, maintenance and improvements was based on an estimate made at July 2009.
[30] Clause 2.2 provides that payment is to be made from the proceeds of sale of Bernard’s Remuera property. If Bernard did not pay Gabrielle from those proceeds he would remain indebted to her. If he paid her using funds from another source, that would still reduce his debt to her. Clause 2.2 does not expressly fix a time for payment. Gabrielle appears to have acquiesced in Bernard using funds from the Remuera property to pay for the improvements at Stanley Point. Mr Keene QC did not submit that Bernard used Gabrielle’s money for the improvements. The proceeds of the Remuera property were Bernard’s. He was not holding them on trust for her.
[31] Clause 2.3 allows Bernard to repay the debt through work and materials. To the extent that there is a shortfall in his work and materials, his indebtedness will not be reduced. Gabrielle will have a claim against him for any shortfall in the value of work and materials expended.
[32] If the value of Bernard’s work and materials did exceed $1.4 million, but he has not paid the $900,000, it would be arguable for Bernard that any extra value for
any work and materials over $1.4 million could be taken into account against his
5 Street v Mountford [1985] AC 809 (HL) per Lord Templeman at 819:
But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence. The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.
$900,000 debt. He could arguably raise it as a matter of equitable set-off, as described in Grant v NZMC Ltd:6
The principle is, we think, clear. The defendant may set-off a cross-claim which so affects the plaintiff's claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are in effect interdependent: judgment on one cannot fairly be given without regard to the other; the defendant's claim calls into question or impeaches the plaintiff's demand. It is neither necessary, nor decisive, that claim and cross-claim arise out of the same contract.
The arguable cross-claim might be based on Gabrielle’s acquiescence at his work in circumstances where he would reasonably expect to have the full value of his work recognised, even if it went over $1.4 million. It would rely on the allocation of payment on the one hand and work and materials on the other as largely an estimate. This point is however academic here as I am satisfied that Bernard does not have an arguable claim for work and materials for more than $1.4 million.
[33] For his accord and satisfaction defence Bernard says that he does not have to pay the $900,000 because Gabrielle agreed in July 2009 to take all Bernard’s beneficial interest in Miranda instead of the payment. His argument relies on two matters:
(a) Gabrielle agreed to hold Miranda on trust for Bernard and his sons when she bought it in 1998; and
(b)He agreed to surrender those beneficial interests in Miranda to her before the deed of 2 July 2009.
[34] To enforce a declaration of an express trust for the Miranda property, Bernard needs to prove some writing by Gabrielle declaring the trust, as required by s 49A(2) of the Property Law Act 1952:7
A declaration of trust respecting any land or any interest in land shall be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.
6 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) 12-13.
7 The corresponding provision under the Property Law Act 2007 is s 25(2), but the 1952 Act applies because Bernard says that the trust was established in 1998 when Gabrielle took title to Miranda.
Bernard has not put any such writing in evidence and does not suggest that any written declaration of trust was ever made.
[35] While there is no evidence for an express trust, the requirement for writing does not apply to a resulting trust.8 It is arguable for Bernard that he took a beneficial interest in Miranda under a resulting trust because of his contribution in the payment of the deposit of $14,500, 10 per cent of the price. His contributions to Miranda by way of maintenance and improvements may also increase his interest in Miranda on the basis of some acquiescence or proprietary estoppel binding
Gabrielle. That gives him only a partial beneficial interest in the property. He holds it in his own right. There is nothing in the evidence to show a resulting trust in favour of his sons. Miranda also has an interest through her payment of the rest of the purchase price. Bernard’s interest as beneficiary of a resulting trust is to be met out of the Miranda property.
[36] As to the second matter, the agreement to transfer his beneficial interest in Miranda to Gabrielle in July 2009, his evidence is that he and Gabrielle met his lawyer on 29 June 2009 and gave him instructions for the deed and for the wills described in [18] above. After the meeting he told Gabrielle that he would put Miranda on the market and sell it to pay her debt. Gabrielle told him that she would love to have it. She was interested in putting a house on a knoll on the farmlet. He and Gabrielle agreed that Miranda would be Gabrielle’s and that would wipe whatever debt he ended up owing her. They returned to the lawyer’s office on 2 July and signed the deed and wills. His evidence presupposes that he and his sons held the entire beneficial interests in Miranda, but that is mistaken for the reasons in [35] above.
[37] The agreement he describes is not enforceable. It was either an agreement to dispose of a beneficial interest in land or it was a disposition of a beneficial interest. Either way, to be enforceable it had to be in writing: under s 24(1) of the Property Law Act 2007 for an agreement:
(1) A contract for the disposition of land is not enforceable by action unless—
(a) the contract is in writing or its terms are recorded in writing; and
(b) the contract or written record is signed by the party against whom the contract is sought to be enforced.
or under s 25(1)(b) for a disposition:
(1) A disposition of any of the following must be in writing and signed by the person making the disposition:
… (b) an existing … equitable interest in land:
[38] There is also vagueness in the agreement he asserts. Gabrielle was to take Miranda, of which she was already the legal owner, for “whatever debt I ended up owing her”. That suggests that the amount of his debt had still to be worked out. It does not address what was to happen if he did not carry out work on Stanley Point to a value of $1.4 million.
[39] The agreement is also inconsistent with the deed he signed the next day. It is implausible that he would make a deed with Gabrielle promising to pay her
$900,000 if the day before he had agreed with her not to pay her that sum. That is an Eng Mee Yong v Letchumanan point.9 It also falls foul of the parol evidence rule as it purports to vary the deed.
[40] Mr Keene submitted that in the family circumstances Bernard should not be held to the deed. I do not agree, he and Gabrielle had committed themselves. While many of their arrangements were informal and based on a sense of family goodwill, in this they did intend to bind themselves legally. For these reasons I reject the defence based on an agreement to transfer an equitable interest in Miranda.
[41] Mr Kohler’s written submissions referred to clause 2.2 as a bill of exchange. I think he meant a promissory note. In the hearing he withdrew that submission – sensibly in my view, given that no time for payment was specified.
[42] In summary I am satisfied that Bernard does not have an arguable defence to the claim for $900,000. The question of interest on that sum is reserved.
The application under s 339
[43] The only person requiring to be served with the proceeding is Bernard. No- one else is identified as having a relevant interest in Stanley Point.
[44] Section 339(1) provides:
(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.
[45] As the power to make an order is discretionary, it is necessary to decide whether to exercise that power at all, and if so, what that order should be. Regard must be had to the factors under s 342:
342A 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.
[46] As already recorded, Gabrielle owns a half interest as tenant in common, with Bernard holding the other half. The Stanley Point property is residential with one house and has an area of 2914 m2. It is in a desirable suburb of Auckland. No-one suggests that it could be conveniently subdivided. If it is to be sold, it is likely to be marketed nationally and internationally. There is no evidence as to its value, but it is a reasonable assumption that it has increased in value since the purchase in 2008
(when the Auckland property market had levelled out with the global financial crisis). It is not necessary to order a valuation of the property first.10 The property is obviously valuable and unencumbered.
[47] As outlined above, Bernard has made significant contributions in improvements and maintenance, arguably worth $1,131,917.52, by way of repaying Gabrielle under clause 2.3 of the deed. His contributions are likely to have added value to the property.
[48] As to hardship, in Coffey v Coffey Associate Judge Osborne said:11
[151] An appropriate definition of what constitutes “hardship” is to be
found in the Shorter Oxford English Dictionary:
“The quality of being hard to bear; or hardness of fate or
circumstance”
These were the dictionary definitions cited with approval by Woodhouse P in Director-General of Education v Morrison, a case involving accommodation grants for students payable by reason of “hardship”.
[152] Cooke J observed in the same case that:
“In ordinary usage hardship does not necessarily connote extreme privation or the like.”
Cooke J was referring to and repeating a particular definition of “hardship” which appears in various dictionaries (including the Oxford) as an alternative to the definitions favoured by the Court of Appeal.
[153] Woodhouse P in Morrison referred with approval to the observation of Mayo J in Returned Sailors' Soldiers' and Airmen's Imperial
10 Property Law Act, s 339(4).
11 Coffey v Coffey [2012] NZHC 1765 (footnotes omitted).
League of Australia (Henley and Grange Sub-Branch) Inc v Abbott
that the word “hardship” was:
“capable of being descriptive of adverse repercussions of every kind.”
In the specific context of s 342, the concept of “hardship” was
considered by Fogarty J in Holster v Grafton. His Honour said:
“‘Hardship’ is a value-laden criterion. It suggests an adverse effect which is of significant impact to the applicant. It has to be read consistent with the policy of the statute which respects property rights of tenants in common, but seeks to resolve conflicts fairly.”
[154] This passage was referred to by Wylie J in Bayly v Hicks. His Honour added that hardship needed to be considered both in the round and by reference to the partition proposals advanced by the parties.
[155] While mindful of the observations of the Court of Appeal in Morrison not to limit the concept of hardship in s 342 of the Act to severe suffering or privation, I would not view the term as embracing mere inconvenience or disappointment. Such lesser impacts might fall for consideration under “other matters relevant” under s 342(f) of the Act but do not semantically fall within the concept of hardship.
[49] Neither side has given evidence suggesting that orders either way under s 339 would cause hardship as opposed to inconvenience or disappointment. Gabrielle is
71 years of age and lives permanently in the United States. I assume that she owns her accommodation there. She says nothing about her other means. Bernard says nothing about his personal circumstances except that he is coming up 65 and is a builder by trade and a musician. There is no evidence as to his income and assets. He does not suggest that he would be able to buy out Gabrielle and I assume that he will not be able to. His inability to raise funds for the initial purchase of Stanley Point suggests that at that time he had few significant investments. In the absence of evidence I assume in his favour that his overall position has not changed markedly, aside from the increase in value in his interest in Stanley Point. No doubt he is approaching retirement. His sons no longer live at Stanley Point. On a sale of Stanley Point he is likely to have enough funds after repaying Gabrielle to buy another place to live. The value of his interest in Stanley Point will vary according to the value of his contributions to the property. His remaining debt to Gabrielle will reduce according to that value. The lower the value of his contributions, the less he will receive from the property.
[50] As relevant matters under s 342(f), Gabrielle made a greater financial contribution to the purchase of the property but has had little benefit from it. Bernard’s contributions on the other hand do not match Gabrielle’s but he has had almost exclusive use of the property, while meeting the outgoings. Bernard also refers to the original reason for buying the property, for use as a “family compound” and has given evidence of other members of the family staying there for visits. Any order in Gabrielle’s favour under s 339 will bring that to an end.
[51] I do not treat Bernard’s contributions to Miranda as relevant. He may have claims against Miranda based on resulting or constructive trusts, but they can be met out of that property. They do not impact on what is to happen to Stanley Point.
[52] I discount Gabrielle’s reasons for no longer staying at Stanley Point after her last visit in 2012. Her reasons, her falling out with Bernard and her objection to his “rules”, might be shown to be baseless in a fuller hearing. She has not shown that her position is correct beyond argument. The reasons therefore cannot be used in a summary judgment application to support any orders under s 339.
[53] Bernard also maintains that the wills made on 2 July 2009 are relevant. He relies on her will leaving Stanley Point to him to say that she is locked into co- ownership of the property. In a counterclaim he has sought an injunction to restrain her from revoking her will. That argument is misconceived. As Richardson J
pointed out in McCormack v Foley:12
By its nature a will is always revocable. It follows that a contract not to revoke a will or a particular gift or clause in the will cannot be specifically enforced and a threatened breach enjoined. Even so, such a contract may be valid and binding on the covenantor. If it is broken the covenantee may sue for damages or seek an order that the property subject to the contract is impressed in the hands of the personal representatives or the beneficiaries under the later will with a trust in favour of the covenantee (Sheppard's Touchstone of Common Assurances (8th ed, 1826) vol 2, p 401; Robinson v Ommanney (1882) 21 Ch D 780, (1883) 23 Ch D 285; Aimers v Taylor (1897) 15 NZLR 530; Benn v Hawthorne (1924) 55 OLR 393, [1925] 4 DLR
400; Re Marsland [1939] Ch 820; and Re Green [1951] Ch 148 and the cases as to mutual wills discussed there; and see generally Williams' Law Relating to Wills (4th ed, 1974) chapters 4-5 and 8-13 and Page on the Law of Wills (3rd ed, 1960), vol 1, paras 10.3, 10.20 and 10.30).
[54] While Gabrielle may have made a will leaving Stanley Point to Bernard, she was not under any obligation to do so. Bernard has not alleged or given evidence of an agreement with Gabrielle that she was to leave the property to him. And any agreement to leave Stanley Point to him would always be revocable. Moreover, Bernard’s debt to Gabrielle under clause 2.1 of the deed was part of her residue which she did not leave to Bernard. The will has limited relevance. It goes to the background to the signing of the deed and shows the goodwill between Bernard and Gabrielle at that time, but it cannot be used to hold Gabrielle to that arrangement.
[55] Gabrielle’s wish to realise her interest in Stanley Point is to be assessed against the factors above. A refusal to make an order under s 339 means that for the time being she should remain locked in as a co-owner, even though she does not intend to stay there herself. A refusal would not necessarily bar a later application. The decision is to be made on the basis of present circumstances, not on what may happen later.
[56] In the absence of any evidence of hardship the best objection that Bernard can make is that he and Gabrielle bought Stanley Point for a joint purpose: to use it as a family compound and to live there in their retirement. He has committed himself to that project through his contributions in work and materials. Gabrielle’s change of mind should not be allowed to defeat the original plan.
[57] Mr Keene also ran an argument distinguishing my decision in Ramsey v Mercer13 on the basis that this was not a hardship case and that Gabrielle, not Bernard, should carry the risk if the joint venture did not work out. In this area each case turns on its own facts. It is not helpful to try to construct principles out of decisions on particular facts. The circumstances in this case are not the same as in Ramsey v Mercer.
[58] The deed of July 2009 does not count against Gabrielle. While it did have legal effect, it was limited. It formally established Gabrielle’s interest in Stanley Point, but it did not bind her to hold that interest indefinitely.
[59] The goodwill between Gabrielle and Bernard from before the purchase to her last visit in 2012 has now gone. Court orders cannot restore that goodwill. In these circumstances a separation of interests is appropriate. That is particularly so because enjoyment of this residential property by them both would require shared use of the property, something that Gabrielle now finds unpalatable. It is also appropriate because Gabrielle has put more value into the property than Bernard – her financial contributions exceed the value of his work and materials. On the other hand Bernard has enjoyed more benefits than she – continuous occupation as opposed to occasional visits. Gabrielle’s wish to realise her interest is not hasty or irrational. They have owned Stanley Point for eight years. She has not been back for the last four years.
[60] It is a common feature of cases under Part 6 subpart 5 of the Property Law Act that co-ownership arrangements made with high hopes and plenty of goodwill founder when differences arise among the owners. This is one such case. Here the factors favouring a separation of interests outweigh those against. Gabrielle has established that Bernard does not have an arguable defence to making an order under s 339.
[61] As to how their interests are to be separated, the options are: sale of Stanley Point and division of proceeds; division of the property in kind; or for one to buy out the other at a fair and reasonable price. Neither side proposes subdivision of the property. There is no evidence that that would be practicable or would comply with s 11 or Part 10 of the Resource Management Act 1991.14 Gabrielle would be happy for Bernard to buy her out but he has not shown any willingness or ability to do so. Gabrielle has not shown that he can pay. I should not order him to buy her out if
I cannot be satisfied that he is able to do so. There was no submission that the decision as to the order could turn on further evidence at a full hearing. It is not reasonably arguable that there is any option but sale of the property.
Outcome
[62] That is as far as the matter can be taken on this summary judgment application. To sell the property it will be necessary to value the property, and devise and carry out a marketing plan. There was no evidence on those aspects. So while I order a sale, the parties will need to work out how to sell the property. I caution that differences on selling the property are typically not suitable for summary judgment but may require a full hearing before a justice. I hope that that will not be necessary and encourage the parties to work on an agreed approach to the sale.
[63] I have not decided the following matters and have left them for later decision: [a] A claim for occupation rent;
[b] A claim for interest under s 87 of the Judicature Act 1908 on the judgment for $900,000;
[c] The value of Bernard’s contribution to Stanley Point;
[d] The value of the parties’ respective interests in Stanley Point;
[e] The distribution of the proceeds of sale; and
[f] The claim for possession of chattels in the third cause of action. [64] I make these orders:
[g] Gabrielle recovers judgment against Bernard for $900,000;
[h] Gabrielle and Bernard are to sell the property at 31A Stanley Point
Road;
[i] Bernard is to pay Gabrielle costs on the summary judgment application. If costs cannot be agreed, memoranda may be filed;
[j] The registrar is to allocate a case management conference to give further directions; and
[k] Leave is reserved to apply further.
Associate Judge R M Bell
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