Chiswell v Cunynghame

[2020] NZHC 1651

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-531

[2020] NZHC 1651

UNDER

The Property Law Act 2007

IN THE MATTER OF

an application under s 339

BETWEEN

IAN KEVIN CHISWELL

Applicant

AND

DIANA PATRICIA CUNYNGHAME

Respondent

Hearing:

17 June 2020

Appearances:

A J Peat for Applicant

T Greenwood for Respondent

Judgment:

10 July 2020

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 10 July 2020 at 3:00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Duncan King Law, Auckland Greenwood Law, Oneroa

CHISWELL v CUNYNGHAME [2020] NZHC 1651 [10 July 2020]

Introduction

[1]                 Ian Chiswell (the applicant) and Diana Cunynghame (the respondent) are brother and sister. They each own a half share of the residential property at 8 Fourth Avenue, Onetangi, Waiheke Island (the property), where the respondent resides with her partner. The relationship between brother and sister has deteriorated to the point that they no longer speak to one another.

[2]                 The applicant would like to sell the property and applies for leave to commence a proceeding by originating application to apply for an order for sale of the property pursuant to s 339 of the Property Law Act 2007 (the Act). The respondent opposes the application.

Background

[3]                 The property was owned and occupied by the parties’ mother, Ruth Chiswell (Ruth) until her death in January 2011. Upon her death, the property passed by transmission to the applicant and respondent initially as executors of Ruth’s will, and thereafter by transfer with each of them becoming the owner of a half-share of the property on 21 March 2011.

[4]                 The respondent and her partner had also been living at the property prior to Ruth’s death, and ever since then they have continued to reside at the property. The applicant says that the respondent’s continued occupancy of the property was initially a matter of mutual convenience, but that there was no arrangement made or agreement between them that she and her partner could reside there rent free or forever.

[5]                 The applicant says that he has been excluded from any use or enjoyment of the property by the respondent over the past two years or so. He says that on a number of occasions over the years since their mother’s death he has asked the respondent to pay some rent for her use of the property, but she has repeatedly refused to do so. He says that he has also asked the respondent to agree to sell the property or consider some alternative arrangements, but that she has similarly refused to entertain his suggestions.

[6]                 The applicant says that he would now like to have the property sold so that he can have access to the value of his half interest in the property. He says that he currently lives on a tight budget and needs the money presently tied up in the property to better support himself and his two sons. The applicant says that the house on the property has deteriorated over the years and without maintenance has become rundown.

[7]                 The applicant applies pursuant to r 19.5 of the High Court Rules 2016 for leave to commence proceedings by originating application on the grounds that the originating application procedure is in the interests of justice and will assist with the just, speedy and inexpensive determination of the dispute and matters in issue between him and his sister. He says that the proceeding will be an application under s 339 of the Act and that the issues are clearly defined and the relevant evidence can be adequately addressed by means of affidavits. He further submits that the dispute between the parties does not involve wide ranging factual issues, and is not such as requires particularised pleadings, interlocutory applications, or discovery before proceeding to a substantive hearing.

[8]                 The respondent opposes the granting of leave on the grounds that the originating procedure is not appropriate for the dispute because: she intends to bring a counterclaim; there are broad ranging issues to be resolved; discovery will be necessary; and interlocutory applications are likely.

Submissions

Applicant’s submissions

[9]                 Mr Peat, counsel for the applicant, says that the Court has a discretion to grant the applicant leave if it considers that use of the originating application procedure is in the interests of justice. He submits the assessment of where the interests of justice lie is informed by the general objective of the High Court Rules as appear from r 1.2 and the just, speedy and inexpensive determination of the matter in dispute.

[10]              Mr Peat submits that the originating application procedure will enable the parties to be fully informed of the issues in dispute without recourse to detailed pleadings and particulars. He submits that an application for an order for sale and division of the proceeds pursuant to s 339 of the Act is a straight forward application of a statutory provision.

[11]              Mr Peat notes that the Court has previously observed that applications pursuant to s 339 of the Act may not be well suited to the summary judgment procedure, while the fact that the proposed application will involve the application of a statutory test and statutory considerations is a factor supporting the use of the originating application procedure.1 He notes that the Court has granted leave for the use of the originating application procedure in a number of cases where orders for sale of properties have been sought.2

[12]              The applicant says that having regard to the nature of the dispute there will be no need for orders for discovery to be made. He notes that, pursuant to s 341 of the Act, an application for an order for sale of division of proceeds may be made by a co- owner of any property, and the relevant considerations applicable to whether the Court should make an order are set out in s 342.

[13]              Counsel submits that the deadlock that exists between the parties as co-owners of the property is a clear basis for the making of an order for sale. Addressing each of the s 342 considerations, Mr Peat says that each of the statutory considerations can be readily covered by affidavit evidence. He says that any documents considered relevant by the parties can be exhibited by affidavit.

Respondent’s submissions

[14]              Mr Greenwood, counsel for the respondent, notes that the respondent is now aged 70 and has been living at the property for approximately 22 years. She is retired and has modest savings and no other property in which she could reside. Mr Greenwood says that faced with the possible sale of the property, the respondent

1      Bayly v Hicks [2012] NZCA 589 at [31]; and Solar Bright Ltd v Martin [2019] NZHC 300 at [23].

2      For example Mortenson v Tui [2019] NZHC 338.

intends to both oppose the sale and to bring a counterclaim in order to seek an order for sale of another property jointly owned by the parties situated on Great Barrier Island.

[15]              Mr Greenwood submits that the respondent’s intention to bring a counterclaim is a factor that should lead the Court to conclude that the originating application procedure is not suited to the determination of the dispute between the parties.

[16]              Mr Greenwood says that the issue of the relative hardship that would be caused to the parties by an order for sale is a relevant consideration which the Court must take into account. He submits that as both parties have indicated they will suffer hardship, the competing contentions will give rise to a broad range of factual issues surrounding the issue of any hardship claimed by them resulting from the making or declining of an order for sale. Mr Greenwood says that supporting documents to establish the parties’ financial positions will be required and therefore discovery will be necessary.

[17]              Mr Greenwood further says that the applicant may revive his previous claim for the payment of rent by the respondent and, were he to do so, there would be the possibility of interlocutory applications being required in relation to such a claim. He says that there may also be a question of issue estoppel in relation to representations made by the applicant and relied on by the respondent regarding her remaining in the property following their mother’s death.

Discussion

[18]              The type of proceeding suited to the employment of the originating application procedure was considered in Hong Kong and Shanghai Banking Corporation Ltd v Erceg wherein Asher J observed:3

[25] These cases show that the type of proceeding suited to the originating application procedure is a straightforward application, not requiring detailed pleadings or interlocutory orders for its fair resolution. Such a type of proceeding tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory

3      Hong Kong and Shanghai Banking Corporation Ltd v Erceg (2010) 20 PRNZ 652 (HC).

tests. It is not well suited to cases involving multiple parties, and cases where there is the possibility of cross-claims or counterclaims.

[19]              The present case is, in my opinion, well suited to being brought by way of the originating application procedure. Here, the issue in dispute is whether the applicant succeeds in obtaining an order for sale of the property pursuant to s 339 of the Act. As a co-owner, the applicant is qualified to bring such an application. The considerations that the Court is required to take into account in determining the application are stipulated by s 342, and the evidence relevant to those considerations can be presented efficiently and effectively by affidavits.

[20]              In my view, the proposed proceeding is an example of a relatively straightforward application of the statutory test and considerations prescribed by s 342 of the Act rather than the determination of substantive rights and the application of common law doctrine and principles. Moreover, I do not consider the employment of the originating application procedure will cause any unfairness or prejudice to the respondent. The applicant’s contentions are clear and there is no advantage to be gained by recourse to the standard procedure, requiring full pleadings with particulars in order to ensure that both parties are fully and fairly informed of the case being advanced by the other. The issues are defined and the evidence to be presented will be accordingly confined to that which is relevant to those issues.

[21]              Although the respondent has signalled an intention to bring a counterclaim and thereby introduce the question of whether another property situated on Great Barrier Island and also in the co-ownership of the parties should be sold or divided, such co- ownership of another property ought not to preclude the Court determining an application under s 339 in relation to the property which is the subject and focus of the current dispute between the parties. If the parties are unable to resolve the issues arising from their co-ownership of the property on Great Barrier Island then they may have recourse to the procedure under s 339 of the Act, but that would be a discrete and separate matter that is not appropriate for determination within the scope of the applicant’s proposed originating application proceeding.

[22]              The respondent may of course present evidence of any matters relevant to the issue of whether she would be likely to suffer hardship as a result of the making of an

order for sale of the property and distribution of the proceeds of sale, and also place any other evidence before the Court that she contends to be relevant to the question of whether or not it should make an order for sale.

[23]              Finally, standing back and viewing the matter overall, I consider that the use of the originating application procedure is in the interests of justice and will better achieve the objective of the High Court Rules of securing the just, speedy and inexpensive determination of the dispute between the parties as to whether the property should be sold and the proceeds divided.4

Result

[24]              The application by the applicant for leave to commence the proceeding by originating application under Part 19 of the High Court Rules 2016 is granted.

[25]              Having succeeded, the applicant is entitled to costs. I direct the parties to file costs memoranda which are not to exceed three pages in length. The applicant is directed to file and serve his costs memorandum within 5 working days of the date of delivery of this judgment. The respondent is to file and serve her costs memorandum within 5 working days following her receipt of service of the applicant’s costs memorandum.

Paul Davison J

4      High Court Rules 2016, r 1.2.