Clark v Hansen
[2016] NZHC 764
•22 April 2016
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2011-454-396 [2016] NZHC 764
BETWEEN CHRISTINE ANNE CLARK
Plaintiff
AND
WILLIAM JOHN HANSEN AND ALEXANDER MCKENZIE GILCHRIST Defendants
Hearing: 4 March 2016 Counsel:
R Parmenter for the Plaintiff
No appearance for the DefendantsJudgment:
22 April 2016
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] This is a matter with a fairly long history. The plaintiff (Ms Clark) owned a property in Levin (the land) with the defendants (Mr Hansen and Mr Gilchrist). Ms Clark owned a one half share in the land, and the defendants each owned (as tenants in common with Ms Clark) a quarter share in the land.
[2] The parties had entered into a property agreement dated 21 July 2006 recording the terms of their “partnership” in the land (the property agreement). Relevant terms of the property agreement included a provision that rates, insurance and other outgoings (but not mortgages) were to be shared equally between Ms Clark and the defendants (cl 2), and each party was entitled to secure a debt by way of mortgage over the land, that party being responsible for his or her particular obligations under the mortgage and being responsible to indemnify the co-owners in
respect of that liability (cl 3).
CHRISTINE ANNE CLARK v WILLIAM JOHN HANSEN AND ALEXANDER MCKENZIE GILCHRIST [2016] NZHC 764 [22 April 2016]
[3] In the event of the parties agreeing to sell the land, the net proceeds of sale were to be divided in the proportions 50 per cent to Ms Clark, and 50 per cent to Messrs Hansen and Gilchrist (cl 4).
[4] In June 2011, Ms Clark applied for orders under s 339 of the Property Law Act 2007 (the Act) directing that the land be sold and the proceeds distributed between the co-owners as if the sale had been made pursuant to the property agreement. Certain other orders were sought which are not now relevant.
[5] Ms Clark applied for summary judgment on her claims, and orders were made by Miller J on 4 October 2011. The Judge made an order under s 339(1) of the Act for the sale of the land. Detailed provisions were included in the order for the manner in which the land was to be marketed, and a procedural mechanism was included which would have permitted a party to buy out his or her co-owners. An independent solicitor was appointed to act for the parties on the sale of the land. The independent solicitor was required to repay and discharge any mortgages over the land, apportion any amount repaid to any mortgagee to the appropriate party’s account, pay any outgoings due in respect of the land such as rates, and balance and apportion between the parties all outgoings previously paid by one or other of the parties (including land agent’s marketing costs and valuer’s costs), to the intent that all the outgoings which had been paid would end up being shared in the proportions of the parties’ ownership of the land, namely 25 per cent to each of Mr Hansen and Mr Gilchrist and 50 per cent to Ms Clark.
[6] The independent solicitor was also directed to apportion selling expenses between the parties and deduct reasonable solicitors’ costs, and apportion those in the proportions of the parties’ ownership of the land. The balance was to be disbursed to Ms Clark and Mr Hansen and Mr Gilchrist, taking into account the apportionments required by the property agreement.
[7] The Judge reserved leave for either side to apply to the Court to vary the terms of the orders.
[8] Two subsequent applications have been made to vary the judgment of Miller J dated 4 October 2011. On 29 April 2013 Associate Judge Gendall (as he then was) made certain variations to the judgment, which otherwise remained in force.
[9] A further application to vary the judgment was made by Ms Clark in 2015. By then the land had still not been sold; Ms Clark contended that Mr Hansen and Mr Gilchrist had been obstructing a sale. The detailed orders for the marketing of the land and the appointment of the independent solicitor remained appropriate.
[10] I made orders on 5 June 2015 further varying the judgment, again reserving leave to the parties to apply for any further variation that might be necessary.
[11] Since then, the situation has been overtaken by events. Mr Hansen and Mr Gilchrist had both borrowed money against the land and granted a mortgage over it. The land was eventually sold by the mortgagee. The net amount received from the sale was $405,555.18.
[12] The proceeds of the mortgagee sale have been applied in part in repaying advances which had been made by the mortgagee to Mr Gilchrist ($65,783.47) and Mr Hansen ($69,544.76). After payment of the real estate agent’s commission and legal costs and disbursements on the sale, and paying rates and water rates due to the date of settlement, the net proceeds of the sale available for distribution between Ms Clark and Mr Hansen and Mr Gilchrist is $249,990.62.
[13] I am advised that the mortgagee has been unwilling to disburse that sum to the parties pending a determination of this Court as to how the proceeds are to be divided between the parties.
[14] Ms Clark has now applied to vary the judgment further, to take account of the altered circumstances resulting from the mortgagee sale. The detailed provisions in the original judgment for the marketing of the property and the appointment of an independent solicitor (which were substantially carried forward in the subsequent variations) are no longer necessary.
[15] Ms Clark now abandons a claim earlier made by her for occupation rent in respect of certain periods when the land was occupied by Messrs Hansen and Gilchrist.
[16] Ms Clark initially applied for orders granting her leave to file an amended statement of claim (reflecting the changed circumstances, including the mortgagee sale), and for leave to seek summary judgment on the amended claim. Those applications came before me on 4 March 2016. Mr Parmenter appeared for Ms Clark, but there was no appearance by Mr Hansen or Mr Gilchrist. Mr Hughes, who has acted as counsel for Mr Hansen and Mr Gilchrist, filed a memorandum in advance of the hearing advising that he was without instruction. He did not appear at the hearing.
[17] At the hearing, I questioned Ms Clark’s ability to file an amended statement of claim after judgment had been given on her original pleading. I also questioned whether I had jurisdiction to entertain a second application for summary judgment.
[18] In the event, I granted Ms Clark leave to amend her application for summary judgment by adding an alternative application for an order varying the judgment of Miller J (as subsequently varied by the Court on 29 April 2013 and 5 June 2015). I directed that Mr Hansen and Mr Gilchrist were to file and serve any notice of opposition to the amended application within five working days of service. I further directed that if a notice of opposition was filed I would hear the application on a defended basis on 8 April 2016. If neither Mr Hansen or Mr Gilchrist filed a notice of opposition, the 8 April 2016 fixture would be vacated and the amended application would be dealt with on the evidence and submissions filed by Ms Clark to date.
[19] Ms Clark filed an amended application on 4 March 2016. In it, she applies to further vary the judgment in accordance with draft orders attached to her amended notice of application. Mr Hansen and Mr Gilchrist have not filed a notice of opposition.
[20] Ms Clark now seeks the following orders:
(a) An order directing that the net proceeds from the mortgagee sale (i.e. the $249,990.62 referred to in para [12] above) be apportioned between the parties as follows:
(i) The total sum of $215,390.55 to be paid to Ms Clark; and
(ii) The balance to be paid to Mr Hansen and Mr Gilchrist.
[21] The sum of $215,390.55 referred to in para [20] above is made up as follows: (a) the sum of $192,659.42, being the sum derived by subtracting from
the $405,555.18 received by the mortgagee the agent’s commission, legal costs on sale, outstanding rates and water rates and other disbursements (total $20,236.33), and dividing the resulting figure ($385,318.85) by two.
(b) the sum of $17,436.85, being the total amount of payments made by
Ms Clark direct to Mr Hansen and Mr Gilchrist’s mortgagee;
(c) the sum of $5,294.28, being the total amount of outgoings on the land paid by Ms Clark on behalf of Mr Hansen and Mr Gilchrist.
[22] Ms Clark also asks for costs and disbursements in the total sum of $22,670, and judgment for interest under the Judicature Act 1908 in the sum of $3,035.75 (calculated to 4 February 2016).
[23] I am satisfied that the changed circumstances make it appropriate to further vary the judgment as Ms Clark requests, and that Mr Hansen and Mr Gilchrist have no reasonably arguable defence to the claims Ms Clark now makes.
[24] Ms Clark accepts that she is responsible for a half share of the agent’s commission and legal and other costs on the mortgagee sale (total $20,236.33), but she is clearly not liable for any part of the total $135,328.23 paid from the sale
proceeds to Mr Hansen and Mr Gilchrist’s mortgagee. Mr Hansen and Mr Gilchrist are liable to indemnify her for the respective amounts of $69,544.76 and $65,783.47, under cl 3 of the property agreement. I find that the amount of $192,659.42 referred to in para [21](a) above is properly payable to Ms Clark from the proceeds of the mortgagee sale.
[25] Ms Clark has also sufficiently proved that, between October 2012 and January 2014, she paid $8,793.11 to the mortgagee in part satisfaction of Mr Gilchrist’s obligations under the Gilchrist/Hansen mortgage, and $8,643.74 in part satisfaction of Mr Hansen’s obligations under that mortgage. Under cl 3 of the property agreement (and under para B of the judgment as varied) she is entitled to have those sums paid to her out of (what would otherwise have been) Mr Gilchrist’s and Mr Hansen’s shares in the proceeds of the sale of the land.
[26] Ms Clark’s claim for $5,294.28 is a claim for reimbursement (under cl 2 of the property agreement) of one half of the following costs paid by her:
marketing costs: $5,139.00 rates: $5,018.31 valuation fee: $431.25 total: $10,588.56
[27] The marketing costs were incurred when the parties were endeavouring to sell the land. Ms Clark has produced a Harcourts’ marketing schedule dated
22 November 2011 setting out required vendor contributions totalling $5,139, and her evidence is that she has paid this sum. She has also produced Westpac Bank reports dated 7 January 2013 and 25 February 2014 showing payments made by her company Puppy Love Ltd for Horowhenua District Council rates on the property, totalling $5,018.31.
[28] Under the terms of the judgment as varied, Ms Clark was entitled to have all selling expenses between the parties apportioned in accordance with the proportions
in which they owned the land. The Harcourts’ marketing costs come into this category, and I am satisfied that Ms Clark (having procured the payment of those costs in full and having a corresponding personal obligation to her company in that regard) is entitled to have one half of those costs ($2,569.50) paid to her out of (what would otherwise have been) Mr Gilchrist’s and Mr Hansen’s shares in the proceeds of sale of the land.
[29] Similarly, Ms Clark is entitled to be reimbursed out of what would otherwise have been Mr Gilchrist’s and Mr Hansen’s shares in the proceeds of sale for one half of the rates payments of $5,018.31 made by her in January 2013 and February 2014. Her entitlement in that regard arises either under cl 2 of the property agreement or under para D of the judgment as varied.
[30] The valuation fee of $431.25 was charged by Kapiti Valuations Ltd, for valuation advice associated with the parties’ attempts to sell the property. Ms Clark’s evidence is that she paid the account on behalf of herself and Messrs Gilchrist and Hansen. Again, she is clearly entitled under cl 4 of the property agreement or under the judgment as varied (para D) to have this sum apportioned between herself and Messrs Gilchrist and Hansen in accordance with the proportions in which they owned the land. The result is that Ms Clark is entitled to reimbursement of the sum of $215.62 out of (what otherwise would have been) Mr Gilchrist’s and Mr Hansen’s shares in the net proceeds of sale.
[31] Ms Clark is accordingly entitled to the orders she seeks in respect of her claim for the $5,294.28 referred to at para [21](c) of this judgment.
Claim for interest
[32] Ms Clark claims interest at the rate of 5 per cent per annum under the Judicature Act 1908, on each of the mortgage payments made by her on behalf of Mr Gilchrist and Mr Hansen, the rates paid by her to the Horowhenua District Council (to the extent of one half of the amount paid), and one half of the marketing costs paid by her to Harcourts. Interest is sought from the date the payments were made by Ms Clark.
[33] I am satisfied that these claims are justified, and that Mr Gilchrist and Mr Hansen have no reasonably arguable defence to them. I note that para E of the judgment as varied on 5 June 2015 required the independent solicitor to:
[where a party had paid another party’s mortgage payments, or had paid a greater share of outgoings (from time to time) than required by the property agreement (“overpayments”)] “credit to any such party’s account interest at the rate of 5% pa on any such overpayments, such interest to commence at the date any overpayment is made and cease on settlement of any sale.”
[34] I do not think that there is any reason why that provision should not continue to apply, at least in respect of the period up to the date of settlement of the sale of the land. But Ms Clark has not asked for the interest to be paid to her out of the share of Messrs Gilchrist and Hansen in the proceeds of sale of the land, and in those circumstances I think the appropriate course is to enter judgment on the claim for interest under s 87 of the Judicature Act 1908, but not direct that it be paid (by the mortgagee) from the proceeds of sale of the land. Consistent with para E of the judgment as varied on 5 June 2015, interest will be awarded at the rate of
5 per cent per annum on the payments made by Ms Clark on behalf of Messrs Gilchrist and Hansen, calculated from the respective dates of the payments to the date of this judgment.
[35] Mr Parmenter provided with his written submissions a schedule showing the total interest claim calculated to 4 February 2016, at $3,035.75. I am satisfied that the interest has been properly calculated to that date. Allowing for additional interest (at 5 per cent per annum) from 4 February 2016 to the date of this judgment, Ms Clark is entitled to interest in the sum of $1,683.32 from Mr Gilchrist, and
$1,692.54 from Mr Hansen, both sums calculated to 22 April 2016.
Orders further varying the judgment
[36] The judgment of this Court dated 4 October 2011, as subsequently varied by the Court on 29 April 2013 and 5 June 2015, is further varied as follows:
(a) by deleting para [3] of the judgment and substituting the following:
Pursuant to the terms of a “Property Agreement” dated 21 July 2006 among the parties hereto, recording the terms of their “partnership” in the land at 80 Vista Road Levin, being the land comprised and described in certificate of title WN 951/1 (Wellington Registry) (the “land”), the sum of $249,990.62, being the net proceeds from the mortgagee sale of the land which are available to be apportioned between the parties, is to be apportioned, as between Ms Clark on the one hand and Messrs Gilchrist and Hansen on the other, as follows:
i. To Ms Clark:
A.the sum of $192,659.42, being one half of the sum derived by subtracting from the purchase price received from the purchaser of the land ($405,555.18) the agents’ commission, legal costs and disbursements, rates and water rates, search fees and courier charges (totalling
$20,236.33, as listed in the Gifford Devine statement to Credit Union Baywide dated 25
November 2015 annexed as exhibit “CC” to
Ms Clark’s affidavit sworn on 18 December
2015); and
B. the sum of $8,793.11, being payments made by Ms Clark to the credit of Mr Gilchrist with the mortgagee; and
C. the sum of $8,643.74, being payments made by Ms Clark to the credit of Mr Hansen with the mortgagee; and
D.the sum of $5,294.28 in respect of payments made by Ms Clark on behalf of
Messrs Gilchrist and Hansen for marketing and valuation costs, and rates in respect of the land;
ii. To the defendants:
A. the balance remaining after paying the plaintiff the sums stated in paras A-D above.
and;
(b) by adding the following paragraphs:
(i)Judgment is entered for Ms Clark against Mr Gilchrist for interest in the total sum of $1,668.32, that sum being calculated at the rate of 5 per cent per annum on the payments made by Ms Clark on Mr Gilchrist’s behalf from the respective dates of the payments down to the date of this judgment; and
(ii)Judgment is entered for Ms Clark against Mr Hansen for interest in the total sum of $1,692.54, that sum being calculated at the rate of 5 per cent per annum on the payments made by Ms Clark on Mr Hansen’s behalf from the respective dates of the payments down to the date of this judgment.
[37] In the event of difficulties arising in the implementation of the foregoing (varied) orders, leave is reserved to the parties to apply by memorandum for any directions (including for any variation of this judgment) which may be necessary to give effect (or full effect) to the intent of the foregoing orders.
Costs
[38] Mr Parmenter asks for costs on a 2B basis for the commencement of the proceeding (including the application for summary judgment), and for the second and third applications to vary the judgment. Associate Judge Gendall directed that costs on the first variation application were to lie where they fell. Costs on the
original application for summary judgment were reserved, and in accordance with my direction in the variation orders made on 5 June 2015 Ms Clark filed a memorandum seeking an award of costs on the second variation application. Mr Parmenter asks for costs of $9,024 on the original application, $5,074.50 on the second variation application, and $7,024.50 on the most recent application. The total claimed is $21,123, and I am satisfied that that is a reasonable claim for the costs of the proceeding to date. While there might have been an argument for reduced costs on the original application (given that there appears to have been a degree of collaboration between the parties in attempting to resolve the dispute by agreeing terms for the sale of the land, and the orders made by Miller J arguably benefitted both parties), Ms Clark should not have been put to the time and trouble of returning to the Court on two occasions in 2015 in an attempt to have the terms of the judgment implemented. Overall, I think the justice of the case will be met by the award of $21,123 which Mr Parmenter proposes. I make an order accordingly.
Ms Clark also seeks an order for disbursements as follows:
Filing statement of claim $1,000 Sealing judgment (on the original application to the Court)
$40
Sealing judgment on the variation orders made on 5 June 2015
$50
Third interlocutory application for variation orders
$200
Sealing fee on this judgment
$50
[39] These disbursement are approved, and I order that they are to be paid to Ms Clark with the costs of $21,123. As between themselves, Mr Gilchrist and Mr Hansen are to be jointly and severally responsible for the costs and disbursements.
Solicitors:
Daniel Overton & Goulding, Onehunga for the plaintiff
Associate Judge Smith
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