Cumming v Smyth

[2022] NZHC 1701

ORDER OF THE COURT FOR SUPPRESSION OF THE AUTHORISED SALE PRICE IN PARAGRAPH [30].

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-000026

[2022] NZHC 1701

UNDER

the Property Law Act 2007

IN THE MATTER

of a property at 49 Birchfield Avenue, Dunedin

BETWEEN

SAMUEL GORDON CUMMING

Plaintiff

AND

MARAMA CLARE SMYTH

Defendant

Hearing:	30 June and 15 July 2022
Appearances:	R M Reeve for Plaintiff
Judgment:	18 July 2022
Reissued:	20 July 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 18 July 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

CUMMING v SMYTH [2022] NZHC 1701 [18 July 2022]

[1]    The plaintiff, Samuel Gordon Cumming (Samuel) and the defendant, Marama Clare Smyth (Marama), were formerly in a de facto relationship. They acquired a property at 49 Birchfield Avenue, Dunedin (the property) in January 2014. They separated in August 2016. The application before me is for summary judgment seeking orders for the sale of the property and disbursement of the sale proceeds pursuant to ss 339-343 of the Property Law Act 2007.

[2]    The application for summary judgment was served on Marama on 9 May 2022. It was also served on the mortgagee, Westpac New Zealand Ltd (Westpac). Marama has taken no steps to defend the proceeding. Westpac has not sought to be heard in relation to the application either.

[3]    When the application first came before me on 30 June 2022, there was no appearance by or on behalf of Marama. I adjourned the application to 15 July 2022 for Samuel to provide further evidence in relation to the following matters:

1.the proposed method of sale;

2.the identity of the agent to be appointed to conduct the sale;

3.whether the property was to be sold subject to a reserve; and

4.a registered valuation of the property.

[4]All that information has been provided.

Background

[5]    Samuel and Marama began their relationship in 2006 in Dunedin. Marama had two children from a previous relationship. Samuel and Marama have a daughter, born in December 2012.

[6]    Samuel and Marama purchased the Birchfield Avenue property in December 2013 and settled the purchase in January 2014. The property is owned by them as joint tenants.

[7]    The property is situated in a well-established suburb of Dunedin. It is a very large residential property at almost 5,000m2. The dwelling comprises a character villa which may have been built in the late 1800s, but has been substantially altered and extended.

[8]    To purchase the property, Samuel and Marama obtained a mortgage from Westpac and also assistance from Samuel’s father.

[9]    The parties separated in August 2016. Samuel moved out of the property on 18 August 2016 leaving Marama to live there with the three children, although responsibility of their daughter’s care has been shared since then. Samuel has returned to the property to live on two occasions for brief periods only. No steps were taken to divide their relationship property or to sell the Birchfield Avenue property at that time.

[10]   Samuel says that since separation the parties have made unequal contributions to the property, with his contributions being much greater than Marama’s contributions. He also says Marama has had the benefit of living in the property and received some income from it, while he has had to pay rent. As a result, in addition to the sale of the property, Samuel is seeking a division of the sale proceeds that reflects the parties’ unequal contributions and the benefit Marama received from her occupation of the property, but he accepts that is a matter that should be determined following the sale of the property.

[11]   In around December 2021, Marama vacated the property to live nearby with her partner. Since then, the property has not been maintained. Marama has also not made contributions to the mortgage. Presently the parties are in arrears to Westpac.

[12]   Samuel has made attempts to reach agreement with Marama for him to purchase the property or for it to put it on the market for sale, but he says those attempts have failed and it is therefore necessary that the property be put up for sale by the Court. This litigation is the means to achieve that end.

Principles

[13]   The principles upon which a plaintiff’s application for summary judgment is decided are well-known. They are stated by the Court of Appeal in Krukziener v Hanover Finance Ltd as follows:1

[26] 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 at 3 (CA). 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 with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). 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).

[14]   A Court may order the sale or division of a property under s 339 of the Property Law Act 2007. Section 339 provides:

339 Court may order division of property

(1)A court may make, in respect of property owned by co-owners, an order—

(a)for the sale of the property and the division of the proceeds among the co-owners; or

(b)for the division of the property in kind among the co-owners; or

(c)requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.

(2)An order under subsection (1) (and any related order under subsection (4)) may be made—

(a)despite anything to the contrary in the [Land Transfer Act 2017]; but

(b)only if it does not contravene section 340(1); and

1      Krukziener v Hanover Finance Ltd [2008] NZCA 187.

(c)only on an application made and served in the manner required by or under section 341; and

(d)only after having regard to the matters specified in section 342.

(3)Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.

(4)A court making an order under subsection (1) may, in addition, make a further order specified in section 343.

(5)Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).

(6)An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—

(a)the [Land Transfer Act 2017]; or

(b)the Deeds Registration Act 1908; or

(c)the Crown Minerals Act 1991.

[15]   Section 342 sets out a series of mandatory relevant considerations in any assessment of an application for an order under 339, which are as follows:

342Relevant considerations

A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:

(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:

(b)the nature and location of the property:

(c)the number of other co-owners and the extent of their shares:

(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:

(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:

(f)any other matters the court considers relevant.

[16]Further powers of the Court are provided in s 343 as follows:

343Further powers of court

A further order referred to in section 339(4) is an order that is made in addition to an order under section 339(1) and that does all or any of the following:

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

(b)fixes a reserve price on any sale of the property:

(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:

(e)allows a co-owner, on a sale of the property, to make an offer for it, on any terms the court considers reasonable concerning—

(i)      the non-payment of a deposit; or

(ii)     the setting-off or accounting for all or part of the purchase price instead of paying it in cash:

(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).

[17]The leading authority is Bayly v Hicks.2 The Court of Appeal concluded:

… subject to the parameters of ss 339 and 343 the court is given a broad discretion and has jurisdiction to make orders and given directions different from those sought by the parties.

[18]   There is case law that suggests the summary judgment procedure is not well- suited to applications under s 339,3 but notwithstanding that, there have now been several successful applications for summary judgment under s 339.4

2      Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [33].

3 Above n 2, at [31].

4      See for example Carey-Venable v Carey [2016] NZHC 2646 and Coffey v Coffey [2012] NZHC 1765.

This application

[19]   As a co-owner of the property Samuel has standing under s 341(1)(a) of the Property Law Act to make this application.

[20]   Considering the relevant considerations under s 342, it appears to me the following matters are most significant.

[21]   Samuel and Marama are the only co-owners of the property and they own it as joint tenants.

[22]   The property is a residential property which is vacant and in need of urgent upkeep.

[23]   Unless the property is maintained it will continue to deteriorate costing the parties money and affecting its future saleability.

[24]   Neither party is deriving any benefit from the property which has become a financial burden. If nothing is done, it is likely the mortgage will continue in arrears which may ultimately result in the bank taking some action against the parties or the property.

[25]   Samuel has attempted to reach agreement with Marama to deal with the property on an agreed basis, but she has not been receptive to proposals and latterly has not engaged in relation to them.

[26]   Marama has not defended this proceeding, nor is it clear how the present situation can possibly be in her best interests. She has not provided any proposal for dealing with the property.

[27]   Importantly, Samuel is locked into an ownership position that is not beneficial and which he is unable to resolve without the Court’s intervention. It is appropriate that the Court provide a pathway out of that circumstance. In the absence of any other proposals, an order for the sale of the property is the most appropriate solution.

[28]   For those reasons there will be an  order made for the sale of the property.  Mr Reeve provided draft orders for both the sale of the property and the distribution of sale proceedings. These include a provision that if the property cannot be sold, then the parties may come back to the Court to seek further directions which may include the Court authorising a sale at below the reserve or authorising a sale to one or other of the parties.

Result

[29]The application for summary judgment is granted.

[30]   There shall be an order for the sale of the property at 49 Birchfield Avenue Dunedin (Identifier OT186/166) as follows:

1.The property is to be sold by deadline treaty after a marketing campaign of no less than four weeks.

2.Ms Tania Porteous, of real estate agency One Agency the Property Specialists, is to be appointed and authorised to act as real estate agent for the purpose of marketing and sale of the property.

3.The plaintiff shall be authorised to accept an offer for the sale of the property.

4.The defendant is to co-operate with the sale of the property and sign any documents necessary to allow for the sale and conveyancing of the property to a purchaser. In the event such co-operation is not forthcoming, the Registrar of the High Court at Dunedin is empowered to sign on behalf of the defendant all further legal documents that may be required to sell the property including, for the avoidance of doubt, the Listing Agreement, any Agreement for Sale and Purchase of Real Estate, any Authority & Instruction and IRD Tax statement.

5.The plaintiff’s lawyers are authorised to act on behalf of both the plaintiff and the defendant in respect of the conveyancing of the property.

6.The proceeds from the sale of the property shall be disbursed in the following priority and manner:

(i)in payment of amounts secured by the mortgage to Westpac New Zealand Ltd (No. 9608076.3);

(ii)in payment of such commission, marketing costs and other sums as are contractually payable to the real estate agency contracted to sell the property;

(iii)in payment of other costs of sale, including but not limited to such reasonable legal costs incurred that are directly attributable to the sale of the property, water charges, rates arrears and/or other apportionments;

(iv)an amount of $200,000 is to be retained in the plaintiff’s solicitors’ trust account on interest-bearing deposit pending determination of the plaintiff’s claims that the defendant pay occupational rent and to equalise the parties’ contributions to the property, unless disbursed by further order of this Court or by the written agreement of the parties; and

(v)any balance of the sale proceeds shall be divided equally between the plaintiff and the defendant, but from the defendant’s share of the net sale proceeds, the plaintiff is to be paid his costs awarded on this interlocutory application for summary judgment plus disbursements as fixed by the Registrar.

7.A copy of the sealed order is to be served personally upon the defendant forthwith.

8.The plaintiff shall make an application to the Court for a hearing as to the parties’ respective entitlement to the sum held by his solicitors within 15 working days of the date of this order;

9.The plaintiff’s solicitors shall, following completion of the sale, provide to the defendant a copy of the settlement statement, legal invoice and conveyancing documents, along with a trust account statement relating to the sale and showing her share of the net proceeds of sale being held on trust. The plaintiff’s solicitors shall be permitted to hold the defendant’s net share of the sale proceeds on interest bearing deposit pending receipt of instructions from the defendant as to how she wishes the proceeds to be paid to her.

10.Leave is reserved to either party to apply to the Court for further directions (including to vary the directions above) which may include, but are not limited to, authorising the sale of the property at below the reserve price or to either party.

[31]   The plaintiff is awarded costs on a 2B basis, together with disbursements as fixed by the Registrar.

O G Paulsen

Associate Judge

Solicitors:
Wilkinson Rodgers Lawyers (M Win), Dunedin