Dalton v Dalton

[2022] NZHC 1849

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000334

[2022] NZHC 1849

BETWEEN

MICHELLE LEE DALTON

Plaintiff

AND

ASHLEY JOHN DALTON

First Defendant

AND

MICHELLE LEE DALTON

Second Defendant

AND

NEW ZEALAND TRUSTEE SERVICES LIMITED

Third Defendant

Hearing:	27 July 2022
Appearances:	C R D Williams for the Plaintiff No appearance for the defendants
Judgment:	29 July 2022

JUDGMENT OF NATION J

[1]        The defendants are trustees of a family trust which owned the family home of the plaintiff (Ms Dalton) and the first defendant (Mr Dalton).

[2]        Ms Dalton brought these proceedings to obtain an order for specific performance to require her husband, as a trustee, to execute the documents required to transfer the home from a family trust to her.

[3]In the statement of claim, Mrs Dalton said:

DALTON v DALTON [2022] NZHC 1849 [29 July 2022]

(a)        she and Mr Dalton began living together in a de facto relationship in 2000, married on 5 February 2006 and separated on 3 February 2018;

(b)       during that relationship, on 12 May 2003, Ms Dalton purchased the property at 30 Ruru Rd, Christchurch (Ruru Rd) and it was transferred to the trust on 16 August 2005;

(c)        on 22 May 2019, Ms Dalton filed an application in the Christchurch Family Court for division of her relationship property with Mr Dalton;

(d)       on 22 May 2019, Ms Dalton pleaded that, to enable the Family Court to deal with Ruru Rd, it was agreed by the trustees to undertake the following:

(i)nominate an early vesting date;

(ii)appoint Ms Dalton as the sole beneficiary of the trust; and

(iii)distribute Ruru Rd to Ms Dalton.

(e)        on 30 January 2020, the trustees entered into a deed of distribution, giving effect to that agreement;

(f)         the deed was signed by the three trustees;

(g)       Mr Dalton has since refused to sign the documentation ncessary to facilitate the conveyancing as required by the deed, including an authority and instruction form; and

(h)       the Family Court proceedings have been placed on hold pending the High Court proceeding.

[4]        On 9 August 2021, the proceedings were sent by email to Mr Dalton. New Zealand Trustee Services, by memorandum, advised the Court that it adopted a neutral position and would abide the decision of the Court.

[5]        In accordance with a direction from the Court, Mr Dalton was served personally with the proceedings on 23 February 2022. He filed no documents in the

proceedings, which were then set down to be heard by way of formal proof on 27 July 2022.

[6]        Pursuant to a direction from the Court, evidence in support of the claim was presented through an affidavit of Ms Dalton. That affidavit confirmed the allegations as pleaded and as referred to earlier.

[7]        Ms Dalton said her lawyers had, at various times, tried to negotiate with Mr Dalton. Early in negotiations Mr Dalton confirmed he had agreed to the transfer of Ruru Rd but refused to engage a lawyer to assist with that. She said Mr Dalton recently suggested the deed is a forged document. Ms Dalton said the deed was prepared by the professional trustee of the trust, the signature on the deed was that of Mr Dalton and it was witnessed by his mother Paulette Houghton. She said “[m]y Family Court proceeding is currently on hold while we wait for the Ruru Road property to be transferred to my sole name, so the Court can make orders accordingly”.

[8]        There was no other evidence in her affidavit as to precisely where the proceedings were at in the Family Court.

[9]        At the hearing before me, Ms Dalton’s counsel told me only that the proceedings in the Family Court were on hold and the parties were proceeding in that Court on the basis that, for the property to be brought into account between the parties, it had to be, first, in the name of Ms Dalton.

[10]      I conveyed the Court’s concern that it was being asked to make an order for specific performance effectively to facilitate a transfer of property pursuant to a distribution from a trust to Ms Dalton. I was concerned at the potential for Ms Dalton to claim that, through a distribution to her from the trust, Ruru Rd should be treated as her separate property. I asked whether an agreement had been reached in the Family Court proceedings that the value of the home would be brought into account equally between Mr and Ms Dalton and whether they had agreed on the current value of the property.

[11]      Mr Williams indicated there was no such agreement, although he referred to the property having an agreed value at the time the trustees signed the deed as to vesting and distribution dated 30 January 2020. Attached to the deed was a schedule which referred to the value of Ruru Rd as $330,000.

[12]      Attached to an affidavit of service of 28 September 2021 was an email from Mr Dalton to Ms Dalton’s solicitors which indicated that Ms Dalton had offered a figure in settlement which could have been based on a suggested 2020 value for the property. Mr Dalton was complaining there had been no valuation of the property and he was concerned that, with the distribution and the documents he was being asked to sign, the property would be in Ms Dalton’s name and she would be able to incur a liability secured over the property which would then reduce its value for division between the parties.

[13]      From what I was told by counsel and from Ms Dalton’s affidavit, there are clearly issues to be resolved between the parties as to how they will each benefit from their former home. That should not be difficult to achieve. Entitlements are usually based on the current value of the property. Where one party has remained in occupation, there might be a claim for a notional occupational rent. However, offset against that would have to be the cost of outgoings on the property such as rates, insurance and perhaps mortgage payments.

[14]      The home was acquired during the relationship by at least one of the parties and then transferred to the trust. The fact it was owned by the trust should not have made it difficult for the parties to benefit from the value of the property in accordance with entitlements under the Property (Relationships) Act 1976.

[15]      If the property had to be owned by the parties personally rather than the trust for matters to be settled through the Family Court, it would have been possible for the trustees to distribute the property into the names of both Mr and Ms Dalton pending settlement of claims between both of them.

[16]      It was of concern to me that the trustees signed the deed, in which the property was transferred by way of distribution into Ms Dalton’s name, with Mr Dalton’s

signature on the deed, witnessed by his mother rather than a lawyer advising him as to what he was doing.

[17]      The trustees nevertheless signed a deed dated 20 January 2020 by which they agreed to distribute the property to Ms Dalton. To effect that distribution, conveyancing documents need to be signed by all parties.

[18]      Because of those concerns, during the hearing I asked Ms Dalton’s counsel, Mr Williams, if Ms Dalton accepted that, if the property were to be put in her name, this would be on the basis the value of it would be brought into account between Mr and Ms Dalton personally in the relationship property proceedings that are currently before the Court. Mr Williams took instructions from Ms Dalton and said she agreed to this.

[19]      I reserved my judgment, indicating I would need to set out carefully the terms on which any order for specific performance might be made.

[20]      Mr Williams also asked for an order for costs given that Ms Dalton has been granted legal aid for the proceedings and Legal Aid will have a charge over her share of the property for the amount she receives in legal aid. Subsequent to the hearing, he sought costs of $5,007.50, the amount invoiced to Legal Aid in respect of the proceedings. On a 2B basis, the costs entitlement would be $10,606.61.

[21]      On reflection, I have decided the appropriate course is to neither decline nor grant the order for specific performance at this time. The parties need to resolve their respective claims in the Family Court on the basis they are both entitled to share in the value of the Ruru Rd property. Both parties and their advisors need to do whatever is required to achieve this.

[22]      I am accordingly adjourning this application for a telephone conference with me at 2.15 pm on Monday 7 November 2022, with leave for either party to have it brought on before then if it has not been possible to progress matters in the Family Court.

[23]      I am also directing that a copy of this judgment be provided to the Family Court with the expectation the Family Court will be able to set the proceedings down for a case management conference to ensure both parties are taking the steps required to enable them to resolve their respective claims.

[24]      I note Ms Dalton has made a claim for costs as to these proceedings in the sum of $5,007.70. There is a potential liability as to that which the parties may have to take into account in reaching any settlement. At this point, I reserve the issue of costs.

Solicitors:

Patient & Williams, Christchurch

New Zealand Trustee Services, Auckland.

Copy to:
A J Dalton, First Defendant

Copy to:

Judge Hunt, Family Court, Christchurch.