Dyson v Young
[2024] NZHC 2166
•5 August 2024
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2023-488-000102
[2024] NZHC 2166
UNDER ss 339 to 343 of the Property Law Act 2007 and Part 19 of the High Court Rules 2016 BETWEEN
KIMBERLEY ANN DYSON
ApplicantAND
CATHERINE ELIZABETH YOUNG
Respondent
Hearing: 5 August 2024 Counsel:
RC Mark for Applicant
Judgment:
5 August 2024
ORAL JUDGMENT OF DOWNS J
Solicitors/Counsel: RC Mark, Kerikeri. MB Dodds, Kerikeri.
DYSON v YOUNG [2024] NZHC 2166 [5 August 2024]
The case
[1] This case is about a co-owned property, and what should happen to it. One owner, Kimberley Dyson, says it should be sold. The other owner, Catherine Young, has not participated in the case.
The property
[2]The property is in Awanui, a small township on the outskirts of Kaitaia.1
[3] Its certificate of title records a fee simple estate and importantly, that Ms Dyson and Ms Young each owns a half-share (as tenants in common).
Background
[4] The background is a little messy. It is most easily explained by capturing much of Ms Dyson’s first affidavit:
Lead-up to the property purchase
The property was formerly owned by Aaron and Kathy-Lee Haywood, who were close friends of mine. They were concerned as to the living situation at the time for my daughter and myself. They offered to sell to me their property at … Awanui. The property had been tenanted for many years. I was offered the property at what was said to be a discount of $30,000 to reflect that no real estate agent would be involved in the sale and my friendship with the vendors.
At the time I was easily in a position to finance the purchase through the Diamond Family Trust. I, however, talked about the purchase to my then long term friend, Catherine initially in her capacity as a trustee.
The Diamond Family Trust (“DFT”) was created by Deed dated 25 March 2004. I regard the DFT’s primary beneficiary as being my daughter. On 1 December 2009, Catherine became a new trustee of the DFT. I continued as a trustee.
The original intention between Catherine and myself was for the DFT to purchase the property. The agreement for sale and purchase of the property dated 20 June 2017 originally recorded the purchaser as myself and Catherine as trustees for the Diamond Family Trust. Ultimately, when the agreement for sale and purchase for the property was fully signed by Catherine and myself, the reference to “as trustees for the Diamond Family Trust” was crossed out, as was the reference to “nominee”. … I had provided to my conveyancing lawyer the Trust Deed establishing the DFT and the Deed dated 1 December 2009 appointing Catherine as a new trustee.
1 It is not necessary to record the precise address which, of course, is identified in the court file.
Once Catherine had decided to come on board as a joint purchaser with me of the property, there was no need for me to obtain finance as originally contemplated when the purchase was going to be effected by the DFT. I emailed Patterson Law 4 July 2017 to confirm that finance had been secured (through Catherine) and that there would be no need to register a mortgage over the property. Patterson Law confirmed the agreement as unconditional as to finance on 4 July 2017.
Catherine and I each gave instructions to Patterson Law to the effect that title should be taken as tenants in common in equal shares. We each signed a private individual client authority and instruction for an electronic transaction, authorising the transfer into our joint names as tenants in common in equal shares. … Excess funds of $500.00 had been provided for settlement purposes. That excess was refunded to Catherine.
Property sharing agreement
At some stage shortly after the agreement for sale and purchase was signed, Catherine arranged for what I understood was a Thames lawyer to draft a property agreement. Brenda Fay from Purnell Jenkinson Oliver sent a draft to Catherine on 26 June 2017 which Catherine copied onto me. I was not consulted at all as to the draft and had no input into the drafting. I signed a corrected version of a property agreement on or about 1 July 2017 and returned it to Catherine. …
The agreement provided that I would get a 2/5th share (40%) on the basis that Catherine would advance to me $48,000 which was to be secured by a deed of acknowledgement of debt. Catherine, who is referred to in the agreement as Kate, was entitled to 8% interest. The agreement included the provision that if either myself or Catherine wished to sell at any time in the future, then we would offer our share to the other and if the other was not interested in purchasing, then the property was to be sold as a whole on the open market. As far as I was aware, Catherine did not sign the agreement at any stage prior to 24 August 2017. No acknowledgement of debt form was ever provided to me, nor was one sought. I understood Catherine did not want to provide any form of agreement to our conveyancing lawyer, and then in any event subsequently varied the agreement so that we would each take a discrete half share in the property. I understood I would have a debt to Catherine of $48,000 that would carry interest at 8%.
The first notice I received of Catherine signing the agreement was on 18 April 2023, when her lawyers provided a signed agreement purporting to be dated 4 July 2017. Catherine argued through her lawyer that I had agreed to transfer the property to her without any payment back to me at all. Catherine’s allegation in that regard is entirely false. Catherine has not provided me with any accounting as to use of the rental income generated from the property.
Post purchase
I did not take occupation of the property following settlement. The previous tenants remained in occupation and continued to pay rental, with Ray White Kaitaia managing the tenancy. The original rental amount was $260.00 per week. That increased in September 2019 to $290.00, before increasing again in April 2021 to $330.00. The current rental is $420.00 per week.
The arrangement with Ray White Kaitaia is that the rental less Ray White charges is all paid to Catherine. The payments are made to Catherine’s bank account … Typically, Ray White Kaitaia makes payments to Catherine on a monthly basis of now $1,837.20. …
By my calculations, payments have been made to Catherine to 31 March 2018 of $6,954, to 31 March 2019 of $12,352, to 31 March 2020 of $12,615, to 31 March 2021 of $13,155, to 31 March 2022 of $14,528 and to 31 March 2023 of $17,917. The total payments to Catherine since acquisition of the property to 31 March 2023 total $77,521.
Over the years since purchase of the property, various improvements have been made and maintenance carried out to the property. I have personally provided my labour to such work without charging for it. Some of the expenses incurred in such work have been paid for personally by me and not reimbursed through Catherine. Catherine has not provided me with any reconciliation of the rental payment account. I understand from that rental payment account, Catherine pays insurance and rates. Some small payment has been made to me to pay for invoices that I have provided to Catherine.
Particulars of the work undertaken by me on the property and expenses met by me are as follows:
(a)Water blasting and hedge planting. Water blaster hire was paid for by me;
(b)Assisting in getting new spouting installed;
(c)Arranging for a new water tank, including delivery, fitting and placement and including replacement of clothesline and provision of trailers of sand (Catherine reimbursed $3,000 for the cost of the water tank);
(d)Digger and driver hire of $420.00 paid to Kaitaia Hire for digger and trailer and Peter Wright labour of $240.00;
(e)Final payment on bathroom installation of $1,000;
(f)Paid to Tony Stewart (Twin Coast Property Maintenance) $3,480 for house painting;
(g)Provision of scaffolding, ladders, undercoat, fillers, sanders, brushes, trailer and labour on the house repaint (two undercoats and one top coat).
Valuation
I commissioned a valuation report from Northland Valuers. The valuation
describes the property as a single dwelling (house, town house, unit or apartment) on a single vacant residential site. The house is described as a circa 1950s wooden weatherboard and tiled dwelling together with a separate carport. The house comprises three bedrooms and one bathroom. The market value was assessed by Northland Valuers as at 22 May 2023 at $365,000.
Discussion regarding the property
Through lawyers, on 23 November 2022, I advised Catherine that I was open to selling to her my half share of the property with the purchase price being determined by obtaining a valuation. I advised that I saw the co-owning relationship with Catherine as having completely broken down and that it was not an option for me to leave the status quo in place. Effectively, Catherine’s response (through a lawyer in April 2023) was to say that she fully owned the property and that I should in good conscience agree to a transfer into Catherine’s sole name without any payment.
At one stage I considered Catherine and I had agreed to sell the property and divide the proceeds of sale after undertaking an accounting relative to the rental income and my $48,000 debt. In early 2022, after a spruce up of the property, we agreed to sell. We discussed notifying the tenants as to our intentions and getting three real estate agent appraisals. On 17 February 2022 I text Catherine as to getting appraisals, advising as to a possible cash sale purchaser and asking Catherine to work out the financial position between us based on a sale at $350,000. Ray White Kaitaia provided an appraisal dated 7 March 2022 at $305,000 to $320,000. Catherine advised by text 11 March 2022 two real estate agencies appraised the property at $305,000 to $330,000. Thereafter Catherine’s communication dropped off and I could not get agreement to listing the property for sale. The financial analysis requested was never provided.
My current position – hardship
I will be 63 years of age in November 2023. Because of my circumstances, I still work long hours. There are occasions when I work up to 70 hours a week with very significant travel. I have only one significant personal asset and that is my share in the property. The DFT does own a residential property.
I have a 21-year-old daughter, who is fulltime studying and dependent on me for her support.
I am receiving none of the income generated from the property. My relationship with Catherine has completely broken down. I need to get my investment out of the property. If the property is not sold, I am consigned in continuing a property owning partnership with Catherine where I receive absolutely no benefit in circumstances where Catherine now appears to have no regard for my ownership interest. I consider I will experience real hardship if the property is not sold and an accounting of the proceeds is not undertaken to identify the shares Catherine and I will each have in the proceeds of sale and the rental income.
Hardship to Catherine
Catherine has typically been in relatively privileged circumstances. I understand Catherine owns a comfortable home. As far as I am aware Catherine does not work, and in my time of knowing Catherine she has rarely, if ever, worked full time. There will be no hardship to Catherine through a sale. Indeed Catherine will on what I propose not only get paid back her original capital, but will have a share in a reasonable capital gain and a share of the rental income.
[5] Ms Dyson’s second affidavit addresses other matters, including expenses she has paid in relation to the property and those paid by Ms Young.
Ms Dyson’s application
[6] Ms Dyson applies for the property to be sold and the proceeds distributed to her and Ms Young.
[7] The application was served (personally) on Ms Young on 8 January 2024.2 Ms Young has not filed any document in connection with the application; did not appear when the application was called on 21 June 2024; and has not participated in any other manner. Brewer J directed the application be heard by formal proof (when it was called 21 June).
Principle
[8] The application is governed by ss 339–343 of the Property Law Act 2007. These, so far as they are relevant, provide:
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
(c) only on an application made and served in the manner required by or under section 341; and
2 As established by an affidavit of service dated 17 January 2024.
(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.
...
341 Application for order under section 339(1)
(1)An application for an order under section 339(1) (and for any related order under section 339(4)) may be made by all or any of the following people:
(a) a co-owner of any property:
(b) a mortgagee of any property of a co-owner or co-owners if, under the mortgage and subpart 7 of Part 3, the mortgagee has become entitled to exercise a power of sale:
(c) a person with a charging order over any property of a co-owner or co-owners.
(2)Every person who is one of the following must, if not already a party to the proceeding on that application, be served with a copy of that application:
(a) a co-owner of the property:
(b) a person who has an estate or interest in the property that may be affected by the granting of the application:
(c) a person claiming to be a party to, or entitled to a benefit under, an instrument relating to the property.
(3)The court to which that application is made may, by order made on an application for the purpose, change, or dispense with service on, the people who must be served under subsection (2).
342 Relevant 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.
343 Further 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).
[9] Unsurprisingly, the Court of Appeal has said these provisions confer “a broad discretion”.3
Analysis
[10]The key provision is s 342, the architecture of which I borrow.
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
[11] Ms Dyson’s evidence suggests Ms Young might contest the extent of Ms Dyson’s interest in the property, or indeed, whether Ms Dyson has any interest in the property. However, Ms Young has not participated in the case; settlement (on 24 August 2017) proceeded on the basis each owner held a half-share in the property;4 and the certificate of title records each as owning a half-share. I see no reason to question that title.5 Consequently, each owner has a half-share.
[12]This analysis also addresses s 342(c).
The nature and location of the property
[13]The property is residential, modest, and tenanted. As observed, it is in Awanui.
[14] A valuation report dated 22 May 2023 records a market valuation of $365,000. Ms Dyson says she cannot afford the cost of an updated valuation.
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
[15] Mr Dodds’ written submission on behalf of Ms Dyson helpfully addresses the issue of hardship:
…. The Applicant’s evidence as to hardship to the Respondent, is that the Respondent is in a relatively privileged position. The submission is that there will be no hardship to the Respondent through a sale. That can be compared
3 Bayly v Hicks [2012] NZCA 589, [2013] NZLR 401 at [33].
4 Despite Ms Dyson earlier signing an agreement that she owned 40 percent of the property.
5 Land Transfer Act 2017, ss 51 and 52.
to hardship to the Applicant. The submission is that plainly there are adverse impacts to the Applicant from the current standoff. The Applicant’s only capital asset is her share in the property. The Applicant has been kept out of all income generated by the property. The Applicant has put her labour into improvements on the property, as well as contributing to some capital improvements and maintenance. The relationship with the Respondent appears to have completely broken down to the point where the Respondent appears to deny even that the Applicant has a co-ownership interest in the property. The Applicant is the one who sourced the property for purchase. It was the Applicant who was offered the property at what was said to be a discount of $30,000 to reflect that no real estate agent would be involved and her friendship with the vendors. Originally, the purchase was to be effected by the Diamond Family Trust on the basis that the Trust acquired finance. As noted previously, the Diamond Family Trust’s primary beneficiary is the Applicant’s daughter. Without an order for sale, it is plain the current standoff will continue with continuing prejudice to the Applicant.
The value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property
[16] Ms Dyson says Ms Young has paid the rates (totalling $15,022.96 between 2017 and 2024) and spent $8,477.87 in relation to the renovation of the bathroom. Ms Dyson says she has spent $6,640 on the property, as well as providing labour for which she has not been reimbursed.
Any other matters the Court considers relevant
[17] Ms Dyson emphasises she has not received any rental income from the property even though it has been tenanted since acquisition. Ms Dyson acknowledges she must repay Ms Young $48,000, with interest (at eight percent per annum), following Ms Young lending her that money in connection with the purchase of the property.
Evaluation
[18] Six points emerge. First, one owner—Ms Dyson—wants the property sold. Second, the relationship between her and the only other owner—Ms Young—appears broken. Third, the property is Ms Dyson’s only asset of significance.6 Fourth, Ms Dyson has not enjoyed any of the rental income from the property. Fifth, her circumstances favour a sale. Sixth, Ms Young’s position can be protected by the
6 Albeit the Diamond Family Trust owns another property.
imposition of conditions. It follows I am satisfied the property should be sold and the proceeds distributed between Ms Dyson and Ms Young.
Conditions
[19] The draft suite of conditions proposed by Ms Dyson provides for the repayment of $48,000 and interest at eight percent until today (by the resulting figure it employs).
[20] Another condition requires brief elaboration. It is proposed that the Registrar of the High Court be authorised to sign any documents in connection with the sale if Ms Young does not cooperate. Section 343(g), in my view, provides for an order of this nature. The order is necessary because it is highly likely Ms Young will not participate, as she has not to this point.
[21]The draft orders also include provision for costs on a 2B scale. It too is proper.
……………………………..
Downs J
Dyson v Young [2024] NZHC 2166
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