Fraser v Butler
[2017] NZHC 944
•10 May 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-416-23 [2017] NZHC 944
BETWEEN NEIL ANDREW FRASER BY HIS
LITIGATION GUARDIAN ROSS WILLIAM FRASER Plaintiff
AND
MARILYN TERESA BUTLER Defendant
Hearing: 20 March 2017 Appearances:
Mr Simperingham for the Plaintiff
Mr Weatherhead for the DefendantJudgment:
10 May 2017
JUDGMENT OF CULL J
Introduction
[1] The plaintiff (Mr Fraser) seeks an order under s 339(1)(a) of the Property Law Act 2007 (the Act) that a farming property in the Waimata Valley in Gisborne (the Property) be sold and seeks directions as to how the proceeds from the sale are to be divided.
[2] Mr Fraser suffers from dementia and this action is bought on his behalf by his litigation guardian. Mr Fraser is a majority share co-owner of the Property, which is his most significant asset and as he derives no benefit from the land, he seeks that the land now be sold.
[3] The Property is currently being occupied by the defendant, Ms Butler, his former de facto partner, who occupies the Property exclusively with her family. Although registered as the owner of the Property, Ms Butler holds the Property as to
a 29 per cent share for herself and the remaining 71 per cent for Mr Fraser.
FRASER v BUTLER [2017] NZHC 944 [10 May 2017]
Background facts1
[4] Mr Fraser was originally the owner of the Property, comprising approximately 86 ha situated in Waimata Valley Road, Waimata Valley, Gisborne. In August 1993, Mr Fraser transferred a half-share in the Property to his wife, Katrina Fraser.
[5] Mrs Fraser died intestate in early 2005. Her estate was administered by the
Public Trust Office (the Public Trust).
[6] Mr Fraser was adjudicated bankrupt in or about late 2006 or early 2007, and his one-half share in the Property vested in the Official Assignee. The Official Assignee obtained an order from the High Court that the Property be sold to satisfy Mr Fraser’s debts. Mr Fraser and Ms Butler entered into an arrangement, which averted a sale by the Official Assignee. Two things occurred under that arrangement.
[7] First, the Public Trust indicated that on payment of the sum of $60,711, which was required to cover the Public Trust’s obligations and costs associated with the administration of the late Mrs Fraser’s estate, the Public Trust would be prepared to transfer the late Mrs Fraser’s one-half share in the Property to Mr Fraser. Second, there was an agreement by Ms Butler to pay both the $60,711 sought by the Public Trust and the amount owing to Mr Fraser’s creditors in his bankruptcy. In exchange for her payments, Ms Butler would be entitled to a 29 per cent interest in the Property.
[8] On 1 June 2007, Mr Fraser and Ms Butler entered into a deed recording their arrangement. The deed records the background as described above, including the particular amounts required to satisfy the Public Trust ($60,711) and the Official Assignee in respect of Mr Fraser’s creditors ($84,513.37). A mortgage to ANZ Bank was registered on the title. The deed recorded that Mr Fraser was unable to raise any money to satisfy those liabilities, but that Ms Butler had obtained a loan offer from
the Bank of New Zealand (BNZ) for $190,000. Both parties understood, and the
1 The background facts are taken from the amended statement of claim and the judgement of
Smith AJ, Fraser v Butler [2017] NZHC 120, on the defendant’s strike-out application.
deed recorded, that it would be necessary to register a mortgage on the property to secure the new lending from BNZ, after the ANZ mortgage was repaid.
[9] The deed recorded Ms Butler’s willingness to borrow the funds required to
complete the transaction, as follows:
On the basis that she becomes the sole registered proprietor of the property but in doing so will recognise that [Mr Fraser] has an interest in the property and that interest should be satisfied by a partition of the land or a transfer in terms of this agreement to [Mr Fraser and Ms Butler] as tenants in common in the defined share.
[10] The operative clauses in the deed provided that, on payment of the amount due to the Official Assignee, the Public Trust, and ANZ Bank, and payment of outstanding rates by Ms Butler, Mr Fraser would transfer to Ms Butler an interest in the fee simple of the Property, namely, a 29 per cent share. Ms Butler was entitled to all the income, including rent, from the Property. There was provision for rent payable by a tenant on the Property to be payable to Ms Butler.
[11] Clauses 3 and 5 of the deed recorded the parties’ respective shares, namely
29 per cent to Ms Butler and 71 per cent to Mr Fraser, and the steps that were to be taken in five years time. Those clauses provided:
3.Ms Butler will make additional payments out of her own income to meet the payments due to the BNZ who shall have a registered first mortgage over the property. Having regard to the situation Mr Fraser has been in and the steps Ms Butler has taken to secure the property, Ms Butler declares and Mr Fraser agrees that the property shall be held by Ms Butler as to 29/100ths for herself and the remaining 71/100ths for Mr Fraser.
5.On the fifth anniversary of the date of this agreement Ms Butler shall either transfer a 71/100ths share in the property to Mr Fraser so that from that date she and Mr Fraser will hold the property as tenants in common, 29/100ths to herself and 71/100ths for Mr Fraser or they shall look at the feasibility of subdividing or partitioning the property to reflect the 29/100ths – 71/100ths ownership arrangement. Both Ms Butler and Mr Fraser will do all things that are necessary and sign all documents that are necessary to give full effect to the terms of his agreement.
[12] The Property was transferred to Ms Butler and registered in her sole name on
15 October 2007. Mr Fraser and Ms Butler began their relationship in 1994, approximately a year after the death of Mr Fraser’s wife. Following Mr Fraser’s
bankruptcy in 2005, Ms Butler sold her home at Patutahi in October 2006 and moved onto the Property with her daughter, to live with Mr Fraser.
[13] Differences arose between Mr Fraser and Ms Butler in 2008, with Ms Butler serving Mr Fraser with a trespass notice on 1 July 2008, forbidding him entry onto the Property. In early November 2008, Ms Butler advertised the Property for sale without any prior consultation with Mr Fraser. Mr Fraser responded by registering a caveat against the title to the Property on 13 November 2008. Ms Butler has since resided in the house on the Property with her family and had the benefit of sole occupation from 1 July 2008 to the present.
[14] When the five year period was up, namely the 1 June 2012 anniversary date referred to in cl 5 of the deed, Ms Butler had taken no steps to transfer the Property into the names of the parties as tenants in common in unequal shares, and no discussions had been held on the possibility of subdividing or partitioning the Property.
[15] Mr Fraser says that, from about September 2013, he made written requests to Ms Butler to perform the agreement, but she has failed to do so. He says that he has also asked Ms Butler to vacate the house but Ms Butler has refused.
[16] Since leaving the property, Mr Fraser developed dementia and currently lives in a retirement village. He has received no benefit from the land since the date of his departure on 1 July 2008.
Issues
[17] The parties have reached agreement on the issues for determination in this proceeding. They are:
(a) Should the court make an order for sale pursuant to s 339(1)(a) of the
Act, as sought by the plaintiff?
(b)If the court is minded to grant the order for sale, what additional directions, pursuant to s 343 of the Act should be made in relation to the proceeds of sale?
(c) Whether the Court should make a determination on the relative adjustments, to determine the plaintiff’s share, while giving the defendant the opportunity to buy the plaintiff ’s share pursuant to s 343(e) of the Act?
The parties’ positions
Mr Fraser
[18] For Mr Fraser, Mr Simperingham submits that Mr Fraser’s case is simple. He is a majority share co-owner of the Property, which is his most significant asset. Mr Fraser relies solely on his application under the Act, as pleaded in his Amended Statement of Claim. He seeks that the property be sold under s 339(1)(a) of the Act and for directions under s 343(d) as to how the proceeds from the sale are to be divided. In this case, Mr Fraser owns a 71 per cent share of the Property and seeks that share in sale proceeds.
Ms Butler
[19] Mr Weatherhead for Ms Butler submits that there should no order for the sale of the Property but there should be a determination adjusting the relative shares between the parties. In particular, the determination should achieve fairness in accounting between the parties and adjust their rights in an equitable manner.
[20] Ms Butler sold her home in 2006 and moved onto the Property in late 2006. She provided the funds to enable them to meet Mr Fraser’s living expenses, maintain the farm and save the Property from sale. She paid the rates and insurance without contribution from Mr Fraser.
[21] Ms Butler seeks postponement of sale that would enable the Property to benefit from an increase in value and, given the health and position of Mr Fraser, he would receive no benefit from the sale in any event.
[22] Whether a sale is directed or not, Ms Butler seeks a determination of the adjustments to reflect her maintenance of the Property, namely:
(a) the balance on the mortgage;
(b) the payment of principal and interest by her; (c) payment of rates and insurance; and
(d)an amount to compensate her for the alleged sabotage by Mr Fraser of the electrical supply to the Property.
[23] Lastly, it is submitted that the adjustments sought by Ms Butler would quantify her share and may give her the opportunity to offer to buy Mr Fraser’s interest. In the alternative, quantification could assist in the parties’ consideration of a subdivision.
Should the court make an order for sale pursuant to s 339(1)(a) of the Act, as sought by the plaintiff?
[24] Section 339 of the Act empowers the court to make orders for the division of property. Section 341 specifies who may make such an application, including a co- owner of any property pursuant to s 341(1)(a). In this case, Mr Fraser makes the application as a co-owner and his status was upheld by Associate Judge Smith in his
decision on the strike-out application by Ms Butler.2
[25] Section 339 of the Act 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
2 Fraser v Butler, above n 1.
(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
1952; 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
(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)).
…
[26] The mandatory considerations, which a court must consider in making an order under s 339 of the Act are set out in s 342. Section 342 provides:
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.
Discussion
[27] Although Ms Butler submits that there should be no order for the sale of the Property, the critical issue for Ms Butler is the determination adjusting the relative shares of the parties. Ms Butler seeks adjustments for her payments of outgoings on the Property, including the mortgage, which was raised to pay off Mr Fraser’s existing mortgage and to acquire Ms Butler’s 29 per cent share of the ownership. Ms Butler seeks a postponement of any sale, to enable both parties to benefit from an increase in value of the property. If the order for sale is not made, then Ms Butler wants an opportunity to buy-out Mr Fraser’s interest or, alternatively, quantification of the adjustments to be made in respect of the parties’ interests, which may enable the parties to consider subdivision of the Property.
[28] For Mr Fraser, an order for sale is sought as being the most appropriate remedy. The value of any contributions by the parties will be considered under issue three.
[29] To assist in the court’s consideration, the parties called evidence from
Mr Fraser’s guardian, Ross Fraser, as well as Ms Butler and her boarder Mr Collins. [30] From the evidence I heard, the following facts emerged:
(a) The deed recording the agreement between Ms Butler and Mr Fraser was signed on 1 June 2007 and a valuation was obtained by Lewis and Wright on 15 June 2007, valuing the property at $884,000.
(b)Between July 2007 and 11 October 2007 the Official Assignee and the Public Trust’s interests were settled, with the upstanding ANZ mortgage being repaid and Ms Butler obtaining a loan of $230,000 from BNZ, thereby acquiring her 29 per cent share of the Property.
(c) On 11 October 2007, the title was registered in Ms Butler’s name, on the basis set out in the agreement. Nine months later, Ms Butler called the police because of verbal abuse by Mr Fraser towards her
and her daughter, with Mr Fraser receiving a trespass notice from the police as a result.
(d) Mr Fraser left the Property on 1 July 2008 and has not occupied the
Property since. He has received no benefit from the Property.
(e) The Property has a stand of mature trees, which at an early stage the parties considered harvesting and applying the proceeds to subdivide the Property. This possibility, although discussed, was never advanced by the parties, although Ms Butler sought a figure for the cost of subdividing the property, which was in the region of $30,000 or more. Neither she nor Mr Fraser have the funds to advance any subdivision.
(f) Ms Butler alleges, and Mr Collins gave evidence, that they believed
Mr Fraser sabotaged the electricity on the Property on 18 October
2008. Mr Fraser was not seen by Mr Collins on the date in question but did see Mr Fraser’s vehicle parked on the far side of the shed out of his sight. Subsequently, it was discovered that the power supply had been cut off. The door to the meter box was left open, which was unusual. Ms Butler gave evidence that she could not afford the
$8,500 quoted for the electrical repair. Until 2014, when an acquaintance paid for the reconnection of the electricity at a price of approximately $7,000 (although there is no documentary evidence to support this) she cooked on an outside fire or BBQ and he did the same for heating water. Since leaving the Property, Mr Fraser has not paid anything towards the maintenance or outgoings of the Property.
(g)Ms Butler has remained in sole occupation since 1 July 2008; receives the rent as agreed under the deed from the tenant on the Property; has a boarder living in the Property who does not pay rent but does work in and around the Property; and has other members of her family residing there. She has also had the benefit of the wood grown on the Property, but no one has touched the stand of trees. Ms Butler has
paid the rates (including some rate arrears), the house insurance and interest and principal on the $230,000 BNZ mortgage.
(h)Ms Butler accepted that eventually the Property would have to either be sold or she would have to buy out Mr Fraser’s share. However, in the absence of finding a way to subdivide the land, she told the Court that it would be better to wait until Mr Fraser “passes on” before the matter is reconsidered. She did not see that there is any benefit to Mr Fraser in receiving any money from the sale of the farm. As Ms Butler puts it “it will not make any difference to Neil’s life”. A sale would, however, make a substantial difference to her life as she would have to try and obtain another house and move elsewhere.
(i)Ms Butler obtained an estimate of the value of the revenue from harvesting the trees on the Property, which was $117,042. She states that those funds would be more than enough to meet the costs of subdivision on the Property.
(j)Mr Ross Fraser had applied to the Gisborne District Council in 2013 for resource consent to harvest the trees, because he considered the trees were owned by Mr Fraser. Although consent was granted, no steps were taken to harvest the trees.
[31] Mr Ross Fraser confirmed that his brother has no other property or money, other than his majority interest in the Property. He also confirmed, when questioned, that he visits Mr Fraser regularly, takes him out on visits and trips away from the retirement home and pays for the extras, that are required for day-to-day expenses and for treats. It was evident to me that Mr Ross Fraser is subsidising and financing the extra costs of Mr Fraser’s care, as he told the Court:.
I actually paid two, … and a half, $3000, … while trying to get him into …
Kiri Te Kanawa but then to arrange with WINZ…
…
… there was a sort of a gap between when they started paying, paying his thing there and it added up to about two and a half $3000 which I have actually now paid off.
…
I bring him magazines and stuff like that. I bring him clothing. I buy clothing for him …
[32] Mr Ross Fraser described visiting the Property, in particular to check on the Property’s forest, and was met with a menacing and threatening response from Ms Butler’s family members, who were present.
[33] There is considerable tension between Mr Ross Fraser and Ms Butler, as was evident during the hearing, such that any proposal for agreement to be reached on subdivision of the land or the provision of revenue from harvesting the trees is unlikely to be reached.
[34] Having heard the evidence of the three witnesses and considered the extent of the respective shares of Ms Butler and Mr Fraser, including the respective hardship to be caused to either of the parties as required under s 342(d), I am satisfied that an order for sale should be made under s 339(1) of the Act for the following reasons:
(a) It is unacceptable that Mr Fraser should continue to receive no benefit from his majority share of the Property, because he is now disabled and is in a rest home.
(b)Mr Fraser has received no benefit from the Property, his only asset, for eight years nine months.
(c) Ms Butler has had all the benefit of the Property for eight years nine months, without paying any rental to Mr Fraser.
(d)Ms Butler has paid all the outgoings on the Property and the BNZ mortgage payments. She has received, however, the rents paid by the tenant on the Property and payments towards the living expenses of her household from her two children and one boarder. None of them pay rent as such, but contribute by way of work, maintenance of fences and scrub clearing, as well as contributing to food and living expenses.
(e) Although Ms Butler will have to find alternative accommodation on any sale of the Property, the benefits to Ms Butler as the minority co- owner (which will have to be assessed against the payments and/or contributions Ms Butler has made) are out of proportion to the absence of any benefit to the majority co-owner, Mr Fraser.
[35] For those reasons, the order for sale is made under s 339(1)(a).
If the court is minded to grant the order for sale, what additional directions, pursuant to s 343 of the Act should be made in relation to the proceeds of sale?
[36] Once a court makes an order under s 339(1), the court may make a further order specified in s 343.3 Section 343 of the Act provides:
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).
3 Property Law Act 2007, s 339(4).
[37] Ms Butler submits that in the event the Court orders a sale of the Property, she seeks an “equitable accounting between the owners” and a determination adjusting the relevant shares between the parties, for the payments made by Ms Butler in respect of the Property.
Relevant principles from the cases
[38] A number of authorities were relied on by Mr Weatherhead for Ms Butler. In Bunyan v Parish, Muir J helpfully summarised the following settled principles that are relevant and apply to the resolution of claims between co-owners.4 They are:
(i) The unity of possession is common to both joint tenancies and to tenancies in common.5 Both co-owners are entitled equally to enjoy the property, whether that be in occupation or in receipt of a proportional share of the rents or profits resulting from the property’s management.6
(ii) If one co-owner takes sole occupation of jointly owned property, he or she is not usually liable to compensate the other simply by being in sole occupation.7 However, if the co-owner has been excluded and is unable to enjoy their occupation rights they may be entitled to compensation in the form of an occupation rent. Exclusion by way of breakdown of relationship has been recognised as one such category.8
(iii) Contributions towards mortgage repayments, both principal and interest as well as to rates and property maintenance and expenditures that have increased the value of the relevant property have all been recognised as relevant to the accounting which is required on sale or purchase by one co-owner of another’s share.9
[39] Mr Weatherhead referred to Muir J’s observation that the considerations informing the exercise of the Court’s discretion under ss 339 and 343 of the Act do not seem to be materially different from the considerations in imposing a constructive trust: “the Court must do its best fairly to reflect the value of the respective parties’ contributions.”10 In Bunyan, Muir J quantified the mortgage repayments, both principal and interest, rates and insurance, together with a further
sum to compensate for interest on all the outgoings paid, totalling a sum which was
4 Bunyan v Parish [2016] NZHC 2225 at [32].
5 Tom Bennion and others Land Law in New Zealand (2nd ed, Brookers, Wellington, 2009) at
[6.6.01].
6 Bull v Bull [1955] 1 QB 234 (CA).
7 McCormick v McCormick [1921] NZLR 382 (SC) at 385.
8 Surridge v Quinn HC Wellington CP830/91, 13 May 1993.
9 Long v Moore (1989) 1 NZ ConvC 190,239 (HC).
10 Bunyan v Parish, above n 4, at [33].
to be deducted from the value of the property, because of Ms Bunyan’s excess contribution. In that case, the co-owner had made minimal contributions to the sustenance of the property and had enunciated his interest in it. The mortgage had been refinanced from the initial joint application for loan finance by both co-owners at the outset.
[40] In Deeks v Deeks, Hillyer J confirmed that the general approach of the court to the adjustment of the relative shares of the parties in partition proceedings is a pragmatic one, to seek to achieve fairness in accounting between the two parties.11
He made an adjustment to the wife’s share of the property, because she had expended money on improvements, which had increased the value of the property. However her claims for rates and expenditure on the maintenance of the property were rejected, as she alone had the benefit of occupation and no occupational rental was paid or ordered.
[41] The same approach to payments towards maintaining or sustaining the property by insurance payments or general upkeep was reinforced by Wallace J in Long v Moore.12 In that case, the payments for mortgage interest and other outgoings which sustained the property were not made by the party in occupation. The plaintiff was entitled to recover 50 per cent of the payments made by him, because he was responsible for making half of the payments. In the absence of any
occupation rent being paid, the plaintiff was entitled to recover his 50 per cent share of payments made and the payments made by the defendant in occupation towards maintaining the property was “more than counter balanced” by her sole occupation.13
[42] In Whimp v Bigham, Ellis J confirmed that the exclusion of one party from a property upon the breakdown of a relationship may justify the award of fair occupation rent.14 An assessment of what occupation rent should be ordered is based upon the rental that could have been obtained for the co-owned premises. In that case, however, the plaintiff abandoned his claim for fair occupation rent and the
orders reflected this.
11 Deeks v Deeks [1988] 1 NZLR 664 (HC).
12 Long v Moore, above n 9.
13 At 190, 243.
14 Whimp v Bigham [2016] NZHC 1261.
[43] In this case, Ms Butler acquired her 29 per cent share of the Property by taking over the extant liabilities, including the existing mortgage. The $230,000
BNZ mortgage was raised by her to acquire her share of the Property. She has also paid the outgoings on the Property, namely rates and insurance and seeks an adjustment for all of the payments, including the capital and interest on the mortgage.
[44] In relation to the adjustment sought for her payments on the BNZ mortgage, I consider that this was her “purchase price” for the 29 per cent share. If the court allows a deduction for her payments of interest and principle, Mr Fraser is effectively paying for Ms Butler’s acquisition of an interest in his property. This case differs from the others cited on behalf of Ms Butler, in that there was no obligation on Mr Fraser under the deed of agreement between the parties that he was responsible for the mortgage liability or any other outstanding liability. As Wallace J
observed, that much will depend on the circumstances of each case.15 In this case, it
is an important factor that the payments were made by the party in occupation, pursuant to the deed of arrangement between the parties. As part of the deed of arrangement, Ms Butler has been receiving the rental from the tenant on the Property. Over a period of more than eight and a half years, Ms Butler had the opportunity to seek to increase that payment, but to date has not done so.
[45] As noted above, Ms Butler has had her employed children residing on the
Property, together with a boarder, who pays no rent.
[46] The evidence further reveals that the Property has reduced in value and there is considerable maintenance to be undertaken.
[47] In those circumstances, I do not consider adjustments should be made for the payments of mortgage principal and interest or the rates and insurance outgoings. Having retained all of the benefits flowing from the Property in rental payments and exclusive occupation, with no payment to Mr Fraser for rent, I consider that Ms Butler’s payments are more than counterbalanced by her sole occupation without
payment of any occupation rent.
15 Long v Moore, above n 9, at 190,242.
[48] There is one matter that does trouble me. On the evidence before me, it is likely that Mr Fraser did interfere with the electrical supply to the Property. I assess this on a balance of probabilities. Given that it was his vehicle that was parked on the far side of the shed and, although he was not seen specifically by Mr Collins, the resulting damage to the meter box provides strong circumstantial evidence that it was more than likely Mr Fraser who did such damage.
[49] There have been no invoices produced but I am prepared to accept that the reconnection of the power cost $7,000 and I will make an order that $7,000 be deducted from Mr Fraser’s share.
Conclusion
[50] Pursuant to s 343(a) of the Act, I find that a payment of $7,000 compensation is owed by Mr Fraser to Ms Butler, from his share of the Property.
Whether the Court should make a determination on the relative adjustments, to determine the plaintiff’s share, while giving the defendant the opportunity to buy the plaintiff ’s share pursuant to s 343(e) of the Act?
[51] Mr Weatherhead attached a schedule of the appropriate adjustments he sought to be made on behalf of Ms Butler in respect of her share of the Property, with a projected amount to be paid to Mr Fraser to buy out his share. On the proposal provided, deductions of all mortgage payments of $200,000 together with a further
$183,685 was deducted from a 71 per cent share of the Property valued at $650,000. This left a proposed payment to Mr Fraser of $55,975.
[52] For the reasons I have outlined above, I do not accept that the mortgage balance and/or Ms Butler’s payments to date should be deducted from Mr Fraser’s shares. Nor am I in a position to confidently reach a view about the value of the Property.
[53] Having determined that the Property should be sold, I consider the fairest approach to both parties is for the plaintiff to obtain a registered valuation and give Ms Butler an opportunity to purchase Mr Fraser’s share at market value. If
Ms Butler cannot purchase Mr Fraser’s share at market value, then the Property is to
be sold at public auction.
[54] I am making the following orders for sale. I am granting leave to each of the parties to come back to the Court in respect of the orders, if necessary.
Result
[55] I accordingly order that:
(a) Mr Ross Fraser is to obtain a registered valuation of the Property and serve it on Ms Butler.
(b) Within 30 days of receipt of the valuation Ms Butler can make a
formal offer to purchase Mr Fraser’s share at market value.
(c) If Ms Butler:
(i) does not exercise the option to purchase; or
(ii)formally advises Mr Ross Fraser that she does not wish to make a formal offer;
(iii)Mr Ross Fraser is to organise, with a reputable real estate agent of his choosing, a public auction for the sale of the Property at 1572 Waimata Valley Road, Waimata Valley, Gisborne comprising 85.88 hectares of land, a house and shed, more particularly described in Certificate of Title GS5D/191 as Lot 3, Deposited Plan 8369.
(d)The date of the sale may be determined by the plaintiff or his agent but shall be set having regard to the time reasonably required by Ms Butler to find alternative accommodation, being no more than eight weeks from the date of receipt of the valuation.
(e) Ms Butler is to cooperate with all aspects of the sale process including (but without limitation) by signing any necessary authorisations, keeping the Property clean, tidy and presentable for sale, and making reasonable access available for viewing as the agent requires.
[56] When the Property is sold, the proceeds of sale are to be distributed as follows:
(a) The payment of any real estate agent’s commission and legal fees incurred by the vendors in connection with the sale and transfer of the Property.
(b)Payment of any marketing costs in relation to the sale and payment of the valuation fee.
(c) The balance of the sale proceeds are to be divided as follows: (i) 29 per cent plus $7,000 is payable to Ms Butler; and (ii) 71 per cent is payable to Mr Fraser, less $7,000.
[57] Costs lie where they fall.
[58] I decline to make any order as to occupation rent. For completeness, the
BNZ mortgage balance is to be payable from Ms Butler’s share.
[59] Leave is reserved for the parties to come back to the Court to seek such further orders as may be necessary to enable the Property to be sold and to implement the above orders.
Cull J
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