Fursdon v Brian Barclay Trustee Limited
[2023] NZHC 3422
•29 November 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-499
[2023] NZHC 3422
UNDER the Property Law Act 2007 and the Partnership Act 2019 BETWEEN
VICKI GILLIAN FURSDON
Plaintiff
AND
AND
BRIAN BARCLAY TRUSTEE LIMITED,
as trustee of the BRIAN BARCLAY TRUST First Defendant
BRIAN RAYMOND BARCLAY
Second Defendant
Hearing: 20 November 2023 Appearances:
G M Brodie for Plaintiff A M Corry for Defendants
Judgment:
29 November 2023
JUDGMENT OF ASSOCIATE JUDGE LESTER
FURSDON v BRIAN BARCLAY TRUSTEE LIMITED [2023] NZHC 3422 [29 November 2023]
[1] Vicki Fursdon (Vicki) and Brian Barclay (Brian) began a relationship in mid-2018 and separated in January 2021. When the relationship began, Vicki owned a property at Depot Road, Oxford (the property) which she had purchased in October 2010. Brian Barclay Trustee Limited (the Trust) is the trustee of Brian’s Trust.
[2] Vicki and Brian structured their property arrangements as follows. Vicki and the Trust formed a partnership under the Partnership Act 1908 to which Vicki sold the property. That sale and purchase is recorded in a written agreement which settled on 23 August 2018.
[3] On the same day as the partnership agreement, which is called a property sharing agreement, Vicki and Brian entered into a contracting out agreement under s 21 of the Property (Relationships) Act 1976 which recorded that Vicki’s share in the partnership was not and will not at any stage become relationship property. Vicki says the agreement provided that the property would remain Vicki’s separate property. The contracting out agreement included: “Vicki and Brian record that they have together with the Trustee of the Brian Barclay Trust entered into a separate agreement dealing with the ownership of the [property].”
[4] Accordingly, the principal asset in the relationship was held by Vicki and the Trust in a partnership. There are some further minor items of relationship property to be dealt with between Vicki and Brian but they are not the subject of this judgment.
Vicki seeks sale order
[5] In this proceeding, Vicki sought sale orders in respect of the property pursuant to s 343(d) of the Property Law Act 2007. Given the property was held in a partnership under the Partnership Act, jurisdiction in respect of a sale was subject to the Partnership Act, subject to the terms of the partnership agreement which provided that on the partnership being dissolved and in the event neither partner was able to purchase, the property would be sold.
[6] Jurisdictional and/or pleading issues were overtaken by the parties sensibly agreeing to the property being sold and the terms of the orders made at the end of this judgment largely reflect what they had agreed prior to the hearing commencing.
[7] One area of disagreement is how the proceeds of sale should be divided between the parties.
Shares under the partnership agreement
[8] The partnership agreement records that the sale proceeds should be divided as to 22/37ths to Vicki and 15/37ths to the Trust which equates to 59 per cent to Vicki and 41 per cent to the Trust. That division was calculated at the time of the partnership agreement and reflected the value of the property as determined by a valuation at the time, the amount Brian was contributing towards the mortgage and that he was taking over the balance of the mortgage.
[9]The agreed terms of sale are that the parties will accept an offer of at least
$1,060,000.00 for the property. On that basis, Vicki’s additional share of the net proceeds will be something like $90,000.00 in round numbers.
[10] The original application for summary judgment filed by Vicki sought that from the sale proceeds there be an interim distribution to the parties of $150,000.00 with the balance held. Vicki sought leave to bring her application for summary judgment after an unsuccessful settlement conference. After the summary judgment application was set down, Vicki sought leave to file an amended application seeking orders that the proceeds be distributed in accordance with the partnership agreement. Leave to seek summary judgment and to amend the application was originally opposed and indeed, the opposition was formally maintained, albeit as I will discuss below, the objection was rather overtaken by the position reached at the hearing.
[11] Brian has commenced proceedings in the Family Court seeking to challenge the terms of the partnership agreement. Whether that agreement can be set aside by the Family Court I leave to one side but Ms Corry, counsel for the defendants, confirmed during the hearing that her client, Brian, is not arguing for Vicki to receive less than 50 per cent of the sale proceeds of the property. Therefore, the maximum
amount that Brian could recover, assuming he can achieve 50/50 sharing, is as I have said, approximately $90,000.00 subject to a further point addressed below.
[12] I am satisfied it is appropriate to grant leave for the statement of claim to be amended in these circumstances. There is simply no point in Vicki being kept out of her share of the sale proceeds of the property, just as the Trust will receive its share.
[13] Vicki’s claim is for her share of the equity in the partnership. That claim is against the Trust. Brian’s claim does not affect what Vicki is entitled to from the partnership. In other words, Brian’s Family Court claim is not a set off or defence available to his Trust when it comes to the distribution of the partnership equity.
[14] While Ms Corry sought an order that $100,000.00 be held on interest bearing deposit, subject to the outcome of Brian’s Family Court proceeding, such an application amounts to something akin to a pre-judgment charging order or to a freezing order.1 There is no evidence whatsoever of a risk of dissipation of funds by Vicki. A practical confirmation that Vicki does not intend to dissipate what she receives from the sale of the property is that Vicki through counsel, undertook to the Court not to dissipate or part with beneficial ownership in any way of $100,000.00 worth of value for a period of 18 months. 18 months was proposed as being a reasonable time for Brian to pursue his Family Court proceedings, should he wish to do so. Ms Corry confirmed she was happy with a figure of $100,000.00.
[15] I record that undertaking has been given to the Court. Such an undertaking is as enforceable as a Court order.
[16] I accept that undertaking as being a pragmatic way of addressing each party’s concern; Vicki that her funds are not tied up and Brian; that there is not the risk of dissipation.
1 Rule 17.41 of the High Court Rules 2016 requires proof that a party is with intent to defend a claim removing, concealing or disposing of property before a charging order before judgment is available and a freezing order requires a real risk that assets will be dissipated. Robert Osborne and others McGechan on Procedure (online ed, Thomson Reuters) at [HR32.2.03].
41 per cent to Brian or 43 per cent?
[17] In Vicki’s affidavit in support of the application for summary judgment, she recites that she was aware of the need to disclose any matter that may give rise to a defence. As noted in the original application for summary judgment, Vicki was not seeking the distribution of all of the sale proceeds of the property, only $150,000.00 as an interim distribution to her and the Trust.
[18] Brian’s share was calculated in part through attaching a value to a shed that he was going to build on the property. Vicki, in her affidavit says:
I have now received advice from the valuer that the Shed added value of between $60,000 - $65,000 and I have now said that Brian’s percentage can be 43% due to that. This is not an issue for these proceedings. It is a matter for the substantive proceedings.
[19] Vicki ends this aspect of her affidavit by saying that for the reasons she sets out, she does not consider Brian or the Trust has a defence to her application for summary judgment.
[20] This is, in my view, a formal sworn concession by Vicki that Brian is entitled to 43 per cent and not 41 per cent. Vicki has made that concession to address any issue that may give rise to a defence to the application for summary judgment. I do not accept the submission of Mr Brodie, counsel for Vicki, that this concession is somehow linked to an attempt to resolve issues. It is a stand-alone acknowledgement designed to head off what was perceived to be a potential defence.
[21] It is not open to Vicki to backtrack on a formal concession. This was one of the issues where a finding of the Court was sought. The orders made will reflect that the distribution to Brian is to be 43 per cent.
[22] The draft order tabled referred to one real estate agent handling the sale. That is consistent with the terms of the partnership agreement. Ms Corry raised the possibility of there being a second real estate agent involved. That was not agreed. There is no reason to depart from the sale process specified in the partnership agreement.
[23] There are other minor amendments to the draft order that was tabled at the hearing which were discussed and, I understand, agreed at the hearing.
[24] Accordingly, the following orders are made by consent save as indicated above:
(1)The land owned by the plaintiff and the first defendant at 887 Depot Road, View Hill, Oxford more specifically described as an estate in fee simple containing 4.0000 hectares more or less being Lot 4, Deposited Plan 399767 described in certificate of title 398036 (the Property), is to be sold by public tender during the period of four months following the date of the making of this order.
(2)Property Brokers Canterbury Limited (Maurice Newall) (the Appointed Agent) shall be engaged by the plaintiff and the first defendant to prepare a proposal for sale of the property by public tender to include a detailed marketing proposal.
(3)The recommendations of the Appointed Agent in relation to advertising, signage and promotion of the sale are to be accepted by the parties.
(4)The plaintiff and the first defendant shall engage Helmore Stewart (Aaron Milnes and Mia Hofsteede), solicitors, Rangiora to act for them on the sale of the Property. The Property shall be sold on the Particulars and Conditions of Sale of Real Estate, eleventh Edition approved by the Real Estate Institute of New Zealand Incorporated and the Auckland District Law Society Incorporated, amended as may be appropriate.
(5)The plaintiff and the first defendant shall accept the highest of any offer received for the Property which equals or exceeds the sum of
$1,060,000.00 including GST (if any). Clause 9.3 of the Property
Sharing Agreement to govern responsibility for GST as between the parties.
(6)The parties are at liberty to tender for and become the purchaser of the Property in accordance with the terms of sale.
(7)The deposit and balance of the purchase price shall be paid to the trust account of Helmore Stewart to be held on behalf of the plaintiff and the first defendant in accordance with the clauses below.
(8)Helmore Stewart are authorised and directed to pay from the proceeds of sale;
(a)any outstanding rates and insurance premiums relating to the Property;
(b)the commission and any outstanding advertising costs of the Appointed Agent;
(c)any other expenses incurred in the sale process including legal fees for conveyancing; and
(d)the costs of any valuation obtained.
(9)The net proceeds of sale shall be paid;
(a)57 per cent to the plaintiff;
(b)43 per cent to the credit of the second defendant but from which fund shall be paid the amount required to repay the balance owing to the Bank of New Zealand which is secured by mortgage 11197674.3.
(10)Leave is reserved to apply to the Court on 48 hours’ notice for any issue arising out of the sale process and in respect of the plaintiff’s undertaking recorded in this judgment. Specifically, the Court may
determine whether to direct the acceptance of any offer received notwithstanding that the agreed minimum price of $1,060,000.00 has not been achieved through the tender process.
(11)The parties shall sign all transfers, authority and instruction forms and other documentation necessary to give effect to the sale of the Property in accordance with the foregoing.
(12)The remaining causes of action within the jurisdiction of the Family Court are transferred to the Family Court at Christchurch to be heard and determined in conjunction with Family Court proceedings, FAM-2023-009-878. All other causes of action are stayed with leave for the stay to be lifted on the giving of 48 hours’ notice along with a request for a telephone conference. Once all issues are resolved a discontinuance is to be filed.
Costs
[25] Mr Brodie has signalled an intention to apply for costs. He is to file submissions in support of costs of not more than five pages within 15 working days. Ms Corry will file her submissions, also not more than five pages, by 31 January 2024. I will then deal with the issue of costs on the papers.
Associate Judge Lester
Solicitors:
Conway Lane Law, Rangiora (for Plaintiff)
Williams McKenzie, Rangiora (for First and Second Defendants)
Copy to counsel:
G M Brodie, Barrister, Christchurch (for Plaintiff) M Sandom, Barrister, Christchurch (for Plaintiff)
A M Corry, Barrister, Christchurch (for First and Second Defendants)
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