Gallagher v Grant
[2021] NZHC 1907
•27 July 2021
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE
CIV-2021-476-000029
[2021] NZHC 1907
UNDER the Land Transfer Act 2017 and the Property Law Act 2007 IN THE MATTER
of an application for removal of a caveat against dealings and an application for an order of sale
BETWEEN
RACHEL MARGARET GALLAGHER, BLAIR CAYZER GALLAGHER and RICHARD COLIN BURNS GALLAGHER
as trustees of the Margaret Gallagher Family Trust
First ApplicantsAND
RACHEL MARGARET GALLAGHER (as
trustee and executor of the estate of Colin Henry Gallagher
Second Applicant
AND
DEIRDRE MARGARET GRANT
Respondent
Hearing: On the papers Counsel:
R J H Scott for Applicants
Judgment:
27 July 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 27 July 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
GALLAGHER v GRANT [2021] NZHC 1907 [27 July 2021]
[1]The applicants intend to commence a proceeding for:
(a)the removal of a caveat lodged by the respondent on a property at 76 Beacon Point Road, Wanaka (the property) under s 142 of the Land Transfer Act 2017; and
(b)for the sale of the property and distribution of the proceeds of sale under s 339 of the Property Law Act 2007.
[2] The applicants wish to commence their proceeding by way of originating application under pt 19 High Court Rules 2016.
[3] The application for the removal of the caveat can be commenced by way of originating application as of right.1 The application for the sale of the property under s 339 of the Property Law Act is not a proceeding to which pt 19 applies. However, the Court may in the interests of justice permit a proceeding to be commenced by originating application.2 The issue is whether it is in the interests of justice for the Court to make such an order in this case.
Background
[4]The parties are all members of the Gallagher family.
[5] The applicant, Rachel Margaret Gallagher (Mrs Gallagher), is the widow of the late Colin Henry Gallagher (Mr Gallagher). Mr and Mrs Gallagher had three children who are still living, namely the applicants, Blair Cayzer Gallagher and Richard Colin Burns Gallagher, and the respondent Deirdre Margaret Grant (Deirdre).
[6] The residence on the property was built by Mr and Mrs Gallagher and used as a holiday home, predominantly by Mrs Gallagher following Mr Gallagher’s early death. To a lesser extent it has also been used by their children.
[7]The property is presently owned in the following shares:
1 High Court Rules 2016, r 19.2(l).
2 Rule 19.5(1).
(a)a one half share by the first applicants as trustees of the Margaret Gallagher Family Trust (the Trust). This is a trust established by Mrs Gallagher and she is the primary beneficiary; and
(b)a one half share by Mrs Gallagher as the trustee and executor of Mr Gallagher’s estate.
[8] The terms of Mr Gallagher’s will provide that Mrs Gallagher has a life interest in the estate’s one half share of the property and on her death it shall be held for Deirdre.
[9] Mrs Gallagher is now 92 years old and living alone. The trustees wish to sell the property to provide for Mrs Gallagher’s future needs. Whilst she presently enjoys good health it is expected her needs will increase over time and she cannot personally meet those needs. The Trust does not have sufficient other property to do so.
[10] When the possibility of the sale of the property was raised, it led to a falling- out between Deirdre and the applicants. Deirdre then lodged her caveat over the estate’s half share interest in the property.
[11] Attempts to resolve the dispute have failed. The trustees have offered to sell the Trust’s interest in the property to Deidre but she has refused to purchase it on their terms or on any other terms considered reasonable. The applicants have put before the Court correspondence between the parties’ respective solicitors. It shows Deidre considers that she should not have to purchase the estate’s interest in the property because:
(a)she has a claim arising from the mismanagement of the estate’s assets;
(b)it was Mr Gallagher’s wish that she was to have the whole property after Mrs Gallagher’s life interest comes to an end;
(c)Mrs Gallagher settled a one half interest in the property on the Trust to the exclusion of Deirdre; and
(d)there were loans and uneven distributions made to the other siblings from the estate which were against the wishes of Mr Gallagher.
The law
[12] This application is made under r 19.5 of the High Court Rules for permission for the proceeding to be commenced by way of originating application. Under r 19.5(1) the Court may give permission if it is in the interests of justice to do so. Pursuant to r 19.5(2), this application may be brought without notice.
[13] It is well-established that the pt 19 procedure is generally used for cases where it is not necessary to have full pleadings or interlocutory steps for the proper determination of the issues. It is designed to be a speedier and less expensive mechanism than pt 18, although the pt 18 procedure is still more efficient and confined than a general proceeding.
[14] In Solar Bright Ltd v Martin, Solar Bright sought declarations pursuant to s 141 of the Companies Act 1993 and leave to bring the proceeding under pt 19 rather than by way of ordinary proceeding.3 In granting leave, Osborne J applied Hong Kong and Shanghai Banking Corp Ltd v Erceg in which Asher J stated:4
… the type of proceeding suited to the originating application procedure is a straightforward application, not requiring detailed pleadings or interlocutory orders … The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is the possibility of crossclaims or counterclaims.
[15] The decisions dealing with applications to bring proceedings under s 339 of the Land Transfer Act by originating application go both ways. Close attention must be given to the facts of each case, the issues likely to arise, the complexity of the facts and issues and the course the proceeding is likely to take on its way towards a hearing.
3 Solar Bright Ltd v Martin [2019] NZHC 300.
4 Hong Kong and Shanghai Banking Corp Ltd v Erceg (2010) 20 PRNZ 652 (HC) at [25].
[16] In Casbolt v Harman, I considered some of the authorities and refused such an application.5 Very recently, in Lung v Liu a similar application was also refused.6 There, Van Bohemen J noted that cases where leave had been granted to bring applications under s 339 by way of originating application have been where the issues are few and straightforward, and where the evidence for areas of contestation is able to be effectively presented by affidavit.7 He considered the case before him was unsuitable to be brought as an originating application because of the cursory nature of the evidence presented and because there was, “ample scope for disagreement about the underlying factual bases for the dispute and for cross-claims…”.8
[17] The applicants rely on Chiswell v Cunynghame.9 Mr Chiswell and his sister, Ms Cunynghame, each owned a half share of a residential property on Waiheke Island. Their relationship had broken down and Mr Chiswell sought an order for the sale of the property and applied for leave to commence the proceeding by way of originating application. Ms Cunynghame opposed the granting of leave on the ground the originating procedure was not appropriate for the dispute because she intended to bring a counterclaim, there were broad issues to be resolved, discovery would be necessary, and interlocutory applications were likely.
[18] Paul Davison J found the case was well suited to be brought by the originating application procedure. He considered the proceeding was an example of a relatively straightforward application of a statutory test, rather than the determination of substantive rights and the application of common law doctrines and principles.10 Further, the evidence relevant to those considerations could effectively be presented by way of affidavit. He also considered the adoption of the originating application procedure would not cause any unfairness or prejudice to Ms Cunynghame.
[19] Although Ms Cunynghame had signalled an intention to bring a counterclaim the counterclaim related to whether another property, also co-owned by the parties,
5 Casbolt v Harman [2020] NZHC 1354.
6 Lung v Liu [2021] NZHC 1810.
7 At [12], citing Casbolt v Harman, above n 5; McGregor v McGregor [2019] NZHC 2827; and
Chiswell v Cunynghame [2020] NZHC 1651.
8 At [10].
9 Chiswell v Cunynghame, above n 7.
10 At [19]-[20].
should be sold or divided. Paul Davison J considered that to be a discrete and separate matter which was not appropriate for determination within the scope of the application Mr Chiswell intended to bring before the Court. Paul Davison J considered overall it was in the interests of justice to allow the application to be made using the originating application procedure as it would better achieve the object of the High Court Rules of securing the just, speedy and inexpensive determination of the dispute.
Discussion
[20] On balance, I consider it is appropriate to make the order sought by the applicants granting them leave to bring this proceeding by way of originating application. There are several reasons for this.
[21] The application to remove Deidre’s caveat, which is a proceeding to which pt 19 applies, and the application for the sale of the property are related. The applicants seek the removal of the caveat so the property can be sold. The factual background supporting both applications is the same. Furthermore, matters that are likely to be relied upon for the removal of the caveat11 include considerations the Court must have regard to in deciding the application for the sale of the property. These include, for instance, the nature and extent of Deidre’s interest in the property and the hardship that may be caused by the making or refusal to make an order for sale. It would be an inefficient use of the Court’s resources to have two proceedings traversing the same matters.
[22] As the cases have noted, a proceeding under s 339 of the Property Law Act deals with the application of a statutory test. Here, the issues are well defined. I do not see there will be a need for detailed pleadings. There should be no need to join other parties. It is unlikely discovery orders will be necessary because disclosure of the estate administration files has already been made to Deidre. I also do not see any prejudice to Deidre in having the matter heard on affidavit evidence.
11 Rutherford v Rutherford [2015] NZHC 878; (2015) 17 NZCPR 1; Blumenthal v Stewart [2014] NZHC 1924, [2014] NZFLR 1002.
[23] As far as Deidre’s proposed counterclaim is concerned, as was the case in Chiswell v Cunynghame that is a distinct matter. I do not consider it would be appropriate to bring it within the scope of a proceeding concerned with whether the property should be sold to provide for Mrs Gallagher’s needs. Deirdre may bring a claim against the estate separately if she wishes to do so. The possibility she may do so should not prevent this application being commenced by way of an originating application in my view.
[24] Finally, there is the matter of Mrs Gallagher’s age and the potential that she may not be able to provide for her own needs should her circumstances change. The evidence before me is that Mrs Gallagher’s need for money to pay for increased care could happen suddenly and at any time. These are important factors bearing on the interests of justice. I consider granting this application will serve the interests of justice by ensuring the dispute is determined as quickly and inexpensively as possible.
Result
[25] The application for leave to commence this proceeding by way of originating application under pt 19 High Court Rules is granted.
[26]Costs are reserved.
O G Paulsen
Associate Judge
Solicitors:
Lane Neave, Christchurch
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