Holland v Holland
[2017] NZHC 1037
•18 May 2017
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2016-419-152 [2017] NZHC 1037
UNDER The Property Law Act 2007 BETWEEN
DAVID HOLLAND, CHARLES HOLLAND AND TUI PATRICIA HOLLAND
Plaintiffs
AND
GENE MANGU HOLLAND First Defendant
GENE MANGU HOLLAND as administrator and trustee for the estate of NGAHUIA BETTY HOLLAND
Second Defendant
Hearing: 18 May 2017 Appearances:
A M Cook for the Plaintiffs
No appearance for the Defendants
J Niemand for Shane and Dean Livingstone (Interested Parties)Judgment:
18 May 2017
JUDGMENT OF GORDON J
Solicitors: O’Sheas, Hamilton
Niemand Peebles Hoult, Hamilton
Copy to: Defendant
HOLLAND, v HOLLAND [2017] NZHC 1037 [18 May 2017]
Introduction
[1] The plaintiffs are the part-owners of a property at 4 Couch Street, Ngaruawahia.1 The defendant is a part-owner of the property in his personal capacity and holds a further share of the property on trust (Thomas’ share). The plaintiffs seek a declaration that the defendant has breached his duties as trustee, as well as an order requiring the defendant to transfer Thomas’ share to the beneficiaries of the trust. Alternatively, the plaintiffs seek an order from this Court
pursuant to s 339 of the Property Law Act 2007 (PLA) directing the sale of the property and division of proceeds amongst the parties.
[2] The parties to this application all share the same last name and for that reason it is convenient to refer to them by their first names. The plaintiffs are David, Charles and Tui. The defendant is Gene.
[3] Gene has taken no steps in the proceeding to date. Accordingly, the hearing before me proceeded by way of formal proof.
Factual background
[4] The property was previously owned by the plaintiffs’ parents, Percy and Elizabeth Holland. Percy and Elizabeth had six children: Thomas, Ngahuia, Mihi, David, Charles and Tui. The children were raised on the property.
[5] Percy and Elizabeth passed away in 1977 and 1981 respectively. Following Elizabeth’s death, the property was transferred to each of the children in equal shares, in accordance with Elizabeth’s will. Tui lives in the property and has done so since 1981. Ngahuia, and her son Gene, moved into the property in 1983 and Gene has remained there to the present day.
[6] Thomas died in 2002. His will relevantly provided as follows:
1 Being Lot 8 Deposited Plan 6259 with certificate of title SA1792/27.
3.1 I GIVE AND BEQUEATH the following:
…
(iv) the interest in the house and land owned by me at the date of this my Will situated and known as number 4 Couch Street, Ngaruawhia (sic)
TO MY SISTER NGAHUIA BETTY HOLLAND to be held by her in trust for such of my brothers and sisters, MIHI, NGAHUIA, CHARLES, TUI and DAVID and their issue as she may in her absolute discretion think fit and if more than one then as tenants in common in whatever proportion she shall think fit.
3.2 IF my sister NGAHUIA BETTY HOLLAND dies before making her selection then the trust fund will be held UPON TRUST for such of my said brothers and sisters as shall have survived me in equal shares if more than one PROVIDED that if any of my brothers and sisters die before me leaving a child or children who shall survive me and attain the age of twenty (20) years such issue shall take and if more than one in equal shares the share which his her or their parent would have taken had that parent survived me.
[7] At the time of Thomas’ death he held a one-sixth (1/6) share in the property. On 26 May 2004, the executor of his will transferred Thomas’ share to Ngahuia to be held by her in accordance with cl 3.1 of Thomas’ will.
[8] Ngahuia died on 20 August 2012. At that stage, she had not made any formal allocation of Thomas’ share amongst her siblings and/or their children. The plaintiffs say that Ngahuia had stated to each of them at different times that she wished Thomas’ share to be split equally between the siblings, while Gene has apparently indicated a belief that his mother’s lack of action on this front meant that she intended to keep Thomas’ share for herself. Gene was appointed the administrator of his mother’s estate. The certificate of title to the property was later altered to show Thomas’ share as being held in Gene’s name, although there is no evidence that he was ever formally appointed as a trustee.
[9] Mihi died intestate in 1993, some nine years prior to Thomas’ death.
However, her husband, James, was not appointed as an administrator until 4 March
2013. On 22 April 2013, James transferred Mihi’s share to David, Tui and Charles in accordance with a Deed of Family Arrangement dated 21 December 2012. Mihi’s children, Shane and Dean, were also parties to the Deed and agreed to forego their entitlement to Mihi’s share of the property in favour of the plaintiffs.
[10] Prior to Ngahuia’s death in 2012, all parties agreed that she would occupy the home, with Gene, on the basis that Ngahuia would look after it. Since late 2012 there has been an ongoing dispute between the plaintiffs and Gene regarding the property. The plaintiffs say they have paid all outgoings on the property while Gene has contributed nothing and lives there rent free. The plaintiffs now wish to sell the property, as they are getting on in years, in order to provide for their retirement. However, Gene has been unwilling to sell. Further, Gene has refused to deal with Thomas’ share, stating that Ngahuia intended to keep the share for herself. On that basis, Gene apparently argues, Thomas’ share formed part of his mother’s estate and has been passed down to him.
Application for declaration as to breach of trust
[11] The plaintiffs submit that by failing or neglecting to transfer a part of Thomas’ share to the plaintiffs, Gene is in breach of trust. They seek a declaration that Gene is holding Thomas’ share on trust for the beneficiaries of Thomas’ will in the following proportions:
(a) One-fifth to each of the plaintiffs; (b) One-fifth to Gene;
(c) One fifth shared between Mihi’s children, Shane and Dean.
[12] If the Court grants such a declaration, the plaintiffs seek an order requiring Gene to transfer Thomas’ share to the beneficiaries of Thomas’ will, in the proportions identified at [11] above.
[13] The difficulty which the plaintiffs face in respect of this cause of action is that they have not identified any principle of trust law that would require Gene, as trustee, to transfer legal title in the trust property (being Thomas’ share) to the beneficiaries of the trust. In this respect, the first cause of action is misconceived and for that reason I decline to grant the relief sought.
[14] Notwithstanding that difficulty, however, I am satisfied that it is appropriate to grant a declaration as to the equitable interests held by each of the beneficiaries. There is no evidence before the Court to support Gene’s apparent view that Ngahuia exercised her powers as trustee to keep the entirety of Thomas’ share for herself. In fact, there is no evidence to suggest that Ngahuia made any selection at all. In those circumstances, the terms of Thomas’ will are clear:
3.2 IF my sister NGAHUIA BETTY HOLLAND dies before making her selection then the trust fund will be held UPON TRUST for such of my said brothers and sisters as shall have survived me in equal shares if more than one PROVIDED that if any of my brothers and sisters die before me leaving a child or children who shall survive me and attain the age of twenty (20) years such issue shall take and if more than one in equal shares the share which his her or their parent would have taken had that parent survived me.
I am therefore satisfied that the terms of Thomas’ will require that Thomas’ share be held upon trust for the plaintiffs, Gene, and Mihi’s children in the proportions set out at [11] above.
Application for sale and division of proceeds
[15] The plaintiffs seek orders directing the sale of the property and a distribution of the proceeds amongst the family members in specified proportions, and various ancillary orders to facilitate the sale.
[16] Section 339 of the PLA provides that a court may make an order for the sale of co-owned property and the division of the proceeds among the co-owners.2 In determining whether to make such an order, the court must have regard to the following factors:3
(a) The extent of the share in the property of any co-owner by whom 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;
2 Property Law Act 2007, s 339(1).
(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 to be relevant.
[17] The court may also make further orders as necessary in order to facilitate the sale of the co-owned property.4
[18] The property is an unencumbered residential property with a free standing house on it. Given the nature of the property, the natural way of dividing interests in it would be for it to be sold and the proceeds shared.
[19] Although Gene holds an interest in the property, his interest is limited to a one-sixth share, inherited from Ngahuia, and a 1/30 share, representing his part of Thomas’ share. The plaintiffs hold shares totalling two thirds of the property and have a further beneficial interest in Thomas’ share. The Court is therefore likely to give considerable weight to their wishes in respect of the property. The plaintiffs have also given evidence, which I accept, that they have made substantial contributions to the costs of maintenance, insurance and rates on the property over the course of their ownership, while Gene has paid very little, if anything. Further, if the property remains unsold, then the plaintiffs will suffer hardship in that they will be unable to access funds to provide for their retirement. They are now either nearing or at retirement age. David is the only one of the plaintiffs who owns his own home.
[20] On the other hand, the property has been Gene’s home since he was a small child and he is likely to have a significant emotional attachment to the property. Further, an order for sale will cause Gene to suffer a measure of hardship, as he will be required to find alternative accommodation. He will presumably need to pay rent,
which he is not presently required to do. However, he will receive a portion of the sale proceeds, which will go some way towards meeting that additional cost.
[21] Having regard to the considerations listed above, I consider that the fairest way of resolving the present conflict is to make an order for the sale of the property and division of the proceeds amongst the plaintiffs and the defendant in proportion to their respective legal and equitable interests in the property.
[22] Each of the plaintiffs holds two-ninths of the property from their mother (one-sixth inherited from Elizabeth and one-eighteenth, transferred to each of the plaintiffs following Mihi’s death). Each of the plaintiffs has an equitable interest in one-fifth of Thomas’ share, which is one-thirtieth of the property as a whole. In total, each of the plaintiffs has an interest in twenty three-ninetieths (23/90) of the property.
[23] Gene has inherited a one-sixth share of the property from Ngahuia (which Ngahuia, in turn, inherited from Elizabeth) and has an equitable interest in one-fifth of Thomas’ share, being one-thirtieth of the property as a whole. In total, Gene has an interest in one-fifth of the property.
[24] Mihi’s children, Shane and Dean, share an equitable interest in one-fifth of Thomas’ share, which is one-thirtieth or three ninetieths of the property as a whole. However, Shane and Dean have indicated by counsel appearing today that their share in the sale proceeds should be divided amongst the plaintiffs. Each of the plaintiffs would then receive an additional one-ninetieth (1/90) share in the sale proceeds, bringing their total share of the sale proceeds to twenty four-ninetieths (24/90) or, in simpler terms, four-fifteenths (4/15). I am satisfied that course of action is appropriate and make orders accordingly.
Orders
[25] I make a declaration that the equitable interests in Thomas’ one-sixth share in the property at 4 Couch Street, Ngaruawahia, being the house and all that parcel of land comprising 819 square metres more or less and being Lot 8 Deposited Plan South Auckland 6259 having the unique identifier SA1792/27, are as follows:
(a) One-fifth to each of the three plaintiffs; (b) One-fifth to Gene;
(c) One-fifth shared between Mihi’s children, Shane and Dean.
[26] I grant the application under s 339 of the Property Law Act 2007 and direct that the property at 4 Couch Street, Ngaruawahia, being the house and all that parcel of land comprising 819 square metres more or less and being Lot 8 Deposited Plan South Auckland 6259 having the unique identifier SA1792/27 be sold pursuant to s 339(1) of the Property Law Act 2007 as follows:
(a) The plaintiffs are to obtain a registered valuation of land by a valuer of their choosing within eight weeks of the date of this order. The cost of obtaining such valuation will be borne by the plaintiffs in the first instance, but may be recovered from the proceeds of sale prior to disbursement.
(b)The reserve price for the sale of the property is to be fixed at a sum equal to 90 per cent of that specified in the valuation.
(c) The property is to be sold by a reputable real estate agent of the
plaintiffs’ choice, by auction or tender at the plaintiffs’ choice.
(d) The plaintiffs shall elect a lawyer or law firm to act on the sale.
(e) The first defendant and second defendant and any other occupier must vacate the property no later than six weeks from the date of this order.
(f) The first defendant and second defendant are to co-operate 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. Failing such co-operation by the first defendant and second defendant then the Registrar of the High Court
at Hamilton is authorised to and shall sign any documents required to list the property for sale and any such documents that may be required to facilitate the transfer to the new owner following the sale.
(g)The proceeds of the sale are to be disbursed in the following priority and manner:
(i)The payment of the amount due and owing under any mortgage at the date of payment;
(ii) The payment of any outgoings including any rates;
(iii)Payment of any real estate agent’s commission and legal fees incurred in connection with the sale and transfer of the property;
(iv) Payment of any marketing costs in relation to the sale; (v) Payment of the registered valuation;
(vi) Subject to (h) below the balance of the sale proceeds (or debts)
are to be divided as follows:
a. David Holland as to a 4/15 share.
b. Charles Holland as to a 4/15 share.
c. Tui Patricia Holland as to a 4/15 share. d. Gene Holland as to 3/15 share.
(h)From the first defendant’s share is to be subtracted (or added, in the event there are no proceeds) the plaintiffs’ costs in relation to the present application, as determined by the Court; and
(i)The balance owing to the first defendant (if any) is to be held by the lawyer or law firm who acted on the sale on trust in an interest- bearing account in the first defendant’s name. The lawyer or law firm is to notify the first defendant that it is holding such funds and seek instructions as to payment.
[27] For the avoidance of doubt I decline to make any order as to occupation rent.
[28] Leave is reserved to the plaintiffs to come back to the Court to seek such further orders as may be necessary to enable the property to be sold.
Costs
[29] The plaintiffs are entitled to costs. Ms Cook sought increased or indemnity costs on the basis that Gene had refused to engage in constructive negotiation, forcing the plaintiffs to come to court in order to resolve the situation. She referred me to a decision of Brown J, Thomas v Thomas,5 in support of this submission.
[30] In my view, there are no grounds in the present case for an award of increased or indemnity costs. In Thomas v Thomas, the defendant had actively refused to exercise his duties as the administrator of his father’s estate, with the result that he had deliberately deprived his brothers of their entitlement under their father’s will. That is not the situation here. The defendant has merely exercised his legal right to refuse to sell his share of the property.
[31] Further, the conduct of the plaintiffs has not been entirely reasonable, either. In 2012, the plaintiffs issued an eviction notice to the defendant. There was no legal authority for that action.
[32] The plaintiffs are entitled to costs on a 2B basis with disbursements in
5 Thomas v Thomas [2016] NZHC 1117.
accordance with the schedule of costs filed with the draft orders. The costs are to be
recovered as per my direction at [26](h) above.
Gordon J
20