Jacobson v Guo HC Auckland CIV 2008-404-00526

[2008] NZHC 2555

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2008-404-00526

BETWEEN  ERICK CRAIG JACOBSON Plaintiff

ANDHEYING GUO First Defendant

ANDXIAO XIA GUO Second Defendant

Appearances: A Adams for Plaintiff

G A Keene for Defendants

Judgment:      2 September 2008

ORAL JUDGMENT OF ASSOCIATE JUDGE ROBINSON

Solicitors:           LawWorks, PO Box 4204, Auckland

Holmes Dangen & Associates, PO Box 3600, Auckland

ERICK CRAIG JACOBSON V HEYING GUO AND ANOR HC AK CIV 2008-404-00526  2 September 2008

[1]      The plaintiff and the first defendant have been living together in a de facto relationship from August 2005 until they separated on 28 October 2007. On 31 May

2006 they entered into a relationship property agreement. In terms of that agreement they specified separate property and in respect of that separate property contracted out of the Property (Relationships) Act 1976. In September 2006 the plaintiff and the defendants  purchased  a  dwelling  at  24A  Cornwall  Park  Avenue,  Epsom.  The plaintiff has a one half share. The remaining half share is held by the two defendants. The second defendant is a family trust formed by the first defendant.

[2]      Following the separation attempts were made without success to sell the property. The plaintiff believing the first defendant to have obstructed the sale, now brings these proceedings for orders pursuant to sub-part 5 of the Property Law Act

2007 for sale of the property, directions as to how that sale is to be achieved and for an occupation rental.

[3]      The defendant disputes the plaintiff’s claim that she has been obstructive. The first defendant emphasises that she wants the property sold. It is submitted on her behalf that these proceedings are therefore unnecessary. It is also submitted that the summary judgment procedure is not appropriate to determine whether an order for sale should be made, the way in  which  the  sale  is  to  be  achieved  and  the occupation rental. It has been submitted on behalf of the defendant that following the significant change in the law on the coming into force of sub-part 5 of the Property Law Act 2007, it is no longer appropriate for the Court to deal with applications under that sub-part by way of summary judgment.

[4]      I accept that sub-part 5 has effected a change to the law and in particular, the presumption for sale on the application of an owner who has 50% or more of the property which was formerly contained in the Property Law Act 1952 no longer applies under s 342 of the Property Law Act 2007. That presumption has been

replaced by a requirement of the Court to assess the hardship that would be caused to the applicant by the refusal of the order in comparison to the hardship that would be caused to any other person by the making of the order.

[5]      It is highly likely that this change in the law may result in a situation where fewer applications for summary judgments succeed because of the increased likelihood of there being disputed facts that would need to be resolved to determine the relative hardship suffered by the parties.

[6]      However, in this case, there is really no defence offered to the application for sale. The defendant rather than opposing the order for sale really says that the order is not necessary. However the fact that the parties were unable to agree as recently as the commencement of this hearing to an order for sale indicates that the application is justified. It may be that the parties view of each others attitude is completely incorrect. Unfortunately, there is a lack of trust between these two co-owners which makes this application necessary.

[7]      Counsel have very helpfully prepared a memorandum as to the precise orders they are  seeking.  There  has  been  some  discussion  with  counsel  concerning  the wording of those orders. In particular there was some opposition to an order empowering the registrar to sell should the property not be sold by auction arranged by the parties in February next year. Having regard to the history of these proceedings, and without in any way blaming either party, I am satisfied that a direction for sale by the registrar should the property not be sold by February 2009 is entirely appropriate.

[8]      At the conclusion of this judgment, I will specify the terms under which the property is to be sold by incorporating in my decision the orders which I understand to be acceptable to the parties. The plaintiff seeks an occupation rent to be paid by the first defendant for her occupation of the property since the parties separated.

[9]      Pursuant to s 343(F) this Court can require payment by the first defendant of a fair occupation rent for all or any part of the property. This property also happens to form the parties family home as defined by the Property (Relationships) Act 1976.

In terms of that Act, the Family Court can also make orders relating to possession of the family home including the conditions under which a party is to continue to have possession and those orders can also include provision for a party to pay for the right of possession of the property. No proceedings are pending in the family court at this stage. It is not unusual for the  Family Court  and this court to have  concurrent jurisdiction with regard to orders relating to co-ownership of property between spouses or de facto partners. This Court has exercised its summary judgment jurisdiction to make orders for sale of property owned jointly by the parties to a marriage. In those circumstances, the Family Court would also be seized of jurisdiction to make such orders.

[10]     Consequently, I am satisfied that in appropriate cases, it is entirely proper for this Court to make orders for a fair occupation rent to be paid by one party to a marriage or de facto relationship in respect of property owned by both parties. Had there been proceedings pending in the Family Court, that would have been a factor I would have taken into account in determining whether to exercise jurisdiction to make the order under section 343(f). No such proceedings are pending. Had there been disputes as to significant facts which would have impacted on the decision I was to make then quite clearly it would not be proper for the Court to make an order under the summary judgment procedure.

[11]     I will proceed on the basis that the facts advanced by each party are accepted. In particular, I proceed on the basis that the first defendant has been in occupation of the property since the parties separated. I will also take into account in her favour that she has maintained the property in good order and condition. Her evidence in this regard is supported by the valuation. The valuers indicate that the interior of the property is to a high standard and the landscaping is attractive. That reflects on the first defendant’s care of the property. I also take into account the fact that the first defendant is residing there with her son and that the property is ideally placed for her son.

[12]     The first defendant claimed that she really had no option but to remain in the property after the plaintiff had decided to leave the relationship in October 2007. That evidence can be compared with the correspondence at the time. in a letter from

the plaintiff’s solicitors to the defendant of 29 October 2007 The first defendant is advised at paragraph 5:

Rick is prepared to respect your wishes and not return to the property provided that arrangements are made forthwith to place the property on the market for sale.

That would indicate the first defendant was wanting to remain on the property and wanted the plaintiff to keep away. There was no evidence from the first defendant to contradict the letter of 29 October 2007.

[13]     The evidence from valuers indicates that five bedroom properties in the area where the subject property is situated achieve an annual rental of $1,103 per week. The median rental is $1,000 per week. Those statistics are provided by the Department of Building and Housing through bonds lodged with that department. There is evidence that there are properties available in the area similar to the subject property for rental of $1,000 per week. Interestingly enough, statistics provided by the Real Estate Institute of New Zealand show that for the month of April 2008 four bedroom homes rent for a median price of $700 per week with a range from $520 to

$750 a week, there being fourteen houses to let in that range.

[14]     The valuer estimates the current market rental as follows:

a)        From 1 October 2007 $950 - $1,050 per week. b)       From 1 June 2008 $1,050 - $1,150 per week.

There is no reason given by the valuer for the increase in rent from 1 June 2008. It is significant that there are a number of properties in the area available for rent at

$1,000 per week and this would indicate that the market is not very good as there are so many properties available. A significant factor must be the uncertainty of tenure. This property is about to be sold. Anyone taking a lease would need to vacate on short notice. This could be a deterrent, particularly in respect of a family likely to be interested in a four bedroom home moving into the area so as to be close to schools and then finding half way through the school term that they have to vacate.

[15]     Another factor must be the care that the first defendant has taken of the property. It is important from both parties point of view that this property is maintained to a good standard. Failure to do so could adversely effect the price to be obtained in what is not a very good market. When I have regard to those factors, I am satisfied that an appropriate rental for this property is $650 a week; meaning that the first defendant must pay $325 per week being the plaintiff’s half share of that rental.

[16]     In the circumstances, I consider it appropriate that the first defendant should have some time to organise her affairs following the plaintiff leaving the property and I have therefore concluded that the rent should start from 1 December 2007. That gives her two months to rearrange her affairs before rent starts to be paid.

[17]     I am also satisfied that rent to 8 September 2008 should be accumulated and deducted from the first and second defendants share in the proceeds of sale which, means that the first defendant should pay the rent assessed at $325 per week as from

8 September 2008. I have assessed this rent on the basis that both parties are to be responsible for payment of rates, insurances, water rates and Auckland Regional Council levy. In other words, they share those payments equally. Those are the sort of  payments  I would  expect  a  landlord  to  pay particularly  where  the  tenant  is maintaining the property.

[18]     The  remaining  issue  related  to  costs.  Counsel  for  the  plaintiff  properly conceded that in the circumstances of this case there should be no order as to costs. That is in accordance with the normal rules applying in the Family Court in connection with proceedings under the Property (Relationships) Act 1976. Such a concession I am satisfied is entirely appropriate.

[19]     In summary therefore I now make the following orders:

a)       Pursuant to s 339 of the Property Law Act 2007 the property at 24A Cornwall Park Avenue, Epsom is to be sold under the supervision of the registrar of this Court.

b)        The listing agent shall be Barfoot and Thompson, Epsom branch.

c)       Anthony Gardner of Gardner valuations is to be instructed forthwith by or on behalf of the plaintiff and the defendants jointly to undertake a further valuation for the purpose of assisting the plaintiff and the defendants with all aspects of the proposed sale including setting realistic asking, selling and reserve prices. Anthony Gardner’s instructions  are  to  be  ongoing  through  the  sale  process  and  the plaintiff and the defendants shall be guided by Mr Gardner’s assessments of the value at each stage of the sale process if required by any party. If any party requires an assessment over and above those valuations set out in the sale process provided for in these orders, then that assessment shall be at the requesting party’s cost unless otherwise agreed.

d)The costs of valuations as set out in the sale process provided for in these orders shall be shared between the plaintiff and the first defendant equally.

e)       If  the  marketing  and  advertising  program  that  is  proceeding  for September does not produce a satisfactory sale by 30 September 2008 then arrangements are to be made for a further auction to take place no later than 30 October 2008.

f)        If the registered valuation is not achieved by sale by 30 September

2008 then if an offer is received 5% or less than the registered valuation price between 30 September 2008 and the auction, that offer shall be accepted.

g)       The reserve price at auction shall be set by Anthony Gardner. The plaintiff and the defendant shall accept a reserve 5% below Anthony Gardner’s recommendation or lower by agreement between the plaintiff and the first defendant.

h)If  the reserve  price  is  not  achieved  at  auction,  the  property shall remain on the market for a further period until February 2009. A further auction is to be scheduled in late February 2009. Anthony Gardner is to revalue the property for the purpose of setting a realistic asking, selling and reserve prices in February 2009. The plaintiff and defendant  shall  accept  any  offer  no  more  than  5%  below  the reassessed valuation. If the property does not sell prior to auction, then at auction the plaintiff and the defendants shall accept the selling price of 10% below the reserve price set by the valuer.

i)         The costs of all advertising and marketing are to be shared equally.

j)The manager of the Epsom branch of Barfoot and Thompson shall on request by the plaintiff or defendants provide recommendations as to how the property shall be presented at its best to achieve sale and the plaintiff and the defendants shall take all reasonable steps to act on that advice and share any costs equally.

k)In the event sale is not achieved by the above process, there shall be sale by the registrar of the High Court at a sale price determined by the registrar unless another price is agreed by the plaintiff and the defendants provided that unless the parties agree in writing, the registrar shall not accept a price that is more than 10% below the valuation fixed by Anthony Gardner at that time.

l)The net proceeds of sale shall be divided as to one half share to the plaintiff and as to one half share to the defendants. Each party’s share shall be subject to repayment of their respective loans secured by mortgage on the property being repaid from their respective shares. The defendants shall pay to the plaintiff from their share in the proceeds of sale a rental fixed at $325 per week from 1 December

2007 until 8 September 2008 together with any arrears of rent that have accrued thereafter.

m)The  first  defendant  is  to  pay an  occupation  rent  for  the  property assessed at $325 per week from 1 December 2007 until such time as she vacates the property. She shall be entitled to vacate the property on giving one month’s notice in writing.

n)The parties are to contribute equally, that is the plaintiff as to half share and the first and second defendants as to the remaining half share to the following out-goings:

i)        Rates,  insurances,  water  charges,  and  Auckland  Regional

Council Levy.

o)Whilst in occupation, the first defendant is to keep the property clean and present it at its best for sale and repair promptly at her cost all damage caused by her or other invitees to the property. She shall also give up vacant possession to any purchaser of the property.

p)The registrar of the High Court shall sign all documents necessary to effect sale of the property in the event of the defendants or plaintiff’s failure or refusal to sign such documents.

q)Leave is granted to the parties to apply for further directions on seven days notice.

r)        Finally, there is no order as to costs on the basis that the parties will bear their own costs to date. The issue of any further costs arising out

of further applications will be considered at that time.

Associate Judge Robinson