MacKenzie v Smythe
[2012] NZHC 1113
•24 May 2012
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-2516 [2012] NZHC 1113
UNDER Sections 339 to 343 of the Property Law
Act 2007
IN THE MATTER OF an application for a Partition Order
BETWEEN GREGORY JOHN MACKENZIE, COLETTE MACKENZIE AND PETER DYLAN LONG
Plaintiffs
ANDFIONA CHRISTINE SMYTHE Defendant
Hearing: 17 April 2012
(Heard at Wellington)
Counsel: FB Collins and AC Sinclair for Plaintiffs
CD Batt for Defendant
Judgment: 24 May 2012
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment of Associate Judge Gendall was delivered by the Registrar on 24 May
2012 at 3.30 pm under r 11.5 of the High Court Rules.
Solicitors: Gibson Sheat, Solicitors, Private Bag 31 905, Lower Hutt
Tripe Matthews & Feist, Solicitors, PO Box 5003, Wellington 6145
GJ MACKENZIE, C MACKENZIE AND PD LONG V FC SMYTHE HC WN CIV-2011-485-2516 [24 May
2012]
Introduction
[1] This case concerns an unenviable situation where cross-lease neighbours of a residential property in Nottingham Street, Karori, Wellington have fallen out in a major way. Over a period of time, a situation of deepening acrimony has steadily developed between those parties who are the neighbours in question here, the plaintiffs and the defendant. The plaintiffs own and live at No. 70 Nottingham Street and the defendant owns and currently leases out No. 68 Nottingham Street. These two neighbouring properties share a two-house residential cross-lease development concluded over 25 years ago in 1986.
[2] The present application before the Court is one by the plaintiffs seeking by way of summary judgment an order for partition of the property in question under s
339(1) Property Law Act 2007 on the basis that it is owned by the plaintiffs and the defendant as co-owners.
[3] In essence here, on the one hand the plaintiffs seek an order partitioning the cross-lease titles to the property they share with the defendant in order that they have their own fee simple titles to their individual dwelling and surrounds to deal with and (if they choose) to develop as they wish.
[4] On the other hand, the defendant opposes partition at this stage and maintains (now) that she wishes to retain her individual cross-lease title and to enjoy the protections afforded to her in the registered cross-lease over the plaintiffs’ neighbouring property.
[5] At the outset it is useful to note that this case highlights the shortcomings of cross-leases as a method of giving title to adjoining houses or flats, shortcomings which are now widely recognised. As to this, the comments made as long ago as
1994 by Mr D McMorland are worth repeating here:
The great disservice which local authorities have done to the general public for a large number of years by refusing to allow fee simple subdivisions ... and forcing the use of the cross-lease mechanism is only now beginning to surface in litigation. However, the flow has begun, the problems are constantly arising, and they will continue to do so for a long time into the future.
[6] Indeed, in 1999 the Law Commission published a report on shared ownership of land, which again detailed the shortcomings of cross-lease titles. In this report it said:1
Common sense suggests ... that with the passing of time and as buildings age or uses permitted in particular neighbourhoods change, the essentially unsatisfactory nature of this form of tenure will become more and more apparent.
[7] In that 1999 Report the Law Commission clearly recommended that cross- leases should be phased out and replaced with either fee simple subdivisions, or unit title ownership. The Commission also noted the consequences of failing to make this replacement and stated that this would include particular difficulties where a cross-lease scheme had been used (as often occurred and has happened here) to enable in-fill housing so that one “flat” was considerably older than the other.
[8] What is clear is that no legislative action has yet been taken, even though as
Hinde McMorland & Sim Land Law in New Zealand notes:2
... thousands of such situations exist throughout New Zealand affecting in many cases the most valuable asset of the lessee, his or her home.
[9] Hinde McMorland & Sim Land Law in New Zealand goes on to discuss possibilities for the determination of cross-lease developments. In doing so the learned authors state:3
Determination of a cross-lease development may be sought either to redevelop the property as a whole, or to enable subdivision into fee simple titles or into unit titles, and some or all of the cross-lease owners may desire to change the title structure accordingly. If the parties to a cross-lease development wish to determine the development, this can be done either by unanimous agreement between the parties to surrender the cross-leases and take all necessary steps to create the new title structure, or, to convert to a fee simple title structure, by the exercise of the court’s jurisdiction to make a discretionary order of partition, under s 339(1) of the Property Law Act
2007. ...
[10] Hinde McMorland & Sim Law Law in New Zealand notes that in Ko v
Chamberlain4 the owner of one cross-leased flat in a five flat development obtained
1 Law Commission Shared Ownership of Land (NZLC R59, 1999) at [8].
2 Hinde McMorland & Sim Land Law in New Zealand (looseleaf ed, LexisNexis) at 14.021(i)
3 At 14.021A.
a then compulsory order for partition of the cross-lease development against the wishes of the four other owners. More on this aspect later.
[11] In the present case the plaintiffs seek just such a similar remedy being an order pursuant to s 339(1) of the Property Law Act 2007 for the partition of the property from three cross-lease titles into three fee simple estate titles. This partition it is suggested should be in accordance with a plan option attached to the plaintiff’s statement of claim or by such other division as the Court deems appropriate. As I have noted, the application is opposed by the defendant.
Background facts
[12] The plaintiffs, Mr G J MacKenzie and Mrs C MacKenzie and their independent trustee, Mr P D Long, are trustees of the Iron Bridge Trust which owns the cross-leased property at 70 Nottingham Street, Karori, Wellington (70
Nottingham).
[13] They are neighbours with the defendant Ms F C Smythe, who owns the adjoining cross-lease property at 68 Nottingham Street, Karori, Wellington (68
Nottingham).
[14] The neighbouring properties at 68 Nottingham and 70 Nottingham are subject to cross-leases with both the plaintiffs and the defendant having a lease hold interest in their respective dwellings, together with an undivided share (in the case of the plaintiffs a two-thirds share represented by two individual certificates of title WN 30A/321 and WN 30A/322 and in the case of the defendant a one-third share represented by one certificate of title WN 30A/320) in the fee simple to the entire property on which the respective dwellings stand.
[15] The cross-leases between the parties have been the cause of considerable friction between the property owners.
4 Ko v Chamberlain (2007) 8 NZCPR 261, (2007) 5 NZ ConvC 194,417.
[16] Both the larger dwelling at 70 Nottingham, built as I understand it in the
1930s and the smaller residential dwelling at 68 Nottingham, built in the mid 1980s were the subject of this cross-lease development completed it seems in about 1986 by the owner/developer at the time.
[17] Although the total area of the section on which these two dwellings were constructed has an area of 1012 square metres, both houses are separate with no connection to each other and no areas of common property. Interestingly, there was it seems no need for a cross-lease arrangement to be entered into in 1986. The developer/owner could have completed a formal subdivision and provided fee simple titles for each property but chose not to do so.
[18] Presumably to avoid what was seen at the time as the additional expense of a formal subdivision involving also payment of local authority contributions and other requirements, the developer/owner made the decision to undertake the development on a cross-lease basis. It followed that the one cross-lease title noted above was issued for 68 Nottingham and the two cross-lease titles noted above were issued for
70 Nottingham. These properties were subsequently purchased by the defendant and the plaintiffs respectively. It is interesting to note that the cross-leases for 68
Nottingham and 70 Nottingham each provide at para [28] for a “staged development” it seems to allow a third dwelling unit to be built in the future on the plaintiff’s larger exclusive use area of the property. This is presumably also to be represented in the plaintiff’s second one-third share in the fee simple of the property shown in certificate of title 30A/322.
[19] From the affidavit material before the Court there seems little doubt that over the last few years in particular the relationship between the plaintiffs and the defendant has become severely strained.
[20] The plaintiffs allege there is substantial friction and antagonism between them and the defendant and that it has become impossible as neighbours sharing a cross-lease property to reach agreement on any issue no matter how small.
[21] The defendant in turn appears to claim that any conflict between the parties is
of the plaintiffs’ making and is not her responsibility.
[22] It does seem that at one point the plaintiffs and the defendant reached agreement to embark upon a subdivision process for the property with a view to fee simple titles being issued ultimately. Surveyors were instructed jointly and plans outlining various subdivision options were prepared. The defendant purports to claim now that she only agreed to consider subdivision options and participate in this process because of extensive pressure applied on her by the plaintiffs and that throughout she reserved her right to withdraw from the process. She states that she did so withdraw when negotiations between the parties broke down. More on this aspect later.
[23] The plaintiffs in turn claim they have suffered significant hardship because they say they have been put to the cost of going through this subdivision process only to have the defendant withdraw for no good reason at a late and critical point.
[24] In this proceeding the plaintiffs now seek an order for partition of the property under s 339(1)(b) of the Property Law Act 2007 to enable it to be formally subdivided into three fee simple titles. Their preference is for that subdivision to proceed in accordance with a plan attached to their statement of claim. Alternative plans have been prepared by surveyors which show a possible subdivision along the lines of the exclusive use areas drawn in the present cross-lease deposited plan, or alternatively, in a third slightly adjusted position which I understand at one point was the subdivision preferred by the defendant.
[25] The plaintiffs suggest now that the effect of any partition order would simply be a legal change in the status of the respective properties as opposed to any real physical change. The key difference they contend is that the present cross-leases would be surrendered and no longer exist and each owner would have separate fee simple titles.
[26] Essentially, in opposing the plaintiffs’ claim for division of the property in this way, the defendant says she is content with the cross-lease form of ownership
and the protections provided by the provisions of the respective leases, and that she does not wish (now) to incur the cost of subdividing the property.
[27] The defendant it seems has not resided in the dwelling at 68 Nottingham for some time and it is currently tenanted. She has stated at paragraph 27 of her 12
January 2012 affidavit that she wants to sell her property and has repeated this on several other occasions. As to that aspect, the plaintiffs have placed before the Court affidavit evidence of Mr Hamish Bills, a registered valuer, to the effect that in his opinion changing the titles to these properties from cross-lease ownership to fee simple titles would attract an increase in value of “between 5-10% per cent depending on the property”. Mr Bills deposes that given the modest nature of the dwelling at 68 Nottingham, a fee simple ownership would increase its value at the lower end of this range.
Summary judgment principles
[28] The present application before the Court is one for summary judgment brought pursuant to r 12.2(1) of the High Court Rules. This provides that this Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action. The principles relevant to that assessment were summarised by the Court of Appeal in Krukziener v Hanover
Finance Ltd,5 adopted more recently by the Court of Appeal in Cockburn v CS
Development No 2 Ltd6 and Mitchell v Trustees Executors Ltd:7
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR
1; (1986) 1 PRNZ 183 (CA), AT P 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its
evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11
PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example
where the evidence is inconsistent with undisputed contemporary documents
5 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
6 Cockburn v CS Development No 2 Ltd [2010] NZCA 373, (2010) 24 NZTC 24,431 at [26].
7 Mitchell v Trustees Executors Ltd [2011] NZCA 519 at [35].
or other statements by the same deponent, or is inherently improbable; Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[29] A preliminary issue arises here. This is the question as to the suitability of the summary judgment procedure in partition applications under the Property Law Act 2007.
[30] As to this, Hinde McMorland & Sim, Land Law in New Zealand notes:8
Under the former jurisdiction, where in many cases the Court had no discretion but to order either sale or partition if certain basic facts were proved, the summary judgment procedure was well suited and many claims were brought and dealt with expeditiously under that procedure. Under the provisions of the Property Law Act 2007, however, the Court is given a wide discretion in every case as to the order to be made and both parties may raise full and detailed arguments as to the matters bearing on the exercise of that discretion. In this case, the summary judgment procedure is not so well suited to these applications and it may be that a full hearing is much more commonly required.
[31] It is clear that under the previous s 140 of the Property Law Act 1952 considerable jurisprudence existed as to the availability of the summary judgment procedure in cases seeking partition of land or orders for sale. As Tom Bennion and others New Zealand Land Law note:9
Given that the court had no real discretion [under the 1952 Act] summary judgment was entirely appropriate, although it did give rise to issues around relationship property proceedings, and the issue as to whether the residual discretion under the High Court Rules for summary judgment applied notwithstanding was the stark choice available to the court under s 140. These issues were discussed by the Court of Appeal in McMahon v McMahon, but it is suggested that the suitability of applications under s 339
Property Law Act 2007 for summary judgment is far less clear, given that the court in that case emphasised that there was no real choice available to the court in response to the plaintiff’s application under s 140 Property Law Act
1952. Therefore, authorities in relation to summary judgment and s 140 should be treated with caution in relation to s 339 of the 2007 Act.
[32] And, in a 2008 decision in Jacobson v Guo dealing with a summary judgment application under s 339 of the 2007 Act, Associate Judge Robinson noted:10
8 At 13.021(a).
9 Tom Bennion and others New Zealand Land Law (2nd ed, Brookers, Wellington, 2009) at 6.7.08.
10 Jacobson v Guo HC Auckland CIV-2008-404-526, 2 September 2008 at [5].
It is highly likely that this change in the law [because of the Property Law Act 2007] 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.
In the circumstances of the Jacobson v Guo case however, no defence was offered to the application for an order for sale and the circumstances therefore allowed the use of the summary judgment procedure which followed.
[33] Noting these matters, it is the contention of the defendant here that except in quite straightforward cases, the summary judgment procedure which the plaintiffs are endeavouring to utilise in the present case is not appropriate to resolve applications for partition such as this application. More on this aspect later.
Partition application
[34] In this case the plaintiffs’ application is brought pursuant to s 339(1)(b) Property Law Act 2007. Pursuant to this section the Court is enabled to exercise a discretion to order division of a property and to make any related orders under s 343
Property Law Act 2007.
[35] Section 339(3) Property Law Act 2007 provides that before a Court may determine to make an order under s 339 it may order the property in question to be valued and may direct how the cost of that valuation is to be borne.
[36] Section 343 Property Law Act 2007 provides for further orders that can be made in addition to partition orders that, for example, require the payment of compensation by one or more co-owners of a property to other co-owners, direct how a sale of the property if appropriate is to take place, allows a co-owner to purchase the property, allows for payment of a fair occupation rent for all or part of the property and provides for any other matters or steps the Court considers necessary or desirable.
[37] In exercising the discretion to make a partition or sale order under s 339(1) Property Law Act 2007, the Court is required to have regard to a number of relevant considerations outlined in s 342 of the Property Law Act 2007. These are:
(a) the extent of the share in the property of any applicant co-owner; (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 an order;
(e) the value of any contributions made by any co-owner to the cost of improvements to, or the maintenance of, the property; and
(f) any other matters the court considers relevant.
[38] In considering s 342, Wylie J in Bayly v Hicks HC, Whangarei, 19 August
2011, CIV-2009-488-547 at para [33] stated:
[33] The words “must have regard to” (in s 342) are not synonymous with “shall take into account”. Nor do they mean “give effect to”. The Court cannot ignore the listed factors. They must be given genuine thought and consideration and such weight as the Court considers appropriate. However, they will not necessarily be decisive in determining whether an order should be made.
[39] And at paras [35], [36] and [37] of that decision, Wylie J clarified certain other provisions in this part of the Property Law Act 2007 as follows:
[35] The power to make a further order (under s 343(a)) requiring the payment of compensation is likely to assist where a partition cannot or does not produce a fair division between co-owners. The power to make a further order providing for, or requiring other matters or steps is likely to help resolve any practical issues of detail. It may also assist in tidying up issues which arise consequent on a partition, for example, in this case by providing for the payment of postponed rates in the event that they become payable as a result of partition.
[36] Finally, I note that under s 339(3), the Court can order that the property be valued. I observe that the Court can also fall back on the High Court Rules, which give it additional powers such as the power to appoint, on its own initiative, independent experts to inquire into and report upon any question of fact or opinion.11
[37] In summary, the various provisions relevant to the division of co- owned property give the Court extensive discretions, and, together with the High Court Rules, a formidable armoury to effect a fair and reasonable division.
[40] In considering whether a partition or other order should be made under s
339(1) Property Law Act 2007, as I have noted it is necessary to have regard to the relevant considerations detailed in s 342 which I have noted above. I will consider each of these in turn.
(A) The Extent of the Share in the Property of the Plaintiffs as the Co- Owners Making this Application
[41] Here, the plaintiffs who are clearly “co-owners” as tenants in common in terms of the Property Law Act 2007 hold a two-thirds share in the fee simple of the entire property on which 68 Nottingham and 70 Nottingham stand together with a leasehold interest in 70 Nottingham. This majority share in the property reflected in the two titles currently held by the plaintiffs in my view may well be seen as an important factor. Obviously, it would need to form the basis for any final partition that might be ordered here. But, as Wylie J noted in Bayly v Hicks at para [39], overall:
The policy of the statute is to respect the property rights of the parties while seeking to resolve conflicts fairly. A division which did not recognise in so far as practicable their equal shares in the property would be neither fair nor reasonable.
[42] In the present case, as I see it the fact that the plaintiffs as applicants hold a majority share in the fee simple of the property should be seen as a factor to be
weighed in support of the present application.
11 High Court Rules, r 9.36.
(B) The Nature and Location of the Property
[43] In my view there is nothing inherently unique with the property in question here. Nottingham Street is a normal residential street in the older suburb of Karori in Wellington City. The section in question is a larger one comprising 1012 square metres in total with a significant area of garden and mature trees.
[44] 68 Nottingham and 70 Nottingham are separate residential dwellings occupied as such. They stand alone and are an example of the many suburban cross- lease developments throughout New Zealand cities and towns where a smaller residential unit is constructed at the front of a larger garden section on which an older dwelling house stands at the rear.
[45] Three other features should be noted:
(a) In all respects it is clear that the two areas of exclusive use for 68
Nottingham (a much smaller area) and 70 Nottingham (a considerably larger area) are distinct and unconnected to each other and there is no common property;
(b)Both properties have their own separate access and off-street car parking; and
(c) As I understand the position, only one internal cross-lease boundary is
fenced. The other, which bisects the parties’ gardens, is not.
[46] As I see it all these aspects suggest that little by way of practical difficulties would prevent the making of a partition order here dividing this property appropriately between the parties.
(C) The Number of Co-Owners and the Extent of their Shares
[47] The present case concerns only two co-owners. The plaintiffs as noted hold a two-thirds share in the fee-simple and the defendant a one-third share. Essentially, the original sub-divider owner clearly had in mind that the total area provided for
exclusive use by the plaintiffs was sufficiently large to enable a third residential unit (defined specifically as a “Proposed Future Dwelling” in the Staged Development provision specified in the two cross-leases) to be constructed in time. This was allowed for to occur on the third “section” at the property for which the plaintiffs held separate title. This was the reason the plaintiffs acquired and held a two-thirds share in the fee simple and the defendants only a one-third share.
[48] Leaving this aspect on one side however, again the fact that there are only two co-owners here and thus the impact of any partition order is reasonably discreet might be seen as a factor to some extent supporting such an order.
(D) Hardship
[49] In addressing this question of hardship, Wylie J in Bayly v Hicks provided the following useful commentary:
[60] There has been little discussion of the meaning of the word “hardship” in the context of s 342. In Holster v Grafton, Fogarty J observed as follows:
“Hardship” is a value laden criterion. It suggests an adverse effect which is of significant impact to the applicant. It has to be read consistent with the policy of the statute which respects property rights of tenants in common, but seeks to resolve conflicts fairly ...
[61] Here, in my judgment, hardship needs to be considered both in the round and by reference to the partition proposals advanced by the parties, particularly the partition proposal for which Jocelyn has already obtained resource consent.
[50] And, Wylie J went on to note in the particular circumstances prevailing in that case:
[63] Unless an order is made under s 339(1):
(a) The stalemate between them (the co-owners) will continue and cause ongoing friction and antagonism.
(b) Both parties will have to live with the present co-ownership arrangements. These are clearly unsatisfactory. Any renegotiation of the present arrangement is likely to prove difficult.
(c) The present situation precludes both sisters (the plaintiff and defendant) from maximising their interests in Paihia, and from using or developing the property as they see fit. Each has three adult children. At present, neither sister can properly plan for her family’s future.
From both parties’ perspective the issue needs to be resolved.
[51] In the case before me, similar considerations might be seen as applying. From the evidence before the Court, it is clear that a stalemate has developed between the plaintiffs and the defendant and the level of friction and antagonism between them can only be described as extreme.
[52] Notwithstanding this, counsel for the defendant raised a number of matters which she contended would create hardship for the defendant if a Partition Order was made. In particular these were:
(a) Both parties here purchased their individual properties subject to the reciprocal obligations of the cross-leases. They were fully aware of the obligations they were undertaking.
(b)Pursuant to clause 8 of the individual cross-leases the consent of the neighbouring reciprocal lessors was required to any structural alterations (with certain specific exceptions).
(c) Pursuant to clause 16 of the cross-leases the parties each agreed to submit any question or difference they might have of any kind to arbitration – she says this has not occurred here.
(d)The defendant contends the plaintiffs are seeking a Partition Order purely so that they can develop their property as they see fit (and presumably seek to build a further unit on the undeveloped portion of the land) unencumbered by the limitations of the cross-lease. (This however seems to ignore the Staged Development provision at para [28] of the cross-leases which presumably allows construction of this further unit).
(e) The defendant’s evidence now is that although she was prepared to explore the possibility of a freeholding sub-division earlier she is happy with the status quo, which is to preserve the property that she purchased and retain what she alleges are the benefit of limitations on development on the neighbouring property. In addition, she maintains that she does not now wish to be forced into the cost of a sub- division.
(f) The defendant contends the plaintiffs are endeavouring to use the summary judgment procedure here to seek an order for partition to attempt to deny her the opportunity to present a proper defence to the application and this should only be seen as oppressive. The plaintiffs strongly dispute this however and point to the long and obstructive history this whole matter has “enjoyed”.
(g)Finally, although the defendant in the past has expressed an intention to sell her property, she maintains now that she is not committed to the timing of the sale and is also entitled to retain her property if she wishes to.
(h)And, in finally selling the property when she chooses, the defendant says she is entitled to sell it at the highest price she can achieve and believes this will be obtained if the present cross-lease structure remains. Despite the valuers’ evidence here to the contrary, she contends the cross-lease adds value to her property by controlling development to an extent on the neighbouring property.
[53] In response, the plaintiffs’ submission on hardship advanced to me here was that the continuing cross-lease arrangement was significantly more detrimental to them as opposed to the defendant. On this, they contended that unless an order for partition was made:
(a) the stalemate between the parties would continue and cause on-going friction and antagonism;
(b)the plaintiffs had already been put to the significant cost of going through the subdivision process with the defendant’s agreement only to have her without any justification drop out of the process after the surveyor defined what the subdivision options were;
(c) the plaintiffs will have to live with the present co-ownership arrangements, whilst the defendant’s repeated intentions stated in the past were to sell her property;
(d)the present situation precludes both parties from maximising their interest in their respective properties and from using or developing them as they see fit; and
(e) on a personal level, the plaintiffs have two young children and they say they intend to continue living in their property for as long as their family is growing up. In stark contrast, they say the defendant is currently renting her property and intends to sell; and
(f) if the partition and subsequent subdivision does proceed, then according to the valuer’s uncontradicted evidence before the Court, the defendant would have the additional advantage that her property is likely to increase in value. Therefore, the plaintiffs suggest it is apparent that without partition the continuing cross-lease arrangement would continue to create hardship for them, but if partition was ordered, it would have little, if any, detrimental effect on the defendant.
[54] In my view, there is some substance in these submissions advanced by the plaintiffs.
[55] And as I see it, the defendant’s essential contention here is that the present case is not one where there is a deadlock between co-owners who have had co- ownership thrust upon them, for example through inheriting or co-owning property together in the context of a relationship. In the circumstances of a cross-lease, she
notes that each party has willingly entered into contractual arrangements that limit their ability to use the land, offer reciprocal protections and define a process for resolving disputes, and she suggests they should simply be required to live with this.
[56] Whilst I accept that contention advanced for the defendant to a certain extent, for reasons I will outline below the situation in this case changed significantly early in 2011. This was in February 2011 when an agreement was reached between the parties on partition and to jointly instruct a surveyor to prepare subdivision plans outlining partition options, only to have this arrangement revoked without explanation by the defendant alone in August 2011. In this regard the evidence before the Court includes a letter from the defendant’s lawyers exhibited as “CM6” to the 1 December 2011 affidavit of Colette MacKenzie filed in support of the present application. This letter dated 16 March 2011 to the jointly-instructed surveyors from Gillespie Young Watson the solicitors to the defendant confirms the following:
On behalf of our client we confirm that our client is agreeable to the estimate of costs recorded in your email of 28 February 2011. Our client reserves the right to terminate the project at the end of stage 1 in the event that agreement is not reached between the registered proprietors as to the location of the boundary between the proposed lots.
Agreement has been reached between our respective clients as to sharing of your costs. One-third of the invoice is to be paid by our client and the balance two-thirds is to be paid by the MacKenzies.
[57] Although the position appears to be that the defendant throughout did reserve a right to “terminate the project”, this appeared to be on the basis that termination might occur only if “agreement is not reached between the registered proprietors as to the location of the boundary between the proposed lots”.
[58] It follows clearly in my view that after much prior discussion and negotiation the defendant in early 2011 did confirm that she agreed to a partition subject to issues as to final location of the boundary between the properties.
[59] Further, at para [13] of the defendant’s statement of defence filed in this
proceeding on 16 January 2012 the defendant admits that later the parties agreed in
principle on a partition to follow Option 1 provided by the appointed surveyors. This was to the effect that the partition would approximate the existing cross-lease exclusive use areas.
[60] For the defendant then on 8 August 2011 to simply advise without explanation that she was “withdrawing from the fee simple process” must raise issues. Her motive for withdrawing from the partition process without explanation or reasons needs to be questioned.
[61] That the defendant might have been legally entitled to withdraw from this process, in the absence of some binding agreement between the parties otherwise, is probably unquestionable. The fact that she chose to do so however, after what was at least six months of active negotiations and work between the parties and the surveyors on the detail of an appropriate partition line, in my view is relevant to present considerations.
[62] That the defendant has herself acknowledged specifically at para [13] of her statement of defence that some time after 7 April 2011 she and the plaintiffs agreed in principle on proceeding with the Option 1 partition arrangement as I see it must also be regarded as significant here. Under all these circumstances and notwithstanding the submissions advanced on behalf of the defendant on this hardship aspect, I conclude that the hardship that would be caused to the plaintiffs here by refusing a partition order would be substantially greater than the hardship that would be caused to the defendant by the making of such an order. In addition, from the perspective of both the plaintiff and the defendant in this case, the present stalemate and antagonistic position between them needs to be properly resolved.
D. Contributions Made by Co-Owners
[63] In this case, as I have noted above, the defendant recently has used 68
Nottingham primarily for rental purposes and, although there may be some question as to this, it does seem that she also intends to sell the property.
[64] And, as to the plaintiffs, the evidence before the Court is that they intend to make alterations to their property and have already done so they say in an endeavour to enhance its value and to make it more suitable for them as a small family.
[65] In my view, this question of contributions however is essentially neutral here.
E. Other Matters
[66] At para [8] of the plaintiffs’ statement of claim in this proceeding they outline what they contend are a number of disputes which have arisen between the parties primarily arising out of the cross-leases. These are said to include:
(a) Disagreement as to fencing obligations.
(b) Whether a pet could be kept by the plaintiffs. (c) Alleged trespasses.
(d) Drainage maintenance. (e) Disposal of rubbish.
(f) The whereabouts of the common boundary.
[67] Although the defendant at para [8] of her statement of defence denies this pleading on the part of the plaintiffs, she does so saying:
... that the various disputes plead by the plaintiffs are not pleaded with sufficient particularity to enable her to respond but in any event she denies that any of the alleged disputes that are pleaded arise out of the cross-lease.
[68] What is clear, however, from all the evidence before the Court is that a substantial range of disputes between the parties, including certain aspects as pleaded by the plaintiffs noted above, have arisen over the years and these have caused and are continuing to cause substantial acrimony. I repeat that these are
aspects which need resolution and are factors to be borne in mind here in considering the present application.
[69] It is clear that a fundamental principle underlying the right to partition a property is the need to terminate co-ownership in cases of deadlock between the co- owners. Although the defendant is correct when she submits that at the time the parties purchased their individual properties they willingly entered into the cross- lease and contractual arrangements attaching to their respective titles, in my view this is one of those rare cases where matters between the plaintiffs and the defendant have reached a stage of acrimonious dispute and deadlock such that partition to terminate their co-ownership is appropriate.
[70] I reach this conclusion also particularly bearing in mind the matters noted at paras [56] to [62] above. To recap, this is what I see as an “agreement” in 2011 on the part of the defendant to proceed with a partition of the property subject to the final boundary line being acceptable, and a subsequent acknowledgement from her soon after April 2011 that it was agreed in principle to proceed with the surveyor’s suggested Option 1 partition arrangement.
[71] For the defendant to then unilaterally withdraw entirely from this partition process without explanation, having earlier agreed to the notion of partition, in my view is significant here.
[72] I remind myself that the application before me is one for summary judgment in which I must be satisfied that there is no real question to be tried and the plaintiffs must satisfy the Court that the defendant here has no defence to their claim against her.
[73] I am mindful too of the comments regarding summary judgment applications under s 339(1) Property Law Act 2007 in the land law texts noted at paras [30] and [31] above, and the remarks on this made by Associate Judge Robinson in Jacobson v Guo noted at [32] above.
[74] Nevertheless, in the present case, I am satisfied that in the circumstances prevailing here the defendant acknowledged that in early 2011 she agreed to the concept of partition and to contribute towards subdivision costs to effect this and she has no real defence to the present application.
[75] A bare order for partition is to follow. This order, however, is not to deal with the form of the partition in the sense of where a sub-division line is to be drawn nor other matters including valuation, compensation and cost-sharing issues. No detailed submissions on these aspects were advanced before me.
Conclusion
[76] For all the reasons I have given above, I am satisfied that the defendant has no defence to the plaintiff’s claim for a bare partition order. The facts in this case warrant a robust and realistic approach being taken – Bilbie Dymock Corporation Limited v Patel.
[77] The plaintiffs in this case have a right to partition which was effectively accepted by the defendant for some considerable time until she purported to withdraw her consent. This partition right in my view is not constrained by the cross-lease titles. On partition the cross-leases will be automatically surrendered – Ko v Chamberlain at [41].
[78] I find therefore that the plaintiffs are entitled to an order for partition but this must be subject first to the form of the partition to be determined and secondly whether a further order under s 343(a) requiring payment of compensation might be appropriate to produce a fair division between the co-owners.
[79] The application for summary judgment is granted to the extent that there is to be an order for partition of 68 Nottingham and 70 Nottingham in a form yet to be determined. This is precisely in line with the result that was achieved in the plaintiff’s summary judgment application in Ko v Chamberlain and also follows the outcome determined by Wylie J in Bayly v Hicks.
[80] I am not however prepared to direct the form of that partition based only on the disputed material outlining various options which has been placed before the Court.
[81] As occurred in Bayly v Hicks it will be necessary here in my view for the parties to again consider how the partition line should be drawn and how they suggest that matters including compensation (if any), valuation and cost-sharing issues should proceed.
Orders
[82] The plaintiff’s summary judgment application essentially succeeds. An order is now made for partition of 68 Nottingham and 70 Nottingham in a form yet to be determined.
[83] I direct that within 30 working days of the date of this judgment the parties are to file and serve memoranda agreeing (if possible) on a partition line to be implemented, compensation (if any) and any related matters but, in any event suggesting how matters should proceed. This may well include discussion of first, the appointment of experts such as a surveyor to carry out the subdivision or a suggested valuer under s 339(3) Property Law Act 2007 to consider compensation issues (if any) that might arise under s 343(a) Property Law Act 2007, secondly, issues concerning the cost of the partition subdivision and thirdly, issues over whether any resource consent or local authority consents may be required.
[84] These issues concerning the form the partition is to take and related matters might (if necessary) be the subject of consideration under a continuation of the present summary judgment application or alternatively a direction that they should proceed to a full trial. That will be a matter for consideration at that time.
Costs
[85] As to costs, in my view, it is appropriate for these to be reserved pending final determination of this proceeding when the form of the partition is finalised. An order to this effect is now made.
‘Associate Judge D.I. Gendall’
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