Marr v Kennington
[2022] NZHC 2561
•5 October 2022
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2022-441-15
[2022] NZHC 2561
UNDER section 251 of the Property Law Act 2007 IN THE MATTER
of an application by the plaintiffs for a possession order
BETWEEN
PATRICIA JEAN MARR and KEVIN DOUGLAS ROBERTS
Plaintiffs
AND
ANGELA JANE KENNINGTON
Defendant
Hearing: 1 August 2022 Appearances:
S J Webster for Plaintiffs
J D Cameron for Defendant
Judgment:
5 October 2022
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction
[1] In early 2019, Wayne and Elizabeth Kennington sold a property they owned at 43 McGrath Street in Napier to one of their daughters, Patricia Marr, and her partner, Kevin Roberts, the plaintiffs. Wayne and Elizabeth’s other daughter, Angela Kennington, the defendant, was living in the property. She still does. The agreement for sale and purchase recognised Angela’s occupancy in the most perfunctory way. Otherwise, there is no record of the arrangements involved. (As this is a family matter, with so many of the people involved sharing the same surname, I will refer to all involved by their first names).
MARR v KENNINGTON [2022] NZHC 2561 [5 October 2022]
[2] Now, three years on, Kevin and Patricia want to sell the property. They wish to be able to offer it with vacant possession. They say they are entitled to terminate Angela’s occupancy on notice. They served Angela with a notice to quit which expired on 14 February 2022.1 Angela is refusing to vacate.
[3] Kevin and Patricia have now commenced this proceeding seeking an order pursuant to s 251(1) of the Property Law Act 2007 entitling them to vacant possession of the property.
[4]They have applied for summary judgment, which application is opposed.
Principles relating to summary judgment
[5] Part 12 of the High Court Rules 2016 provides for summary judgment. Under r 12.2(1), a plaintiff may apply for summary judgment where the plaintiff contends that the defendant has no arguable defence to the claim.
[6] A summary judgment is intended to enable plaintiffs to secure judgment without undue delay where it is clear there is no defence.2 The leading case is Krukziener v Hanover Finance Ltd where the Court of Appeal summarised the principles that apply in the following terms:3
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claims; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at [3] (CA). 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 or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). 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).
1 Property Law Act 2007, s 210(2).
2 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
3 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
[27] Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
The factual background
[7]The factual background is largely uncontroversial.
[8]The following aspects are not seriously contested:
(a)Wayne and Elizabeth purchased 43 McGrath Street in late 2002.
(b)Virtually straight away, Angela moved into the property.
(c)During late 2018 and early 2019, there were discussions between Wayne and Elizabeth on the one hand and Kevin and Patricia on the other hand, relating to the possible sale of the property to Kevin and Patricia.
(d)There is a difference on the evidence as to which couple initiated these discussions, but nothing turns on this.
(e)At some point, the parties agreed on the terms of sale. They entered into a sale and purchase agreement based on the Real Estate Institute’s standard form contract. The agreement is undated. On the evidence, it is clear it was executed in early 2019, but prior to 29 March 2019, when the transaction was settled.
(f)At some stage, presumably in connection with the process of securing finance, Kevin and Patricia obtained a valuation. The valuer estimated the fair market value of the property at $550,000. No one questions that. There is some debate as to exactly when the valuer was engaged (pre or post agreement). However, again, it is not obvious to me that anything turns on this.
(g)The agreement for sale and purchase is not especially helpful in relation to the issues currently before the Court:
(i)it identified the vendor and purchaser parties, and the purchase price of $375,000;
(ii)under the heading “TENANCIES (if any)” the following appears:
Name of tenant: Andrea Kennington
Bond: Rent: $350.00 p/w Term: Right of renewal:
(iii)to be clear, there are no further details in the agreement as to the term of the tenancy.
(h)As already said, the transaction settled on 29 March 2019.
(i)Apparently, one firm of solicitors acted for both parties on the settlement.
(j)Whilst it is not entirely clear what exchanges there may have been between Kevin and Patricia on one hand and Angela on the other in the lead up to this dispute, on 11 January 2022, Kevin and Patricia’s solicitors wrote to Angela giving her notice to quit, which notice, on my calculations, expired on or about 14 February 2022.
(k)Through her solicitors, Angela lodged a caveat against the title to the property pursuant to s 138 of the Land Transfer Act 2017, asserting a proprietary interest, which was described in the following terms:
The Caveator is lessee under an unregistered lease for life granted in respect of the land. The Registered Proprietor purchased the property for less than market value in consideration of the existence of the lease for life. The Caveator claims an interest in the land as a lessee.
(l)On 2 March 2022, Kevin and Patricia, through their solicitors, applied to the Registrar of Lands for the caveat to lapse. Their application said:
The Applicant, being the registered owner of the estate or interest affected by the caveat against dealings, referred to above, applies to the Registrar for the caveat to lapse.
(m)Angela did nothing, and the caveat lapsed.
(n)Nothing has changed. Kevin and Patricia still wish to sell the property, and to do so with vacant possession. Angela remains in the property, and refuses to leave.
The competing arguments
[9] Kevin and Patricia’s case is straight forward. They say that, because these are family arrangements, the Residential Tenancies Act 1986 has no application. They say that, as there is no written tenancy agreement of the tenancy, it follows that the arrangement is governed by s 210 of the Property Law Act, that is to say that it is terminable on one calendar months’ notice. They say they have given notice and that the tenancy expired on or about 14 February 2022. They say that the long-term lease propounded by Angela would be void for uncertainty as it has no definitive term or provision dealing with rental. Finally, they say that, even if there were some agreement that was sufficiently certain entitling Angela to occupy the property on a long-term basis (which they deny), it would be unenforceable by reason of s 24 of the Property Law Act, which requires agreements for the disposition of real property to be in writing. In the end, they say that Angela has no arguable case for any interest beyond a short-term tenancy under s 210.
[10] In opposing Kevin and Patricia’s application for summary judgment, Angela contends that the arrangements for the sale of the property by Wayne and Elizabeth to Kevin and Patricia, in which she was an active participant, were predicated on an understanding that she – Angela – would be permitted to remain as a tenant in the property on a long-term basis. In support of that contention, Wayne and Angela have sworn affidavits. Their evidence is that the arrangement within the family was that Wayne and Elizabeth would sell 43 McGrath Street to Kevin and Patricia at a
substantial discount (Angela would contend the difference between the $550,000 valuation and the $375,000 sale and purchase price) on condition that Angela would be allowed to remain in the property long-term. She says that the important terms of the arrangement are clear – she is entitled to a tenancy until both Kevin and Patricia reach retirement age, when they can then sell up to fund their retirement, and she has to pay a reasonable rental, having regard to the rental of $350 per week agreed at the time of the sale and purchase.
[11] As to the legal basis for contending that such an arrangement may be enforceable despite the terms of s 24 of the Property Law Act, Mr Cameron relied primarily on the doctrine of part performance. During the course of the hearing, I enquired of counsel whether there might be another related way of looking at the case, that is to say on the basis of equitable estoppel. Either way the argument would be that, although the common law might not be prepared to enforce an unwritten tenancy agreement in these circumstances, equity may do so if it could be established:4
(a)there was an express or implied agreement such as would have been enforceable but for the Property Law Act or other representations by Kevin and Patricia along the lines outlined;
(b)Angela has acted in reliance on that agreement or those representations; and
(c)it would be unconscionable for Kevin and Patricia now to resile from that position.
Discussion
[12] It will be apparent from the above outline of the parties’ arguments that there are fundamental factual controversies in this case. The primary controversy is as to the terms of the arrangement within the family back in 2002. Kevin and Patricia say that this was an agreement for sale and purchase between them and Wayne and Elizabeth, and nothing more. Whilst they were aware that Angela was living at the
4 Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA) at 287; and Burbery Mortgage Finance & Savings Ltd v Hindsbank Holdings Ltd [1989] 1 NZLR 356 (CA) at 361.
property at the time, they did not agree to that casual arrangement being translated into some sort of long-term entitlement. Angela on the other hand contends that it was an agreement that involved her parents, Kevin and Patricia, and herself. She says it was a term of the arrangement that Kevin and Patricia would get the benefit of buying the house at an undervalue as an investment, but the quid pro quo was that she was to have long-term tenure. In this, Angela’s evidence is supported by that of her parents.
[13] In advancing the case on behalf of Kevin and Patricia, Mr Webster placed reliance on three cases, Weine v Capital and Coast District Health Board;5 Chambers v Chatfield;6 and Johnston v Cooper.7
[14] Weine, like this case involved a lease, or rather the renewal of a lease. The plaintiff was asserting that the lease had been renewed orally and the question was whether s 24 of the Property Law Act was a bar to his claim. MacKenzie J accepted that there was an oral agreement to renew the lease, and determined that that agreement was enforceable on the basis of part performance by the parties.8 In doing so, the Judge accepted that Ms Weine had part performed the contract by giving instructions to her solicitors in relation to formalisation of the arrangement and incurring legal costs.9 His Honour concluded that having agreed to renew the lease, and having then stood by while the plaintiff relied on the agreement to engage her solicitors, it was unconscionable for the defendant to deny the renewal.10
[15] As I understood his submission Mr Webster relied on Weine because the Judge had accepted that there was an oral agreement to renew, which he put up as a point of difference between that case and this. But Weine was decided following a trial, and after the trial judge had had an opportunity to hear all the evidence and reach a conclusion in relation to that.
[16]I do not accept that Weine is of material assistance here.
5 Weine v Capital and Coast District Health Board [2012] NZHC 3617.
6 Chambers v Chatfield [2016] NZHC 1871.
7 Johnston v Cooper [2018] NZHC 3087.
8 Weine v Capital and Coast District Health Board, above n 3, at [64].
9 At [52].
10 At [56].
[17] In Chambers the plaintiff was seeking the specific performance of a guarantee. The Court concluded that there was sufficient certainty as to the important terms of the guarantee and on that basis enforced the guarantee notwithstanding that it was not in writing.11
[18] Again, that was a case that was determined by Edwards J following a trial. Her Honour had the opportunity to hear all the evidence and reach a concluded view as to whether or not there had been an agreement, to the terms of the same and, in particular, to whether those terms were sufficiently certain to be enforceable.
[19] Both cases are to be contrasted with this case which is of course an application for summary judgment. The applicants need to establish that the delay they would suffer in waiting for a full trial is unjustified for a lack of defence.12 The only evidence before the Court is in affidavit form. There are major areas of dispute. Those disputes are as to the very points that MacKenzie J in Weine and Edwards J in Chambers had to resolve, and which Mr Webster advances as pointing to the proper outcome in this case. I do not regard them as being especially helpful.
[20] The third case is perhaps of more relevance. As Mr Webster submitted, factually, Johnston was very similar to this case.
[21]In his written submissions Mr Webster summarised the facts in these terms:
30.1The landlord was the brother of one of the tenants and therefore the Residential Tenancies Act 1986 did not apply;
30.2There was no written tenancy agreement;
30.3The plaintiff argued that the tenure was an implied licence revokable at will;
30.4The defendant argued that there was a lease for life;
30.5The defendant argued that they performed maintenance work on the property to support their argument;
30.6The rental was historically lower than market;
30.7The landlord no longer wished the tenants to remain and gave notice;
11 Chambers v Chatfield, above n 4, at [50].
12 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
30.8The tenants served a trespass notice.
[22] In that case Associate Judge Sargisson granted the plaintiff summary judgment, and Mr Webster submitted:
31. Her Honour took the view that the plaintiff was entitled to possession unless the tenants could demonstrate a legal or equitable interest in the land. As with the present case there was no evidence as to how long the tenure was, and there was no part performance which, viewed independently, was put forward on the footing of a “life interest”.
[23] That is a fair summary of the basis for the Judge’s conclusion. However, in my view, Johnston and this case are materially different:
(a)Whereas in Johnston it was concluded that any arrangement between the parties was no more than an implied licence,13 in this case there is a recognition in the sale and purchase agreement executed by the plaintiffs of the existence of a tenancy, albeit that it goes no further than that.
(b)Whereas in Johnston there seems to have been no basis for identifying the duration of the license,14 in acknowledging that the matter has been expressed in different ways in this case, there is as I have already said logic around the proposition that the tenancy may continue down to the point where the plaintiffs have reached retirement age.
(c)As to rental, there is a base line rental as at the date upon which the plaintiffs acquired the property and it does not appear to me that it would be going further than cases have gone in the past to imply a periodic entitlement on the parties to review rental.
[24] At the very least, it seems to me that there are enough distinguishing features to justify the defendant in contending, as Mr Cameron does on her behalf, that she has an arguable case.
13 Johnston v Cooper, above n 7, at [32].
14 At [33]
[25] Kevin and Patricia say that at minimum there must be certainty as to such things as the term of the lease and rental. They point to the fact that, in the course of this litigation, Angela has put forward more than one formula for describing the term of the lease and that there is no provision for rent review. Angela, on the other hand, says that the essential arrangement was to see the parties through until Kevin and Patricia reached retirement age.
[26] It is unnecessary to have regard to any controversial aspects of the affidavit evidence filed and served by Angela (which, as Mr Webster says, contain what appears to be unreliable hearsay evidence) to be able to say that there is evidence to support Angela’s position.
[27] It would be possible to identify other disputes as to more detailed aspects of the case, but the broad dispute is sufficient to dispose of the application.
[28] In this case, the delays faced by the plaintiffs in the lead up to a full trial are not unfair or undue. In order to determine whether there truly was part performance or if the plaintiffs should be estopped from pursuing this claim, the court would benefit from a full hearing. I am left unconvinced that there is no defence to this claim. Whilst I do not suggest this is necessarily how any of the parties thought about the matter, one can see some sort of balance emerging from the arrangements as they are described or portrayed by Angela in opposing Kevin and Patricia’s summary judgment application.
[29] Angela claims there was an arrangement between the plaintiffs and her parents that conferred a benefit upon her, namely the guarantee of a lease that was to continue until the plaintiffs’ retirement. I note that, provided there is an enforceable agreement, Angela is able to enforce the promise made for her benefit as though she were a party to that agreement.15 There is an internal logic to the argument that such a benefit was conferred upon Angela as a counterweight to the benefit Wayne and Elizabeth conferred upon the plaintiffs by selling the property to them at significant undervalue (whether that be $175,000 or some other amount). Kevin and Patricia will, around the time they retire, be able to realise a significant capital gain because of that sale. Such
15 Contract and Commercial Law Act 2017, ss 12 and 17.
an arrangement could serve to ameliorate any perceptions of favouritism between sisters. In the meantime, Angela has continued to live in and maintain the property. Angela should have the opportunity to argue that she and her parents only acted the way they have as a result of a promise made by Kevin and Patricia. That might justify the court considering that either the doctrine of part performance or estoppel prevent the plaintiffs from terminating Angela’s lease.
[30] In the end, on the evidence, I am not satisfied that the plaintiffs can demonstrate that there is no reasonable defence to their claim. For that reason, I am not prepared to enter summary judgment and I dismiss the applicants for the same.
[31] Costs are reserved. If counsel cannot resolve these, as I would expect them to do, they may come back by memorandum in the usual way.
Associate Judge Johnston
Solicitors:
Lunn & Associates Ltd, Napier for Plaintiffs Willis Legal, Napier for Defendant
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