McLeary v Prasad

[2012] NZHC 2151

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-3263 [2012] NZHC 2151

BETWEEN  MORRIS WAYNE MCLEARY AND SUZANNE CHRISTINE MCLEARY Plaintiffs

AND  BHASHKAR PRASAD First Defendant

AND  EVANJALINE SARITA PRASAD Second Defendant

Hearing:         21 August 2012

Counsel:         J D Noble for Plaintiffs

No appearance for Defendants

Judgment:      21 August 2012

Reasons:        24 August 2012

REASONS FOR JUDGMENT OF ASSOCIATE JUDGE BELL

The reasons for judgment were delivered by me on   24 August 2012   at   11:30am

pursuant to Rule 11.5 of the High Court Rules.

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Registrar/Deputy Registrar

Solicitors:

Boyle Mathieson (J D Noble) P O Box 21-640 Henderson, Auckland 0650

Email:    [email protected]

Copy for:

B Prasad and E S Prasad, 2 Figtree Terrace, Goodwood Heights, Manukau 2105

MCLEARY V PRASAD HC AK CIV-2012-404-3263 [21 August 2012]

[1]      The plaintiffs apply for summary judgment.  When the case was called, there was no appearance for the defendants.  I said that I would give summary judgment and would give my reasons later.  I now give them.

[2]      The plaintiffs’ substantive proceeding seeks orders under sub-part 5, Part 6 of the Property Law Act 2007.  The defendants, a married couple, own a property at

2 Figtree  Terrace,  Goodwood  Heights,  Auckland.    The  plaintiffs  are  judgment creditors of Mr Prasad, the first defendant.  They have a judgment for $62,163.10 given in the District Court at Manukau on 28 July 2010.  On 20 September 2010 they registered a charging order for that judgment against the title to 2 Figtree Terrace.

[3]      Mr  Prasad’s  liability  under  the  judgment  to  the  plaintiffs  arose  under  a guarantee.    His company,  BP Automotive Ltd, leased  the plaintiffs’ commercial property at  37  Church  Street,  Onehunga.    Mr Prasad  guaranteed  the  company’s obligations.  The company defaulted under the lease.

[4]      Mr Prasad filed an unsigned and unsworn document, but the defendants have taken no other steps to oppose the summary judgment application or the substantive proceeding.

[5]      Section 339 of the Property Law Act 2007 allows the court to make an order for division of property by ordering a sale of the property and a division of the proceeds, or for division of the property in kind, or by requiring one or more co - owners to buy out the share of the others at a fair and reasonable price.    The court may make further orders under s 343.

[6]      The plaintiffs have standing to apply, because they have a charging order over the property – s 341(1)(c).  Under s 341(2), the application must be served on any co-owner of the property.  That has been done.

[7]      The mortgagee, the Bank of New Zealand, has not been served.   However, the orders proposed are not likely to adversely affect the interests of the Bank of New Zealand.  Under s 341(3), I make an order dispensing with service on the Bank of New Zealand.

[8]      Sub-part 5 of Part 6 of the Property Law Act 2007 has replaced the old partition provisions of the Property Law Act 1952 – ss 140 to 143.  Case law under the 1952 Act established that the summary judgment procedure could be used for applications for partition under s 140.[1]    In applications under s 140 of the Property Law Act 1952, where the applicant owned a half share or greater in the property, the only discretion the court  had  was whether  to order  a sale or  a partition of the property.  It is therefore not surprising that the court granted applications for sale on summary judgment applications.

[1] See for example Riepen v Leone (1987) 2 FRNZ 211.

[9]      The new provisions under the Property Law Act 2007 are different.  There is a wider range of powers that the court may exercise.  The exercise of those powers is not mandatory.  The court retains a discretion not to make any order.  Under s 342, there are mandatory considerations the court must have regard to.  An application under s 339 of the Property Law Act  2007 is not  as straightforward as was an application for sale under s 140 of the Property Law Act 1952.  However, that is not to  say  that  applications  for  summary  judgment  cannot  be  given.    As  with  all summary  judgment  applications,  the  plaintiff  must  satisfy  the  court  that  the defendant has no defence to the cause of action in the statement of claim.

[10]     I deal with the relevant considerations under s 342:

(a)      The extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made.

[11]     The plaintiffs are claiming as judgment creditors of Mr Prasad.  He has a half share in the property.  The plaintiffs have a charging order over his interest in the property.   They have applied so that his half share may be realised. As judgment creditors of Mr Prasad, the plaintiffs have an interest in realising his share in the property so as to satisfy their judgment against him.  Mr Prasad’s interest  in the

property may be the subject of judgment enforcement procedures.  A half share in a

property is large enough that its owner could properly complain if not given the opportunity to realise that interest.

(b)       The nature and location of the property.

[12]     Other than the fact that the property is a residential property in Goodwood Heights, Manurewa, South Auckland, there is no other relevant evidence.  I accept that the property is the family home of Mr and Mrs Prasad.

(c)       The number of other co-owners and the extent of their shares.

[13]     The only other  co-owner  is Mrs Prasad.    She has an equal share  in the property.  She has an interest in retaining the property as a family home.

(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.

[14]     The interests to be considered are the plaintiffs’ and Mrs Prasad’s.  Mr Prasad as judgment debtor cannot assert an interest that could prevail over the plaintiffs’ rights as his judgment creditors.   The plaintiffs have a legitimate interest in being able to  enforce their  judgment.   They identify a relevant  hardship  in cash-flow difficulties they are experiencing while the judgment remains unsatisfied.  They have had limited success in re-letting the premises at 37 Church Street, Onehunga. They are receiving $300 per week for a tenancy of part of the premises.  The rest of the premises are vacant.  There is apparently no market interest in taking the premises. The plaintiffs need to meet mortgage commitments.  The outgoings on the property exceed the income.

[15]     There is no evidence as to any other ability that Mr Prasad might have to meet his liability under the judgment.   As a judgment debtor, he cannot properly object to steps taken by the plaintiff to enforce their judgment against him.   His interest in the Figtree Terrace property is an asset that can be realised to meet his liability under the judgment.

[16]     While Mrs Prasad has not taken any steps in the proceeding,  it  is to  be expected that she would suffer some hardship from the court ordering a sale of the family home.  The property is not registered as a joint family home, under the Joint Family Homes Act, but is available for enforcement of a judgment.  When relative hardship is assessed, Mrs Prasad would have to accept that if her husband fell into financial difficulties, assets that he owned in co-ownership with her may have to be realised to meet his liabilities.  That is a hardship she would suffer in any event.  If the plaintiffs had Mr Prasad bankrupted, the Official Assignee would also take steps to realise Mr Prasad’s interest in the property to raise funds for creditors.  In general, the  Property  (Relationships)  Act  1976  allows  creditors  to  maintain  their  rights

against relationship property, even when it is jointly owned.[2]   The sale of the home

[2] Property (Relationships) Act 1976, s 20A.

would convert Mrs Prasad’s interest in the property into money.   But she will not lose her interest in any event.  Her share of the property does not have to be applied to meet her husband’s liability under the judgment.   In my judgment, she is not entitled to claim that her right to live in the property, as opposed to having her interest in the property converted into money, ought to prevail over the plaintiffs’ interest in having their judgment against her husband satisfied.

(e)       The value of any contribution made by any co-owner to the costs of improvements to, or the maintenance of, the property.

[17]     There is no evidence as to any particular contributions that Mrs Prasad has made to the property.  However, I assume in her favour that she has attended to the maintenance and upkeep of the property.

(f)       Any other matters that the court considers relevant.

[18]     Mr Prasad’s unsigned and unsworn document contested his liability under the guarantee.  As judgment has been given against him, I cannot consider that on this application.  There are no other matters that have been raised that I consider relevant under s 342(f).

[19]     In having regard to all the relevant considerations under s 342, I am satisfied that the Prasads do not have any defence to the McLearys’ application for orders for sale of the property.  In particular, a sale rather than any other order under s 339(1) is appropriate to allow funds to be raised.  Accordingly, I make an order for sale, as sought by the plaintiffs.

[20]     The plaintiffs submitted a draft order which included orders under s 343.

That order is generally appropriate save for some minor “tweaks”:

(a)       In  paragraph  1(b)   -   “31  August   2012”  is   to   be   changed   to

“28 September 2012”.

(b)      In paragraph 1(d) - “proceeds” is to be changed to “precedes”.

(c)       In paragraphs 1(j) and (m) – the mortgagee is to be identified as “the

Bank of New Zealand”.

(d)      In paragraph 1(m)(v)(a)(iii) – the plaintiffs are to have costs on a category 2B basis on the summary judgment application.

(e)       In paragraph 1(m)(v)(a)(iv) – “scale costs” rather than “solicitor/client costs” payable for further steps in this proceeding after 21 August

2012.   However, the costs of conveyancing may be charged for at normal solicitor/client rates.

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R M Bell

Associate Judge