McLellan v Terry HC Greymouth CIV-2010-418-000123

[2011] NZHC 570

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

CIV-2010-418-000123

BETWEEN  ROSALIND MEGAN MCLELLAN Plaintiff

ANDROBERT TERRY First Defendant

ANDTHE PUBLIC TRUSTEE Second Defendant

Hearing:         19 May 2011

Appearances: G M Brodie for plaintiff

First defendant in person
No appearance by second defendant

Judgment:      15 June 2011

RESERVED JUDGMENT OF CHISHOLM J

[1]      This is an application under s 76(2) of the Local Government (Rating) Act

2002 for an order directing the Public Trustee to pay out monies it has held following a rating sale in 1998.   The application is opposed by the first defendant whose counsel, Mr Allen, was granted leave to withdraw at the beginning of the hearing. The second defendant abides the decision of the Court.

[2]      On 6 May 2011 the first defendant, Robert Terry, sought an adjournment on the basis that his barrister had withdrawn and he was not ready to proceed.   His request was opposed by the plaintiff.  By minute issued on 11 May 2011 the request for  an  adjournment  was  refused  on  the  basis  that  Mr Terry  had  had  ample opportunity to obtain legal representation since his barrister had indicated he was

withdrawing in December 2010.

MCLELLAN V TERRY HC GRY CIV-2010-418-000123 15 June 2011

[3]     At the beginning of this hearing Mr Terry renewed his request for an adjournment.   He also asked that I recuse myself because I had made the order bankrupting his brother, Brian Terry, in 1997.  Both requests were declined.

Background

[4]      The plaintiff in this proceeding is the only child of Brian Terry who died intestate on 1 July 2009.  She was granted letters of administration on 15 September

2009 and is entitled to inherit the whole of her father’s estate.

[5]      Brian Terry was registered as the proprietor of three parcels of land that had originally formed part of a larger dairy farm:

(a)       28.4392  hectares  being  all  the  land  in  certificate  of  title  100/102 (Nelson Registry)

(b)      1.1052 hectares being all the land in certificate of title 33/4 (Nelson

Registry)

(c)       32.5443  hectares  being  all  the  land  in  certificate  of  title  133/77 (Nelson Registry).

In the case of the last piece of land Brian Terry was registered as a tenant in common in equal shares with his brother, Robert Terry.

[6]      On 30 January 1998 those properties were sold by the Registrar of the High Court at Greymouth pursuant to the Rating Powers Act 1985 by virtue of unsatisfied judgments for rates.  Those judgments, which were originally obtained in the District Court on 12 March 1993 and 24 March 1993, had been registered in the High Court. Even though Robert Terry held a half share in CT 133/77 he does not seem to have been served with the proceedings that led to the judgments and rating sale.

[7]      Following the rating sale the sum of $131,656.82 was paid to the Public

Trustee.    There  was  no  apportionment  between  the  three  parcels  of  land.    On

16 March 1999 the High Court directed the Public Trustee to pay $21,940.31 to the Official  Assignee  to  satisfy  the  indebtedness  of  Brian  Terry  who  had  been adjudicated bankrupt on 23 June 1997.  Since that time the balance of $109,716.51 has been held by the Public Trustee on interest bearing deposit.

This application

[8]      The plaintiff seeks the following orders:

1. Determining the shares in which the money held by the second defendant following a rating sale is to be divided between the plaintiff and first defendant, and

2. Directing the Public Trustee to pay the money to the plaintiff and the first defendant in accordance with such determination, and

3. An order directing the first defendant to pay the costs of and incidental to this application.

Leave to pursue this application by way of originating application was granted by

Fogarty J on 26 August 2010.

[9]      The order is sought in reliance on s 76(2) of the Local Government (Rating) Act which provides:

76       Application of balance of proceeds

(1)       After the proceeds of a rating sale have been applied under section

75, the Registrar must pay the balance (if any) to Public Trust.

(2)       Public Trust, on the order of the High Court (which may be made by motion in Chambers), must pay the balance to those persons who are entitled to it, together with interest.

An affidavit sworn by the applicant traverses the history of the matter  and the reasons that she seeks an order.

Opposition by second defendant

[10]     Robert  Terry opposes  the  orders  sought  by the  plaintiff  on  two  primary grounds:

(a)       The proceeds of sale ought not to be distributed.

(b)If there is to be a distribution his share is substantially greater than suggested by the plaintiff.

Those grounds are supplemented by an affidavit sworn by Mr Terry on 27 October

2010.

[11]     In his affidavit Mr Terry deposes that the rating sale was unlawful and that both he and his brother have always maintained that stance.  He deposes that he and his brother remained hopeful that the land that was unlawfully sold (or replacement land) would be returned to them.  For that reason they have never sought to access the monies and Mr Terry believes that his niece should not be attempting to do so now.

[12]     The affidavit traverses the history of the Terry farm.   Mr Terry deposes he contributed “work and money”.  He explains that in 1983 he bought a dairy herd that was run on the farm, that he and his brother used money obtained from a mortgage of CT 133/77 to buy materials and build a milking shed, and that over the six years that this herd was milked the cheques went into the farm account which enabled debt to be reduced.  He said that in 1998 the herd was sold off and the funds were applied to  pay  off  the  mortgage  which  was  secured  over  several  titles,  as  well  as  an overdraft.

[13]     Mr Terry deposes that he purchased CT 133/77 in 1983 and that his brother’s name was simply put on the title to facilitate the raising of a mortgage to build the milking shed and that:

15.      Although  my  brother’s  name  is  on  the  title  he  had  and  has  no

financial in it.

16.      This was recognised by the various parties at different times:

At the hearing in December 1992 my brother made it clear to the Court that he had no claim to any of CT 133/77.

Janet  dropped  her  claim  to  my  land  at  a  Family  Court hearing before Judge Costigan on 1 December 1993.

On that basis Mr Terry asserts that he is entitled to a repayment representing his

100% ownership of CT 133/77.

[14]     Then Mr Terry refers to the separation between Brian Terry and his wife, Janet.  Robert Terry states that when his brother’s wifeapplied to the Family Court for her interest in the farm to be determined and divided;  he (Robert Terry) had a right to be served and heard in relation to her application; he was not served with the papers relating to applications concerning possession of the family farmhouse; even though there was a direction that Janet was to be responsible for the outgoings on the property these were not  paid and the rating sale resulted; he was not given an opportunity to oppose the application which was heard ex parte; the property was taken unlawfully; given the absence of any fault on his part he should not have to suffer any loss as a result of the nature of the sale; and there is no evidence to support the accuracy of the proposed distribution.

[15]     Mr Terry also addressed the Court.   He said that he was happy to borrow funds so that his niece could be paid out, but he does not want the fund to be disbursed and he does not see any urgency for this to happen.  This seems to be on the basis that he does not went to compromise any claim that he has in relation to the rating sale.   He said  that if he had  been  given the opportunity he would have provided further information from the Family Court file and he thinks that it is unfair that he is not being afforded an opportunity to supply this information.

Response on behalf of the plaintiff

[16]     Mr Brodie urged the Court to adopt a disciplined approach to the matter.  He said that Mr Terry had been given two months to file a further affidavit and the fixture had been allocated as far back as 4 November 2010. Any further delay would be frustrating in the extreme to the applicant and she should not be subjected to that frustration or the additional cost that will arise if an order is not made now.

[17]     Counsel also submitted that if Robert Terry had a claim against any other parties, including his brother’s estate, it should have been brought long before now. Moreover any disposition of an interest in the titles in favour of Robert Terry would

have to be in writing.   Given that there is nothing in writing there could not have been any such disposition.  An oral statement by his brother is insufficient to overcome the indefeasibility of the titles and the proceeds of sale conferred by s 62 of the Land Transfer Act 1952.

[18]     When I raised the possibility that I might examine parts of the Family court file myself Mr Brodie suggested that this would simply be a “wild goose chase”.  He submitted that the matter should be determined on the basis of the information now before the Court.

Discussion

[19]     Notwithstanding Mr Brodie’s pleas to the contrary I decided that it was in the interests of justice for a limited review of the Family Court file to be undertaken.  I therefore obtained copies of the affidavits filed by Brian Terry and the reserved judgment delivered by Judge Costigan on 1 December 1993.   That judgment determined the substantive issues in FP818/112/91 in which Janet McLellan was applicant, Brian Terry respondent and Robert Terry second respondent.

[20]     It is apparent from Judge Costigan’s judgment that during the course of the hearing Janet McLellan abandoned her application seeking an interest in CT 133/77 with the result that “the second respondent’s interest in these proceedings came to an end”. The Judge noted that the second respondent had:

...  adopted the mantle of a de facto legal advisor and case manager for his brother and attempted to control the proceedings in an inappropriate way. He was warned on a number of occasions that his interruptions, demeanour and language were unacceptable, and was finally asked to leave the hearing once the applicant’s counsel had confirmed that she would not be proceeding with a claim against the property in respect of which the second respondent has an interest.

She further recorded that because the second respondent had failed to comply with the pre-trial directions made on 28 April 1993 and 16 June 1993 he had only been permitted to defend the substantive application on the basis of the affidavits that he had already filed.

[21]     Judge Costigan also recorded that Brian Terry had raised a number of matters on behalf of Robert Terry:

(a)      That stock belonging to Robert Terry had been included in the stock valuation.

(b)      Issue would be taken as to the ownership of the block of land in

CT 133/77.

(c)      Over a six year period stock owned by Robert Terry had been milked by the parties and Robert Terry was seeking reimbursement for the income received in this regard.

The first two matters were resolved by the Judge on the basis that the applicant had not made a claim against the stock and no longer pursued her claim in respect of the land.  In relation to the third matter the Judge concluded that “the evidence clearly does not support such a claim”.

[22]     The judgment also records that Brian Terry had claimed that Robert Terry was a “silent partner” in the farming partnership.  Judge Costigan decided that, this contention  having  been  “completely  refuted”  by  the  applicant  both  during  the hearing and in her affidavit, there was no evidence to support the allegation.

[23]     With  those  matters  in  mind  I  turn  to  s  76(2)  of  the  Local  Government (Rating) Act.  It is clear from sub (2) that when deciding whether to make an order and, if so, the nature of the order, the High Court should ensure that the funds held by the Public Trustee are paid “to those persons who are entitled to it”.   Prima facie that will be the registered proprietors of the three titles concerned in proportion to their respective interests.

[24]     In this case, however, it is necessary to decide whether the Court should go behind the indefeasibility provisions contained in s 62 of the Land Transfer Act.  I agree with Mr Brodie that in order to defeat the legal ownership evidence by the titles Robert Terry would have to establish a beneficial or equitable interest that was

capable of contradicting that legal ownership.  Having considered that matter I have concluded that there is no realistic possibility that the legal ownership evidenced by the titles could be defeated in this case at this late stage.

[25]     While it is clear from the Family Court documents that I have inspected that Brian Terry was sympathetic to his brother’s cause, Judge Costigan, who had the benefit of hearing from all the parties at the time, was obviously unimpressed by the claims  that  Robert  Terry  was  seeking  to  establish.     In  part  this  reflected Ms McLellan’s decision to abandon any claim in relation to CT 133/77 and the restriction on the evidence that the Court was prepared to take into account. Nevertheless, it is apparent that the various issues concerning Robert Terry that were mentioned by Judge Costigan were considered by her and there has been no successful appeal against the outcome.

[26]     In my view, Robert Terry has overstated the position in his affidavit.  While Brian Terry was  obviously supportive of his  brother’s  claim,  this  did not  carry through   into   the   conclusions   reached   by   the   Family   Court.      Moreover, Ms McLellan’s decision not to pursue her claim for an interest in CT 133/77 could not be construed as an acknowledgement by her that Robert Terry was entitled to

100%  ownership  of  the  title.    To  the  contrary,  it  reflected  her  desire  to  avoid becoming embroiled in any dispute concerning that title.

[27]     Given the passage of time since the Family Court hearing (around 17 years) and the rating sale (around 12 years) it is inconceivable that Robert Terry could now successfully defeat the legal ownership shown in CT 133/77 or successfully obtain relief as a result of any irregularities relating to the rating sale.  It is far too late.  The defence of laches could be successfully pleaded.   In any event, this application concerns the distribution of funds that have now been held by the Public Trustee for about 12 years and it is time that they were distributed.

[28]     Given those matters I am satisfied that an order should now be made pursuant to s 76(2) for the funds to be distributed in accordance with the legal ownership reflected  by  the  certificates  of  title.    The  appropriate  apportionment  has  been

calculated by Peter Hines, a registered valuer from Greymouth, and I accept his apportionment.  Mr Brodie has also provided detailed calculations.

Result

[29]     As at 17 May 2011 the Public Trust held $141,347.51.   On Mr Brodie’s calculation (paras 22 and 23 of his submissions) the sum of $106,632.62 should be paid to Brian Terry and $34,695.24 to Robert Terry.  On my calculation that leaves a surplus in the funds held as at 17 May 2011 of $19.65.   In addition, there will be interest that might accrue from 17 May 2011 to the date of payment.

[30]     Subject to the issue of the surplus of $19.65 and interest from 17 May 2011, I accept Mr Brodie’s calculations and there will be orders for the Public Trust to distribute accordingly.   Mr Brodie should submit a memorandum to the registrar (with a copy to Mr Terry) showing how the balance of $19.65  and any further interest are to be apportioned and distributed.

[31]     Costs on a 2B basis totalling $3,572 plus disbursements of $794.14 making a total of $4,366.14 are sought by the applicant.  Given that s 76(2) required an order of the Court regardless of Robert Terry’s attitude I have decided that it would be in the interests of justice if the amount to be paid by Robert Terry was reduced to

$3000.  There will be an order accordingly and that amount  is to be deducted by the

Public Trustee from Mr Terry’s share and paid to the solicitors for the applicant. [32]          Leave is reserved for any party to apply further should the need arise.

Solicitors:

Carruthers & Wetherall, P O Box 127, Greymouth

G M Brodie, P O Box 130 121, Christchurch

Public Trust, PO Box 4549 / DX WP20327, Christchurch

Copy to First Defendant