Morgan v Morgan

[2016] NZHC 2363

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-001488 [2016] NZHC 2363

BETWEEN

RUBY MORGAN

Plaintiff

AND

SONNY JACOB MORGAN Defendant

Hearing:	16 September 2016
Appearances:	A Fuiava for Plaintiff Defendant in person
Judgment:	5 October 2016

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 5 October 2016 at 11.00 am

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Morgan v Morgan [2016] NZHC 2363 [5 October 2016]

Introduction

[1]      Ruby  Morgan  and  her  son,  Sonny  Jacob  Morgan,  own  a  property  at

11 Oxford Road, Manurewa as tenants in common in equal shares.  Mrs Morgan has not lived in the property since the early 1980s.   By that time Sonny, his wife and their three children were living in the property and Sonny and his family have remained there since.  Mrs Morgan paid off the mortgage but Sonny has been paying the other outgoings since Mrs Morgan left.

[2]      The property is valued at $410,000 for rating purposes, the latest valuation being dated 1 July 2014.  It is likely that its current market value is somewhat higher than that – an affidavit from a registered valuer includes an estimate that in June this year it might have been worth $650,000 “as is”; that is, in a rundown state.  In any event, Mrs Morgan wishes to realise her share of the equity in the property but Sonny refuses to purchase it or to agree to its sale.

[3]      Accordingly, Mrs Morgan has applied for orders under the Property Law

Act 2007 directing the sale of the property and the equal division of the net proceeds.

The background facts

[4]      Given the way the proceeding and, particularly, hearing were conducted, it is unnecessary to describe the factual background in much detail.  It is convenient for me to adapt for the purposes of this judgment the helpful and accurate summary of the facts contained in Ms Fuiava's submissions on behalf of Mrs Morgan.

[5]      Mrs Morgan purchased  the property with her husband, William, in 1960. However, Mr and Mrs Morgan separated in 1961 and Mr Morgan later remarried and moved to Australia.   Mr and Mrs Morgan's three sons, including Sonny, remained living in the Oxford Road property.  Mrs Morgan's sons, Kevin and George, moved out of the house in the late 1970s but Sonny remained. After Sonny married in 1974, his wife and in due course their three children also lived in the house.

[6]      Mrs Morgan said that she found it too stressful living with Sonny and his family and in the early 1980s she moved out but continued to pay off the mortgage until it was discharged.

[7]      In 1986, however, Mr William Morgan sold his half-share in the property to Sonny for $1 or $2.  The transfer of his half-share to Sonny was recorded on the title on 26 May 1987, and has since reflected Mrs Morgan and Sonny joint owners.  The mortgage was finally paid off in January 1991.

[8]      Sonny has never paid his mother any rent for the use of her half-share of the property but has paid all the outgoings, including rates and water.  Mrs Morgan is concerned about the state of the property which she says is very run down.  Sonny disputes the valuation of $650,000, saying it is worth at least $750,000 according the Council and that it is probably worth closer to $1 million on the open market.

[9]      It appears to me that Sonny may have misinterpreted the references in the Council’s records to the property having a land value of $350,000 and a capital value of $410,000.  The capital value is the total of the land value and the estimated value of the improvements (essentially the dwelling).  There was insufficient evidence to satisfy me that I should take into account any diminished value resulting from lack of maintenance.

[10]     Sonny  opposes  the  sale  but  his  discursive  statement  of  defence  focuses attention on some early and irrelevant family history, rather than addressing the merits of his mother’s claim.  He did not advance much if any direct evidence about the effect that the sale of the property would have on his family.

The nature of the proceedings

[11]     The registration of the title to the Oxford Street property in the joint names of Mrs Morgan and Sonny as tenants in common in equal shares makes them co-owners for the purposes of the Property Law Act.1   So far as is relevant to this case, the Act

provides that the Court may make an order for the sale of the property and the

1      Property Law Act 2007, s 4.

division of the proceeds between the co-owners.2   Section 343 of the Act empowers the  Court  to  make  incidental  orders  for  the  orderly  and  fair  disposition  of  the property where a sale is called for.

[12]     The exercise of the Court's broad discretion to make a just determination of a dispute between co-owners3 is to be informed by the requirement under s 342 of the Act to have regard to the following considerations:

(a)      the extent of the share in the property of the co-owner by whom the application for the order is made;

(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 the order;

(e)      the value of any contribution made by the co-owners respectively as to the cost of improvements to, or the maintenance of, the property; and

(f)       any other matters the Court considers relevant.

Discussion

[13]     Although Mrs Morgan and Sonny are co-owners of the Oxford Road property in  equal  shares,  Sonny  has  had  the  benefit  of  the  exclusive  occupation  of  the property  for  over  30 years.    Despite  paying  off  the  mortgage,  Mrs Morgan  has derived no benefit from it during that time.  I infer that the sale of the property will cause a degree of hardship to Sonny and his family if they are required to find other

accommodation.  But equal division of the equity released by a sale would provide

2      Section 339(1)(a).

3      Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401, at [27] and [31]-[[33].

him, after the payment of expenses, with a significant capital sum.   Mrs Morgan continues to suffer hardship by being deprived of access to her share in the value of the property.  The hardship caused to her by declining to make an order for the sale, in circumstances where Sonny has declined a proposal to acquire her half-share of the property, far outweighs the hardship which would be caused to Sonny by the sale. Mrs Morgan is elderly and she is entitled to harvest the fruit which has been denied her for more than 35 years.

Conclusion

[14]     I propose, therefore, to direct that the property be sold immediately.  It would be prudent and to the benefit of both Mrs Morgan and Sonny for the parties to spend a modest sum in readying the property for sale, but that possibility was not sufficiently explored at the hearing for me to determine that any orders should be made.  Given Sonny's resistance to the sale, I am not in a position to assume that there would be the necessary degree of co-operation to enable directions to be made effectively.   Nevertheless, I encourage both Sonny and Mrs Morgan to agree on taking sensible steps to get the property ready for sale.

[15]     I am satisfied that the orders which Ms Fuiava sought to be made under s 343 are appropriate, with some modifications.

Decision

[16]     I grant the plaintiff ’s application and make the following orders:

(a)      The property at 11 Oxford Road, Manurewa is to be sold forthwith and the net proceeds, after the implementation of the other orders of the Court, are to be divided equally between the plaintiff and the defendant.

(b)As soon as is practicably possible, the property is to be listed for sale with Barfoot & Thompson, Manurewa (the agent).   The reasonable recommendations of the agent for advertising, signage and promotion

of the sale of the property are to be accepted and implemented by the parties, with the cost being borne by the agent in the first instance.  In the event that the defendant refuses to sign an appropriate listing authority, the Registrar of the High Court at Auckland is empowered to sign any documents required to list the property for sale.

(c)      Pending sale, the defendant shall keep the property clean, tidy and presentable for sale and shall allow the agent and prospective purchasers reasonable access for viewing.

(d)The sale is to be by auction.  If the parties cannot agree, the Registrar of the High Court at Auckland shall decide all issues arising in respect of the sale of the property and is authorised to sell the property at, or before, or after the auction if the Registrar sees fit after receiving advice from the agent.

(e)       At any auction, the auctioneer is authorised to fix a reserve price.

(f)      The powers of the Registrar under paragraph (d) shall include the power to appoint a firm of solicitors to act for the vendors on the sale. In the event that the defendant should refuse to sign such documents as may be required to facilitate the transfer of the property to the new owner following sale, the Registrar is authorised to sign any such documents on his behalf.

(g)From the proceeds of sale, such of the following expenses as have been incurred are to be deducted from the sale price:

(i)       real estate agent commission and sale expenses;

(ii)any outstanding rates, insurance premiums or water charges on the property; and

(iii)actual and reasonable legal fees and disbursements of the firm of solicitors engaged to act as the vendors’ solicitors on the sale.

(h)The net proceeds of the sale are to be paid out to the plaintiff and the defendant in accordance with their equal half-shares.

Costs

[17]     Having   succeeded   on   this   application   despite   Sonny’s   opposition, Mrs Morgan  is  entitled  to  costs  in  this  proceeding,  calculated  according  to  the schedule on a Category 2B basis, together with disbursements fixed by the Registrar. These costs shall be paid by the defendant out of his share of the net proceeds of the sale of the property and the solicitors acting for the vendors on the sale of the property are authorised and directed to pay the costs to Mrs Morgan accordingly.

Leave reserved

[18]     I  grant  the  parties  leave  to  apply  for  any  further  directions  or  orders reasonably required to give effect to this judgment.

.......................................

Toogood J