Nik Consultants (NZ) Limited v Graves

[2024] NZHC 784

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1359

[2024] NZHC 784

BETWEEN

NIK CONSULTANTS (NZ) LIMITED

Plaintiff

AND

JOANNE GRAVES

Defendant

Hearing:	22 November 2023
Appearances:	LT Meys for the Plaintiff M Taylor for the Defendant
Judgment:	18 April 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 18 April 2024 at 12 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Neilsons Lawyers, Auckland

NIK CONSULTANTS (NZ) LIMITED v GRAVES [2024] NZHC 784 [18 April 2024]

Introduction

[1]    The plaintiff and defendant own conjoined dwellings on a  property  in  Mount Roskill, Auckland subject to a cross lease (Property). The plaintiff wishes to build a stand‑alone dwelling on its share of the Property and has applied for an order partitioning the Property into two freehold titles of approximately equal land area, pursuant to s 339 of the Property Law Act 2007 (PLA).

[2]    The plaintiff seeks summary judgment of its claim as it says there is no arguable defence. The plaintiff accepts that summary judgment is not usually available for applications under s 339 of the PLA but says that it is appropriate in the circumstances of this case. The plaintiff relies particularly on the parties having allegedly reached an agreement in principle and that the parties’ relationship is now in a state of deadlock.

[3]    The defendant opposes summary judgment, denying any agreement was reached or that there is a deadlock.

[4]    The question is whether this is an appropriate case to exercise the s 339 discretion to convert the Property into freehold titles on a summary basis. To answer this, I am required to consider the factors in s 342 of the PLA.

Background

[5]    On 16 December 1993, the defendant, Ms Joanne Graves, became the registered proprietor of Flat 1 of the Property at 95 Melrose Road, Mt Roskill, Auckland (95). Ms Graves and her four children moved into 95 and it has been their family home ever since.

[6]    In 2010, Ambrish and Kiran Gupta (the Guptas) purchased Flat 2 of the Property, 95A Melrose Road (95A).

[7]    On or around 23 October 2012, the Guptas transferred 95A to the plaintiff, NIK Consultants Limited (NIK). The Guptas are the sole shareholders of NIK. The Guptas

live in 93B Melrose Road which is owned by a company whose ultimate shareholders, like NIK, are the Guptas.

[8]    In early 2020, the Guptas’ son, Ruchinav1, and his wife, Ankita, raised for the first time with Ms Graves the potential redevelopment of 95A, by demolishing the structurally attached dwelling and building a new, separate dwelling on 95A’s exclusive use area.

[9]    Ms Graves agrees that she was open to considering the proposed development but that at that stage there were no drawings so the discussions were theoretical. Ruchinav says they provided plans to Ms Graves on the strength of those discussions, annexing a copy of those plans to his affidavit.

[10]   Ms Graves points to the date of those plans and says that they were not provided to her until after her email on 13 March 2020 when she said she could not agree to anything, even in principle, until she received answers to a number of queries including the intended final layout of the two dwellings. Ruchinav annexes a copy of this email to his affidavit but Ms Graves says it is incomplete with the final paragraph not included. That paragraph said:

At this point, these are our initial concerns. Until we have this level of information we cannot agree to give any consent, and we would need this information before consulting with our lawyer again.

[11]   Shortly after Ms Graves’ email, New Zealand entered COVID‑19 lockdown. Ms Graves’ evidence is that the next discussion about the proposed redevelopment was not until 13 October 2020. Following that discussion, Ankita sent an email dated 21 October 2020 attaching documents, with the email saying that it was in response to the letter of 13 March 2020. Ms Graves annexes a copy of this email and the documents attached to her affidavit. These plans are the same plans that Ruchinav says were provided prior to the March 2020 email which Ms Graves disputes. In any event the plans do not include architectural plans for the intended dwelling or where it would be situated on the Property but just for the proposed boundary. The documents attached to Ankita’s email also included a letter for Ms Graves to sign

1      I refer to Ruchinav Gupta and his wife Ankita Gupta by their first names throughout the judgment to avoid confusion with Ruchinav’s parents. I intend no disrespect in doing so.

confirming her consent to investigation and further work on the intertenancy wall, demolition of the current 95A dwelling under the supervision of a structural engineer, and “[c]onstruction of a new dwelling with an area of 230 square metres or more as permitted by Auckland Council”.

[12]    Ms  Graves’  evidence  is  that  she   advised   Ruchinav   and  Ankita   on 26 October 2020 that she would not consent at that stage and confirmed her position by email on 27 October 2020. A copy of that email is annexed to her affidavit.

[13]   NIK’s lawyer at the time, DK Law, wrote to Ms Graves on 23 December 2020 referring to previous discussions and documents provided and saying that both parties would benefit significantly from the works especially in terms of privacy as the new house would be built further away from the intertenancy wall the parties currently share. The letter says that in response to Ms Graves’ concerns about the proposed works NIK is prepared to give regular updates at each stage of construction and is open to some form of compensation. The letter asks Ms Graves to advise whether she is open to meeting with them to discuss, including to provide further details about the proposed works.

[14]   Ms Graves responded substantively on 18 January 2021 proposing subdivision of the Property into freehold titles for the first time. However, the proposal was that subdivision would only occur nearing completion of the new dwelling as Ms Graves was concerned that if it happened earlier, more than one dwelling might be erected on 95A. The letter said that there would need to be future discussion regarding boundaries and easements for any potential subdivision. It finished by saying that if agreement could be reached on the matters in the letter then Ms Graves would be happy to discuss the details of the process going forward with the hope of reaching a final agreement for her to take to her lawyer for review.

[15]   DK Law responded on behalf of NIK on 13 September 2021 saying NIK would agree to subdivision but only if it occurred prior to completion of the proposed dwelling. To alleviate Ms Graves’ concern regarding the possibility of multiple dwellings, DK Law said NIK was prepared to enter into a binding covenant that only one dwelling could be built. DK Law’s letter, like Ms Graves’ earlier letter, said if the

parties proceeded with subdivision, boundaries and appropriate easements would need to be agreed and attached plans outlining a proposed boundary line. The letter asked Ms Graves to initial in the space provided if she agreed and finished by saying if they received confirmation from Ms Graves an agreement would be drawn up mapping out the above plus specifics in relation to the subdivision.

[16]   Ms Graves replied on 2 November 2021 referring to a conversation the previous day and confirming a proposal that Ms Graves would agree to. This proposal included an alternative boundary and that access to 95A be via the driveway for 93 Melrose Road. Ms Graves explained this would allow for the driveway of 95 to become part of 95 only, although there would be a passing bay at the entrance to 95 to avoid congestion.

[17]   In February 2022, NIK’s new lawyers, Neilsons Lawyers, wrote to Ms Graves referring to the previous correspondence between the parties and recording that Ms Graves had previously agreed that it is sensible for both titles to be made freehold. The letter did not respond to Ms Graves’ November 2021 proposal but said that to address Ms Graves’ concerns NIK would be willing to register a restrictive covenant against the title to 95A to prohibit the construction of a second dwelling on the site. In addition, the letter confirmed that NIK agreed to cover the costs of subdivision plus the removal of the internal door and refinishing in accordance with the Council’s requirements. The letter then stated that the offer set out would be available for 20 working days and, if not consented to, would result in the matter being referred to arbitration in accordance with the cross lease.

[18]   Ms Graves’ evidence is that she was taken aback by the letter and wondered if Neilsons had their “wires crossed” as the letter recorded that plans for a single dwelling had been provided to Ms Graves but no such plans had ever been provided. Ms Graves says she called Neilsons thinking there may be some misunderstanding that could be clarified. The conversations did not resolve matters, so Ms Graves instructed solicitors.

[19]   On 23 March 2022, Ms Graves’ lawyers wrote to Neilsons confirming that Ms Graves “remains open to progressing a conversion of the property into separate

freehold titles” and referring to Ms Graves’ preferred option as provided to NIK on 2 November 2021 — to which there had been no response. The letter recorded that Ms Graves’ primary concern at that time was in relation to the use of the common area driveway. The letter said that under the cross lease the common area driveway was for the exclusive use of the parties but that because a portion of the boundary fence between 95A and the neighbouring property, 93B Melrose Road, had been removed, the driveway was frequently being used by the residents of 93B Melrose Road and other vehicles apparently associated with other dwellings at 93 Melrose Road. The letter records that Ms Graves did not consent to such use. As noted above, the Guptas resided in 93B Melrose Road.

[20]   Ms Graves’ lawyers explained that Ms Graves’ November 2021 proposal was intended to provide a modest degree of physical separation between Ms Graves’ dwelling and the driveway. The letter acknowledges that the proposal involves additional parties but provides those parties with additional driveway and vehicle turning bay width and does not impose any restriction on NIK’s further development of 95A whether on its own or together with 93B Melrose Road by way of restrictive covenant. The 23 March 2022 letter attaches an updated plan of Ms Graves’ preferred proposal for conversion to freehold. An offer was also made in the letter to meet to discuss matters. There does not appear to have been any response from NIK or Ruchinav or Ankita to that offer.

[21]   On around 12 May 2022, NIK served Ms Graves with a notice of breach of the cross lease in respect of Ms Graves’ pets, maintenance and fencing at 95, and a historic alteration to the dwelling. NIK required Ms Graves to either remedy each of the alleged breaches or NIK would proceed to arbitration for orders to terminate the cross lease.

[22]   On 20 May 2022, Neilsons provided a copy of the notice to Ms Graves’ bank as mortgagee.

[23]   On 26 May 2022, Ms Graves’ solicitor responded to NIK’s notice, seeking advice in respect of the joint fencing maintenance decisions and informally notifying

the plaintiff of its breaches in respect of the boundary fence with 93B Melrose Road, which had remained unremedied since February 2022.

[24]   On 7 July 2022, Ms Graves served NIK with a formal notice of breach of lease in respect of the unremedied boundary fence and resulting nuisance from the additional unauthorised users of the shared driveway; and unauthorised plumbing works/pipes running above ground along the length of the driveway. Ms Graves’ notice required NIK to reinstate the boundary fence.

[25]   On 19 July 2022, Ms Graves’ solicitor notified Neilsons that all outstanding repairs and maintenance works, as identified in NIK’s notice, were complete other than those that required a joint decision with NIK.

[26]On 19 September 2022, NIK applied for an arbitrator to be appointed.

[27]   On 21 September 2022, Ms Graves’ solicitor wrote to NIK, advising that NIK was in breach of the cross lease and that NIK’s notice was therefore nugatory. The letter reiterated Ms Graves’ concerns regarding NIK’s unremedied breaches.

[28]   Neilsons responded on 10 October 2022, denying NIK’s notice was nugatory, denying each of Ms Graves’ previous responses to the various breaches NIK had alleged against her, and alleging that NIK was entitled to seek an arbitrator’s order to determine the cross lease on the basis of Ms Graves’ allegedly unremedied breaches.

[29]On 25 October 2022, Ms Graves’ solicitor responded setting out:

(a)why Ms Graves was not in breach of the cross lease;

(b)why the balancing of factors under s 342 of the PLA would weigh heavily against any claim by NIK for the cross lease to be determined under s 339; and

(c)why NIK’s actions and pattern of dealing called into question its bona fides in respect of the allegations of Ms Graves’ breaches  of  the cross lease.

[30]   The letter required NIK to reinstate the fence between 95A and 93B Melrose Road and asked for NIK’s input into the decision on how to repair the shared boundary fence (as required by NIK’s previous notice demanding Ms Graves undertake fencing maintenance issues).

[31]   NIK did not respond to that letter either through its lawyers or otherwise and did not reinstate the fence between 95A and 93B Melrose.

[32]   On 16 June 2023, NIK filed these proceedings seeking orders by way of summary judgment pursuant to s 339(1)(b) of the PLA that the parties’ cross lease titles be divided into two freehold titles of approximately equal land area.

[33]   Orders were sought in the alternative that NIK is entitled to demolish the existing conjoined dwelling at 95A and build a detached replacement dwelling that complies with all laws and Council regulations, and to demolish the historical alteration to 95 Melrose.

[34]   NIK confirmed by memorandum dated 20 November 2023 that these alternative orders and the claims relating to nuisance and the historical alteration are not pursued in this summary judgment application.

[35]   In addition, the 20 November 2023 memorandum addressed an issue arising in respect of service of the first affidavit of Mr Manoj Dutta, an architect engaged by NIK, dated 28 May 2023. It appears that this affidavit was not served on Ms Graves until just prior to the filing of the defendant’s submissions on 16 November 2023.

[36]   NIK says that most of the documents that were annexed to the first affidavit of Mr Dutta and the advice he gave are also contained in the first affidavit of Ruchinav which  was  filed   and   served.   Furthermore,   Mr   Dutta   filed   a   reply   dated 19 September 2023 which was properly served. That affidavit was filed late but an application was made for leave to extend the time for filing.

[37]   I accept both affidavits for the purposes of the summary judgment application but discuss the impact of this late filing upon Ms Graves below.

Legal Principles

Property Law Act 2007

[38]   The plaintiff brings its application pursuant to s 339 of the PLA which provides:

1. Court may order division of property

(1)A court may make, in respect of property owned by co-owners, an order—

(a)for the sale of the property and the division of the proceeds among the co-owners; or

(b)for the division of the property in kind among the co-owners; or

(c)requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.

(2)An order under subsection (1) (and any related order under subsection (4)) may be made—

(a)despite anything to the contrary in the Land Transfer Act 2017; but

(b)only if it does not contravene section 340(1); an(c)     only on an application made and served in the manner required by or under section 341; and

(d)only after having regard to the matters specified in section    342.

(3)Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.

(4)A court making an order under subsection (1) may, in addition, make a further order specified in section 343.

(5)Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).

(6)An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—

(a)the Land Transfer Act 2017; or

(b)the Deeds Registration Act 1908; or

(c)the Crown Minerals Act 1991.

[39]   The relevant subparagraph in s 339(1) is subsection (b), seeking the division of property in kind among co-owners.

[40]   Section 339(2) sets out the circumstances in which an order under s 339(1) may be made and requires the Court to have regard to the matters specified in s 342.

Those matters are:2

(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:

(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 any co-owner to the cost of improvements to, or the maintenance of, the property:

(f)any other matters the court considers relevant.

[41]   When making an order pursuant to s 339(1), the Court may also make additional orders under s 343. These can include requiring the payment of compensation, directing how the expenses of any division of the property are to be borne and any other matters or steps the Court considers necessary or desirable as a consequence of the making of the order under s 339(1).

[42]Section 340 of the PLA provides:

340Order under section 339(1)(b) subject to restrictions on subdivision of land

(1)No order under section 339(1)(b) (and no related order under section 339(4)) may subdivide land contrary to section 11 or Part 10 of the Resource Management Act 1991.

(2)A court that concludes that an order under section 339(1)(b) (or a related order under section 339(4)) would contravene subsection (1) may make an order of that kind that does not contravene that

2      Property Law Act 2007, s 342.

subsection, or may instead make an order under section 339(1)(a) or

(c) (and any related order under section 339(4)).

[43]   As the Court of Appeal held in Bayly v Hicks, it is unsurprising that there is this limitation in the PLA. Otherwise, the Court would have the ability to “ride roughshod” over the provisions of the Resource Management Act 1991 (RMA).3

Summary judgment principles

[44]   Rule 12.2(1) of the High Court Rules 2016 provides that summary judgment may be granted where 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.”

[45]   The principles governing summary judgment are well settled with the following summary taken from the leading authority, Krukziener v Hanover Finance Ltd:4

(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, there is no real question to be tried.5

(b)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.6

(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not uncritically accept evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary

3      Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [29].

4      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

5      Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

6      MacLean v Stewart (1997) 11 PRNZ 66 (CA).

documents or other statements by the same deponent or is inherently improbable.7

(d)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.8

[46]   The Court of Appeal held in Bayly v Hicks that the summary judgment procedure is not well suited to s 339 applications because on such applications the Court must exercise a broad discretion and take into account a variety of factors and possible outcomes.9 The Court contrasted this with the previous position under the Partition Acts 1539 and 1540 and the discretion given by s 140 of the Property Law Act 1952 to order sale of the land instead of partition:10

As the commentaries observe, much of the case law prior to 2007 focusing as it did on the limited choices available to the court, will now be rendered otiose by the new discretion clearly given by s 339. The previous division between the Partition Acts, which dealt with division between co-owners and the Property Law Act 1952, which related to sale to third parties, has gone. So has the rigid requirement of the past that the court must make orders if the criteria set out in the Acts were proved. This has been replaced by a broad discretion, where the relevant considerations are set out in s 342.

[47]   In Anderson v Anderson, Associate Judge Bell commented that the Court could not grant summary judgment of a s 339 application unless there is only one possible outcome.11 However in Coffey v Coffey, Associate Judge Osborne (as his Honour then was) instead considered that summary judgment may be appropriate where there were clear concessions or indisputable facts such that “clarity of appropriate outcome occurs”.12 After carefully considering the facts relating to the party’s co-ownership of the property, his Honour held that such clarity existed in that case.

7      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.

8      Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

9      Bayly v Hicks, above n 3, at [31].

10 At [25].

11     Anderson v Anderson [2020] NZHC 788 at [9].

12     Coffey v Coffey [2012] NZHC 1765 at [45].

Should a s 339 order be made by way of summary judgment?

[48]   I turn now to the factors set out in s 342 to assess whether it is appropriate for a s 339(1)(b) order to be made by way of summary judgment in this case.

[49]   Because this is a summary judgment application, consideration of the s 342 factors is on the basis of whether they provide a reasonably arguable defence to the   s 339 application either on their own or in combination with other factors.

Section 342(a) — extent of the shares

[50]   Each of the parties in this case has a half share in the undivided fee simple of the Property.

[51]   Counsel for Ms Graves submits that as neither party is a majority owner either by land area or by flat number, this consideration is neutral and does not support the application. This can be contrasted with the facts in MacKenzie v Smythe, a case relied on by NIK, where the plaintiffs held a two-thirds (and therefore majority) share in the fee simple which the Judge held should be seen as a factor to be weighed in support of the application.13

[52]   I consider that this factor is neutral because currently each party has a half share in the Property. Neither party therefore has a greater right than the other to determine whether the Property ought to be divided into two freehold properties.

Section 342(b) — the property’s nature and location

[53]   The  Property  is  a  cross  lease  of  an  undivided   one-half   share   of   1,138 square metres with two residential dwellings that are conjoined on the Property. The dwellings share a structural wall, access to the roadway, common use areas and utility meters.

13     MacKenzie v Smythe [2012] NZHC 1113 at [42].

[54]   NIK proposes demolishing the 95A dwelling and rebuilding a larger separate, stand-alone dwelling. As recorded above, it has indicated it is prepared to include a covenant that only one dwelling will be built on the site.

[55]   Ms Graves submits that: there is no way to divide the Property that affords the parties separate road access; there are multiple complicating factors both to detaching and demolishing the dwelling at 95A; and there are issues regarding the fair and practical division of the land that the parties co-own. These factors in her submission weigh against an order to partition the Property at least on a summary basis.

[56]   By contrast, NIK submits that the Property has an existing fence line between the cross-lease sections that has been in place for decades and in a similar location to that sought for the freehold boundary. NIK submits that it would be appropriate to order that the Property be partitioned in circumstances where the front and rear sections are already treated as separate and the proposed build is of a single residential dwelling.

[57]   NIK relies in particular on three earlier decisions: Ko v Chamberlain,14 MacKenzie v Smythe,15 and Kid Country Te Atatu Ltd v Hoy.16 Counsel for NIK submits that the case for freeholding this cross lease is even stronger than it was in those cases.

[58]   However, Ko v Chamberlain can be distinguished as it was decided under the previous provisions which were directory rather than discretionary as s 339 is now.

[59]   MacKenzie v Smythe, may also be distinguished in terms of this factor as the properties were not conjoined, there was no shared vehicle access and no areas of common property.17

[60]   Finally in Kid Country Te Atatu Limited v Hoy, it is not clear whether the two units were conjoined or not. As Downs J held in that decision, however, the issue in

14     Ko v Chamberlain (2007) 8 NZCPR 261 (HC).

15     MacKenzie v Smythe, above n 13.

16     Kid Country Te Atatu Ltd v Hoy [2019] NZHC 988.

17     MacKenzie v Smythe, above n 13, at [17].

s 339 cases “is not whether other cases are apparently similar, but whether the facts of this one warrants an order given the principles above.”18 I note that the application in Kid Country was not made by way of summary judgment.

[61]   A factor relevant to the nature and location of the Property in this case is that the ultimate owners of NIK, the Guptas, reside in the neighbouring property, 93B Melrose Road. It is the fence between both addresses ultimately owned by the Guptas, 95A and 93B Melrose Road, that has been removed to permit access between the addresses.

[62]   In conclusion on this factor, the nature and location of the property does not favour partition on a summary basis because the two dwellings are conjoined so that the boundary between the properties will require adjustment and because of the shared access and associated issues, including use of the shared access by third parties.

Section 342(c) — the number and percentage share in the property of other co‑owners

[63]   In this case there are only two co-owners under the cross lease — both party to this litigation. In Kid Country Downs J held that the fact that there was only one other co-owner provided modest support for the application as the impact would be confined.19 In the circumstances of this summary judgment application, I consider this factor neutral.

Section 342(d) — hardship

[64]   In Holster v Grafton, Fogarty J observed that hardship is a “value-laden criterion”,20 commenting that hardship suggests an adverse effect which is of significant impact to the relevant party. Fogarty J held that hardship has to be read consistently with the policy of the statute which respects the property rights of tenants in common but seeks to resolve conflicts fairly. Similarly, Osborne J held in Coffey v Coffey:21

18     Kid Country Te Atatu Ltd v Hoy, above n 16, at [17].

19     At [22]–[24].

20     Holster v Grafton (2008) 9 NZCPR 314 (HC) at [50].

21     Coffey v Coffey, above n 12, at [155].

While, mindful of the observations of the Court of Appeal in [Director-General of Education v Morrison], not to limit the concept of hardship in s 342 of the Act to severe suffering or privation, I would not view the term as embracing mere inconvenience or disappointment. Such lesser impacts might fall for consideration under “other matters relevant” under     s 342(f) of the Act but do not semantically fall within the concept of hardship.

[65]   Counsel for NIK submits that the only real hardship is the current inability of NIK to replace the small aged, conjoined dwelling with a modern home which would allow its proposed tenants to raise a family. In addition, NIK submits that the hardship alleged by Mrs Graves cannot be significant as she initially proposed a subdivision solution on 18 January 2021 which she said “will benefit both parties.”

[66]   Ms Graves submits that an order now would defeat her property rights under the cross lease and expose the amenity, character and privacy of her longstanding home to intrusion and interference by the development of 95A. Should the Court decline the orders, Ms Graves says the effect on NIK is not hardship, but merely disappointment with having to conform with the contractual obligations and limitations imposed by the cross lease when developing the 95A dwelling. Ms Graves submits inconvenience or disappointment falls well short of the test for hardship in the context of s 342 evaluations and that moreover it is precisely the inconvenience which NIK (and the Guptas before NIK) accepted might result when purchasing 95A.

[67]   I acknowledge that Ms Graves did originally propose subdivision into freehold titles but that proposal was on the basis that the new dwelling at 95A would be close to being finalised before subdivision occurred. Furthermore, the boundary between the two freehold properties was still to be agreed. If an order were made for division now, it may remove Ms Graves’ current right under the cross lease to reasonably withhold her consent to the new dwelling. Further, the boundary proposed by NIK may not necessarily fairly divide the Property between the parties given the replacement of the conjoined dwellings with two stand-alone dwellings, one of which will be in a different location on the Property.

[68]   In addition, the intended footprint of the new dwelling was only included in a plan attached to the affidavit of NIK’s architect in reply. As a result, Ms Graves has not yet had an opportunity to provide evidence on the impact of the intended site.

[69]   Counsel for NIK submitted at the hearing that one option may be to order division but to require further evidence and submissions as to the appropriate boundary and whether any further orders are necessary. Counsel for NIK said it was unfair to NIK to require it to go to the expense of obtaining architectural plans before it knew whether an order for division would be made. However, Ruchinav and Ankita have been prepared since the beginning of this matter to build a new dwelling on the Property. Even if the Court does not order division under this application a new dwelling could still be built if Ms Graves consents or an arbitrator considers consent reasonably ought to have been given.

[70]   Significantly, Mr Dutta said in his first affidavit affirmed in May 2023 (but not served on Ms Graves until November 2023) that:

[W]hile proposals for the dwelling design have been drawn up, no exact dwelling plan has yet been finalised as the plaintiff is waiting to be sure the Court will allow a new dwelling to be constructed.

[71]   In this application, the Court is not determining whether the new dwelling can be constructed, it is instead determining whether the applicant has satisfied the Court on a summary basis that the Property should be partitioned. It is difficult to determine this in the absence of architectural plans as the question of hardship cannot properly be considered.

[72]   At the hearing it was clear that one of Ms Graves’ main concerns was that architectural plans for the house had not been provided to her.

[73]   Ms Graves explains in her affidavit that several years ago the  owners of     93 Melrose Road when redeveloping that property promised to build only one dwelling but instead built three dwellings. As a result, Ms Graves explains that she is now more cautious. However, with the nature of the proposed development involving demolition of a conjoined unit and construction of a new dwelling in close proximity to her house, I consider that it is a legitimate concern of Ms Graves that architectural plans had not been provided. Without these, Ms Graves is not in a position to consider how the new dwelling will impact on her dwelling and whether she ought to consent, either pursuant to the cross lease or to the partition of the Property (or both).

[74]   The issues with service of the affidavits of the architectural consultant for the plaintiff, Mr Dutta, are unfortunate in the circumstances of this case as they have only exacerbated communication issues between the parties. In addition to Mr Dutta’s first affidavit not being served on Ms Graves until November 2023, well after Ms Graves had served her own affidavit, Mr Dutta’s affidavit in reply was served late. Furthermore, it was only in Mr Dutta’s affidavit in reply that there was finally a proposed footprint provided for the intended dwelling (but still no architectural plans for the dwelling).

[75]   In my view, Ms Graves has a reasonably arguable defence to the application to partition based on the hardship factor in s 342(d) at this stage of the proceedings.

Section 342(e) — value of contributions by any co-owners to the costs of the properties’ improvements or maintenance

[76]   Under the cross lease the parties contribute equally to any common area, maintenance or improvements. The parties do not otherwise rely on this factor and so I treat this consideration as neutral.

Section 342(f) — any other matters the Court considers relevant

[77]   The main basis for NIK’s submission that summary judgment is appropriate, is that Ms Graves had agreed to the subdivision, relying on MacKenzie v Smythe. However, I consider that it is at least reasonably arguable that the parties did not reach an agreement in this case. Furthermore, the facts of MacKenzie v Smythe are in any event distinguishable.

[78]   In MacKenzie v Smythe, in terms of the agreement reached, Associate Judge Gendall (as his Honour then was) relied on the defendant’s admission in her statement of defence that she had previously agreed to partition of the properties in accordance with “Option 1” provided by jointly appointed surveyors.22 His Honour accepted the agreement reached may not be binding but held that the fact that the defendant withdrew entirely from the partition process without explanation after at least six months of active negotiations and work between the parties and surveyor, supported

22     MacKenzie v Smythe, above n 13, at [56] and [59].

partition on a summary judgment basis.23 The Judge accepted that this was a rare position to reach.24

[79]   In this case, although Ms Graves suggested subdivision, no agreement was ever reached. NIK relies on an email from Ms Graves on 18 January 2021 suggesting that division is a solution “that will benefit both parties”. However, in the email Ms Graves proposes that the new dwelling is near completion prior to finalising division and states that any potential subdivision would require discussion of boundaries and easements. Throughout the correspondence following, Ms Graves continued to reserve her rights in terms of any subdivision.

[80]   It is clear from the correspondence between the parties discussed above that it is reasonably arguable that no agreement was reached in respect of subdivision. The letter from NIK’s lawyers at the time in response to Ms Graves’ letter of 18 January 2021 (as discussed above in paragraph [15]) is evidence that there was no agreement as it disagreed with Ms Graves’ condition that subdivision only occur nearing completion of the new dwelling and asked Ms Graves to initial the plan attached “if she agreed”.

[81]   Counsel for NIK submits that it is sufficient that there was an agreement in principle, but I consider it is reasonably arguable that even an agreement in principle was not reached. I do not therefore consider this case can be said to be similar to MacKenzie v Smyth on the basis that an agreement was also reached here.

[82]   Furthermore, in terms of the other distinguishing facts, in MacKenzie v Smythe the cross-lease shares in the property were entirely separate as each had separate road access and off-street parking, there were no shared common areas and the dwellings were separate stand-alone buildings.25

[83]   Here, the development proposed involves the demolition of a conjoined unit, construction of a new dwelling in close proximity to Ms Graves’ house and with a

23     MacKenzie v Smythe, above n 13, at [61].

24 At [69].

25 At [45].

shared driveway. These are very different circumstances to those in MacKenzie v Smythe.

[84]   Another distinguishing factor is that in Mackenzie v Smythe the Court held that it was “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.”26

[85]   In this case NIK considers that the parties are in a state of deadlock but Ms Graves does not.

[86]   Considering the evidence on a summary basis, it does not appear to show the parties are in a state of irretrievable deadlock. Ms Graves has not yet been given an opportunity to consent to the planned new dwelling in accordance with her current right under the cross lease as no architectural plans have been provided to her. It is difficult for Ms Graves to consent, or to consider the impact of division, without draft plans at least. Furthermore, Ms Graves’ proposals appear to attempt to reach an improved position for both parties. Seeking the consent of the owners of 93, 93A and 93B Melrose Road to 95A sharing their driveway may be one way of making the division workable. I agree that there is no obligation on those parties to agree but that does not prevent an enquiry being made, particularly where Ms Graves has offered to agree to a passing bay remaining on her property and it may be one way of resolving matters.

[87]   By contrast, the approach of NIK appears to have contributed to difficulties between the parties because they seem to expect Ms Graves to agree in the absence of basic details in terms of the proposed dwelling.

[88]   Counsel for NIK submits that it is clear from Ms Graves’ correspondence that she does not recognise that NIK has a legal right to convert the cross lease to a freehold on as close to equal terms as possible. However, there is no such right. As discussed above, s 339 now provides the Court with a broad discretion.

26     MacKenzie v Smythe, above n 13, at [69].

[89]   Furthermore, Mr Dutta’s original affidavit proceeds on the basis that “the Court may wish to divide the property as close to an even split of land between the parties as possible.” However, the discretion provided by s 339 does not require an even split of land necessarily, it is more nuanced than that. Where there is currently a shared driveway along the length of the Property and there are conjoined dwellings, the appropriate division may not be on the basis of an even split of the land.

[90]   A renewed constructive approach by NIK based on provision of the information requested and a focus on the s 342 factors rather than an expectation of division on the basis of equal shares in the land (as opposed perhaps to the value of the divided properties) is likely to improve matters between the parties.

Conclusion

[91]   As will be obvious from the discussion above, I do not consider that consideration of the factors in s 342 supports an order being made under s 339 on a summary judgment basis. It is reasonably arguable that there was no agreement by Ms Graves to divide the properties unconditionally even in principle and I do not accept that the parties are in a state of irretrievable deadlock. The complexities of the Property, with the currently conjoined dwellings, the lack of architectural plans for the new dwelling, the shared vehicle access and the likely impact of any division on sun and amenity, all contribute to summary judgment being clearly inappropriate.

[92]   Counsel for NIK submits that although there may not be clarity on the appropriate boundary, the Court could still make an order for division and direct further submissions and evidence on the appropriate boundary. However, the appropriate outcome may be not to make a partition order. It is not a situation where there is clarity around the appropriate outcome as is necessary for a summary judgment application to be granted in respect of a s 339 application.

Result

[93]   The application by NIK for summary judgment of their claim for orders pursuant to s 339 of the PLA is declined.

Costs

[94]   The usual position in unsuccessful summary judgment applications is that costs are reserved in accordance with the principle in NZI Bank v Philpott.27

[95]   In my preliminary view, however, it may be appropriate in this case to award costs now, potentially on an increased basis, as the plaintiff approached the application on the basis that it had a legal right to convert the cross lease to a freehold on as close to an equal split of the land as possible when this is not the position under s 339 of the PLA. Furthermore, it ought to have been clear to it that this case was inappropriate for summary judgment because of the complexities of the Property, including conjoined dwellings and a shared driveway and because Ms Graves had not been provided with architectural plans for the proposed new dwelling.

[96]   I ask the parties to confer on costs and only if agreement cannot be reached to file memoranda, on behalf of the plaintiff within 25 working days and the defendant within a further 10 working days.

Associate Judge Sussock

27     NZI Bank v Philpott [1990] 2 NZLR 403 (CA).