Official Assignee v Harding
[2022] NZHC 1509
•28 June 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1100 [2022] NZHC 1509
UNDER Section 339 of the Property Law Act 2007 IN THE MATTER
of the bankrupt estate of Paul Harding
BETWEEN
OFFICIAL ASSIGNEE IN BANKRUPTCY OF THE PROPERTY OF PAUL HARDING
Plaintiff
AND
ANTHONEDA JULIE HARDING
Defendant
Hearing: 28 June 2022 Appearances:
R Hindriksen for the Plaintiff
No appearance by or for the Defendant
Judgment:
28 June 2022
JUDGMENT OF GAULT J
This judgment was delivered by me on 28 June 2022 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors:
Mr G Neil and Mr R Hindriksen, Meredith Connell, Office of the Crown Solicitor, Auckland
OFFICIAL ASSIGNEE v HARDING [2022] NZHC 1509 [28 June 2022]
[1] This application for summary judgment by the Official Assignee (Assignee) was listed for first call today. The Assignee seeks orders under s 339 of the Property Law Act 2007 (PLA) that the property at Unit 1E, Morning Star Units, 20 Morning Star Place, Mt Albert, Auckland (the property)1 be sold and the proceeds be divided between the defendant, Ms Harding, and the Assignee.
[2] The documents were served on Ms Harding on 16 May 2022. She did not file any opposition and there was no appearance by or for her this morning.
[3] Mr Hindriksen, for the Assignee, sought summary judgment today. He had filed a helpful memorandum in support. As he submitted, there is no doubt that applications for sale orders under s 339 of the PLA are amenable to the summary judgment procedure and summary judgment has been granted in many cases.
[4] However, none of the cases he cited involved judgment in a list call. Even where the application is undefended, applications for such sale orders ordinarily proceed by way of a formal proof hearing. That is because s 339 of the PLA involves the exercise of a judicial discretion having regard to prescribed statutory factors requiring a judgment with reasons. Such applications are generally not suited to orders in a busy list court. An exception not requiring a formal proof hearing is Bank of New Zealand v Padamati.2
[5] In this case, there was time in the list this morning and I have now had an opportunity to review the statement of claim and affidavits. A formal proof hearing is not required and would add further cost which, if the orders sought are made, would ultimately reduce Ms Harding’s share of the sale proceeds.
Background
[6] On 8 October 2014, Ms Harding’s husband, Mr Paul Harding, purchased the property subject to a mortgage to Bank of New Zealand (BNZ). The property is a residential unit.
1 More particularly described in identifier 302876, legal description Unit F15 and Accessory Unit 175 and 1/70th share of Accessory Unit 456-457, 459 Deposited Plan 346086.
2 Bank of New Zealand v Padamati [2021] NZHC 45.
[7] On 26 March 2019, Mr Harding was adjudicated bankrupt by order of this Court on the application of the Commissioner of Inland Revenue.
[8] On or about 10 September 2019, Mr Harding advised the Assignee that he had intended to jointly purchase the property with his wife but as she was unemployed at the time BNZ required the property to be solely registered in Mr Harding’s name. The Assignee was informed that Ms Harding had intended to be a co-owner of the property and that she contributed to the mortgage and other expenses. The extent to which Ms Harding contributed to the mortgage and other expenses appears to be limited to the last two years. In any event, the Assignee has determined that Mr Harding held a half share in the property on trust for Ms Harding and beneficially retained the other half for himself.
[9] On 28 May 2020, the Assignee acknowledged to Ms Harding that she was beneficially entitled to a half share in the property.
[10] The Assignee has identified the half interest in the property as Mr Harding’s only asset of material and realisable value. Inland Revenue has filed claims in the bankrupt estate totalling $487,242.36 of which $89,761.48 is a priority sum. If the Assignee’s half interest in the property is realised, it will be insufficient to cover the entirety of the bankrupt’s debts. The property has a current capital value of $340,000. As at 31 March 2022, the debt to BNZ secured by the mortgage was $240,137.41.
[11]On 11 April 2022, the Assignee took transmission of legal title to the property.
[12] As far as the Assignee is aware, Ms Harding is in sole occupation of the property; Mr Harding is in prison.
[13] The documents were also served on BNZ on 16 May 2022. BNZ has not taken any steps in the proceeding. No other party has an interest in the property that may be affected by the granting of the application. Accordingly, all interested parties have been served as required by s 341(2) of the PLA.
Legal principles
[14] Under s 339 of the PLA, the Court may make, in respect of property owned by co-owners, an order for the sale of the property and division of the proceeds among the co-owners.
[15] In considering an application under s 339, the Court must have regard to the following factors set out in 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;
(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; and
(f)any other matters the Court considers relevant.
Analysis
[16] In terms of the statutory factors, Ms Harding has a half share in the property, which is a residential unit in suburban Auckland. Ms Harding is the sole occupant given Mr Harding’s imprisonment, but I accept it may be their family home. Ms Harding has made financial contributions to BNZ since August 2021.
[17] Even so, on the basis of the evidence set out in the affidavits in support, particularly the affidavit of Ms Naicker, I am satisfied that the statutory factors weigh in favour of the orders sought. This is particularly because:
(a)Ms Harding has not opposed the Assignee’s claim.
(b)Since May 2020, the Assignee has attempted to negotiate with Ms Harding and has offered her the opportunity either to purchase the Assignee’s half share or to agree to sell the property on the open market. For two years, the Assignee has granted Ms Harding multiple extensions of time. Even allowing for COVID-19 disruption, Ms Harding has been given reasonable opportunity to avoid a Court ordered sale. When the Assignee’s representative explained to Ms Harding on 6 April 2022 that the Assignee would be taking transmission of title and enquired as to whether Ms Harding would agree to be registered on the title with the Assignee as an equal share tenant in common, Ms Harding said it was her house and she was not interested. She then hung up.
(c)The hardship that will be caused to the Assignee by refusing the order outweighs the hardship caused to Ms Harding by ordering sale. The Assignee has legal duties to Mr Harding’s creditors. Sale of the property is required to realise the Assignee’s half interest for the benefit of Mr Harding’s creditor. Ms Harding will receive her share of the net proceeds after costs.
[18] The order sought includes a stay for 14 days, as is common in such sale orders, to enable Ms Harding to make an offer to acquire the Assignee’s interest. Mr Hindriksen acknowledged that in the circumstances a longer period is appropriate. I consider a stay of 28 days is appropriate to provide Ms Harding with a final opportunity to purchase (or arrange for the purchase of) the Assignee’s half interest in the property.
Result
[19] I make orders under s 339 in the terms sought, save for that modification, as follows:
(a)Orders that:
(i)the property be sold by public auction with a reserve set at
$430,000 under the control and conduct of the Assignee in accordance with the orders set out below;
(ii)the Assignee is authorised to sign any authority to sell, agreement for sale and purchase, memorandum of transfer or other document required to carry into effect the sale of the property for and on behalf of Ms Harding;
(iii)Ms Harding as occupier is to:
(A)maintain the property in good tidy condition up to settlement;
(B)co-operate with the Assignee in the sale and marketing process; and
(C)permit access to the property as and when required by the Assignee and/or his appointed real estate agency for the purposes of photographing and marketing it for sale;
(iv)the proceeds from the sale of the property shall be disbursed in the following priority and manner:
(A)in payment of such commission, marketing costs and other sums as are contractually payable to the rest estate agency contracted to sell the property;
(B)in payment of other costs of sale, including but not limited to such reasonable legal costs incurred by the Assignee that are directly attributable to the sale of the property, water charges, rates arrears and/or other apportionments;
(C)subject to the order made at paragraph (a)(iv)(D) below, any balance shall be divided equally between Ms Harding and the Assignee; and
(D)from Ms Harding’s half share of the net sale proceeds, costs of this proceeding (including those awarded on the interlocutory application for summary judgment) plus disbursements as fixed by the Registrar shall be deducted by the Assignee and retained by him.
(b)An order that the orders set out in order (a) above be stayed for a period of 28 days from the date of service of the sealed orders of the Court on Ms Harding, to provide her with a final opportunity to purchase (or arrange for the purchase of) the Assignee’s half interest in the property.
(c)An order reserving the Assignee leave to urgently return to the Court for further directions or orders of the Court if the occupier(s) of the property do not comply with the above orders or act in a way that impedes the sale process.
(d)Costs on a 2B basis, together with disbursements as fixed by the Registrar.
Gault J