Swanson v Norris
[2021] NZHC 3342
•7 December 2021
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2020-463-31
[2021] NZHC 3342
UNDER Section 339 and 343 of the Property Law Act 2007 IN THE MATTER OF
An application for division of property among co-owners
BETWEEN
WALTER EARNEST SWANSON
Plaintiff
AND
AMANDA EILEEN NORRIS
Defendant
ANZ BANK NEW ZEALAND LIMITED
Interested Party
CHRYSTAL NAPIER SWANSON, SAPHYRE NAPIA SWANSON and JAYDE SHEKAHN
Interested Party
Hearing: 3 December 2021 Appearances:
P Kirk for plaintiff
Judgment:
7 December 2021
JUDGMENT OF HARLAND J
[Formal Proof]
This judgment was delivered by me on 7 December 2021 at 4.45 pm Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date: ………………………………..
Counsel/Solicitors:
P Kirk, O’Sullivan Clement Lawyers, Rotorua
SWANSON v NORRIS [2021] NZHC 3342 [7 December 2021]
Introduction
[1] Mr Walter Swanson, a solicitor in Rotorua, applies as the executor of the estate of his deceased brother Mr Tewiremu Napia Swanson for an order pursuant to ss 339 and 343 of the Property Law Act 2007 (the Act) to sell a property at 58 Taharangi Street, Rotorua (Record of Title CT SA 15B/1238) (the property), in respect of which he and Ms Amanda Norris, Mr Tewiremu Swanson’s former wife, are the registered proprietors. Orders related to the sale are also sought.
[2] The interested parties are the mortgagee, ANZ Bank of New Zealand Limited (ANZ) and the three children of Mr Tewiremu Swanson. The three children are the beneficiaries of Mr Tewiremu Swanson’s estate. They are not Ms Norris’ children.
[3] I will refer Mr Walter Swanson and Mr Tewiremu Swanson as to the “plaintiff” and “deceased” in this judgment appreciating that it is rather impersonal and formal. I intend no disrespect in doing so, I do it simply to avoid confusion. To be consistent I will also refer to Ms Norris as “the defendant”.
[4] Neither the defendant nor any of the interested parties have taken any steps in the proceedings despite having been served with them.1 This matter has therefore proceeded before me by way of formal proof.
[5] In support of his application, the plaintiff filed an affidavit dated 3 August 2021. The plaintiff confirmed his evidence in Court before me and answered additional questions to clarify my understanding of the matters he had referred to in his affidavit.
[6] I am satisfied from hearing the plaintiff that he has tried very hard to engage with the defendant but, for whatever reason, she has chosen to ignore his attempts to deal with matters without the Court’s involvement.
1 Affidavit of service of Aimee Alice Amelia Rendall sworn 19 May 2021; Affidavit of service of Cecilia Dawn Tutua sworn 28 May 2201; Affidavit of service of Cecilia Dawn Tutua sworn 18 June 2021.
[7] I am satisfied that orders are needed to progress the resolution of the estate because the estate has no funds and the expenses in relation to the property continue to accrue.
The background to the application
[8] The deceased was married to the defendant, but in about May 2019 they separated.
[9]The deceased died at Rotorua on or about 22 February 2020.
[10] The deceased and the defendant were the registered proprietors of the property, which prior to their separation, they owned as joint tenants. The property is subject to a mortgage to the ANZ. Following his separation and prior to his death, the deceased instructed his lawyer to sever the joint tenancy. At the time of his death, the deceased and the defendant owned the property as tenants in common in equal shares.
[11] The deceased appointed the plaintiff as the sole executor and trustee of his will dated 16 February 2020. The plaintiff’s obligation is therefore to gather in the deceased’s assets, pay out any debts and distribute the residue to the deceased’s children as directed in his will.
[12] At the time of the deceased’s death he was living in the property alone. Shortly after he died however, the defendant re-entered the property and took possession. She has had the sole occupation of the property since that time. The defendant has not however made any payments towards the outgoings on the property. These outgoings include:
(a)mortgage payments (weekly payments of $160.20);
(b)insurance ($1,820.16 a year);
(c)rates ($3,140.98 annually);
(d)payments in respect of loan to Hot Swap (balance of approximately
$2,151.88);
[13] As a result of the defendant’s failure to pay the outgoings, the rates and mortgage went into arrears and the property became uninsured.
[14] In order to protect the assets of the deceased’s estate, the plaintiff arranged to pay $5,292.57 towards the rates and Hot Swap loan out of the estate funds. A further rates instalment of $977.95 was due by 20 August 2021 but has not been paid as there are no funds in the estate to pay this account.
[15] The plaintiff found out that the house insurance had lapsed and paid the sum of $3,057.58 (a payment of $995.23 on 8 September 2020 and $1,820.16 on 20 April 2021) out of his personal funds as there were insufficient funds in the estate to cover these costs. The house is insured until 22 December 2021 when a further payment of
$1,820.16 is due. It is almost certain that the plaintiff will also need to pay this.
[16] The mortgage has not been paid. There are no funds in the estate to pay the mortgage and the plaintiff is not in a position to pay it personally. The balance of the mortgage at 3 August 2021 was $124,956.50 and the arrears at that date were
$10,883.30.
[17] In July 2021 the plaintiff engaged Eve’s Realty and the Professionals Real Estate to provide him with sales and rental appraisals for the property:
(a)The Professionals have indicated that the property is likely to sell for somewhere between $450,000.00-$490,000.00. They advised the market rental for the property would be between $450 and $500 per week.
(b)Eve's Realty also provided the plaintiff with an appraisal which indicated that the property is likely to sell for between $450,000.00-
$500,000.00. They advised that the market rental for the property would be around $555.00 per week.
[18] The plaintiff is also concerned that the property may have been damaged during the defendant’s occupation of it. Although the plaintiff has tried to gain access the property and talk with the defendant about this and all matters relating to the estate, the defendant has not engaged with him in any way. The plaintiff is aware that there is likely to be a broken window and potentially other damage that will need to be fixed, depending on the extent of it, prior to sale. He seeks an order charging the defendant’s share of the sale proceeds with the cost of any repairs necessary for sale or any devaluation in the property duet to the defendant’s negligence or neglect.
The law
Section 339 of the Property Law Act 2007 (PLA) provides:
339 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); and
(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.
[20] I am satisfied that service has occurred in terms of s 341 of the PLA. I am also satisfied that there is nothing in this application to indicate a contravention of s 340(1).
[21] In deciding whether or not to exercise my discretion to make an order under s 339, I must have regard to the matters set out in s 342 of the PLA. This section provides:
342Relevant considerations
A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:
(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.
[22]Further orders are sought under s 343, which provides:
343Further powers of court
A further order referred to in section 339(4) is an order that is made in addition to an order under section 339(1) and that does all or any of the following:
(a)requires the payment of compensation by 1 or more co-owners of the property to 1 or more other co-owners:
(b)fixes a reserve price on any sale of the property:
(c)directs how the expenses of any sale or division of the property are to be borne:
(d)directs how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied:
(e)allows a co-owner, on a sale of the property, to make an offer for it, on any terms the court considers reasonable concerning—
(i)the non-payment of a deposit; or
(ii)the setting-off or accounting for all or part of the purchase price instead of paying it in cash:
(f)requires the payment by any person of a fair occupation rent for all or any part of the property:
(g)provides for, or requires, any other matters or steps the court considers necessary or desirable as a consequence of the making of the order under section 339(1).
The orders sought
[23]The plaintiff in his statement of claim seeks:
A. An order for the immediate sale of 58 Taharangi Street, Rotorua, repayment of the ANZ Mortgage and the division of the proceeds among the co-owners pursuant to s 339 of the Property Law Act 2007 (“the Act”).
B.Orders pursuant to s343 of the Act as follows:
(a)That the defendant is to vacate the property immediately; and
(b)That the plaintiff shall have sole occupation of the property to enable him to facilitate the sale of the property; and
(c)Fixing a minimum/reserve price on any sale of the property; and
(d)That the plaintiff has the sole right to select the real estate agent and determine the sales and marketing process; and
(e)Charging the defendant’s share of the proceeds of sale with the cost of any repairs necessary for sale, or any devaluation in the property due to the defendant’s negligence or neglect; and
(f)Directing how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied; and
(g)Directing how the expenses from the sale of the property are to be borne, and
(h)That the defendant is to pay for any utility charges related to the property during her period of occupation; and
(i)Requiring the payment of compensation by the defendant to the plaintiff; and
(j)Requiring the payment by the defendant of a fair occupation rent for all of the property; and
(k)That the Court Registrar shall sign any sale and purchase agreement, authority and instruction form, tax statement and any other documentation required to be signed by the defendant to facilitate the sale; and
(l)Providing for, or requiring, any other matters or steps the court considers necessary or desirable as a consequence of the making of an order under s339( 1) of the Act.
(m)Costs.
[24] In counsel’s memorandum dated 3 September 2021, a further direction has been sought that the Court Registrar sign any listing agreement required to facilitate the sale of the property.
[25] Because the plaintiff is not able to assess any damage to the property, he is unable to form a view about whether repairs will be necessary prior to its sale or whether it should be sold in the condition it is in once the defendant vacates it. Because there are no funds in the estate, the latter position could eventuate.
[26] In relation to the order sought that the defendant is to pay for any utility charges related to the property during her period of occupation, the plaintiff explained that this order is required because he is simply unaware of whether any utility accounts are in the deceased and defendant’s joint names or whether they are only in the defendant’s name.
Should the order be made?
[27] I have had regard to the matters outlined in s 342 of the PLA. The plaintiff advised me that he considers the property will be able to be sold relatively promptly as there is a shortage of housing in Rotorua, and it is within a price range that makes it marketable. Given that the plaintiff is a solicitor based in Rotorua, I give weight to his opinion about this.
[28] I asked the plaintiff about the need for the defendant to immediately vacate the property. I accept that the plaintiff’s request for this to occur is only based on the fact that the defendant has completely refused to deal with him in a sensible and pragmatic way. I am satisfied that if the defendant wished to do so, the plaintiff would be amenable to all reasonable requests to assist in the resolution of this matter. The plaintiff is prepared to allow the defendant to remain in the property for a short period over the Christmas and New Year break. This is a significant concession, given that the defendant has remained in possession of the property without paying any of its expenses since 22 February 2020. In my view, allowing the defendant to remain in the property until mid-January, in all the circumstances, is reasonable. The order I make for her to vacate the property will require the defendant and any other occupants she has authorised to remain at the property to vacate it no later than 5.00 pm, 14 January 2022.
[29] In order to allow the plaintiff time to assess what is needed before the property can be properly marketed, I make an order that the property shall not be offered for sale prior to 11 February 2022.
[30] If there has been any damage to the property that was caused by or during the defendant’s occupation of the property, it is reasonable for the cost of those repairs to be deducted from the defendant’s share of the sale proceeds. These will, however, need to be assessed at a later date. The same applies to any cost the estate must bear for utilities expenses. To deal with these fairly, I reserve leave to the plaintiff to file a further affidavit with the Court, outlining the costs he considers are attributable to the defendant. I also require occupational rent to be dealt with in the affidavit as well
[31] It is not necessary for a timeframe to be placed on the filing of this affidavit as it will depend on when the property sells. However, I am satisfied that the plaintiff wishes to attend to this as soon as he can in order to fulfil his obligation as trustee and executor of his late brother’s estate.
[32] It is also appropriate to reserve leave to come back to the Court in relation to any other issue that arises following the making of these orders.
Orders
[33]I make the following orders:
A.An order for the sale of 58 Taharangi Street, Rotorua, repayment of the ANZ Mortgage and the division of the proceeds among the co-owners pursuant to s 339 of the Act.
B.Orders pursuant to s 343 of the Act as follows:
(a)The defendant is to vacate the property and to arrange for any people she has permitted to stay at the property to also vacate it, no later than 5.00 pm, 14 January 2022.
(b)The plaintiff shall, after 5.00 pm, 14 January 2022, have sole occupation of the property to enable him to facilitate the sale of the property, but shall not be authorised to offer the property for sale prior to 5.00 pm, 11 February 2022.
(c)The plaintiff is authorised to fix a minimum/reserve price for the sale of the property.
(d)The plaintiff has the sole right to select the real estate agent/s and to determine the sales and marketing process.
(e)The Court Registrar is to sign any listing agreement required to facilitate the sale of the property.
(f)The Court Registrar shall sign any sale and purchase agreement, Authority and Instruction Form, Tax Statement and any other documentation required to be signed by the defendant to facilitate the sale.
(g)The defendant’s share of the proceeds of sale is to be charged with the cost of any repairs necessary for sale, or any devaluation in the property due to her negligence or neglect, however the quantum of the cost of any such repair and/or devaluation are to be established by the plaintiff in a further affidavit and are to be subject to a further order of the Court.
(h)The plaintiff is authorised to arrange for the proceeds of the sale of the property and any interest on the purchase amount to be held in his solicitor’s trust account to be divided or applied in accordance with a further of the Court.
(i)Expenses associated with the sale of the property including but not limited to real estate agent fees and legal fees, are authorised to be deducted from the sale proceeds.
(j)The defendant is to pay for any utilities charges related to the property during her period of occupation, such charges to be deducted from her share of the sale proceeds, however if applicable, the quantum of this is to be established by the plaintiff in a further affidavit and is to be subject to a further order of the Court.
(k)The defendant is to pay a fair occupation rent, such rent to be deducted from her share of the sale proceeds. The quantum of this is to be established by the plaintiff in a further affidavit and is to be subject to a further order of the Court.
[34] The plaintiff is to file a further affidavit outlining the cost of any repairs necessary for sale or any devaluation in the property caused by the negligence or neglect caused either by the defendant or others she has allowed to remain in the property following the sale of the property. The affidavit is also to outline the quantum of any utilities deductions, occupational rent and any other compensation and or reimbursement claimed by the plaintiff against the defendant which is not covered by the orders in para [33].
[35] I reserve leave to the plaintiff to apply for any further orders necessary to implement these orders or if there are any other matters in relation to the sale of the property which require the Court’s further attention. I authorise the plaintiff to request that these matters be referred to me, given my knowledge of the file.
Costs
[36] The plaintiff seeks costs. It is appropriate that costs be categorised at this point. Costs on a 2B basis are reasonable and appropriate.
Harland J
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