Telford v Telford
[2022] NZHC 3564
•20 December 2022
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2021-419-000054
[2022] NZHC 3564
UNDER Part 18 of the High Court Rules 2016 IN THE MATTER OF
Constructive trust, resulting trust, express trust
BETWEEN
WILLIAM JAMES TELFORD and EILEEN TELFORD
Plaintiffs
AND
WILLIAM JAMES TELFORD and TESSA EVE MARTIN
Defendants
Hearing by VMR: 15 December 2022 Counsel:
PA Depledge for Plaintiffs MA Dempster for Defendants
Judgment:
20 December 2022
JUDGMENT OF DOWNS J
(Relief)
This judgment was delivered by me on Tuesday, 20 December 2022 at 2 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Clyde Law, Hamilton.
McKenna King Dempster Ltd, Hamilton. PA Depledge, Hamilton.
TELFORD v TELFORD [2022] NZHC 3564 [20 December 2022]
The case
[1] This judgment is a sequel to my decision of 16 June 2022 and should be read with it.1 In short, I found Billy and Eileen had a 73 percent interest in the property, and Jamie and Tessa had a 27 percent interest in the property.2
[2] Billy and Eileen want to buy Jamie and Tessa’s interest with their daughter, Shelley.3 Shelley now lives with Billy and Eileen at the property, along with her children. Jamie and Tessa want to sell their interest, albeit on the open market. That, of course, would require the property to be sold. Billy and Eileen do not want to sell the property. They want to keep living there with Shelley and her children. This judgment addresses the impasse.
[3] For convenience, I call Billy and Eileen’s proposal the private sale. I call Jamie and Tessa’s the open market sale. These are labels, not more.
Principle
[4] Section 339(1) of the Property Law Act 2007 enables the Court to make orders in the type of situation that arises here:
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.
1 Telford v Telford [2022] NZHC 1412.
2 I continue to use Christian names for the reasons identified in my earlier judgment at [1].
3 Billy and Eileen assure the Court they will enter a written property sharing agreement drafted by a solicitor. This judgment presupposes that would occur if there is a private sale.
[5] Section 343 of the same Act affords the Court a broad suite of supplementary powers in relation to an order made under s 339.
[6] Section 342 identifies matters the Court must consider in determining whether to make an order under s 339(1):
(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.
[7]I consider these matters below, though not in the exact sequence of the section.4
Analysis
[8] I have already identified the respective shares and owners: again, Billy and Eileen have a 73 percent interest in the property; Jamie and Tessa have a 27 percent interest.
[9] The property is a landscaped, 8.44-hectare lifestyle block, with a brick, four- bedroom home. As discussed in my earlier judgment, Billy and Jamie built the home between March 2015 and November 2016, or thereabouts.
[10] Billy and Eileen say they would suffer hardship if the property were placed on the open market as they may be forced to leave (if the property attracted a sale price they could not afford). Billy is 65 and Eileen is 60. Billy is unlikely to work again for the reasons identified in my earlier judgment. The couple is settled at the property and enjoy living there with Shelley and her children. I accept, as Mr Depledge
4 I do not need to consider the value of contributions in this judgment as my earlier judgment was directed at that very question.
contends, Billy and Eileen have an emotional connection to the property. It is their home.5
[11] Ms Dempster argues Billy and Eileen have changed their tune because at or about the time of trial, they wanted to sell the property. Mr Depledge observes that was because they believed they had no choice; Shelley’s involvement makes all the difference. I do not think it important Billy and Eileen might have changed their minds. People do so.
[12] Jamie and Tessa say they will suffer hardship unless there is an open market sale because the property is likely to sell for more than its valuation. Unsurprisingly, they want to get as much for their share as possible. Billy and Eileen adduced evidence at trial of a registered valuation of $1,300,000 (as at 23 March 2022). Jamie swore an affidavit 23 August 2022. He said he believed if the property were sold on the open market, at an auction, “it would likely be sold for closer to $1,600,000”. I consider this figure, or anything like it, unrealistic. I do so because Jamie and Tessa obtained a registered valuation 23 September 2022, that is after Jamie swore that affidavit, of
$1,285,000.
[13]So, there is little between the competing valuations: $1,300,000 versus
$1,285,000. Furthermore, Billy and Eileen’s valuer reconsidered his valuation of 30 August 2022. He again came up with the figure of $1,300,000.
[14] Another aspect is important here. Jamie and Tessa’s valuer says changes in the economy, including to interest rates, “is causing a decreased demand for the available housing stock that comes to the market, and this may in the future result in an easing of residential property prices”. He adds, “The property market at present is in a state of change, and it is likely that economic influences may well result in a subdued property market for 2022 with prices remaining stable or possibly declining”.6
[15] It follows Jamie and Tessa are unlikely to be materially disadvantaged by the private sale and purchase of their interest, particularly given the near consensus of the
5 Billy found the property and negotiated its purchase; he was “the driving force” for its acquisition. See [32] of my earlier judgment.
6 Emphasis added.
valuers. An open market sale, however, would be disruptive to Billy, Eileen, Shelley, and her children, and potentially distressing to Billy and Eileen.
[16] Jamie and Tessa say the private sale is likely to drag on, and an open market sale would be quicker. Jamie and Tessa and their children are living with Tessa’s parents. They want resolution as quickly as possible and hope to buy their own home.
[17] These concerns are reasonable. However, the private sale could be completed on or before 28 February 2023. Mr Depledge stressed this date was achievable and accepted on behalf of Billy and Eileen that an open market sale should occur if the private sale has not settled by that date.
[18] This leaves two things at this juncture. First, Ms Dempster expresses scepticism about Shelley being able to afford to buy Jamie and Tessa’s share. Ms Dempster says the letter from the bank addressed to Shelley made it clear finance was conditional.7 The answer to this point is that an open market sale will occur if the private sale does not proceed.
[19] Second, Ms Dempster expresses scepticism about the figures in an earlier bank letter to Shelley concerning conditional finance.8 That letter says, “If the value of the property you intend to buy is less than $1,450,000, we may reduce the amount we’ll lend to you under this loan”. Ms Dempster argues this in her written submission:
Page 2 of the ANZ letter states that the bank has valued the property at
$1,450,000. If the plaintiffs actually believe that the property is worth
$1,450,000 then the defendants are being significantly underpaid for their share. However, if the plaintiffs have not disclosed the actual valuation to ANZ, then finance will inevitably fall through when and if this is disclosed. It is clear that the financing for $482,400 will not be lent on a valuation of
$1,300,000. Page two of the ANZ letter sets out clearly that if the information ANZ receives isn’t true, or if they get new information that they believe materially affects the value, ANZ can change or withdraw the loan approval. This will inevitably happen, the pre-approval is flawed.
[20] Ms Dempster’s submission is inaccurate. The letter does not say the bank has valued the property at $1,450,000. Indeed, the letter does not identify the basis for
7 Letter from ANZ dated 9 November 2022.
8 Letter from ANZ dated 23 June 2022.
that figure. Ms Dempster’s submission also comes perilously close to alleging fraud. In this respect, the submission is gratuitous.
[21] I return to the mix, which clearly favours a private sale. But, if this does not occur by the date identified, Jamie and Tessa’s preference should be respected.
Other relief?
[22] Jamie and Tessa seek a contribution for rent based on the extent of their interest, from 30 May 2022 to settlement, a figure of $174.15 per week.
[23] Billy and Eileen say this should not be payable for the reason identified by Mr Depledge: Jamie and Tessa left the property because of behavioural problems associated with their consumption of drugs, and not for any other reason. Consequently, no rent contribution should be payable.
[24] I decline to re-enter history about Jamie and Tessa’s departure from the property. The short point remains they have a 27 percent interest in the property. I award $174.15 per week until settlement, but from the date of my earlier judgment, which is 16 June 2022, rather than 30 May, the date of the hearing. I do so because that judgment included rent to that point.9
[25] Jamie and Tessa also seek reimbursement of their share of the insurance, rates, and mortgage from 30 May 2022. Again, the relevant date is 16 June, not 30 May, because my earlier judgment made allowance for this until then. A more significant point arises. There is no evidence Jamie and Tessa have been paying their share of the insurance, rates, or mortgage. Indeed, when I raised this issue with Ms Dempster, she acknowledged Jamie and Tessa had taken “a holiday” from one or more of these payments. I, therefore, make no allowance.
Form of orders and related matters
[26] Mr Depledge says I may treat “as fact” that Billy, Eileen, and Shelley (or some related combination) have chosen to purchase Jamie and Tessa’s share, and that
9 See [69] of my earlier judgment.
settlement will occur on or before 28 February 2023. Billy and Eileen agree to conditions to facilitate the private sale.
[27] Ms Dempster framed a suite of orders directed at the open market sale. Mr Depledge says Billy and Eileen agree to these if the private sale fails.10
Result
[28] I fix the value of the property in relation to the private sale as $1,292,500, being the mid-point of the valuations.
[29] I direct the private sale of Jamie and Tessa’s 27 percent interest in the property to Billy, Eileen, and Shelley (or some related combination, including Shelley alone) on or before 28 February 2023, failing which, I direct the open market sale of the property. This direction is subject to the suite of directions in the appendix to this judgment.
[30] Billy and Eileen must also pay Jamie and Tessa rent calculated at $174.15 per week from 16 June 2022 until settlement.
……………………………..
Downs J
10 Other than in relation to rent and insurance etc. I have already addressed these aspects.
Appendix
Conditions in relation to the private sale
1.The value of Jamie and Tessa’s interest is 27 percent of the net equity in the property using $1,292,500 as the value of the property.
2.Net equity excludes the outstanding loan balance in relation to Billy and Eileen’s truck.11
3.Settlement must occur on or before 28 February 2023.
4.Jamie and Tessa must execute all documentation required to carry out the private sale (if any).
Conditions in relation to the open market sale (by consent)
5.Billy and Eileen are to nominate two real estate agents to provide an appraisal. Jamie and Tessa are also to nominate two real estate agents to provide an appraisal. The agent with the highest appraisal is to be chosen as the listing agent.
6.The property is to be marketed for four weeks.
7.The property is to be sold at auction. The reserve is $1,300,000.
8.Conveyancing is to be carried out by a firm agreed by the parties.
9.Upon settlement:
(i)All secured loans; any bank fees; and conveyancing fees are to be repaid from the sale proceeds.
(ii)73 percent of the net sale proceeds are to be paid to Billy and Eileen; 27 percent of the net sale proceeds are to be paid to Jamie and Tessa.
11 See [51] of my earlier judgment.
(iii)The outstanding truck loan balance is to be deducted from Billy and Eileen’s 73 percent share. (Approximately $17,000 has been repaid by Billy and Eileen in relation to the truck loan.)
10.Billy and Eileen must execute all documentation required to carry out the open market sale.
Condition applying to both types of sale
11.A party or the parties may apply for directions in relation to any matter concerning the implementation of these orders.
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