Thomson v New Zealand Guardian Trust Company HC Hamilton CP 76/00

[2001] NZHC 550

IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY CP 76/00

UNDER the Property Law Act 1952

BETWEEN JG THOMSON, KW THOMSON, D THOMSON, CM ROBBS, RC THOMSON, SL THOMSON, JN THOMSON and ID THOMSON
Plaintiffs

AND (1) THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED
(2) JM THOMSON
(3) HA THOMSON, GC THOMSON, ER THOMSON and MJ HOLT
Defendants

Hearing: 8 June 2001
Counsel: EJ Hudson for plaintiffs
KG Parker for defendants

Judgment: 22 June 2001

JUDGMENT OF MASTER FAIRE

[1] The plaintiffs apply for summary judgment. They seek an order for sale of two titles. The first title contains 27.7816 hectares. The second title contains 96.8412 hectares.

[2] The plaintiffs and second and third defendants are the children of the late WG Thomson. He died on 10 October 1982. Probate of his will was granted to the first defendant on 17 November 1982. The plaintiffs are eight of the late WG Thomson’s children. The second and third defendants are five of those children. The first defendant is the executor of the late WG Thomson’s estate.

[3] The second defendant and her husband lease the two titles on a month-to-month tenancy.

[4] The will of the late WG Thomson provides that on the death of his wife, the capital and income of his estate is to be held by his trustee equally for those of his children who survive him and attain the age of 20 years. The deceased’s wife died on 7 January 1987.

[5] A transmission in favour of the first defendant in respect of the subject lands was registered on 3 February 1984. The first defendant has now transferred the two titles to the thirteen children in equal shares. That transfer was registered on 13 September 2000.

[6] This proceeding was filed on 1 November 2000. The principal affidavit in support was sworn on 25 May 2000. It is apparent that the pleadings were also prepared prior to that date. This is the only reason for the inclusion of the first defendant. As a result of the transfer of title to the thirteen children, the first defendant has no further part to play. A further, and not insignificant consequence of the early preparation of the documents, is that the various events which occurred after their preparation were not placed before the Court when the documents were filed. They were raised by the second and third defendants in the affidavits filed in opposition.

[7] This is an unsatisfactory aspect to this case and has caused me concern. The picture painted by the statement of claim and affidavits in support is one essentially of a dispute between the thirteen children as to the price that should be paid by one group for the interest of the other. As events have been placed before the Court, first by the affidavits and then, more recently, by submissions from counsel from the Bar, that approach to the dispute, although essentially the core issue, is an oversimplification.

[8] The essential pleading of the plaintiffs is as follows:

[a] They are interested in the lands to the extent of a moiety;

[b] The lands ought to be sold, there being no good reason to the contrary.

[9] Before analysing the specific grounds of the defendants advanced in opposition, it is appropriate that I briefly summarise the background which was placed before the Court, essentially in the affidavit of one of the third defendants, HA Thomson. In her affidavit she said as follows:

“3. One of the principal reasons why the second and third defendants wish to purchase the interest of the plaintiffs in the land is that the lands are ancestral land and our whanau have had uninterrupted occupancy or ahi kaa of the land for at least 12 generations. The Waikato Maori Land Court Minute Book 16 records that on 21 May 1887 orders were made confirming Kewene Te Haho and Te Whareroa and others were owners of the Manuaitu Block of which Manuaitu B4B No 2 and Manuaitu B3 are part. The second and third defendants, and indeed the plaintiffs, are direct descendants of both Kewene Te Haho and Te Whareroa through our late mother Maude Thomson (nee Paekau). Te Whareroa was our Great Great Grandfather and Kewene Te Haho was our Great Great Uncle. Our late father Geoff Thomson purchased the B4B2 block from Edward Schnackenberg in 1933. Edward Schnackenberg had purchased the block from Ratahi Te Whareroa and others in 1919. In 1941 our late father purchased the Manuaitu B3 block from Ratatpu Te Haho and others. Both Ratatpu Te Haho and Ratahi Te Whareroa are also related to us as they are also descendants of Kewene Te Haho and Te Whareroa.

4. In 1955 our late father leased two additional land blocks, the Manuaitu B8B and Manuaitu B6. Through the process of succession our late mother become a major shareholder in both these blocks.

5. Our late mother was also the sole owner of Manuaitu B7 adjoining our late father’s land. This block is freehold land in European title.

6. The land, the Maori leasehold land and our mother’s land have been farmed as one entity for the last 44 years and the second and third defendants wish this situation to continue.”

[10] That summary is not disputed by the plaintiffs.

[11] In addition, Heather Thomson said:

“7. In addition the second and third defendants consider that the family has obligations and commitments to our hapu and wider whanau directly affecting the land. If these lands are sold outside the family we will not be able to continue to maintain the expectations of our hapu and wider whanau. One of the obligations is to provide our marae with vehicle access through the land to the mussel beds at Waiau at the southern end of the beach and Matawha at the northern end of the beach. The family also provides through the land vehicle access for the marae to gather eels from the Toreparu Stream where it runs across the land. The marae collects these foods for tangihanga, weddings and ceremonial occasions such as the annual July 1 poukai. There is no alternative vehicle access to the mussel beds and eel fishery.

8. Further if the lands were sold outside the family it would be uneconomical to continue to farm the Maori leasehold blocks and as a result it would be necessary to cancel both leases. The marae would, as a result, possibly lose access to water and firewood presently available from Manuaitu B8B and Manuaitu B6 blocks.

9. Janeva Thomson, the second defendant, is a tangata kaitiaki nominated by the marae under the Kaimoana Customary Fishing Regulations 1998. She is ideally placed to discharge the duties associated with this role as she lives in the area and has vehicle access through the land to the area’s shell fish beds and fishing grounds. In her role Janeva Thomson authorises customary fishing within the rohe moana in accordance with Tikanga Maori.

10. These obligations to the marae were fostered and maintained by both our parents. Both parents are buried at Motakotako Marae. Our late mother was a trustee for this marae. I have inherited that role and am one of the current trustees. I believe that both our parents expected the family to continue to fulfil these obligations and commitments to the marae.”

[12] The content of these last paragraphs are not accepted by the plaintiffs.

[13] In an affidavit in reply, one of the plaintiffs. who confirms that he has authority of all the plaintiffs, says that:

“The plaintiffs do not oppose the second and third defendants acquiring the plaintiffs’ interest in the lands, provided it is for a value which reflects the market.”

[14] The same deponent, in the reply affidavit, advises that the second and third defendants obtained and made available a valuation from registered valuers for the subject property. The valuation was dated 8 June 2000. It assessed the value of the property at $390,000. It is addressed to the first defendant. It recommended that the property be put on the open market for sale with a recommended asking price of $410,000. The report, which was simply exhibited to the affidavit, contains a statement:

“We doubt that the sale realisation suggested by the land agents would be realised - we often advise neighbouring farmers that they can pay up to a 15 per cent premium for an adjoining property because of economics of sale etc but our assessment is considered realistic for a stand alone sub-economic unit.”

[15] The plaintiffs say that their inquiries revealed that the valuation was considerably lower than would be reflected within the market. They received an unconditional from a neighbour. The neighbour’s offer was for $550,000. Counsel’s advice to the Court was that the offer remained open for acceptance.

[16] The essential points raised in opposition to the granting of an order for sale pursuant to s 140(1) of the Property Law Act 1952 are the following:

[a] The claim is not an action for partition and therefore s 140(1) of the Property Law Act 1952 does not apply;

[b] The second and third defendants undertake to purchase the interests of the plaintiffs in the land described in the statement of claim and therefore s 140(3) of the Property Law Act 1952 applies;

[c] The Court should exercise its residual discretion against the entry of summary judgment because of the failure to reveal the events which have occurred between May and October 2000 which events included an offer to purchase the plaintiffs’ interest in the subject lands.

[17] This is an unfortunate dispute which should not have got as far as it has. The evidence of the plaintiffs is, as I have recorded, that they:

“Do no oppose the second and third defendants acquiring the plaintiffs’ interests in the lands.”

[18] Mr Parker advised from the Bar that the defendants were prepared to match the offer from Peacocke Farms Limited, the neighbour I referred to. He further advised that his clients had finance available. I stood the matter down to enable the parties to reach their own conclusion. Regrettably they have not been able to do so and it is now for the Court to consider the matter.

[19] It is appropriate that I briefly summarise the applicable principles which must be applied by the Court in dealing with a summary judgment application.

[20] Rule 136 of the High Court Rules requires that the plaintiff satisfies the Court that a defendant has no defence. That was explained by the Court of Appeal in Pemberton v Chappell [1987] 1 NZLR 1, 3 as follows:

“In this context the words “no defence” have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence.”

[21] The Court added at page 4:

“Satisfaction here indicates that the Court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty.”

[22] The Court commented on the position where it a defence was not evident on a plaintiff’s pleading. At page 3 the Court said:

“If a defence is not evident on the plaintiffs pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff’s right to have his case proceed to judgment without tendentious delay and a defendant’s right to put forward a real defence”

[23] That position was further considered in Australian Guarantee Corporation (NZ) Ltd v McBeth [1992] 3 NZLR 54, 59 where the Court said:

“Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiffs verification stands unchallenged and ought to be accepted unless it is patently wrong.”

[24] It is often a matter of discretion. I bear in mind the direction given by the Court of Appeal in Bilbie Dymock Corporation v Patel (1987) 1 PRNZ 84, 85 where the Court said:

“But the need for judicial caution has to be balanced, when considering a summary judgment application, with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case”

[25] In Tilialo v Contractors Bond Limited (CA 50/93, 15 April 1994) the Court said at page 7:

“The Courts must of course be alert to the possibility of injustice in cases in which some material facts to establish a defence are not capable of proof without interlocutory procedures such as discovery and interrogatories. That does not mean that defendants are to be allowed to speculate on possible defences which might emerge but for which no realistic evidential basis is put forward.”

Later in the same judgment, the Court at page 8 said:

“Drawing the line between mere assertions of possible defences and material which sufficiently raises an arguable defence so that the defendant should not be denied the opportunity to employ interlocutory procedures and have a trial is a matter of judgment. Views may well differ.”

[26] Against that general background I now consider the specific grounds which have been advanced by the defendants in opposition to summary judgment.

[27] The defendants claim that the plaintiffs’ claim is not an action for partition in terms of s 140(1) of the Property Law Act.

[28] Section 140(1) provides:

“Where in an action for partition the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the land to which the action relates request the Court to direct a sale of the land and a distribution of the proceeds, instead of a division of the land between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale accordingly.”

[29] In Fleming v Hargreaves [1976] 1 NZLR 123 the Court of Appeal gave a
helpful summary of the position in New Zealand in relation to partition at page 127. The Court said:

“In this country the law as to partition is substantially the same as the law stood in England prior to 1925. There is an article on the subject by the late Mr E C Adams in (1952) 28 NZLR 137. The history of the development of the law is set out in a footnote in 21 Halsbury’s Laws of England (1st ed 834-835). The original common law right to a partition was confined to coparceners but was extended to joint tenants and tenants in common by the Statute of Partition in 1539, and then to joint tenants and tenants in common for a term of years of for life by the Statute of Partition 1540. Under these statutes, which appear to be still in force in New Zealand (see Butterworths Annotations of New Zealand Statutes (1929), vol 2, Table No 2), partition was a matter of right, and the court had no discretion to refuse partition or to order sale in lieu thereof. To meet this position the Partition Acts of 1868 and 1876 were enacted. These various statutes are to be found in 9 Chitty’s Statutes (6th ed) 628 et seq. Subsections (1) and (2) of s 140 of the Property Law Act 1952 correspond closely with ss 3 and 4 of the Act of 1868. Thus it is that in New Zealand the court must either partition or order a sale: Gray v Dawson (1910) 12 GLR 511.”

[30] Mr Parker referred to Horne v Horne (High Court, Christchurch, M 197/94, Holland J, 8 June 1994). At page 3 His Honour said:

“The statement of claim in the present proceedings seeks an order for sale under s 1450 of the Property Law Act 1952. In its strict terms s 140 only applies where there exists an actin for partition. Although the statement of claim before me does not include an application for partition, Counsel for the defendant has very sensibly recognised that what is clearly involved here is a partition action with an application for summary judgment for an order for sale. He acknowledged that he did not wish to challenge the jurisdictional point based on pleadings only.”

[31] The defendants, in this case, do not make that concession.

[32] The submission that the proceeding is not an action for partition but simply an action for an order for sale was considered by Chilwell J in Cook v Hitchens (1982) 1 NZCPR 439, 447. This judgment was not referred to by Holland J in Horn v Horn (supra). Chilwell J at page 442, said

“In my judgment the expression “action for partition” means an action in which the Court has jurisdiction to consider a division of the land. This jurisdiction the Court undoubtedly has when an action is brought, as this counterclaim was, under s 140(1). It matters not, in my view, that the applicant seeks an order for sale and not an order for division or such an order with the order for sale in the alternative. The application, once made, gives the Court jurisdiction to consider division of the land, which, of course, it will consider with varying degrees of attention depending upon whether either party seeks division. It was at all times open to Mrs Cook to urge a division instead of the sale had she wished.”

[33] Chilwell J then reviewed the authorities and the history of legislative changes in relation to the partition of land. He noted that in three cases where a finding has been made that the proceeding ought to have prayed for partition as well as sale that there is no clear evidence as to whether the point was the subject of careful argument. His Honour concluded that the authorities as to the matter of pleading were in a state of doubt. He noted that that position was removed by an amendment made to the UK statute. His conclusion, however, was that the pleading in the counterclaim in that case, which is in a similar form to the claim in the proceeding before me was sufficient to give the Court jurisdiction to deal with the matter pursuant to s 140(1) of the Property Law Act 1952.

[34] The problem has arisen because New Zealand had not enacted a provision similar to s 7 of the Partition Act 1876 (UK).

[35] I agree with the conclusion reached by Chilwell J. Once the proceeding seeking an order for sale is filed, the Court is seized of the jurisdiction granted by s 140 which is a jurisdiction to consider either a sale or the division of the land. Gray v Dawson (1910) 12 GLR 511, Pillar v John Odlin & Co Ltd [1951] NZLR 224 and Polden v Rowling [1958] NZLR 31.

[36] I reject Mr Parker’s first ground. I hold that this Court does have jurisdiction to deal with the matter pursuant to s 140(1) of the Property Law Act 1952.

[37] Section 140(1) provides two alternatives. The first is an order for partition of the subject property. The second is a sale of the subject property. One or other option must apply. If the party applying has an interest in the subject land to the extent of one moiety or upwards, the Court must adopt the option for an order for sale unless it sees good reason to the contrary.

Whether there is good reason to the contrary requires a consideration of whether the other option should be ordered, namely a partition.

[38] The affidavits deal only with a sale, ie either to one of the groupings of the current owners or to a third party. Mr Parker, in submissions, referred to the possibility of a boundary adjustment. I have no material available to evaluate whether there is good reason to order a partition. The position adopted by the parties from the plaintiffs’ point of view of a sale of the whole, and from the defendants’ point of view of the acquiring of the whole leads me to the conclusion that no foundation has been laid for the consideration of a partition option. When I consider the approach approved in Australian Guarantee Corporation (NZ) Ltd v McBeth (supra) referred to in paragraph 23 of this judgment, I am satisfied on this issue that the plaintiffs have discharged the onus of proof. I am also mindful of the Court of Appeal’s comments in Haines v Carter (CA 268/99, 20 November 2000). At paragraph 97(2) the Court said:

“A bald assertion that there is a defence but without any elaboration or detail is unlikely to be seen as raising an arguable defence for the purposes of resisting summary judgment. So the assertion by Mr Haines that he was entitled to rectification of clause 2.17 of the agreement (which in substance was the only evidence advanced as to that) simply did not meet the threshold.”

I conclude there is no foundation here for an arguable defence based on a possible partition.

[39] I now consider the second ground. It is expressed in the notice of opposition this way.

“The second and third defendants undertake to purchase the interest of the plaintiffs in the lands described in the statement of claim pursuant to section 140(3) Property Law Act 1952.”

[40] Mr Hudson submitted that s 140(3) can have no application unless there is consent to the application of the subsection. He referred specifically to the judgments of Cook v Hitchens (supra) and an unreported judgment of Smellie J Dale v McCullough (High Court, Auckland, CP 411/87, 15 June 1987). It is appropriate to consider what the Judges in the two decisions to which I have made reference said about the operation of s 140(3). Chilwell J in Cook v Hitchens (supra) said of s 140(3):

“It has limited application. It applies to a person who requests a sale of the land and who says, in effect, there need be no sale if my opponent will buy my share. Upon an undertaking to purchase being given the Court may direct a valuation of that share, ie the share of the party requesting a sale. The section does not apply to assist a person, such as Mrs Cook, who did not request a sale and who still actively opposes sale.”

[41] In Dale v McCullough (supra) His Honour reached the conclusion that a party who requests a sale of the whole property cannot be compelled to part with his share on a valuation if he does not wish to do so. In reaching that conclusion, His Honour referred to the text in Hinde McMorland & Sim (Vol 2), page 936 and Pitt v Jones (1880) 5 AC 651 and Richardson v Feary (1888) 39 ChD 45.

[42] I agree with that approach. Section 140(3) can have no application to the present case because the plaintiffs do not consent.

[43] The third ground advanced is the residual discretion. In particular, Mr Parker relied upon the failure to refer to the events between May and October 2000. This ground is answered by the Court of Appeal judgment in McMahon v McMahon [1997] NZFLR 145, 148. The Court held that where the relief relied upon is statutory in origin and the statute admits of no discretion then there can be no basis to refuse the relief by virtue of the provisions of Rule 136 of the High Court Rules.

[44] I expressed the view earlier in this judgment that it is unfortunate that the parties have not been able to agree on a resolution of it. Mr Hudson, in his submission, has confirmed the plaintiffs do not consent to an order being made in terms of s 140(3). His clients now promote the position that all parties should be given the opportunity to acquire the subject land despite the fact that they have at an earlier time expressed the position that they had no objection to the second and third defendants acquiring the land.

Conclusion

[45] In my view, an order for sale pursuant to s 140(1) is appropriate. I expressed the desire to counsel that there should be agreement if I reached this conclusion on the appropriate direction to be given in relation to the sale. Mr Hudson’s submissions contain a number of directions. It is clear to me that all parties should be entitled to bid at the auction. The parties should be entitled to set off his or her share against the purchase price bid at auction. The property should be available for inspection prior to the auction. The plaintiffs should pay the initial costs associated with arranging the sale by auction but on the basis that that is to be refunded to them on a sale occurring.

Orders and directions

[46] Counsel did not present to me comprehensive directions relating to a proposed sale. It is desirable that the order of the Court contain same. Having regard to the conclusion I have expressed in this judgment I invite counsel to confer with a view to a joint memorandum being submitted as to the appropriate order for sale. The memorandum should deal with the matters that I have referred to and should also deal with

[a] matters pertaining to representation in relation to the sale by auction,

[b] the appropriate auctioneer,

[c] the time of the auction,

[d] the terms and conditions of auction, and

[e] any other matters which are necessary to see that a sale at auction can be taken through to completion.

If the parties are unable to agree and file such memorandum within 14 days of the date of this judgment, I direct that the plaintiffs shall file and serve such a memorandum within 14 days of the date of this judgment. The defendants shall file and serve a memorandum with any additions or alterations seven days thereafter. The Registrar shall refer the memoranda to me and I will settle the final form of judgment.

Costs

[47] The plaintiffs have been successful in this proceeding. They are entitled to costs which I fix pursuant to Category 2. I have examined the steps which have been taken and, in my view, Band B is appropriate. Accordingly, I order that the defendants pay the plaintiffs costs based on 2B together with disbursements as fixed by the Registrar.