Turner v Goldsbury
[2023] NZHC 179
•13 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-000337
[2023] NZHC 179
UNDER ss 339–343 of the Property Law Act 2007 IN THE MATTER OF
an application for a partition order
BETWEEN
WARREN AUSTIN TURNER,
LINDA CHRISTINE TURNER and GEOFFREY MALCOLM BILKEY
First PlaintiffsSUZANNE LESLEY WARDLAW, DERYCK ANDREW WARDLAW, CHRISTOPHER JAMES FABER WATERS and MELISSA LEA WARDLAW
Second Plaintiffs
AND
KELVIN GLEN GOLDSBURY, CHRISTINE JOY NIGHTINGALE and ONEHUNGA TRUSTEE COMPANY LIMITED
First Defendants
CCCK INVESTMENTS LIMITED
Second Defendant
Hearing: 7–8 November 2022 Appearances:
R O Parmenter for Plaintiffs
S J Ryan and S A Kilgour for Defendants
Judgment:
13 February 2023
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 13 February 2023 at 12.00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
TURNER v GOLDSBURY [2023] NZHC 179 [13 February 2023]
[1] The property at 19 The Parade, Bucklands Beach, Auckland is a cross-lease development of four flats. The flats are “owned” as follows:
(a)Flat 1 – the first plaintiffs (Turners);
(b)Flat 2 – the first defendants (Goldsburys);
(c)Flat 3 – the second defendants (CCCK); and
(d)Flat 4 – the second plaintiffs (Wardlaws).
[2] CCCK is associated with the first defendants. For convenience I will refer to the first and second defendants as the Goldsburys.
[3] The Turners wish to demolish and rebuild their flat which is dilapidated and subject to tidal inundations. They sought consent from the other cross-lease neighbours. The Goldsburys refused to give their consent. An arbitrator determined that the Goldsburys’ refusal was neither unreasonable nor unfair within the terms of the cross-lease.
[4] The Turners now seek an order of partition under s 339(1)(b) of the Property Law Act 2007 (PLA). The Wardlaws support the Turners’ application.
[5] The Goldsburys do not oppose the construction of a single-storey building within the existing floor plan of Flat 1, but oppose the Turners’ plans which extend beyond this. The Goldsburys oppose partition on the basis they will lose the bundle of rights they currently enjoy under the cross-lease and the ability to control future development of Flat 1.
Factual context
[6] The property at 19 The Parade is situated at the northern end of Bucklands Beach. The Tamaki River is just across the road.
[7] The Turners’ flat, Flat 1, is situated at the front of the property. It is a two- storey building. The top level was built in or about the 1920s. The bottom level was constructed in around 1988.
[8] Titles to Flats 2, 3 and 4 were all issued in 1997. The dwellings were built around that time and are of similar design and style. Flats 2, 3 and 4 are elevated above Flat 1 and have a coastal outlook to the west over the Tamaki River. Flat 4 exists immediately behind Flat 1. All flats share a common driveway. Each flat has an area of restricted use associated with it.
[9] The cross-lease is dated 20 October 1995. It includes provisions for a staged development of the site (which have occurred and are now spent). It also contains standard provisions providing for the lessees to perform covenants in the lease, and entitlement to quiet enjoyment.
[10] Clause 6 of the cross-lease requires each lessee to keep and maintain their flat in good order, condition, and repair.
[11]Clause 9 of the cross-lease provides as follows:
9.NOT TO MAKE ANY STRUCTRUAL ALTERATIONS OR ADDITIONS TO THE FLAT
(a)Not to erect on any part of the land any building, structure or fence, nor to alter, add to or extend any existing building on the land without the prior written consent of the Lessors. Such consent shall not be unreasonably or arbitrarily withheld.
(b)If any addition or alteration proposed by the Lessee shall have the effect of altering the external dimensions of the flat, the Lessee shall upon receiving the Lessors’ consent prepare and have deposited in the Land Transfer Office at the Lessee’s own cost a flat plan of the alterations or additions and upon deposit of the plan, surrender this lease and execute a new lease in substitution therefore. The Lessors shall at the Lessee’s cost execute such surrender of lease and the new lease in substitution therefore and the Lessee shall thereupon forthwith register the same. The cost of obtaining necessary mortgagees’ consents shall be borne by the Lessee.
[12] Clauses 10 and 20 place restrictions on the use of the restricted and common areas.
[13] Clause 19 imposes an obligation on each owner to reinstate the flat in the event of destruction or damage.
[14]The cross-lease also contains the following dispute resolution clauses:
(a)Clause 26 contains an arbitration clause. The parties to the lease may submit any dispute, question or difference relating to the lease or use or occupation of the land to an arbitrator for determination.
(b)Clause 27 sets out a procedure for decisions and requires written notice to be given to all owners of any proposed action. If the proposed action is not agreed to unanimously within 14 days after the date of service, the matter shall be deemed to be a question to be arbitrated under cl 26.
[15] The Turners describe their house flooding during king tides with the result that the basement level cannot be used as originally intended. Given the age of the house, and the salt-water inundation, the Turners consider that the house is dilapidated and should be replaced.
[16] The Turners first sought approval from their neighbours to demolish the house and rebuild it in 2017. They presented a set of architectural drawings and related documents to the other flat owners. These were amended in around June 2018 to meet some of the Goldsburys’ objections.
[17] The Goldsburys refused to consent to the plans. The Turners invoked the arbitration provision in the lease, seeking a determination of whether the defendants were unreasonably or arbitrarily withholding consent to the proposed plans.
[18] In an award dated 4 March 2019, the arbitrator found that the Goldsburys’ refusal to consent to the proposed alterations to Flat 1 was neither unreasonable nor arbitrary. That was because the proposed design of the replacement building had
effects that were more than trifling, including increases in height, and an increase in the bulk of Flat 1.1
[19] Subsequently, in response to a further arbitration initiated by the Turners, the arbitrator declined to rule on various questions without revised design plans. These questions included whether the terms of the cross-lease allowed the Turners to demolish and rebuild outside the existing envelope, and the area of unused site coverage available for such a rebuild. The arbitrator urged the parties to put their past differences behind them, to attempt to accommodate the interests of the other side, and to try and resolve matters by negotiation or mediation with a mediator.
[20] Further plans were prepared in August 2020. The Turners say they sought the Goldsburys’ consent to these plans. However, the Goldsburys say they have only ever received two sets of plans from the Turners, both designed by Mr Kohler. Their decision to withhold consent is only in respect of the specific plans presented.
[21] The Turners filed the current application in February 2021. The application seeks an order of partition dividing the property among the co-owners in such manner as the Court thinks fit, but preferably in accordance with a scheme plan which is annexed to a schedule to the statement of claim. The scheme plan generally represents the boundary divisions shown on the cross-lease plan, including the restricted use areas associated with each Flat. The existing common area would become a “Jointly Owned Access Lot” (JOAL) under the scheme plan. In simple terms, the neighbours would continue to share ownership of the common driveway.
[22] The Goldsburys say the effect of the scheme plan will be to essentially reduce their landholding interests as owners of the two flats and provide a less attractive bundle of rights than the bundle of rights under the cross-lease.
1 The award was described as an interim award because it did not deal with the issue of costs. However, it addressed the matters of the substantive dispute in every other respect.
Legal framework
[23] The application is made under s 339 of the PLA. That section gives the Court a broad discretionary power to order division of jointly owned property subject to restrictions on the division of land.
[24] The power to divide the property “in kind among the co-owners” in s 339(1)(b) empowers the Court to partition the property and divide it among co-owners.2
[25] Section 342 sets out the relevant considerations which the Court must have regard to when considering whether to exercise its discretion to make an order under s 339(1) of the PLA.
[26] The Court also has a discretion to make ancillary orders under s 343 of the PLA.3
[27] In Bayly v Hicks, the Court of Appeal said that the Court is required to stand back and assess the “most just and practical way through the impasse before the Court”.4 The Court’s broad discretion means that the orders made by the Court do not have to reflect those sought by the parties.5
Should partition be ordered?
[28] I consider each of the s 342 factors in deciding whether to grant the relief sought.
Extent of the share in the property (s 342(a))
[29] Two of the four flats are owned by the Goldsburys. They oppose the application. The Turners and Wardlaws own the other two flats. They support the application. The equal support for and against the application means this factor is neutral in the overall balance.
2 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [25].
3 Property Law Act 2007, s 342.
4 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [32].
5 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [41].
The nature and location of the property (s 342(b))
[30] The Turners submit that the nature and location of the property supports their application. They say that their flat is dilapidated and subject to tidal inundations and in need of replacement. Further, they say that the flats are in a prime position, being close to the beach, and that this also favours partition to allow the land to be developed. The Turners say their proposed plans would have minimal impact on their neighbours.
[31] I do not consider this factor to favour the Turners’ application. The core issue in dispute does not concern the current state of the Turners’ flat or the prime location of the address. The difference centres around the extent of the Turners’ plans for redevelopment and the impact of that redevelopment on the Goldsburys.
[32] That difference is governed by the terms of the cross-lease. The Turners purchased their flat on the basis of this cross-lease and with knowledge of the restrictions it contains. The other flat owners also purchased their flats in reliance on the terms of the cross-lease.
[33] The cross-lease provides a mechanism by which disputes between neighbours regarding their respective flats may be resolved. The Turners triggered those dispute resolution mechanisms but were unsuccessful before the arbitrator. The application for partition should not be allowed to circumvent that result.
[34] I consider the cross-lease nature of the property, and the mechanisms it provides for resolving disputes, weighs against a partition order in this case.
The number of other co-owners and extent of their shares (s 342(c))
[35]This factor is neutral for the reasons set out above in relation to s 342(a).
Hardship (s 342(d))
[36] The Turners say they will suffer hardship if the land is not partitioned. Mrs Turner encapsulated the alleged hardship in her evidence in chief as follows:
… They refuse to engage with us, meaningfully, about how we might be able to move forward with our hopes of having a better place to live. I think it is
because they do not like us and enjoy being difficult; they will reject anything we put up out of spite. For my part (and I say this on behalf of my husband), I find myself unable to deal with them in any way at all.
…
Where that stand-off leaves Warren and me is that we are stuck with living in a worn-out house, which is susceptible to inundation. There’s no point in trying to flood-proof the property because it would be a waste of money trying to protect something which is so, so tired. There is no point in trying to reason with them; there is no point in going off and spending money on re-working architectural drawings without any clear understanding of the framework for such a re-work.
[37] On the other side of the fence, the Goldsburys say they will suffer hardship if the partition order is made as they will lose the rights under the cross-lease to control the impact of changes made to the other flats. Counsel for the Goldsburys submits the Court should be slow to intervene and to extinguish those rights in a situation where the mechanism provided for under the cross-lease is still workable.
[38] There is considerable merit in the last of these submissions. The cross-lease has a term of 999 years. All parties purchased their properties on the basis of the terms and conditions set out in the cross-lease. This included the limitations on building work set out in cl 9 of the cross-lease. That clause prohibits the erection, alteration, addition, or extension of any existing building without the prior written consent of the other owners. That consent shall not be unreasonably or arbitrarily withheld.
[39] Importantly, the cross-lease provides a means by which disputes between owners may be resolved, and hardship alleviated or mitigated. Any dispute may be referred to arbitration. If the Turners consider the Goldsburys are acting unreasonably by withholding consent, then they may refer the dispute to arbitration. That is exactly what the Turners did. The arbitrator ruled against them. That is, he found that the Goldsburys were not acting unreasonably in declining to consent to the plans then proposed. Being on the losing side of an arbitration convened under the cross-lease does not provide a reason to bypass the mechanism altogether and partition the land.
[40] The plaintiffs called evidence at trial from a valuer, Mr Priest. In his expert opinion the proposal to create four new fee simple titles would be of benefit to all property owners. That was subject to a proviso, however, that the proposed dwelling
was not higher than the existing one (or not significantly so), and that it occupied the footprint shown on the plans, with the existing view shaft not compromised. That was especially important for the Goldsburys’ flat, which sits behind the Turners’ flat.
[41] Mr Priest’s valuation does not take into account the loss of the cross-title property rights. As Mr Ryan, for the Goldsburys, submits, hardship is a “value-laden” criterion,6 and accordingly much broader than economic hardship. The loss of the bundle of rights and controls afforded under the cross-lease constitutes a hardship for the Goldsburys.
[42] I accept that efforts to revise plans and secure the Goldsburys’ consent have been time consuming and costly. I also accept that, at times, it has been difficult for the Turners to understand the Goldsburys’ key concerns with the proposed building. The Goldsburys appear reluctant to articulate those concerns and at other times the Goldsburys have simply refused to engage.
[43] The Turners expressed frustration at not knowing the parameters of the building that might be acceptable to the Goldsburys before incurring the cost of preparing further plans. This was the genesis of the second arbitration.
[44] While that frustration is understandable, the process envisaged under the cross- lease is for the Turners to present a proposal to the Goldsburys and seek their consent. That consent cannot be unreasonably or arbitrarily withheld. What is unreasonable or arbitrary must be assessed by reference to a particular proposal.
[45] The Goldsburys have indicated that their concerns generally lie with the height and bulk of any proposed replacement dwelling. They have said they would have no objection to a single-storey house on the site. At trial, Mr Goldsbury suggested that they were unlikely to have a problem with a two-storey house that was at the same height as the existing one, and which had the same or similar gable roof design. He also indicated a concern about materials which might be reflective and cause glare, and concerns about any planting that might obstruct their views or interfere with their line of sight.
6 Holster v Grafton (2008) 9 NZCPR 314 (HC) at [50].
[46] That gives a broad outline of concerns to be addressed. Ultimately, however, the Goldsburys’ consent must be linked to a specific set of plans put forward by the Turners. If the Turners believe that the Goldsburys are being unreasonable in withholding consent, then they may trigger the arbitration process under the cross- lease and seek a determination on that issue.
[47] There was evidence called at trial directed to other incidents which the Turners relied on to support their claim that the Goldsburys were unreasonable and difficult to deal with.7 These incidents include not allowing tradespeople access to the flat, yelling and swearing at tradespeople, positioning a derelict boat on the common driveway to make access more difficult, refusing to consent to the installation of fibre cable, abusing the installers when they attended the site, throwing rubbish into the Turners’ property, and intimidating and threatening behaviour involving screaming and abuse.
[48] The Wardlaws supported the Turners in this regard, although their interactions with the Goldsburys have not been at the same level.
[49] I accept that some of the Goldsburys’ behaviour has been inflammatory and unnecessarily hostile. It falls short of the sort of neighbourly behaviour expected of those in a shared arrangement. However, while partition may reduce opportunities for conflict, it will not alleviate or remove that conflict altogether. Most of the behaviour described has nothing to do with the cross-lease relationship. The parties will remain neighbours with a shared driveway and will necessarily have to deal with each other in that capacity even if partition is ordered. The type of behaviour described may still occur irrespective of the nature of the legal relationship between each of the flat owners.
[50] The Turners rely on Minehan v McGuigan, and Gonsalves v Williams in support of an order for partition.8 These cases are distinguishable from the present. Both cases concerned orders for sale, rather than orders for partition. There were no
7 I ruled the evidence of Mr Duke and Ms Batten, called on behalf of the plaintiffs, to be admissible. This evidence concerned historical interactions between both witnesses and the Goldsburys. The probative value of this evidence was very low. However, there was little or no prejudice in allowing it to be adduced, and it was accordingly ruled admissible at trial.
8 Minehan v McGuigan [2020] NZHC 1686; and Gonsalves v Williams [2014] NZHC 2376.
other avenues in those cases by which the acrimony could be relieved. Here, the cross- lease provides for a mechanism which the parties can, and have, used.
[51] Furthermore, the sale orders in those cases meant that the parties no longer had to deal with each other. As I have already explained, that is different to this case where a partition order would simply change the legal status of the relationship between the parties, but they would remain living next door to each.
[52] On this last point, Mr Parmenter referred me to Del La Varis-Woodcock v Thomaes.9 Palmer J acknowledged that partition would not fix the dysfunctional relationship in that case as the parties would continue being neighbours. However, the Judge considered that the “relative certainty of property rights that comes with division will remove potential flashpoints that are inherent in co-ownership”.10
[53] I do not disagree with those comments in the context of that case. But decisions under s 339 of the PLA are fact specific. Unlike this case, the arrangements between the parties in Del La Varis-Woodcock did not include a mechanism to relieve the potential flashpoints inherent in co-ownership. Given the history of the dispute between the parties in this case, I am not confident that partition will remove the source of ongoing tension. Indeed, if the Turners build a house on their property without any regard to the reasonable concerns of the Goldsburys, then there is every possibility that the situation will worsen.
[54] The Wardlaws initially said they would also suffer hardship if the partition order was not made. The hardship was said to arise from being unable to move towards the installation of a lift shaft to maintain or improve their quality of life.
[55] In their evidence given at trial, Mr and Mrs Goldsbury indicated they would agree to the installation of the lift in the Wardlaws’ flat in return for agreement to allow future recladding of the Goldsburys’ flats when required. In his evidence at trial, Mr Wardlaw agreed that such an approach was reasonable. In those circumstances, I do not need to address the allegation of hardship to the Wardlaws.
9 Del La Varis-Woodcock v Thomaes (2017) 18 NZCPR 686 (HC).
10 Del La Varis-Woodcock v Thomaes (2017) 18 NZCPR 686 (HC) at [56].
[56] An assessment of the comparative hardship to the parties in these circumstances weighs against an order of partition in this case.
Value of any contribution made by any co-owner (s 342(e))
[57] The Turners say this factor is irrelevant to the overall assessment. The Goldsburys, however, say that the Turners have failed to undertake maintenance since purchasing their property in 2012. The Goldsburys say this is in breach of cl 6 of the cross-lease which contains a covenant for maintenance. The Goldsburys argue that the Turners cannot take advantage of their own breach of the lease by seeking to override the cross-lease terms in favour of partition.
[58] The Turners deny they have breached the obligation to maintain in the cross- lease.
[59] On the evidence before me, I am unable to determine whether the current state of the Turners’ flat is due to a failure to maintain. The bottom level is some 100 years old. The Turners have been reluctant to invest too much in the property while they pursue re-development plans.
[60] In any event, the issue is only of peripheral relevance to the core matters in dispute. The issue is not the cause of the current condition of the Turners’ flat. There is no claim or cross-claim for the Turners for breach of the obligation to maintain. Rather, the issue in the proceeding concerns the scope of the proposed plans to replace the flat. In that context, whether the Turners have breached the maintenance covenant in the lease in the past is of little moment in determining whether a partition order should be made.
[61]This factor holds no weight in the overall analysis.
Any other relevant matters (s 342(f))
[62] There were no additional matters raised by the parties that have not been addressed.
Conclusion
[63] The s 342 factors weigh against the plaintiffs’ application in this case. The interests of justice do not favour partition of the titles and I am not satisfied that an order should be made.
[64] This conclusion makes it unnecessary to address the plaintiffs’ submissions regarding the sharing of the expenses of partition between all four parties. Similarly, it makes it unnecessary to address the defendants’ request for conditions to be imposed if this Court had decided to order partition.
Result
[65]The application is dismissed.
[66] The Goldsburys are the successful party in the litigation. The parties are urged to agree costs. If costs cannot be agreed, then a memorandum in support of costs may be filed 15 working days after delivery of this judgment. A memorandum in opposition shall be filed 10 working days thereafter. The memoranda shall be no more than five pages in length. Costs shall be determined on the papers.
Edwards J
Counsel/Solicitors:
R O Parmenter, Auckland Graham and Co, Auckland S J Ryan, Auckland
Daniel Overton and Goulding, Auckland
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