Vallance v Vallance
[2014] NZHC 699
•8 April 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001572 [2014] NZHC 699
UNDER the Property Law Act 2007 IN THE MATTER
of an application for a sale order pursuant to ss 339 to 343 of the Property Law Act
2007
BETWEEN
CLIVE CONWAY VALLANCE and ROSS RAYMOND TEMPLETON as Trustees of the Estate of Arnold Raymond Vallance
Plaintiffs
AND
CHRISTOPHER VALLANCE Defendant
Hearing: 26 March 2014 Appearances:
P J Shamy for Plaintiffs
J E Bayley for DefendantInterim Judgment:
8 April 2014
INTERIM JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] The plaintiffs are the trustees in the estate of A R Vallance who died in 2001. At the time of his death Mr Vallance was the owner of a half share of a residential property as a tenant in common with his late wife, Mrs D M Vallance.
[2] Mrs Vallance was a life tenant in her late husband’s estate and continued to live in the house after his death. In October 2001 she sold her half share of the property to the defendant, Christopher Vallance, so he became the owner of a one- half share of the property as tenant in common with the trustees in his late father’s
estate. The agreement for sale and purchase between Mrs D M Vallance and
CLIVE VALLANCE and R R TEMPLETON as Trustees of the Estate of Arnold Raymond Vallance v
CHRISTOPHER VALLANCE [2014] NZHC 699 [8 April 2014]
Mr Christopher Vallance included chattels, described as stove, fixed floor coverings, blinds, curtains, drapes and light fittings.
[3] Since the death of Mrs D M Vallance died the trustees in the estate of her late husband have been endeavouring to reach agreement with Mr Christopher Vallance on a means of realising the half share of the property owned by the estate. Various proposals have been put forward, discussed and discarded and in the end it has been necessary for the trustees to bring this application to the Court for orders under the Property Law Act 2007.
[4] Section 339 of that Act provides, to the extent relevant:
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) … (b) … (c) … (3)
(d)
…
only after having regard to the matters specified in section 342.
(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)).
[5] Section 342 sets out certain matters to which the Court is required to have regard when making an order under s 339(1). By the time this matter came for hearing by the Court the parties had agreed that an order could be made by consent for the sale of the property and division of the proceeds between the trustees and
Mr Christopher Vallance. They are equal owners so equal division is agreed. There are, however, comparatively minor issues between the parties which require consideration under s 343, and depending on the outcome of that assessment, an adjustment to the way in which the proceeds of sale are paid out. As well, there is a dispute over certain chattels within the property, and a decision on ownership of those chattels, and (depending on that decision) how they should be dealt with in the sales process, is also required.
[6] Ancillary orders relating to the sale may be made under s 343:
343 Further 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).
[7] The issues requiring determination on this application are these:
(a) Ownership of certain chattels within the property, and orders in relation to them.
(b) The appointment of a real estate agent to conduct a sale, and who should sign the listing with that agent.
(c) Who should sign other documents necessary for the property to be sold at auction and for title to be transferred to a purchaser.
(d) The setting of a reserve price, and a mechanism to apply if the property does not sell at auction.
(e) A claim by the trustees in the estate for payment by Mr Vallance of occupation rent.
[8] The plaintiffs seek resolution of these issues by way of summary judgment. Summary judgment may be entered for a plaintiff where it is shown that a defendant does not have an arguable defence to the claim. The onus of proof lies on the plaintiff. However, if the evidence presented by a plaintiff shows on its face that a plaintiff is entitled to the remedy sought, an evidential onus passes to a defendant to
demonstrate a tenable defence.1
[9] The Court will not normally resolve material conflicts of evidence or assess credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility, for example where it is inconsistent with disputed contemporary documents or other statements by the same deponent, or is inherently improbable. The Court is to take a robust and realistic approach where the facts
warrant it.2
First issue: chattels
[10] The late Mr and Mrs Vallance lived in this property as their residence. They held the title to the property as tenants in common in equal shares. When Mr Vallance died he left a will. By clause 5 he left his wife a life interest in his “share in the residential property at 116 Bowhill Road, North Brighton, Christchurch” or, at her election, either a property purchased in substitution or the proceeds of sale invested to provide income. On her death the property or the
proceeds of sale were to be held on trust for their six children who include the first-
1 Auckett v Falvey HC Wellington CP296/86, 20 August 1986.
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].
named plaintiff, and the defendant. By clause 6 Mrs Vallance received the residue of the estate.
[11] When Mrs Vallance sold her one half share of the property to Mr Christopher Vallance on 20 October 2010, she signed an agreement for sale and purchase. On that document the vendor was described as:
Dorothy Muriel Vallance (as to her half share).
In the portion of the document with the heading “Property” the address of the property is followed by the words “(as to the half share owned by Dorothy Muriel Vallance)” and this is followed by the legal description of the property.
[12] In clause 1.1(14) “property” is defined to mean “the property described in this agreement”.
[13] The agreement states:
It is agreed that the vendor sells and the purchaser purchases the property, and the chattels listed in Schedule 1, on the terms set out above and in the General Terms of Sale and any Further Terms of Sale.
It will be noted that “the property” and “the chattels” are described in such a way that the chattels are not included in “the property”.
[14] In Schedule 1 there is the following list:
Stove Fixed floor coverings Blinds Curtains Drapes Light fittings
[15] These are the chattels which are in issue. In addition, there are four items on the property which Mr Christopher Vallance provided, and which the estate accepts are his own property. These are a greenhouse, a shed, a heat pump and a dishwasher. I will refer to this group of chattels separately.
[16] The trustees say that the estate of the late Mr Vallance owns a half share in the chattels referred to in the agreement for sale and purchase between Mrs Vallance and her son, relying essentially on the proposition that Mr and Mrs Vallance decided to own their home in equal shares, but as tenants in common not as joint tenants, so
they owned the chattels normally associated with a residential property on the same basis, resulting in Mrs Vallance only owning a half share in the chattels and therefore selling only that share to her son. Mr Christopher Vallance says, however, that he bought all the chattels from his mother when he purchased her half share of the real estate.
[17] Only two documents relating to that sale have been produced to the Court. The first is the agreement for sale and purchase to which I have referred. The second is a letter to the solicitors for Mrs Vallance from Quotable Value which sets out a “Desktop Estimate Certificate: Estimate of Value for Related Party Transfer”. It estimates the value of the property at $395,000 which “includes an estimated
$10,000 (Ten Thousand Dollars) chattels – derived from analysis of key sales …”.
[18] Mr Christopher Vallance and his mother evidently accepted this estimate as
Mrs Vallance agreed to sell her half share to her son for $197,500.
[19] In relation to the chattels in the house which are referred to in the sale contract, I find:
(a) Mrs Vallance came to own all the chattels:
(i) Initially Mrs Vallance owned a half share of these chattels, as tenant in common with her husband until he died. This reflects the basis on which they elected to own their home; I see no basis for the proposition that they owned the chattels as joint tenants.
(ii) Then Mrs Vallance received her late husband’s share of those chattels pursuant to clause 6 of his will: “I give devise and bequeath all the rest and residue of my estate both real and personal …” to Mrs Vallance.
There is no mention of the chattels in clause 5 of the will, which gave Mrs Vallance a life interest in “the residential property at
116 Bowhill Road, North Brighton Christchurch”.
(iii) If I am wrong in this and they owned the chattels jointly, Mrs Vallance received her husband’s half share of the chattels on his death, by survivorship.
(iv) Therefore either way, by survivorship or under clause 6, at the time Mrs Vallance sold her half share of the residential property to Mr Christopher Vallance, she owned all the chattels in it.
(b) She sold her entire interest in those chattels to Mr Christopher Vallance:
(i) The agreement makes it clear that “the property” sold is the realty, and that Mrs Vallance sold only her half share of that, but there is no similar limitation in relation to the chattels.
(ii) There is no evident logical reason for Mrs Vallance retaining a half share of the chattels she owned, which would have resulted in her husband’s estate owning half the realty, her son owning the other half of the realty and half the chattels, and her owning the other half of the chattels.
(iii) I think it unlikely the parties would have elected this ownership structure, and consider it more likely Mrs Vallance sold all her chattels to Mr Christopher Vallance.
(iv) I accept this is inconsistent with the valuation used for the sale; the price paid was half the valuation figure, which included all the chattels and as a matter of logic this suggests she sold only a half share.
(v) The valuation is at best an estimate of the value of the chattels, and lacks detail and analysis. I find it of little value in resolving this issue.
[20] The consequence of these findings is that although the estate and Mr Christopher Vallance are owners as tenants in common of the property which is to be sold, Mr Vallance owns the chattels which he claims to be his, which I have listed in paragraph [14], above.
Second issue: appointment of a real estate agent to conduct a sale
[21] Mr Shamy seeks an order that the property be sold by auction, to be conducted by a licensed real estate agent, David Findlay of Ray White Metro. He proposes that the trustees will sign a listing authority and agency, and asks that Mr Christopher Vallance be directed to do so also. Mr Vallance declines to do so; he takes the view that the trustees should arrange and authorise the sale as it is at their instigation. They should instruct and give an agency to the selling agent, and thus become liable for payment of selling fees and expenses, and he should not be required to take those steps or accept that liability. He does accept, however, that once the property is sold, the expenses of sale should be deducted from the proceeds of sale before division, and in that way he will bear half of the cost.
[22] The selling agent will be required to carry out real estate agency work in relation to the sale of the property. Real estate agency work is defined in s 4 of the Real Estate Agents Act 2008. The relevant part of the definition is “any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction”.
[23] An order for sale under the Property Law Act is an order that the entire property be sold, that is, the share of any co-owner, jointly. Each co-owner is, therefore, a vendor. The services of the real estate agent will be carried out for the purpose of bringing about a sale on behalf of each owner, and therefore real estate agency work is being done on behalf of each owner. This brings both the estate and Mr Christopher Vallance within the definition of “client” in s 4: “the person on whose behalf an agent carries out real estate agency work”.
[24] This brings into play certain duties on behalf of a real estate agent (see for example s 124) and also relates directly to a real estate agent’s entitlement to commission. Section 126 provides that an agent is not entitled to any commission or expenses from a client for or in connection with any real estate agency work carried out by the agent for the client unless the work is performed under a written agency agreement signed by or on behalf of the client, and the agent.
[25] It follows, therefore, that it is necessary that both the estate and
Mr Christopher Vallance sign the agency agreement, and I so direct.
Third issue: who should sign other documents necessary for the property to be sold at auction and for title to be transferred to a purchaser?
[26] On this point there is no question that both the trustees and Mr Christopher Vallance, as registered proprietors, should sign these documents. I so direct. Out of an abundance of caution, and in light of the considerable disagreement on most issues between the trustees and Mr Vallance, I will reserve leave for this to be reconsidered in the event of either side refusing to sign documents.
Fourth issue: the setting of a reserve price, and a mechanism to apply if the property does not sell at auction
[27] In papers prepared for the hearing both counsel advise that agreement had been reached that the property be offered for sale by auction with a reserve price of
$428,000. This follows from an updated valuation for the property which sets that value, and includes the sum of $6,000 for chattels.
[28] In case the property does not sell at auction, it is necessary for a procedure to be settled to achieve a sale by other means, likely to be private treaty. I propose orders in the following terms:
(a) In the first instance the property is to be offered to the highest bidder at the reserve price.
(b) If an agreement to sell at this price to the highest bidder is not signed within 48 hours of the end of the auction, the property is to be offered for sale at a price set at no lower than five (5) per cent below the reserve. An offer for a price no lower than that figure is to be accepted by the trustees and Mr Vallance.
(c) If the property is not sold within these parameters within 30 days of the date of the auction, counsel may apply for further directions.
[29] I refer to both these issues in the conclusion to this interim judgment.
Fifth issue: should Mr Christopher Vallance be directed to pay an occupation rent?
[30] The trustees say that Mr Vallance has been in possession of the property and has used it as his residence for some years, and should pay an occupation rental from the date of his late mother’s death until he vacates the property or, should he purchase it at auction, takes title to the estate’s one-half share.
[31] The estate produced in evidence an estimate of rental by an agent of $380 to
$400 per week, but that assessment was made without an inspection of the interior of the property, was made some months ago, and its validity was limited to a period of
14 days due to a rapidly changing rental market.
[32] Mr Vallance says he should not pay occupation rental. He says he has looked after the property, has had no request for an occupation rental until recently and has not prepared himself for expenditure on rent (which he might have met by taking in a
tenant) and has paid the rates and insurance on the property.
[33] Mr Bayley refers to in Re Pavlou (a bankrupt),3
where Miller J made an
observation on the circumstances in which occupation rent can be paid. He said:
First, a court of equity will order an inquiry and payment of occupation rent, not only in the case where the co-owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid. The fact that there has not been an ouster, or forceful exclusion, therefore, is far from inclusive.
[34] This passage was cited in Dyas v Elliott.4
In that case the learned Judge also
referred to “Land Law in New Zealand” at 13.002(a) where the learned authors set out the circumstances in which a co-owner, who has failed to exercise his or her right of possession, is entitled to claim an occupation fee from another co-owner. Mr Bayley says that the present circumstances do not fit any of the criteria suggested by the learned authors, but the third criterion is where one co-owner occupies the land
as tenant of the others’ share and owes rent accordingly.
3 Re Pavlou (a bankrupt) [1993] 3 All ER 955.
4 Dyas v Elliott (2010) 11 NZCPR 252.
[35] In my view, this provision and the express power to require payment of a fair occupation rent set out in s343(f) of the Property Law Act 2007 give this Court jurisdiction to order payment of an occupation rent.
[36] Two factors will bear on the decision I make in relation to the amount to be paid. First, there should be a reasonable period after the death of the late Mrs Vallance before occupation rent commences, to take account of the change of circumstances brought about by her death, for which no express provision was made by way of the trustees in her late husband’s estate then requiring the payment of rent. Had this occurred it would have triggered the prospect of Mr Vallance taking in a tenant or boarder to assist with the cost. In my view a reasonable period is three months after her date of death.
[37] Secondly, the valuation assessment presented in evidence is inadequate for the purpose of assessing rent. I make the following directions:
(a) The trustees are to arrange for a real estate agent practising in residential letting to inspect the property and provide a report, which is to be submitted to the Court, on a reasonable market rental for the property if let on a monthly tenancy, between the beginning of November 2011 and the present. The rent will be assessed on the basis that a tenant would provide the chattels I have found belong to Mr Christopher Vallance. The inspection is to be carried out in the presence of Mrs Sarah Roberts, solicitor to the trustees. Mr Christopher Vallance is to be make access to the property available for this purpose at a time that meets the convenience of the agent and Mrs Roberts. The report is to be made available to Mr Shamy and Mr Bayley. Upon its receipt Mr Shamy is to file it with a memorandum containing any comment on it which he wishes to make; likewise, Mr Bayley is to file a memorandum with any comment on the valuation which he wishes to make.
(b) I will then make a ruling in relation to occupation rental. I can indicate to the estate and to Mr Vallance that if occupation rental is ordered, there will be a credit allowed against any liability Mr Vallance has for a
one-half share of any rates and insurance he has paid which relate to the period for which an occupation rental is assessed. These details are to be given in counsel’s memoranda. Further, if an occupation rental is assessed, arrears of rental will be directed to be paid from Mr Vallance’s share of the proceeds of sale, but further consideration will be given to ongoing occupation rental being paid contemporaneously should the property not sell within the timespan set out above (30 days
of the auction).
Conclusion
[38] As a result of the findings I have recorded in this judgment, further input from counsel is necessary.
Chattels
[39] Given the finding that I have made in relation to chattels, it is necessary for counsel to make submissions on how the issue of chattels should be dealt with in relation to the sale.
[40] Although this was the subject of some debate at the hearing, my ruling on the matter now opens the way for the parties, through counsel, to agree on a practical way for these chattels to be handled at the time of sale. In this context, “chattels” includes the shed, greenhouse, heat pump and dish-washer. Mr Vallance wishes the chattels to remain in the house (and garden), with it being made clear to potential purchasers that these chattels are not included in the sale, but could possibly be sold to a successful purchaser at an agreed sum. On the other hand the trustees, as I understand it, prefer that the property be offered for sale without the chattels in it. My present inclination is that all the chattels should remain, and the terms of sale should expressly state that they are excluded from the sale and will be removed before settlement unless sold separately to the successful purchaser. I will also direct the incidence of any cost incurred to make good the premises on removal of the chattels (for example any damage caused by removing the heat pump, such as holes in the wall of the building).
Procedure
[41] Although at the hearing counsel indicated agreement on a reserve price, this included a stipulated sum of $6,000 for chattels. The agreement needs to be revisited given the ruling I have made in this judgment on the ownership of the chattels, and if not confirmed or varied by agreement I will fix the reserve.
Occupation rent
[42] Directions are given on this issue, above.
Procedure
[43] The directions given in paragraph [37] in relation to assessment of occupation rent are to be followed as soon as possible. Memoranda on that issue, and on the other outstanding issues to which I have referred, are to be filed thus:
(a) By Mr Shamy, within 15 working days.
(b) By Mr Bayley within a further five working days.
(c) By Mr Shamy, strictly in reply, within a further five working days.
[44] At the expiration of that period the case will be referred to me for further consideration. If I consider it necessary, I will convene a further hearing, but my preference is that the memoranda should be such that I can resolve remaining issues and issue a judgment with final orders on the papers. These orders will include directions on how the proceeds of sale are to be applied to reflect the decisions made
by the Court, and equal division of the proceeds after any payments ordered.
J G Matthews
Associate Judge
Solicitors:
Bridgeside Chambers, Christchurch. Rhodes & Co, Christchurch.
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