Van der Byl v Van der Byl

[2022] NZHC 850

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2021-454-32

[2022] NZHC 850

IN THE MATTER

of section 339 of the Property Law Act 2007

AND

IN THE MATTER

of an application for orders for the purchase or sale of a property

BETWEEN

ROBIN CHARLES VAN DER BYL

Applicant

AND

PEGGY MIMBRY VAN DER BYL

Respondent

Hearing:

1 March 2022

Counsel:

D I Sheppard for Applicant

T G A Manktelow and H K Clow for Respondent

Judgment:

28 April 2022

JUDGMENT OF SIMON FRANCE J

Introduction

[1]                 This proceeding involves a family home owned equally by a mother and son. The mother is aged 88 and wishes to remain in the house as long as she can. The son is 66 years old and lives in Australia in straitened circumstances. He wishes to extract his capital so he can provide for himself. The relationship is seemingly irretrievably broken down.

VAN DER BYL v VAN DER BYL [2022] NZHC 850 [28 April 2022]

[2]                 The son, Mr Robin Van Der Byl, seeks orders under the Property Law Act that either the mother buys out his share or the house is sold.1 Although a 50 per cent owner, Mr Van Der Byl is willing for the purposes of any orders made in these proceedings to be treated as a one-third owner. The application is opposed. The rest of the family side with Mrs Van Der Byl, and contend that Robin should just wait until their mother/grandmother passes  away  or  circumstances  force  her  to  leave.  If Mr Van Der Byl succeeds in his core application, he also seeks orders compensating him for unpaid rents.

[3]                 I begin the judgment by observing resolution is not easy. Mrs Van Der Byl has lived on the property for nearly 30 years. The set-up allows a family member to reside there and assist with her needs. She understandably does not wish to move. On the other hand, her son is 66 years old and renting a bedroom in a relative’s house. He has basic Australian superannuation and a vacant block of land (recently purchased for AUD $55,000) on which he wishes to build a kit-set home (AUD $105,000 plus construction) to provide some certainty of accommodation for his remaining years. The online valuation of their jointly owned house ($850,000) would suggest a one- third payout would enable him to build his house, and secure accommodation for the rest of his life.

[4]                 The evidence from  the  respondents  has  not  disclosed  the  capacity  of  Mrs Van Der Byl, aided by her family, to buy Robin out. The approach seems to be a collective view that how Robin came to own any of the house is dubious, and his claims will not be recognised. Reliance is very much placed on the perceived moral outrage of a son seeking orders removing his 88-year-old mother from her house.

[5]                 There is a sequence of topics that will provide the necessary context for a decision:

(a)how Robin came to acquire an interest in the property, and what the expectations were;

1      Property Law Act 2007, s 339.

(b)events occurring in 2009 when Robin moved out of the house to enable his brother (Steven) to live there and in 2012 when, without Robin’s knowledge (he was now living in Australia), Steven moved out and a grand-daughter of Mrs Van Der Byl moved in. This occupancy has changed over the years to the present day but has always been some family member; and

(c)the personal circumstances of Mr Van Der Byl and his mother.

Robin acquires an interest in his parents’ home

[6]                 In 2006 Robin had returned to New Zealand from Australia. He lived near his parents and became aware of his father’s increasing frailty. He began living at the family home in Palmerston North Monday to Friday, and returning to Levin, where his wife lived, on the weekends. Wanting to improve these arrangements, Robin suggested a granny flat be built at the back of his parents’ property. His parents could live in it and Robin and his wife would move into the main house.

[7]                 A family meeting was called at which this idea was put. Robin says there was general support for the idea but none of his parents or siblings could contribute to the

$100,000 sum required for the granny flat. It was agreed a mortgage would be raised against the house. Robin owned a property in Australia. He would meet the mortgage costs in the interim, but was going to sell the Australian property and discharge the mortgage. This is indeed what happened. Robin says his father and mother were concerned he be protected so suggested he take a one-third share of the house. This also happened.

[8]                 Evidence from the respondent’s side has been filed by Mrs Van Der Byl, her sons Steven, Paul and Leonard, and Leonard’s daughter Donna. Steven and Len were at the initial meeting. Len says the idea was that the flat be built so “family could live in the main house to look after the parents”. He thought it a reasonable idea but would not contribute an equal share of $20,000. Steven recalls the suggestion of each contributing $20,000 and says “all of us” rejected the idea. When later Robin suggested building it and paying for it himself, Steven did not think it necessary as the house was big enough, but did not object.

[9]                 Mrs  Van  Der  Byl’s  husband  was  ill  at  the   time   with   heart   issues. Mrs Van Der Byl says her focus was on him. She agrees she thought it would be helpful to have family living close, but denies she and her husband were, as Robin claims, “very excited by the prospect of the granny flat”.

[10]              After there was agreement to Robin’s plan, and the project was under way, Mr Van Der Byl Snr died. A dispute now arises concerning the views at that time about the ongoing need for the granny flat. In his original evidence, Robin merely observed the construction continued, was completed and his mother moved in. The respondent’s affidavits advanced a different line.

[11]              Mrs Van Der Byl said she thought with her husband dead there was no need for the granny flat and said so to Robin on many occasions. Robin would not take no for an answer, saying it was too  late.  She  says  he  built  it  against  her  wishes. Mrs Van Der Byl further claims the relevant documentation, now disclosed, shows it could have been stopped. Steven says his mother made it clear to everyone in the family she no longer wanted it built, but Robin insisted it was too late to stop construction. Paul says he was always opposed to the idea but does not comment on the period after his father’s death, and nor does Leonard.

[12]              In reply, Robin disputes his mother was ever opposed to the flat, and says she never asked for construction to stop. He also provides evidence as to what stage the building was at when his father died – I am satisfied from that evidence withdrawing would have been impractical, or at least very expensive and would have left the parties to deal with a partly built house (foundations, joists and bearers in place, and the particle board flooring).

[13]              In support of his position, Robin filed an affidavit from his former wife (Christine). She says Mrs Van Der Byl was excited about the flat, and enjoyed choosing the kitchen, colours and furnishings. Mr Van Der Byl Snr took comfort from the security it offered his wife. Christine says Mrs Van Der Byl never requested construction stop and remained engaged with the project. The need for the flat remained if she and Robin, together with her children from an earlier marriage, were to move into the house as planned.

[14]              Mr Van Der Byl was the only deponent to give oral evidence. He was not asked about this aspect.

[15]              The other topic to be addressed here is how Robin came to hold ownership of the family home. The deponents for Mrs Van Der Byl all say they only realised in 2012/13 Robin had a share when Donna did some digging into her grandmother’s situation. Some of the family say they always had suspicions but that Robin always denied having any interest in the property. The respondents describe the whole thing as “murky”. Mrs Van Der Byl accepts she must have signed the relevant documents but says she did not understand what was happening, it being the case that her husband decided business matters and she went along with it.

[16]In my view, some core facts are not capable of dispute:

(a)Robin put $100,000 into the granny flat, thereby paying for it. It was done by selling his property in Queensland and discharging the mortgage taken out for this purpose;

(b)Robin’s father suggested he have a share of the family home as protection for his investment and this was done by giving him a one- third share. One-third seems proportionate to the input;

(c)the two parties, Robin on the one hand and his parents on the other, had independent legal advice and separate lawyers acting for them;

(d)for unknown reasons the parties were made co-owners rather than tenants in common;

(e)when Mr Van Der Byl died, the survivorship rules meant Robin and his mother took his share and became owners of half the property each. A transmission giving effect to this was prepared by Mrs Van Der Byl’s lawyer and signed by both; and

(f)Mrs Van Der Byl has signed every relevant document.

[17]              As noted, Mrs Van Der Byl now denies knowing any of this. The Court has not had the advantage of seeing and hearing from her. On its face, her affidavit discloses a person who is very coherent and with some quite detailed recollections of events. If there is presently any infirmity or frailty it is not apparent from the affidavit.

[18]              Mrs Van Der Byl says she remembers going to the lawyer’s office and being told to sign documents, but they were not explained to her. It appears from what she otherwise says that Mrs Van Der Byl may not have demurred anyway, given that in business matters she ceded control to her husband.

[19]              The idea of the documents not being explained by a lawyer is at odds with standard practice, but two matters give me pause. First, in the absence of any explanation, making the parties co-owners with the succession implications appears an error on the part of the legal advisor. There is nothing in the arrangements that would suggest this was intended. Second, after these events Mrs Van Der Byl made a will prepared by the lawyer which gave $100,000 to Robin for his contribution to the house. This is inexplicable given that Robin already had the one-third ownership interest.2 I accordingly accept questions about the quality of advice received can be raised, but it can be taken no further than this.

[20]              Before reaching conclusions, it is necessary to make an assessment of Robin’s evidence. He was a straightforward witness who, in my view, was telling the truth as he understood it. He was direct in his answers, did not shy away from addressing the implications of his application and did not seek to overstate his case. This does not mean, of course, all his recollections and interpretations are necessarily correct, but I had no reason to question his honesty. Further, to a large extent his claims are supported by the available documentation.

[21]              My conclusion is that Robin acquired a one-third share fairly. There was a reason for his being given it and one-third seems a proportionate response to an input of $100,000 at that time. The parties had independent advice and a proper process was followed. If Mrs Van Der Byl had no understanding of what was happening, that was

2      It may be there is uncertainty over the exact timing of the will instructions. If they predated the subsequent transactions it might explain the apparent error.

by choice. There was every opportunity to understand, if she wanted. Claims by the respondent’s family of “murkiness” are not supported by the material available.

[22]              The reason for the increase in Mr Van Der Byl’s interest from one-third to a half is clear, but is the product, at least as can be known on the evidence, of error by a legal adviser. I say this because nothing in the arrangements that resulted in a one- third share would support an implementation mechanism that had the effect of increasing the size of the share. Mr Van Der Byl is correct to recognise this and limit his claim in these proceedings to a one-third. It is an approach on his part that matches my general assessment of his evidence.

[23]              For the purposes of the application I accordingly conclude Robin legitimately has a one-third interest in the property. In terms of why the granny flat was built, the immediate reason was because Robin and his family needed the house if they were to live there and provide support.

[24]              It is difficult to reach firm views on the broader picture. Obviously the idea of a granny flat inherently involves family members being on site to provide assistance. But there is little to indicate any cohesive plan or forward thinking. The family claim that Robin just went ahead and did it. I do not accept that and prefer the evidence of Robin and his former wife. Further, however, the reality is the rest of the family claim no involvement, even to the extent of not knowing Robin had been given an interest in the property. This tells against the idea now advanced of some plan or agreement for family to always live there.

[25]              My assessment is that the flat was built to assist with family living on site to provide assistance. That was the thinking at the time of both Robin and his mother. There is little evidence of thinking about what would happen if circumstances changed, but there would have been an assumption the property would continue to provide a home for Mrs Van Der Byl. I am not satisfied on the papers the wider family had much role. They may have held a similar assumption but there was no agreement.

Events following Robin moving out

[26]              In 2009, Robin’s brother Steven lost his house to fire. It was agreed that he would move into the flat and that his mother would move into the house. Robin, Christine and her children moved out of the house and into a rental property they owned. This required them to evict tenants with a consequent loss of rental, thereby putting pressure on meeting the outgoings.

[27]              It is common ground that Steven made payments to Robin of $185 per week, increasing at one point to $220 per week. Robin says this was rent to offset the rental income he lost. Mrs Van Der Byl disputes this, saying she would never charge him rent. The family appear to have the view it was to assist with outgoings on the house, and that Robin did not apply the funds as intended.

[28]              Christine’s affidavit supports her former husband, noting she would never otherwise have agreed to moving out and losing the rental income. Christine says she was present when Robin discussed this with his mother who agreed. Again I prefer the evidence of Robin supported by Christine, and consider Mrs Van Der Byl’s memory of the matter must be failing her, as it has undoubtedly done as regards some of the events when the one-third ownership was transferred. The context of Robin and Christine needing to move houses, and losing the rental property income is consistent with their recollections of what happened.

[29]              The records also suggest that Robin did continue to make payments towards the outgoings on the house, being rates, insurance and phone. At the same time Robin used a room at the house for work purposes and paid $50 a week.

[30]              Things changed in November 2011. Robin was made redundant and moved back to Australia for work. Christine followed shortly after. The following November Steven moved off the property, and stopped paying the $220. Robin eventually learned a niece, Donna, had moved in. He sought a continuation of the payments but she declined. According to Robin this would eventually lead to the need to sell his investment properties for very little gain due to an inability to maintain the outgoings. It is not clear to me why rental would not be coming in on the investment properties given Robin had moved out.

[31]              Robin has not been involved in the property since, neither making contribution or receiving income. In 2013, when family divisions were first developing or becoming entrenched, Robin made an offer to transfer back his share in the property for $100,000 but that was not taken up.

Current situation

(a)  Robin Van Der Byl

[32]              Mr Van Der Byl is now 66 years old. He has had heart surgery but presently seems recovered from that triple bypass operation. He is single, now being divorced from Christine.

[33]              Mr Van Der Byl was required to give up work because of a number of physical ailments, the most immediate being carpal tunnel syndrome. He received a payment from his superannuation fund which gave him just under $65,000. $53,000 of that was spent on the piece of land he has purchased. He qualifies for the National Age Pension which is his only income. He rents a bedroom in the house of a relative. The owners of the house are likely to sell in the not-too-distant future.

(b)  Mrs Van Der Byl

[34]              Mrs Van Der Byl is 88 years old and has lived at the house for nearly 30 years. She receives National Superannuation and some further superannuation from her husband’s fund. The total is $573 a week. She describes herself as reasonably independent. She has a heart condition and the proceedings have caused her stress. She receives support from her family in the form of assistance with meals and transport when needed.

Submissions

[35]              On behalf of Mr Van Der Byl it is submitted his circumstances are very difficult and he should be able to access his holding in the property to provide for himself.  Mr Sheppard advanced the proposition by reference to the mandatory relevant factors identified as s 342 of the Property Law Act 2007.

[36]              Concerning the extent of his share of the property, it is submitted the family’s label of “murkiness” is unfounded. The ownership interest was his father’s suggestion, reflected a clear contribution by Robin to the property, and was effected with the assistance of independent lawyers for each party. It is noted that there has been no challenge to any of the transactions, nor evidence about Mrs Van Der Byl’s attendance on her lawyer.

[37]              Section 342(d) requires the Court to consider the competing hardships of making the order or  not.  Recognising  the  central  importance  of  this  criterion, Mr Sheppard submits the balance favours Mr Van Der Byl. Concerning his mother, and accepting the emotional wrench that moving would involve, there is no evidence filed on her behalf as to what hardship it would otherwise cause.

[38]              Her two-thirds share should suffice to purchase another smaller property. She has as much income as her son and, although plainly older, enjoys equivalent health. It is submitted there is no evidence to support any conclusion other than Mrs Van Der Byl could continue to live in a property she owned with sufficient income.

[39]              By contrast, Mr Van Der Byl is reduced to renting a bedroom from a relative. He will struggle if required to pay ordinary rental rates and will be committed to living in rental accommodation. How long this may continue  cannot  be  known,  since Mrs Van Der Byl is seeming in reasonable health.

[40]              It is accordingly submitted the fair outcome is a partition order, the effect of which would be to leave both owners in a position to own their own property, and no worse off income-wise than each is now. Robin would be saved a rental outgoing, but would of course acquire ownership outgoings.

[41]              On behalf of Mrs Van Der Byl it is submitted she has a reasonable expectation to live in the house until she dies. It is argued the Court should recognise a constructive trust to that effect, as was done by the Court of Appeal in Lo v Lo.3 The trust exists because:

3      Lo v Lo [2021] NZCA 693.

(a)Mrs Van Der Byl and her husband provided a vastly greater share of the equity;

(b)the flat was built, as Robin acknowledges, so that family living on the property could look after Mrs Van Der Byl;

(c)the expectation of living there until she dies is reasonable; and

(d)it is reasonable Robin should yield to his mother’s interest because of the original purpose behind the arrangement.

Analysis

[42]              It is necessary to begin with a consideration of Lo v Lo on which the respondent places reliance. The house in that case was purchased by way of a cash sum of $85,000 provided by the mother, and a mortgage of $300,000. The house was in the name of the mother’s two sons, as was of course the mortgage.

[43]              Five years later, the sons bought another property, and the original property was retained as a rental investment. Ultimately, however, it was sold and the proceeds applied to reducing the mortgage on the remaining house where the family now all lived.

[44]              The case concerned a desire on the part of one of the sons, who had for some time been meeting most of the outgoings, to obtain his share. He asked to be bought out but that did not happen and relationships with his brother had broken down. He moved out and his brother assumed responsibility for outgoings. Although on the title a half owner, the son offered to be bought out for the equivalent of a one-third interest.

[45]              The Court concluded that although the brothers owned the house, half each, the mother had made significant contributions in the expectation that the property would provide a home for herself and her mother.4    The brothers understood this

4      At [73](b)–(c).

expectation from the outset and it was a reasonable expectation from which it would be inequitable for the brothers to resile.5

[46]              The Court continued, however, to note that the mother’s reasonable expectation was not as to a six-bedroom house as the current one was. Rather, it was that she would have an interest sufficient to ensure a home for her and her mother. Of some relevance to the present case are the following observations:6

… We do not consider that she could have a reasonable expectation that both twins would contribute indefinitely to the cost of housing their youngest brother. Nor would her reasonable expectation extend to requiring one or other brother to provide a home for the other, without any contribution from that other brother.

[84] It would be inequitable for Chi Na to be left without an appropriate home for herself and for her mother. If she wishes to live with other family members, and they wish to live with her, that result can be reached by agreement: but the additional adults in that house can be expected to meet the costs associated with purchasing and owning the larger property that is required in order to accommodate them.

[47]              The respondent’s argument in the present case seeks in some ways to cut across the broad discretion of the Property Law Act considerations by imposing a constructive trust on Mr Van Der Byl’s share. In that way, analysis of the competing hardships does not arise because it is not an unencumbered holding concerning which an order for sale could be made. Rather, it is a share in a property that is subject to a trust that gives his co-owner a right to live on the property with whom she chooses for as long as she chooses.

[48]              There is some objective material to support the contention in that plainly the purpose of building the granny flat was to enable Mrs Van Der Byl to live in it while Robin lived in the house and provided for her. There is little evidence, however, beyond that and I do not accept that the respondent’s evidence lays the basis for such a trust to be recognised.

[49]              Mrs Van Der Byl says she was not aware that an interest in the property had been transferred to Robin and that she did not want the granny flat to be built. She

5      At [73](d)–(e).

6      At [83]–[84].

does not testify as to any understanding or expectation at the time. I have rejected any claim of murky dealings by Robin at the time, and must recognise that the parties were legally represented when Robin acquired his share. In my view, the Court is free to consider the application on its own terms and in accordance with the Property Law Act.

[50]              Concerning that, once one moves beyond the discomfort involved in making orders that might see an elderly lady required to sell her home of 30 years, the competing equities and hardships are relatively clear. If the application is granted, and assuming no effort is made to buy Robin out, the end result should be:

(a)Mrs Van Der Byl would still have adequate capital to purchase her own house, albeit not one as well set up for live-in assistance as the present. She should not on a day-to-day basis be worse off, and may end up with spare capital;7 and

(b)Robin will be able to abandon his somewhat parlous current rental situation and build a modest kitset home in which he can live mortgage- free. He will obtain a level of security that is denied him now.

[51]              In terms of s 342(d) of the Act, the hardship to Mrs Van Der Byl is real but much more emotional than impacting on her lifestyle. An order for sale should not lead to any diminishing of her quality of life, or her financial position. On the other hand, the equivalent upgrade to her son’s position would be truly significant. The balance plainly favours the applicant.

[52]              For the avoidance of doubt I note I have considered the other mandatory factors in s 342 of the Act:

(a)The extent of the shares: For the purposes of this application, I consider the extent of the shares has been considered, and for the purposes of this  application  is  one-third  Mr  Van  Der   Byl   and   two-thirds Mrs Van Der Byl. I note, however, that in law they are equal owners.

7      That cannot be known and is not part of the reasoning. It is merely recognised as a possibility.

Mr Van Der Byl’s acknowledgement that  one-third  is  a  proper figure for this application does not diminish the strength of the application vis-à-vis Mrs Van Der Byl’s greater share.

(b)The nature and location of the property: This has some relevance to the extent that the nature of the property, two dwellings, makes it ideally structured for Mrs Van Der Byl and a replacement property is likely to be less so. I have had regard to that.

(c)The value of any contributions made to improving or maintaining the property: There has been no evidence concerning improvements since 2009 such that they should be accounted for in allocating shares for the purposes of the application.

Orders

[53]              These orders have regard to those requested in the application. They do not direct Mrs Van Der Byl to buy her son out, but will instead proffer that opportunity as a first step. They made ancillary process orders under s 343 in order to set out as clear a pathway as possible at the least cost to the parties. Concerning inevitable expenses, my assessment is that given the present means of both parties, the equitable approach is for each to bear their own costs, and to split equally joint expenses.

[54]              The  structure  of  the  process  is  to  direct  immediate  valuation,  allow  Mrs Van Der Byl an opportunity to buy her son out and failing that, direct sale of the house. The parties are free to seek clarification or variation, but now the decision is made, it would be in everyone’s interests to achieve resolution at a minimal cost.

(a)A valuer is to be engaged within two weeks of receipt of this judgment. If agreement cannot be reached, the parties should request a suitable person to nominate one. The costs of the valuation are to be shared equally.

(b)Upon receipt of the valuation Mrs Van Der Byl will have one month to offer to buy her son’s interest in the property for the equivalent of one- third of the valuation.

(c)If this option is exercised, purchase is to be within a month. Each party to carry their own expenses.

(d)If the option is not exercised, the house is to be listed for sale either by tender or auction, whichever is the most common method in the region. If agreement cannot be reached, a suitable person should be requested to nominate one.

(e)Mr Van Der Byl is to receive one-third of the net proceeds.

Further orders under s 343 of the Act

[55]              The application seeks orders for payments made by Mr Van Der Byl, lost rental and an occupation fee. The lost rental is dated from December 2012 when Steven stopped paying.

[56]              I am satisfied by some margin that there is no basis for this claim. The arrangements that were entered into when the flat was built never contemplated that Mrs Van Der Byl would have some rental liability in relation to her own property if Robin did not live there. The arrangements with Steven cannot be said to extend beyond their own facts. Robin was living there; he offered to move out if Steven would offset the rent on another property that Robin was thereby losing.

[57]              The evidence does not suggest Robin ever sought to move back in, and the share of the property he acquired was to protect the funds he provided for the granny flat. It was never, in my view, intended to create rental interest and obligations on anyone. The application treats the situation as if it were an investment by Robin, which is not what it was. It was providing family assistance which was recognised by giving him a share in the property. He is receiving the benefit of the increase in the value of the property and is thereby adequately compensated for the use of the money.

[58]              The discretion under s 343 is wide.8 In my view, it would create an injustice to diminish Mrs Van Der Byl’s share by imposing on the last 10 years some unpaid rental obligation. This application is declined.

Conclusion

[59]              My assessment is that Robin legitimately acquired an interest in the property. His parents wished to ensure his investment was protected. There is little evidence that the parties looked to the future as to what the implications of the co-ownership arrangement might be.

[60]              I consider it can be fairly held that the idea was to secure a living option for Mrs Van Der Byl. Were a partitioning order to put that under any risk then I consider the justice would have favoured Mrs Van Der Byl. The evidence, however, suggests the applicant can be paid out his share and Mrs Van Der Byl will still be in a position to own a suitable property without impacting on her standard of living. If an order is not made, Mr Van Der Byl will be left in a very difficult living situation both in the present and the foreseeable future. The consequent hardships well outweigh the understandable sadness and distress that Mrs Van Der Byl would feel in having to move to a different house.

[61]              My assessment is that Robin has acted fairly. The family’s belief that there was something murky in how he acquired his interest appears to have coloured their approach, such that a fair offer by Robin in 2013 to transfer back his share for $100,000 does not appear to have been seriously engaged with. Robin holds his interest legitimately, and has a genuine need to access it. The value of the property allows his share to be realised while leaving Mrs Van Der Byl in a situation to purchase a new suitable property. The orders hereby made reflect that.

[62]              The parties may file costs memoranda if required. To assist with limiting costs, I record my tentative assessment is that costs should follow the event on a normal basis. The claim for lost rent was a very small aspect of the hearing and the applicant’s

8      Dyas v Elliott (2010) 11 NZCPR 252.

lack of success on that does not alter the situation. It is of course over to the parties to submit for a different assessment.

Simon France J

Solicitors:

Innes Dean, Palmerston North for Applicant

Fitzherbert Rowe, Palmerston North for Respondent