Whimp v Bigham
[2016] NZHC 1261
•13 June 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-766 [2016] NZHC 1261
IN THE MATTER OF an application under s 339 of the Property
Law Act 2007
BETWEEN
SIMON JOHN WHIMP Plaintiff
AND
ANATIA BIGHAM Defendant
Hearing: 10 June 2016 Counsel:
J A Herd and J L Mills for Plaintiff
No appearance for DefendantJudgment:
13 June 2016
RESERVED JUDGMENT OF ELLIS J
I direct that the delivery time of this judgment is
9.45 am on the 13th day of June 2016
WHIMP v BIGHAM [2016] NZHC 1261 [13 June 2016]
[1] Mr Whimp and Ms Bigham were in a relationship from approximately
April 2006 until January 2014. On 18 August 2009, they purchased a property at
14C Sharpe Crescent, Wainuiomata (the property) as tenants in common. The property was purchased from Ms Bigham’s father. The price was $240,000, which was funded by a $40,000 gift made to Ms Bigham by her father and a mortgage to BNZ. The amount of the BNZ mortgage was $214,000, $14,000 of which was used to pay various personal expenses.1
[2] Things did not, however, go as expected. Ms Bigham has, since 2009, been living in the property with her son. Mr Whimp never moved in. He has continued to pay half the mortgage payments and has also, on his account, paid the insurance on the house and/or its contents.
[3] Perhaps surprisingly, the evidence suggests that the house has decreased in value between 2009 and mid 2015.2 In any event Mr Whimp understandably wishes to relieve himself of the mortgage commitments from which he has received no benefit. Ms Bigham has earlier indicated her willingness and desire to buy him out but subsequent discussions have come to nothing. It seems that she may not have the financial wherewithal to do so.3
[4] Mr Whimp has therefore filed these proceedings in which he seeks:
(a) an order for division of property under s 339(1)(a) of the Property Law Act 2007 (the PLA) and the division of the proceeds (or debt) amongst the co-owners; and
(b)an order pursuant to s 343(f) of the PLA requiring the defendant to pay the plaintiff a fair occupation rent for the period of occupation.
1 Some $7,000 of those funds were used to pay off Mr Whimp’s credit card debt and $4,000 was put towards Ms Bigham’s moving and set up costs. Where the rest was spent is not now ascertainable.
2 A July 2015 valuation put the worth of the property at $200,000.
3 It was on 17 January 2014 Mr Whimp told Ms Bigham that he no longer wished to own the property. She said that she wished to keep the property and would investigate arrangements for buying the plaintiff out of his share. Mr Whimp says that between January 2014 and October
2015, Ms Bigham was given many opportunities to buy him out. He has detailed this in his affidavit and I accept his evidence about this.
[5] Ms Bigham has filed no statement of defence or opposition and has taken no steps. The matter therefore proceeded before me by way of formal proof.4
Notwithstanding the absence of opposition I must still be satisfied that there is a proper factual and legal basis for the orders sought.
[6] The BNZ has indicated it neither consents nor opposes the application for sale.
Division of property
[7] Under s 339(1) of the PLA the Court may make an order for the sale of property owned by co-owners and for the division of the proceeds between them.5 In deciding whether to make an order the Court must have regard to:6
(a) the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made;
(b) the nature and location of the property;
(c) the number of other co-owners and extent of their shares;
(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by making the order;
(e) the value of the contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property; and
(f) any other matters the Court considers relevant.
[8] I consider these in turn.
4 High Court Rules, r 15.9.
5 Section 339(1)(c) provides that the Court may also require a co-owner to purchase the share in the property of another co-owner at a fair and reasonable price. There is, however, no evidence to suggest that Ms Bigham is able to do this.
6 Section 339(2)(d) and s 342.
Extent of share
[9] Mr Whimp and Ms Bigham own the property equally, which seems to me to be a neutral factor.7
Nature and location of the property
[10] The property’s apparent reduction in value over time (which may be linked to
its nature and location) is said by Mr Whimp to favour sale.
[11] Against that, however, is the fact that the property is effectively Ms Bigham’s family home. She has lived there with her son for seven years. The house formerly belonged to her father. I therefore do not accept the submission that it can be assumed that no sentimental value attaches to the property from Ms Bigham’s perspective. That is a factor that militates somewhat against sale.
Number of the co-owners and extent of shares
[12] Mr Whimp and Ms Bigham own the property in equal shares. It is said that
the “deadlock” that results from that favours an order for sale.
Hardship
[13] Mr Whimp submitted he will suffer considerable hardship if an order for sale was not made, for the following reasons:
(a) he has never lived in the property or enjoyed any other benefits from it;
(b)he has suffered ongoing stress from being emotionally and financially tied to the property (and therefore to Ms Bigham), since the
breakdown of their relationship;
7 Fuller v Smeets [2013] NZHC 1284 at [15].
(c) the property appears to have negative equity. The sum owing under the mortgage is $203,297.45 and the July 2015 valuation put the worth of the property at $200,000; and
(d)it seems Ms Bigham is not in a financial position to be able to afford to purchase Mr Whimp’s share and so his interest in the property cannot be realised without a sale.
[14] Ms Heard submitted that his case is comparable with Coffey v Coffey, where the applicants were shut out from enjoying the property.8 Associate Judge Osborne held that “hardship of the clearest kind [exists] where one co-owner is running on in occupation of a previously shared residence to the exclusion of the other”.9
Ms Heard also referred me to Matthews v Piacun-Matthews, where a sale order was granted to an applicant who had been unable to live at the property for 12 years.10
[15] Notwithstanding the absence of evidence, there is necessarily some countervailing hardship to Ms Bigham. As I have said, she has lived in the house as her home with her son for seven years. When it is sold she will have to find somewhere to live. Her son may have to change schools.
Improvements or maintenance
[16] Mr Whimp is not aware of any improvements made to the house by Ms Bigham and submits that she could only claim routine maintenance by reason of her occupation.
Other relevant considerations
[17] Submissions made by Mr Whimp under this heading are as follows;
8 Coffey v Coffey [2012] NZHC 1765.
9 At [44].
10 Matthews v Piacun-Matthews [2015] NZHC 558. Reference was also made to Gonsalves v
Williams [2014] NZHC 2376 and Western v Abdoelrahman HC Auckland CIV-2010-404-2998,
11 March 2011.
(a) he has contributed an extra $5,372 toward the property, despite having never lived there; 11 and
(b) Ms Bigham has acted in an “obstructive” and “unhelpful” manner
over the sale.
[18] The following undisputed matters also seem relevant:
(a) the joint loan used to fund the purchase the house was also used to: (i) pay off Mr Whimp’s $7,000 credit card debt; and
(ii) pay $4,000 for Ms Bigham’s moving and set up costs.
(b)Ms Bigham (through a gift from her father) contributed $40,000 to the original purchase price.
Conclusions on sale
[19] On the basis of the evidence before me it seems to me the property should be sold. It is simply unreasonable to expect Mr Whimp to continue to contribute to a property from which he has obtained no benefit whatsoever and which does not even appear to be likely to realise a capital gain. The hardship to him in not ordering a sale outweighs any hardship to Ms Bigham. Most of the other s 339 factors are neutral. The matters referred to in [17] and [18] are discussed further below.
Fair occupation rent
[20] Section 339(4) provides that a Court in making an order under s 339(1) may make a further order specified in s 343. Section 343(f) allows for the Court to make an order that “requires the payment by any person of a fair occupation rent for all or
any part of the property”.
11 In Cooper v Pongi [2013] NZHC 3265 at [10]-[11] the plaintiff had paid more in rates, insurance and mortgage payments than the defendant. Justice Courtney ordered that the defendant pay to the plaintiff his share of the costs incurred from the proceeds of sale.
[21] Dyas v Eliot sheds light on the provision:12
… It is not every absent co-owner who can obtain occupation rent from the other. While it would be unwise to endeavour to set out parameters for the exercise of the discretion, where one co-owner chooses to stay in possession and this makes it not reasonably practicable for the other co-owner to continue to cohabit, occupation rent will usually be ordered. The position will be different where a co-owner leaves voluntarily, would be welcome back, and it is reasonably practicable for that co-owner to live there.
[22] Here, the circumstances surrounding the break-up are a little unclear. It could perhaps be argued that Mr Whimp “left voluntarily”. But he says that he “was never allowed to move into the property”. There is no evidence to the contrary.
[23] In any event, the decision in Thorpe & Ors v Hannam says that the exclusion of one party from a property upon the breakdown of a relationship may justify the award of fair occupation rent.13 I can think of no compelling reason why that would not be so in the present case.14
[24] An assessment of what occupation rent should be ordered is based upon the rental that could have been obtained for the co-owned premises.15 In the similar circumstances of Jacobson v Guo, Associate Judge Robinson took into account the fact that the son had been living at the property and the maintenance and upkeep of the house.16 He considered evidence from valuers of average rental prices and gave credit to the defendant for the uncertainty of tenure if a third party had rented the property. He settled on an appropriate rental value and halved it.
[25] In Mr Whimp’s affidavit he suggests that Ms Bigham has received a financial benefit of between $31,700 and $39,625 (being his assessment of the average rent
for that period, divided in two).17
12 Dyas v Elliot (2010) 11 NZCPR 252 at [18].
13 Thorpe & Ors v Hannam (2010) 11 NZCPR 471 at [48].
14 For example the circumstances of the relationship do not seem to have been such as to suggest that Mr Whimp had any obligation to maintain Ms Bigham. Her son is not his son.
15 Mr Whimp acknowledged that, in accordance with Martin v Walker HC Auckland CIV-2011-
404-2942, 29 September 2011 at [30], the occupation rent is based upon the rental that could have been obtained for the co-owned premises, rather than the amount of rent that he has had to pay for alternative premises.
16 Jacobson v Guo (2008) 9 NZCPR 850.
17 He also sought leave, if the Court were minded to make such an order, to obtain evidence from a valuer as to the relevant occupation rent.
[26] I agree that an order for occupation rent would, in principle, be appropriate. The following matters, however, also seem relevant to whether an order should be made:
(a) Mr Whimp has paid approximately $56,270.77 in mortgage payments and $8,331.30 in insurance premia related to the house.
(b)Ms Bigham has paid approximately $47,229.34 in mortgage payments, and has met all rates payments on the property totalling approximately $12,000. Overall, she has paid approximately $5,372 less in mortgage payments and outgoings than has Mr Whimp.
(c) Ms Bigham contributed $40,000 more to the purchase of the property.18
(d) The mortgage funds were also used to:
(i) extinguish Mr Whimp’s $7,000 credit card debt; and
(ii) meet Ms Bigham’s moving and set up costs of $4,000.
(e) In terms of the remaining $3,000 of the mortgage funds that are unaccounted for, I am inclined to proceed on the basis that each party equally obtained the benefit of the extra $14,000, therefore that Ms Bigham used the $3,000 for her own purposes.
[27] If these matters are all taken into account it would mean that Ms Bigham has contributed $34,628 more to the property than Mr Whimp.
Conclusions
[28] Because of the apparent inequality of the parties’ contributions to the
property, I raised with Ms Heard during the formal proof hearing the possibility of an
18 In the circumstances of this relationship there could be no suggestion that half of this should be
Mr Whimp’s under the Relationships (Property) Act 1976.
effective offset of Ms Bigham’s additional contribution against Mr Whimp’s claim for fair occupation rent. The amount of that contribution falls within the mid-range of Mr Whimp’s calculation of the rent which might be owing.
[29] Ms Heard then took instructions from Mr Whimp and advised that, although he had some concerns about the $40,000 (although he accepts it was contributed), he realistically accepted that to pursue them might not be productive and would result in further delays. Proceeding on the basis of an informal set-off would also avoid the need to pay for an independent assessment of the occupation rent amount. Accordingly Mr Whimp agreed to abandon that aspect of his claim. What that also means is that it will not be necessary to take account of Ms Bigham’s additional contribution when it comes to the proceeds of the sale which (on that basis) I consider should be divided equally.
Orders
[30] I am satisfied that the sale order sought by Mr Whimp is appropriate and I direct that the property at 14C Sharpe Crescent, Wainuiomata, being the house and all that parcel of land comprising 588 square metres more or less and being part of Lot 2 deposited plan having the unique identifier 442528 be sold pursuant to s 339(1) of the Property Law Act 2007.
[31] Pursuant to the powers to make ancillary orders contained in ss 339(4) and
343 of the Property Law Act 2007 I also make the following directions:
(a) the property should be sold by public sale to be organised by the plaintiff and a reputable real estate agent of his choosing;
(b)the date of the sale may be determined by the plaintiff or his agent but shall be set having regard to the time reasonably required by Ms Bigham to find alternative accommodation. The sale date shall be no sooner than six weeks from the date of this judgment;
(c) Ms Bigham is to co-operate with all aspects of the sale process including (but without limitation) by signing any necessary
authorisations, keeping the property clean, tidy and presentable for sale, and making reasonable access available for viewing as the agent requires; and
(d)when the property is sold the proceeds of the sale are to be disbursed in the following priority and manner:
(i)the payment of the amount due and owing under the mortgage at the date of payment;
(ii)payment of any real estate agent’s commission and legal fees incurred by the vendors in connection with the sale and transfer of the property;
(iii) payment of any marketing costs in relation to the sale;
(iv)subject to (v) below the balance of the sale proceeds (or debt) are to be divided equally between the plaintiff and the defendant;
(v)from the defendant’s share is to be subtracted (or added, in the event there are no proceeds) the plaintiff’s 2B costs in relation to the present application, which are to be submitted first to the Court for approval; and
(vi)the balance owing to Ms Bigham (if any) is to be held by Morrison Kent on trust in an interest-bearing account in her name. Morrison Kent is to notify Ms Bigham that it is holding such funds and seek instructions as to payment.
[32] For the avoidance of doubt I decline to make any order as to occupation rent.
[33] Leave is reserved for Mr Whimp to come back to the Court to seek such further orders as may be necessary to enable the property to be sold.
Costs
[34] The plaintiff is entitled to costs on a Category 2B basis together with disbursements as fixed by the Registrar. My direction at [31](d)(v) above pertains.
Solicitors: Morrison Kent, Wellington, for Plaintiff
Copy to: Defendant
“Rebecca Ellis J”
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