Williams v Williams

[2018] NZHC 728

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000251

[2018] NZHC 728

IN THE MATTER

of an application for order for sale pursuant

to ss 339 to 343 of the Property Law Act 2007

AND

IN THE MATTER

of a claim for specific performance of a deed dated 17 November 2005

BETWEEN

BELINDA JANE WILLIAMS and GREVILLE CHRISTOPER NIGEL

WILSON as trustees of the Belinda Jane Williams Trust

Plaintiffs

AND

ANNA LORRAINE WILLIAMS and GREVILLE CHRISTOPHER NIGEL

WILSON as trustees of the Anna Williams Trust

Defendants

Hearing:

17 April 2018

Appearances:

M Locke for the Plaintiffs

No appearance by or on behalf of the Defendants

Judgment:

19 April 2018

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Thursday, 19 April 2018 at 10:00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

M Locke, Barrister, Auckland Turner Hopkins, Auckland

WILLIAMS & ANOR v WILLIAMS & ANOR [2018] NZHC 728 [19 April 2018]

[1]                   This proceeding concerns a house property situated at 238A Sunset Road, Windsor Park, Auckland (the property). The parties are the trustees of two family trusts established in 2004 in favour respectively of the first-named plaintiff and the first-named defendant, who are sisters.

[2]                   Mr Wilson, who is the second-named plaintiff and the second-named defendant, is the solicitor who acted in the establishment of the trusts. He is an independent trustee in both trusts.

[3]                   The trusts purchased the property in 2005 with the intent that both sisters live in the house. They recorded the terms of their joint purchase in a Deed Regarding Ownership of Property dated 17 November 2005.

[4]                   The plaintiffs now seek by way of summary judgment an order under ss 339 to 343 of the Property Law Act 2007 for the sale of the property which is owned by the trusts (as to registered title at least) as tenants in common in equal shares.

[5]                   The plaintiffs served the proceedings on the defendants on 15 March 2018 and 9 March 2018 respectively. The defendants have, however, taken no steps to oppose the application for summary judgment. The first-named defendant emailed counsel for the plaintiffs on the afternoon of 16 April 2018 and said that she wished to advise all concerned that she would abide by her sister’s wishes and agree to place the property at 238A Sunset Road on the open market. The second-named defendant has also advised counsel for the plaintiffs that he is conflicted and will abide the decision of the court. He also stated:

Finally I would note that the draft order that you have prepared which contemplates my firm Herne Bay Law carrying out some conveyancing and distribution of funds between the two trusts as set out. Were the Court to make an order on those terms or similar terms then I believe they are practicable and appropriate. This indication from me is in no way be interpreted as me supporting the proceedings or opposing them as set out above.

[6]                   The proceedings have also been served on the owner of the other unit under the cross-lease, Bushglen Holdings Limited, and on the Westpac Banking Corporation (Westpac), who has an interest in the property as mortgagee. Bushglen Holdings

Limited has filed a notice of appearance reserving rights. Westpac has, however, not filed any documentation.

[7]                   Because the defendants have taken no steps to oppose the application for summary judgment, I am required to determine it on an undefended basis.

Relevant principles

[8]                   The principles to be applied in considering an application for summary judgment have been clearly established through decisions of the Court of Appeal, such as Pemberton v Chappell,1 Grant v NZMC Limited,2 and Westpac Banking Corporation v MM Kembla New Zealand Limited.3

[9]                   In considering the plaintiffs’ application, I propose to apply the following general principles, which apply to all applications by a plaintiff for summary judgment:

1.The plaintiffs must satisfy the Court that the defendant has no arguable defence to the claim brought against it. The issue is whether there is a real question to be tried.

2.It is generally not possible to determine disputed issues of fact based on affidavit evidence alone, particularly when issues of credibility arise. Issues of law, even though they may be complex, can, however, be determined in an application for summary judgment.

3.Although the Court should adopt a robust approach, nevertheless summary judgment may be inappropriate where the ultimate determination determines on a judgment that can only properly be reached after a full hearing of all the evidence.

1      Pemberton v Chappell [1987] 1 NZLR 1 (CA).

2      Grant v NZMC Limited [1989] 1 NZLR 8 (CA).

3      Westpac Banking Corporation v MM Kembla New Zealand Limited [2001] 2 NZLR 298 (CA).

Deed regarding ownership of property

[10]               The deed dated 17 November 2005 records that although title to the property was to be taken by the parties as tenants in common in equal shares, the provisions of the deed should apply. It noted that the trusts had each contributed $150,000 towards the purchase price, but that the plaintiffs had contributed an additional $100,000 to enable the purchase.

[11]               The deed provided that the additional $100,000 contributed by the plaintiffs was to be regarded as an interest free loan, but in the event that the trusts did not sell the property within two years of the date of purchase, they would use their best endeavours to refinance the loan. Pending such refinance, the plaintiffs were entitled to require interest to be paid on the balance of the loan from time-to-time outstanding at the same rate as was then payable under bank first mortgage variable interest home rates.

[12]               The deed also provided that the trusts would be jointly and severely liable with respect to loan agreements secured by any current or future bank or other mortgage relating to the property and would pay such loan outgoings in equal shares.

[13]               In the event that either trust wished to sell its interest in the property then the intending seller was to advise the other party by notice in writing of their wish to sell and propose a market value that they found acceptable. In the event that the other party wished to purchase the property at the value so proposed by the intending seller she was to tender to the intending seller an executed agreement for sale and purchase in which the price was the market value suggested by the intending seller. The deed further provided that in the event that either party wished to purchase the property, but did not accept the market value proposed, the matter may be referred to arbitration. In the event that the other party did not elect to purchase the property within the specified 14 day period, either party may then place the property on the market for sale. In the event that the parties were unable to agree over any matter affecting their ownership of the property, including the interpretation of the deed, the dispute was to be referred to arbitration.

[14]               Finally, in the event of the sale of the property the proceeds of sale were to be applied as follows:

1.First in repayment of any bank mortgage and/or any other mortgage secured over the property.

2.Second in payment of any real estate commission and legal fees and disbursements in relation to the sale.

3.Third in repayment of the loan from plaintiffs.

4.Fourth in repayment of any further loan made by either trust to the trusts.

5.Fifth any balance then remaining to be divided equally between the parties.

Proposed sale of property

[15]               The original mortgage loan to purchase the property was with ANZ National Bank (ANZ), but this was refinanced in 2010 through Westpac. The agreement was that the trusts would borrow on first mortgage loan from Westpac to pay out the existing ANZ loan and borrow a further $50,000 of which the defendants would be responsible for $27,208 and the plaintiffs responsible for $15,877.

[16]               The first-named plaintiff and the first-named defendant lived together at the property from the date of purchase until the first-named defendant went to live in the UK from about 2011 to 2014. The first-named plaintiff left the property to live in a rented flat from 2014, after which the first-named defendant lived at the property. She currently still lives at the property.

[17]               The first-named plaintiff and first-named defendant did not contribute to the mortgage, rates and insurances during the periods they were not in occupation of the property. The first-named plaintiff is of the view that this balances out more or less equally and does not require an adjustment.

[18]               The first-named plaintiff says she is now suffering financial hardship and is need of the capital she has in the property. She does not believe that the first-named defendant will suffer hardship if the property is sold.

[19]               In an effort to get the first-named defendant to either buy the first-named plaintiff out of the property or agree to sell it, the parties went to mediation two years ago. However, no agreement was reached. Mr Wilson also wrote to the first-named defendant on 3 May 2017, suggesting the property be sold. This did produce any response from her.

[20]               Present counsel wrote to the first-named defendant by letter dated 7 September 2017 giving notice of the first-named plaintiff’s wish to sell the property under the provisions of the deed and advising that if she did not take steps, then the present proceedings would issue and costs would be sought.

[21]               No response was received, other than a letter from Birdsey & Associates Lawyers, who wrote to present counsel on 9 April 2018 enquiring whether a one month adjournment would be agreed to enable the first-named defendant to submit and complete an offer to purchase the property, the purchase price being unspecified and bank finance having yet to be confirmed. That request was declined on instructions by letter from the present counsel the following day, the first-named plaintiff taking the view that there had been sufficient delays already and that the first-named defendant would be able to bid at the auction in any event.

[22]               The first-named plaintiff believes that a reasonable reserve figure for an auction is $750,000. An online e-valuation dated 5 February 2018 gave an estimated value for the property of $838,000 and an estimated selling range of $770,960 to

$905,040.

Decision

[23]               Section 339 of the Property Law Act 2007 gives the Court the power to order property owned by co-owners to be sold and the proceeds divided. Section 342 specifies the considerations that the Court must have regard to in the making of an

order. The rights of the present parties under the Property Law Act have been modified only by the provisions of the deed, as set out above.

[24]               In the present case, the plaintiffs have given notice of their wish for the defendants to purchase the property in terms of the deed. The defendants have not responded to the plaintiffs’ notice of wish to sell their interest in the property within the prescribed 14 days. The defendants have still yet to make any meaningful response, although both the first-named and second-named defendants have indicated that they will abide the decision of the Court.

[25]               There has been no referral of the matter to arbitration, and indeed there is no difference to be arbitrated. The plaintiffs, however, clearly cannot unilaterally list the property for sale, although it seems from email correspondence yesterday from the first-named defendant to present counsel that she is now willing to list the property for sale.

[26]               There is no provision in the deed providing a power of sale and I am of the view that the parties’ rights and remedies under the deed have been, in effect, exhausted. That being the case, the parties must fall back on the Property Law Act for a resolution of their substantive rights. There has been an impasse between them with the effect that the first-named plaintiff has been denied access to her share of the capital in the property. It appears that sale is the only way of enabling her to access her share.

[27]               The plaintiffs and the defendants are co-owners. I am of the view that the hardship requirement in s 342(7) of the Property Law Act, in relation to the first-named plaintiff, is made out, and there are no apparent grounds to believe that the defendants will suffer hardship if an order is made. There is no other ground among the relevant considerations set out in s 342 that the Court is required to consider that weigh against the making of an order for the sale in the present case.

[28]               The orders sought as to sale are unremarkable and reasonable and that the orders relating to the division of the net sale proceeds are consistent with the terms of the deed. The orders will enable Mr Wilson to make any adjustments necessary from

the net sale proceeds. Otherwise the parties have leave to come back to Court for further directions.

Result

[29]I hereby make the following orders:

1.There is an order pursuant to s 339(1)(a) of the Property Law Act 2007 for the sale of the house and land at 2/238 Sunset Road, Windsor Park, Auckland, being more particularly described first as an estate in fee simple as to a one-half share in that parcel of land containing 918 square metres more or less being Lot 6 Deposited Plan 44266 and secondly an estate of leasehold in Lease C.479787.3 in Flat 2 Deposited Plan 155005 described in Unique Identifier in a 92C565 (the property).

2.The property shall be presented for sale by auction by Barfoot and Thompson real estate agents, Mairangi Bay office.

3.The auction shall be held on 31 May 2018 at the Bruce Mason Centre or at such alternative date and such alternative venue as the first-named plaintiff shall nominate in her sole discretion.

4.Unless the parties agree otherwise in writing, the auction reserve price shall be $750,000.

5.The costs of marketing the sale of the property shall be met equally by the parties. If the plaintiffs pay more than half of such expenses, then they shall be entitled to be reimbursed such sum from the defendants’ share of the net sale proceeds of the property.

6.The terms of the auction and auction agreement shall be as per the usual terms of auction and auction agreement furnished by Barfoot and Thompson, subject only to any alterations agreed between the parties.

7.If the property fails to sell at auction the property shall be marketed privately by Barfoot and Thompson until such time as a sale is achieved and if a sale is achieved this shall be on the basis of the standard Auckland District Law Society agreement for sale and purchase with any alterations agreed between the parties.

8.Conveyancing in respect of the sale of the property shall be carried out by Herne Bay Law, solicitors, on the parties’ joint instructions and the parties shall meet the reasonable costs and disbursements of Herne Bay Law in so acting.

9.The net proceeds of sale of the property shall be divided between the plaintiff and defendant, subject only to any costs awarded by this Court in favour of one party against the other being paid from one to the other from the sale proceeds as follows:

a.From the sale proceeds the following shall be paid:

(i)Agent’s fees and disbursements.

(ii)Legal and related costs and disbursements.

(iii)Repayment of balance of ANZ loan.

(iv)Repayment of the loan from the first-named plaintiff to the parties ($100,000) together with interest from 18 December 2007 pursuant to clause 1(c) of the deed between the parties dated 17 November 2005 at the same rate as was payable from time-to-time under first mortgage home loans.

b.The balance available for division thereafter shall be divided equally between the plaintiffs and the defendants save only for any adjustment required in respect of:

(i)             The plaintiffs being liable for repayment of 40 per cent and the defendant 60 per cent of the ANZ loan referred to in order 9(a)(iii) above.

(ii)           Any order for costs and disbursements made by this Court in this proceeding.

(iii)         Any other matters agreed between the parties in writing.

10.Both the plaintiffs and the defendants shall promptly do all things and sign all documents necessary to enable the above orders to be implemented.

11.Leave is reserved to any party and Mr Wilson to seek further other directions in order to give effect to these orders as may be appropriate on seven days’ notice to the other party. Such further directions may be sought and responded to by memorandum of counsel.

12.The defendants shall pay to the plaintiffs costs of this proceeding in the sum of $10,562 calculated on a category 2B basis, which is inclusive of disbursements.

Woolford J