Wilson v Bougen HC Wanganui CIV-2010-483-246

[2010] NZHC 2389

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV-2010-483-246

UNDER  the Property Law Act 2007

IN THE MATTER OF     Sections 339 and 343 of the Property Law

Act 2007

BETWEEN  GRAHAM ALISTER WILSON Plaintiff

AND  DONALD IAN BOUGEN Defendant

Hearing:         8 December 2010

Appearances: S. Burlace - Counsel for Plaintiff

R. Leith - Counsel for Defendant

Judgment:      14 December 2010 at 10.00 am

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This decision is delivered by Associate Judge Gendall on 14 December 2010 at

10.00 am under r 11.5 of the High Court Rules.

Solicitors:           Johnston Prichard Fee & Partners, Solicitors, PO Box 1115, Auckland

R J Leith, PO Box 2026, Wanganui

GA WILSON V DI BOUGEN HC WANG CIV-2010-483-246  14 December 2010

Introduction

[1]      Before the Court is an application by the plaintiff seeking summary judgment against the defendant.

[2]      Initially the defendant filed an Appearance under Protest to Jurisdiction on 7

September 2010, but this was not pursued.

[3]      Then, on 8 September 2010 this Court granted leave to the defendant to file and serve out of time his Notice of Opposition to the summary judgment application.

[4]      The matter was then scheduled for hearing on 8 December 2010 and at the commencement of that hearing before me counsel for the plaintiff and counsel for the plaintiff and counsel for the defendant filed a Memorandum of Consent seeking a range of consent orders in terms of the summary judgment application.

[5]      At the time and by consent therefore, the following orders were made:

(a)       Pursuant to s 339 of the Property Law Act 2007 the property at 74

Karaka Street, Wanganui, is to be sold under the supervision of the registrar of the High Court at Wanganui;

(b)The  property  shall  be  listed  for  sale  with  a  real  estate  agency appointed by the Court for auction no later than 31 January 2011;

(c)A valuer shall be appointed by the Court or by the president of the New Zealand Law Society and shall be instructed to forthwith undertake a valuation of the property on behalf of the parties for the purpose of assisting the parties with all aspects of the proposed sale including setting  realistic asking,  selling  and  reserve prices.    The valuer’s instructions are to be on-going through the sale process and the parties shall be guided by the valuer’s assessment of the value at each stage of the sale process if required by any party.  If any party requires any other assessment of the value to be undertaken, then the

cost of that assessment shall be borne by the party requiring it unless otherwise agreed;

(d)       If the marketing and advertising program that proceeds 31 January

2011  does  not  produce  a  satisfactory  sale  of  the  property  by  31

January 2011 then arrangements are to be made for a further auction to take place no later than 28 February 2011;

(e)If the registered valuation is not achieved by sale by 31 January 2011 then if an offer is received no more than 5% below the registered valuation price between 31 January 2011 and 28 February 2011, that offer shall be accepted;

(f)The reserve price at auction shall be set by the valuer.   The parties shall  accept  a  reserve  5%  below  the  valuer’s  recommendation  or lower by agreement between the parties;

(g)      If the  reserve  price  is  not  achieved  at  auction,  the  property shall remain on the market for a further period until April 2011.  A further auction is to be scheduled to take place no later than 30 April 2011. The valuer appointed is to revalue the property for the purpose of setting a realistic asking, selling and reserve price in April 2011.  The parties shall accept any offer no more than 5% below the reassessed valuation.    If  the  property does  not  sell  prior  to  auction,  then  at auction the parties shall accept the selling price of 10% below the reserve price set by the valuer.

(h)In the event sale is not achieved by the above process, there shall be a sale by the registrar of the High Court at a price determined by the registrar unless another price is agreed by the parties provided that unless the parties agree in writing, the registrar shall not accept a price that is more than 10% below the valuation fixed by the valuer at that time;

(i)Pending  the  sale  of  the  property  and  while  the  Defendant  is  in occupation, the defendant is to keep the property clean and present it at its best for sale and repair promptly at his cost all damage caused to by (sic) him or other invitees to the property.   The defendant shall also give up vacant possession to any purchaser of the property;

(j)Leave is granted to the parties to apply for further directions on seven days notice;

(k)The registrar of the High Court shall sign all documents necessary to effect sale of the property in the event of the defendants or plaintiffs failure or refusal to sign such documents;

(l)        The sale proceeds be applied as follows:-

(a)      Firstly, in repayment of the loans owed to the ANZ National Bank Limited being the funds due on the loan account and joint account;

(b)Secondly, in payment of all outgoings on the property down to the date of settlement of the sale provided that while the defendant remains in occupation the defendant shall pay the outgoings on the property;

(c)Thirdly, in payment of valuation fees and commission and real estate fees and other costs of sale on the sale of the property;

(d)Fourthly, in payment of the solicitors conveyancing costs and disbursements incurred in connection with the sale (but not in connection with this proceeding);

(e)Fourthly, the balance (including accrued interest) should then be divided equally into two equal sums being the plaintiff’s one-half share and the defendant’s one-half share of the net proceeds of sale.

[6]      Those orders are confirmed.

[7]      Then, before me on 8 December 2010, counsel indicated that the order for equal division of the net sale proceeds of the property outlined at para [5](l)(e) above remained the subject of a claim by the plaintiff for an adjustment on the basis that he contended the plaintiff’s share of the net sale proceeds should be increased and the defendant’s share reduced.  That aspect was opposed by the defendant.  It was this issue which was the subject of argument before me on 8 December 2010.  I now turn to address that question.

[8]      As I have noted above, this issue is to be determined under the plaintiff’s present summary judgment application which is brought pursuant to r 12.2 High Court Rules.

Background Facts

[9]      The plaintiff and the defendant purchased and own a residential property at

74 Karaka Street, Wanganui (“the property”) as tenants in common in equal shares. The  property was  purchased  in  January 1998  for  $39,000.00.    At  the time  the plaintiff paid the initial deposit of $5,000.00 and a further sum of $6,517.23 towards the purchase.   The balance of the purchase price was funded by a mortgage loan from the ANZ Bank of $29,000.00 the repayments for which were to be met equally by the plaintiff and the defendant.

[10]     Following settlement of the purchase, the plaintiff and the defendant lived together in the property in a de facto relationship.  Regrettably this relationship broke down and according to the plaintiff it was terminated around December 2007 when the plaintiff left the property.  The defendant has remained in occupation since that time.

[11]     The defendant does not accept that the relationship ended in December 2007. His position is that, although the parties have not lived together on any regular basis since December 2007, when the plaintiff moved out, their relationship did not finally end until 1 year later in December 2008.

[12]     Whilst he lived in the property and for a time after the defendant left he continued to contribute equal payments towards the mortgage, rates and insurance on the property but these payments ended in May 2009.

[13]     There is little doubt that since he left the property, the plaintiff has made endeavours to reach agreement with the defendant regarding its sale.   At times it appeared the defendant had agreed for a sale to be undertaken but then it seems he changed his mind.

[14]     The plaintiff says that he brings these present proceedings only because in his words “the defendant has been obstructive and has engaged in delaying tactics to prevent the sale of the property”.

[15]     It seems that the amount outstanding under the ANZ Bank mortgage loan as at 31 March 2007 was $20,359.50.

[16]     As I have noted at para [4] above, the parties finally agreed at the eleventh hour when the hearing of the present application was about to begin for orders to be made for the sale of the property.  The terms of these orders are set out in the consent order noted at para [5] above.  What remains to be addressed are the matters noted at para [7] above.

Counsel’s Argument and My Decision

[17]     As  I have  noted,  these  matters  are  to  be  addressed  under  the  plaintiff’s present summary judgment application.   The principles applying to summary judgment applications are well known, and are succinctly summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187 as follows:

[26]     The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or

other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[18]     Here, the plaintiff’s first claim to justify unequal sharing of the final sale proceeds is his claim to recover from the defendant the initial $5,000.00 deposit and further  equity contribution  of  $6,517.23  which  he  paid  from  his  own  resources towards the purchase of the property in January 1998.  The defendant made no such contribution.

[19]     This claim is opposed by the defendant on the basis that he contends the Property (Relationships) Act 1976 governs the situation and, as the parties were in a de facto relationship for approximately 10 years and the property represents their family home, in terms of s 11 Property (Relationships) Act 1976 the sale proceeds are to be shared equally.  This is irrespective of the imbalance in initial contributions for the purchase which are acknowledged to have occurred here.

[20]     On this aspect, counsel for the defendant referred to McLean v Cheyne (2003)

22 FRNZ 954 and in particular para [50] of my decision in that case which noted:

[50]     There  can  be  no  doubt  that  the  clear  intention  of  s  4(4)  Property (Relationships) Act 1976 is to require that that Act predominate over all other legislation which might otherwise apply where any question relating to relationship property arises between any de facto partners to the extent that such issues are dealt with by the Property (Relationships) Act 1976 – see Official Assignee v Williams [1999] 3 NZLR 427.

[21]     Counsel  for  the  defendant  before  me  went  on  to  acknowledge  that,  this clearly not being a situation involving a relationship of short duration, the only possible exception to equal sharing of the family home sale proceeds here in terms of s 11 Property (Relationships) Act 1976 requires extraordinary circumstances and no such circumstances exist here.

[22]     As I see the position, there is substance in these arguments.   I accept that extraordinary circumstances to justify unequal sharing based solely upon the imbalance in the deposit contribution from the parties here is not appropriate.  Nor

were there any other aspects placed before me by the plaintiff to indicate that these would constitute extraordinary circumstances to justify unequal sharing.

[23]     For these reasons I reject this argument advanced by the plaintiff.

[24]     The second basis for the plaintiff’s claim to unequal sharing of the property sale proceeds rests upon a claim for occupation rental to be paid by the defendant for his period of sole occupation of the property.  I turn to address this aspect now.

[25]     The basis for the plaintiff’s summary judgment application in this case is s

341 Property Law Act 2007.

[26]     Section 339(4) Property Law Act 2007 enables a Court when making an order under s 341 to make a further order as specified in s 343.  Section 343 provides in part:

343       Further Powers of the Court

A further order referred to in s 339(4) is an order that is made in addition to an order under s 339(1) and that does all or any of the following:

(a)        Requires the payment of compensation by one or more co-owners of the property to one or more other co-owners

..... and

....

(f)         Requires the payment by any person of a fair occupation rent for all or any part of the property. ....

[27]     The Court therefore has the specific power to make an order under s 343(f) Property Law Act 2007 for payment of a fair occupation rent in a situation such as the present.  In Jacobson v Guo and Guo, High Court, Auckland, 2 September 2008

– CIV-2008-404-526, Associate Judge Robinson, the Court ordered payment of an occupation rent by one party in circumstances reasonably similar to those prevailing in the present case.

[28]     In that case, Associate Judge Robinson at paras [9] and [10] stated:

[9]       Pursuant to s 343(F) this Court can require payment by the first defendant of a fair occupation rent for all or any part of the property.  This property also happens to

form the parties family home as defined by the Property (Relationships) Act 1976. In terms of that Act, the Family Court can also make orders relating to possession of the family home including the conditions under which a party is to continue to have possession and those orders can also include provision for a party to pay for the right of possession of the property.  No proceedings are pending in the family court at  this  stage.    It  is  not  unusual for  the  Family Court and  this  Court  to  have concurrent jurisdiction with regard to orders relating to co-ownership of property between spouses or  de  facto  partners.    This  Court  has  exercised its  summary judgment jurisdiction to make orders for sale of property owned jointly by the parties to a marriage.   In those circumstances, the Family Court would also be seized of jurisdiction to make such orders.

[10]     Consequently, I am satisfied that in appropriate cases, it is entirely proper for this Court to make orders for a fair occupation rent to be paid by one party to a marriage or de facto relationship in respect of property owned by both parties.

[29]     On this issue, however, in Thorpe & Ors v Hannam HC, Wellington, CIV-

2009-485-2168, 29 April 2010 (at paragraph 48), the Court held that:

[38]It appears to be a basic principle that a tenant in common in occupation is not  liable  to  pay  an  occupation  rent  merely  because  the  other  tenant chooses not to occupy the property, but that equity provides for compensatory adjustment where one party causes the other to be excluded from the property:  Surridge v Quinn HC Wellington CP No. 830/91, 13

May 1993 at 13.   This principle is inapplicable where the party’s own conduct causes that party’s exclusion:  Berkett v Dempsey HC Wellington AP53/02, 30 September 2002 at para 36.  The breakdown of a relationship may constitute sufficient grounds, however, to cause “exclusion” from the property Surridge v Quinn at 14.

[39]       Asher J in Dyas & Ors v Elliott & Ors HC Auckland CIV-2008-404-1021

16 April 2010 at paragraph 18 referred to Surridge v Quinn and stated that:

“The court’s discretion under s 343(f) is wide and unfettered but these cases assist in applying it.   Under that section an absent co-owner may obtain occupation rent from the co-owner in possession.   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.”

[30]     Applying these principles to the present case, I am satisfied on the material before the Court, that despite giving what he says have been a number of invitations to  the  plaintiff  to  return  to  the  property,  the  defendant  has  chosen  to  stay  in possession throughout.  In the terms outlined in the Dyas decision and given what has been a breakdown in their personal relationship, this has made it not reasonably practicable for the plaintiff as the other co-owner to continue to co-habit with the defendant.  Arguments were raised before me over who was essentially to blame for

this breakdown in the relationship.   Suffice to say, however that notwithstanding this, it seems clear that the relationship between the parties had reached a position where it was unreasonable to expect that they would realistically resume living together in what is a reasonably compact 2 bedroom house from at least the middle of 2008.

[31]     I say this bearing in mind Exhibit “J” to the affidavit of the plaintiff sworn 2

July 2010 filed in this proceeding which is a letter dated 8 August 2008 from the plaintiff’s solicitors, Johnston Pritchard Fee & Partners to the defendant.  This letter first, notes that the relationship between the plaintiff and the defendant had broken down and secondly, indicates that the plaintiff wishes the property to be placed on the market for sale and seeks consent for this process.

[32]     Given the nature of the present application before me, I find therefore that the plaintiff is entitled to a credit by way of occupation rent to be paid by the defendant from 1 September 2008, (giving the defendant a period of a little over 3 weeks to find alternative accommodation if he chose to do so once he was on notice from the plaintiff’s solicitors that the relationship had broken down and the property was to be sold).

[33]     In response, the defendant contends that he really had no option but to remain in the property after the plaintiff decided to leave the relationship presumably to keep it maintained and secure.   That begs the question, however, whether it could have been rented and a rental return achieved for both co-owners, had he decided to vacate at the time.

[34]     As I understand the position, the home on the property has two bedrooms and since the plaintiff left, at no time has the defendant had any other person boarding or sharing the property with him on a regular basis.

[35]     There is also no evidence before me to suggest that, during this time, the defendant carried out significant repairs or improvements to the property for which he should receive some allowance.

[36]     Given my finding that an occupation rent is appropriate here, I turn to the next issue which relates to the amount to be assessed for this.  On this aspect, the evidence before the Court from LJ Hooker, real estate agents, is that this property would rent during the period concerned for $160-170.00 per week.  This evidence is essentially uncontradicted by the defendant.  The plaintiff has also placed before the Court Department of Statistics rental information which shows a range for similar property house rentals in Wanganui to be at the $160-200.00 per week level.

[37]     That said, and  given that the application before me is one for summary judgment, in my view a slightly reduced basic rental rate of $150.00 per week should be applied as an occupation rental calculation here.  This is because in my view a significant factor in the present case for any possible outside tenant of the property would  be  their  relative  uncertainty  of  tenure,  given  that  the  property  would ultimately need to be sold consequent upon the breakup of the parties’ relationship. Anyone occupying the property as a tenant would thus have the added deterrent of possibly needing to vacate on relatively short notice.

[38]     A further factor which I take into account here is the fact that the defendant has been responsible for maintaining the property and no doubt keeping lawns and gardens under control for about 3 years since December 2007 when the plaintiff vacated.  I remind myself that the present application is one for summary judgment and, as there is nothing before me to raise any dispute on this aspect, I find that a reasonable deduction of $40.00 per fortnight or $20.00 per week for lawn mowing and section maintenance (which on the evidence before me has not been excluded as an obligation on the parties to this proceeding as landlords if an outside tenancy was arranged) should be deducted from the notional rent.

[39]     This  brings  the  notional  weekly  rental  down  from  $150.00  per  week  to

$130.00 per week. The plaintiff’s entitlement to a one-half share of this would amount to $65.00 per week.

[40]     As I have noted at para [32] above, this occupation rental of $65.00 per week is to be paid by the defendant (by deduction from his ultimate half share in the sale proceeds) from 1 September 2008.   This is subject to one last rider.   This is to

represent the fact that the defendant alone has paid total mortgage payments, rates and other outgoings on the property from 21 May 2009.  Before this time they were shared equally.

[41]     Before me, counsel for the parties agreed that these total outgoings from that time amounted to $91.93 per week.  To take into account any other matters which may have arisen (and any possible increases in this amount henceforth), I round this figure off to (say) $95.00 per week.   One half of this amount totalling $47.50 per week should have been paid by the plaintiff and thus should be deducted from his one-half share of the occupation rental to which he would otherwise be entitled from

21 May 2009.

[42]     That said, an order is now made as an additional order (m) to the consent orders made for sale of the property and distribution of the sale proceeds outlined at para [5] above as follows:

(m)Notwithstanding the provisions of para (l)(e) of the consent order made herein, the defendant is to pay to the plaintiff from his one half share of the balance proceeds of sale the following amounts by way of

occupation rental for the property:

(a)	(i)	An amount fixed at $65.00 per week from 1 September 2008  to  21  May  2009  being  a  total  amount  on  my
calculations of $2,426.19; and
(ii)	An amount fixed at $17.50 per week (calculated at $65.00 per week minus $47.50 per week as noted at [41] above)
for  the  period  from  21  May  2009  up  to  the  time  the defendant vacates the property (be it on settlement of an
ultimate  sale  or  otherwise).     By  my  calculations,  this

amounts at this point to $1,426.08 for the period up to today 14 December 2010, the date of this Judgment.

(b)Otherwise, there is to be no further adjustment to the equal sharing of the net sale proceeds of the property in terms of the

consent order made earlier.

Costs

[43]     The plaintiff has essentially succeeded in large measure with his summary judgment application and is entitled to an order for costs here.

[44]     Counsel have requested, however, that costs at this point should be reserved, and if the parties are unable to agree on the issue it can be the subject of later submissions.  This seems a sensible approach here.

[45]     Costs are therefore reserved.

[46]     If the parties are unable to agree on the issue of costs, then they may file memoranda sequentially, which are then to be referred to me and I will decide the issue of costs based upon the material before the Court.

‘Associate Judge D.I. Gendall’