C K Keery v L J Thomas and M W Thomas

JurisdictionNew Zealand
CourtHigh Court
JudgeMatthews,Judge
Judgment Date10 Feb 2015
Neutral Citation[2015] NZHC 113
Docket NumberCIV-2014-409-000567

[2015] NZHC 113

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

Associate Judge Matthews

CIV-2014-409-000567

Between
Colin Keith Keery
Plaintiff
and
Lysandra Jane Susan Thomas and Mark William Thomas
Defendants
Appearances:

D M Lester for Plaintiff

R C Dey for the first-named Defendant

No Appearance for the second-named Defendant

Summary Judgment application for orders under s339(1)(c) Property Law Act 2007 (PLA) (order requiring co-owners to purchase the share in the property of other co-owners) that the plaintiff be permitted to purchase a property from the first and second defendants — the plaintiff and the defendants were owners of a property in Christchurch in one-third shares — plaintiff lived in the property with his wife — defendants had not contributed to payments on the property in some years — caveats were registered against the defendants' interests to protect debts owed to a finance company and the Legal Services Agency (the creditors) — money outstanding on mortgage — plaintiff said defendants did not have any equity in the property at all so he should not be directed to make any payment to them — agreed to a condition that he be responsible for repaying the balance owing to the creditors — whether the defendants would be bound by an order made under s339(1)(c) PLA to transfer the property to the plaintiff — whether there would be prejudice to the defendants if the order was made.

Held: In Bayly v Hicks the Court of Appeal noted that there was no requirement that the orders made under s339 could only be those that were specifically sought by a party. The Court said that such a restriction would unduly cramp the scope and efficient operation of what was clearly remedial legislation. Viewing the PLA in this way, if it was appropriate to make an order under s339(1)(c) that K purchase the share in the property owned by each of Ms T and Mr T, each of the latter parties were bound by that order, pursuant to s339(5), as well as by any further orders that might be made under s339(4). As a result they would be bound to give effect to the orders by transferring the property to K.

Section 342 (relevant considerations for order under s339(1)) required the Court to have regard to stated factors. K had a minority interest in the property but it was his residence. Neither Mr nor Ms T had made any payment in respect of the property for several years. The evidence established that neither Ms T nor Mr T had any equity in the property. The only evidence on its value was given by the valuers instructed by K, who assessed the value at $320,000. However, that was on the basis that the work required to repair the earthquake damage was carried out. The cost of that was assessed by EQC at $118,000, so the property was worth $202,000 as it stood. $92,000 was owed on the first mortgage.

Mr T and Ms T's share in the property would be approximately $2,700 once K's advance and arrears he had paid on the mortgage was repaid. Taking into account the sums owed to Dorchester and the Legal Services Agency, neither Ms T nor Mr T had any remaining equity in the property.

While there was some force to Ms T's submission that requiring immediate payments of the Dorchester and Legal Services debts would cause some hardship to Ms T, this could be alleviated by imposing a condition on the order that K pay the balance owing. K would consent to an order in these terms and also to a condition that he paid the costs of the documentation required for this purpose.

Given that K and his wife lived in the property, and he was the only party with any remaining interest in it in financial terms, there would be significant hardship to him by declining the order.

Application for summary judgment granted. Order that K purchase the share of Mr T and Ms T on stated conditions, including that the purchase be effected without payment of consideration by K to Mr T or Ms T.

JUDGMENT OF ASSOCIATE JUDGE Matthews

Matthews
1

The plaintiff (Mr Keery), the first-named defendant (Ms Thomas) and the second-named defendant (Mr Thomas) are owners of a property in Christchurch. The property was bought in 2006 and financed by Mr Keery providing $65,400, structured as an advance to Ms Thomas and Mr Thomas, who agreed to repay the debt on demand. Mr Keery has registered a caveat against the interest of Ms Thomas and Mr Thomas to support an equitable mortgage granted by them over their share in the property in his favour.

2

Ms Thomas is a daughter of Mr Keery. Mr Thomas was her husband when the house was purchased but they separated a year later. At around that time a further caveat was registered against the interest of Mr Thomas by Legal Services Agency and shortly after that a statutory land charge was registered under s 32 of the Legal Services Act 2000. In 2010 a caveat was registered against the interests of Ms Thomas and Mr Thomas by Dorchester Finance Limited (Dorchester). This caveat supports an agreement to repay an advance by Dorchester to a third party which Ms Thomas and Mr Thomas had guaranteed.

3

For approximately four years, Ms Thomas and Mr Thomas (and later just Ms Thomas) lived in the house, and for the last four years Mr Keery has lived in the house with his wife. Ms Thomas and Mr Keery are estranged.

4

At various times Mr Keery has paid sums of money to the first mortgagee, some of which are in dispute and some of which are accepted.

5

The house was damaged in the earthquakes experienced in Christchurch in 2010 and 2011. A sum of $118,000 for repairs was received from the Earthquake Commission, and paid to the first mortgagee in reduction of its advance. The balance owing under the mortgage is approximately $92,000.

6

In July 2014 a firm of registered valuers instructed by Mr Keery assessed the value of the property at $320,000, including $5,000 for chattels, on the basis that repairs necessitated by the earthquakes had been fully repaired. 1

7

Mr Keery now seeks an order that he purchase the property from Ms Thomas and Mr Thomas. He says that they do not have any equity in the property at all so he should not be directed to make any payment to them. He does, however, consent to a condition on the order he seeks that he be responsible for repaying the balance owing to Dorchester, and the balance owing to the Legal Services Agency. He applies for orders by way of summary judgment.

8

Rule 12.2 of the High Court Rules provides:

12.2 Judgment when there is no defence or when no cause of action can succeed

(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

9

The principles the Court is to apply on an application for summary judgment are summarised in Krukziener v Hanover Finance Ltd: 2

[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 at 3 (CA). 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 at 341 (PC). 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).

10

In Auckett v Falvey, Eichelbaum J said: 3

On a summary judgment application, the onus is on the plaintiff to show that there is no defence. On the present facts, the plaintiffs are able to pass an evidential onus to the defendants by exhibiting the contract which on its face, entitles them to the remedy they now seek. The defendants are then in a position of having to demonstrate a tenable defence. However, the overall position concerning onus on the application is that at the end of the day the question is whether the plaintiffs have satisfied the Court as to the absence of a defence.

11

I take from these authorities that the correct approach of the Court is to consider the following:

  • (a) Does the evidence for the plaintiff establish a position which on its face would entitle it to the remedies it now seeks?

  • (b) If so, has the defendant demonstrated a tenable defence?

  • (c) The onus which shifts to the defendant is an evidential one only; the burden of proving that the defendant does not have a defence rests throughout with the plaintiff.

12

The orders sought by Mr Keery are under s 339(1)(c) of the Property Law Act 2007. This provides:

339 Court may order division of property

  • (1) A court may make, in respect of property owned by co-owners, an order—

    • (a) …

    • (b) …

    • (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.

13

When considering an application under this provision, s 342 requires the Court to have regard to certain factors:

342 Relevant considerations

A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:

  • (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...

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