Dyas v Elliott

JurisdictionNew Zealand
JudgeAsher J
Judgment Date16 April 2010
Neutral Citation[2010] NZHC 607
Docket NumberCIV-2008-404-001021
CourtHigh Court
Date16 April 2010

In The Matter Of of Sections 339 and 343 of the Property Law Act 2007

BETWEEN
Carole Ann Dyas And Toby Bruce Jones As Trustees Of The Carole Ann Family Trust
Plaintiffs
and
Colin John Elliott And Horrobin Nominees Limited As Trustees Of Ceejay Investment Trust
Defendants

[2010] NZHC 607

judges:

Asher J

CIV-2008-404-001021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Application for occupation rental following breakdown of de facto relationship — whether occupation rental was required to be paid under s343(f) Property Law Act 2007 for a time period when only one of the co-owners lived on the property owned by their trusts — whether the dispute should be settled as a relationship property dispute under the Property (Relationships) Act 1976.

Appearances:

J Cox for Plaintiffs

C Elliott acting in Person

JUDGMENT OF Asher J

Asher J

This judgment was delivered by me on 16 April 2010 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules

………………………………………..

Registrar/Deputy Registrar

………………………………………..

Date

1

Carole Dyas and Colin Elliott lived together in a de facto relationship between 2000 and 2006. Ms Dyas and the co-trustee of her family trust seek occupation rental for 78 Rame Road, Greenhithe, for the period that Mr Elliott occupied it following their separation. She relies on s 343(f) of the Property Law Act 2007.

Background
2

Ms Dyas and Mr Elliott began their de facto relationship in approximately February 2000. In late 2002 they decided to purchase a coastal property at 78 Rame Road, Greenhithe, (“78 Rame Road”). They would acquire the property as tenants in common in the names of their respective family trusts, which were formed specifically for this purpose. On settlement 78 Rame Road was acquired by the two trusts as tenants in common in equal shares. The two trusts were Ms Dyas' family trust, the Carole Ann Family Trust, and Mr Elliott's family trust, the CEEJAY Investment Trust.

3

Ms Dyas and Mr Elliott were both working and had children by previous relationships. Both had been married earlier and Mr Elliott has deposed without contradiction that they wished to keep their personal relationship separate from their business relationship, with no property being purchased in their own names.

4

The same two trusts also purchased a commercial property at Kilham Avenue, College Road, Northcote. That property was also purchased by the two trusts as tenants in common. There were securities held over both properties, and there was significant debt. Another trust controlled by Mr Elliott, the Boyd Rhys Trust, loaned a considerable amount towards the purchase of the properties.

5

The relationship between Ms Dyas and Mr Elliott came to an end in October 2006. In December 2006 Ms Dyas left the Rame Road property. She has deposed that she found it impossible to stay there, given the breakdown of their relationship. There was a cottage on the property. A month later in January 2007, Ms Dyas returned to the Rame Road property and endeavoured to set up house in the cottage. However, there was an immediate scene between Ms Dyas and Mr Elliott and the police were called. Ms Dyas left and has not lived on the property since. Since December 2006 she has been living with family members or in rented accommodation.

6

On 26 February 2008, the trustees of the Carole Ann Family Trust issued proceedings against the trustees of the CEEJAY Investment Trust, seeking orders in a summary judgment application for the sale of the Rame Road property, distribution of the proceeds, and for a fair occupation rent under s 343 of the Property Law Act 2007. A statement of defence was filed. The parties eventually agreed to cooperate in selling the Rame Road property, and it was sold in May 2009. The sale price was $1,456,000, all of which went to repay the existing bank mortgage that was secured over the Rame Road property and the Kilham Avenue property.

7

The summary judgment application was not proceeded with by the Carole Ann Family Trust. However, it sought a fixture for the claim for occupation rent. That is the issue presently before the court. The occupation rent in question runs from the time when Ms Dyas left the property in December 2006, to the time of sale in May 2009.

8

Ms Dyas filed an affidavit from a real estate agent, a Debbie Murray, who deposed that the rental value of the property during the relevant period was in the vicinity of $1,400 – $1,500 per week. Mr Elliott strongly contests that assessment, asserting that the actual rental value is far less. He submits that he has paid rates, insurance and maintenance, and done certain improvements to the property which would have to be taken into account. He opposes paying any occupation rental, asserting that his affairs and those of Ms Dyas are best considered in the round, taking into account other property and investments. He submits he has contributed far more than her.

Can the Carole Ann Family Trust claim under s 343?
9

Section 339(1) of the Act gives the court the power to make orders for the sale of a property owned by co-owners, and the division of proceeds. Under s 341(1) a co-owner can make any such application. Section 342 provides:

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 location of the property:

  • (c) the number of other co-owners and the 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 the making of the order:

  • (e) the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:

  • (f) any other matters the court considers relevant.

10

Section 343 which gives further powers to the court, provides:

343 Further powers of court

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

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

Under s 343 a further order “referred to” in s 339(4) is an order made in addition to an order under s 339(1). Therefore the relevant considerations under s 342 apply under s 339(1) and s 339(4) to s 343(f).

11

Sections 339 – 343 of the Act replaced s 140 of the Property Law Act 1952, which provided for an action for partition in which a court could direct land owned by more than one person to be sold. Section 140 had given the court the power to direct a distribution of the proceeds of sale and to make other orders. It did not, however, contain any specific provision for the payment of a fair occupation rental.

12

Given the lack of any specific guidelines for the awarding of occupation rental, it is fruitful to consider the previous legal position. The position at common law is discussed in Hyne McMorland and Sim, Land Law in New Zealand Vol 2 at para 13.002. The general proposition stated by Salmond J in McCormick v McCormick 1 is quoted:

Considerations of justice and convenience have led to the recognition of a general principle that one co-owner cannot by failing to exercise his right of use and occupation establish a claim for compensation against another co— owner for the lawful exercise of his own equal right.

Section 343(f) does, therefore, give the court a general power it did not previously have. The specific considerations set out at s 342 appear to be directed more to the court's general discretion to order a sale. None of the s 342 considerations specifically address issues relating to the occupation of property. However, circumstances referred to in that section, including the respective shares of the co- owners, the comparative hardship arising from the grant or refusal of an order, and the value of contributions by the co-owners, may be relevant.

13

Relying on a number of authorities it is stated by the learned authors of Land Law in New Zealand at 13.002(a):

Therefore, no co-owner who has failed to exercise his or her right of possession is entitled to claim an occupation fee from another co-owner even though that other occupies the whole of the land. There are, however, three situations in which one co-owner may recover an occupation fee from another who has the sole use and enjoyment of the land: (1) Where one co— owner has actually evicted the other and wrongfully prevented him or her from having the use of the land, the ousted co-owner can either bring an action of trespass or an action for recovery of possession and for mesne profits; (2) Where one co-owner occupies and uses the land under some agreement with the other under which the occupying co-owner becomes the bailiff or agent of the other so that he or she must account to the other for the latter's share of the profits; (3) Where one co-owner occupies the land as tenant of the other's share and owes rent accordingly.

14

Mr Cox for the Carole Ann Family Trust submitted that under the previous common law the Carole Ann Family Trust would have in any event been entitled to recover an occupation fee.

15

In Dennis v McDonald 2 Purchas J reviewed the authorities in England relating to the ordering of occupation rent between co-owners. There a de facto co— owner successfully obtained occupation rent from her de facto partner, when she had left him because of his violence or threatened violence, taking her children with her. She was granted occupational rental, despite the absence of any specific act of ouster. He stated at pg 638:

Counsel for the plaintiff submitted, I think correctly, that when one looks at the...

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