Dyas v Elliott

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

[2010] NZHC 607

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

judges:

Asher J

CIV-2008-404-001021

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
Appearances:

J Cox for Plaintiffs

C Elliott acting in Person

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.

Held:

The court's discretion under s 343(f) Property Law Act is wide and unfettered. 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 to do equity between the parties. 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.

Ms D was excluded from living in the cottage because she and Mr E could not peaceably live on the same property. Application for occupation rental was approved with an allowance for amounts paid on property expenses by Mr E's trust when Mr E was in exclusive occupation.

Furthermore, as Mr E and Ms D were in a de facto relationship, the property in question would have been governed by the PRA, had it been owned by them personally (s4 — Act a code). However, no relationship property proceedings were brought because the land was owned by the trusts, rather than Ms D and Mr E as individuals. Given that the family home was not owned by either of the partners to the de facto relationship, s11B(1) PRA may apply, and there was the possibility of orders under s11B(2) to compensate for the lack of a house owned by the partners in their own names. The making of an order under s343(f) Property Law Act did not pre-empt the making of an order under s11B PRA at a later date. It would have been unjust for the court to refuse to make an order under s343 merely because the option under s11B PRA was not exercised. Application granted.

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.

342 Relevant considerations
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).

343 Further powers of court
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 McCormick1 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...

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