LAPWOOD v LAPWOOD [2018] NZHC 1206

LAPWOOD v LAPWOOD [2018] NZHC 1206 [25 May 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-2673[2018] NZHC 1206BETWEEN LESLIE REED LAPWOODPlaintiffAND WAYNE REED LAPWOODDefendantHearing: 25 May 2018Appearances: G D Stringer for the PlaintiffDefendant is self-representedJudgment: 25 May 2018ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELLSolicitors:Inder Lynch, Papakura, for the Plaintiff[1] Mr Leslie Lapwood, an elderly widower, lives in a rest-home. To pay for hisrest-home care, he wishes to realise his interest in a property at 402 Papakura-Clevedon Road, Clevedon. In this proceeding, he seeks an order for sale under s 339of the Property Law Act 2007. He and his late wife, Ivy, lived there for many yearsuntil she died in December 2006. They owned the property as tenants in common inequal shares. In her will, Ivy left her estate to her four sons in equal shares. They areJohn Charles Matthew Teirney and Eric Vincent Teirney (sons of her first marriage),Wayne Reed Lapwood (the defendant) and Lance Peter Lapwood (sons of hermarriage to Mr Leslie Lapwood). Each son accordingly owns a one-eighth share inthe property.[2] Leslie has applied for summary judgment. John and Eric agree to a sale on theterms proposed by Leslie. Lance knows about the proposal. He has been served bysubstituted service but he has taken no steps. Wayne, the only defendant, says that hereluctantly agrees to a sale, but he does not agree with all the arrangements proposedby Leslie to sell the property.[3] The principles on which a plaintiff's application for summary judgment isdecided are well established. The Court of Appeal stated them in Krukziener vHanover Finance Ltd.1[26] The principles are well settled. The question on a summary judgmentapplication is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. Theonus is on the plaintiff, but where its evidence is sufficient to show there is nodefence, 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 normallyresolve material conflicts of evidence or assess the credibility of deponents.But it need not accept uncritically evidence that is inherently lacking incredibility, as for example where the evidence is inconsistent with undisputedcontemporary documents or other statements by the same deponent, or isinherently 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 ofjudgment. The Court may take a robust and realistic approach where the factswarrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].[4] To give a plaintiff summary judgment, the court has to be satisfied thatjudgment can be entered now without the need for any more interlocutory steps – forexample, discovery and interrogatories – or for a full hearing with witnesses givingevidence in person and being cross-examined.[5] In a typical summary judgment application, the court applies rules of law andconsiders whether a defendant has an arguable defence on the facts when those rulesare applied. Proceedings under Part 6 sub-part 5 of the Property Law Act 2007 are notlike that typical case. An application under s 339 requires the court to exercise adiscretion taking into account a variety of factors which may carry different weightaccording to the circumstances of each case. The considerations are set out in s 342of the Act. The law has changed markedly from partition proceedings under s 140 ofthe Property Law Act 1952. In Bayly v Hicks, the Court of Appeal recognised that thecourt now has a broader discretion and said:2The summary judgment procedure is not so well suited to s 339 applications.[6] In an application under s 339 the court first has to consider whether to makean order for division of the property amongst the co-owners. If it decides that thereshould be an order for division, it needs to decide what form that order should be: asale of the property and division of the proceeds, dividing the property in kind, orordering one owner to buy out the others. Sometimes a mixture of orders is possible.If the court decides to make an order for division, it is required to decide other matters.If the property is to be divided in kind, a plan of subdivision needs to be prepared anddirections need to be given to for approval of the subdivision by the local authority,and for subdivision works to be carried out before separate titles can issue. It will alsoneed to direct how the costs of the subdivision are to be borne. If one owner is to beordered to buy out the interests of others, a price needs to be fixed. And if there is tobe a sale of the property, the court needs to consider how that sale is to be carried out.That may require consideration of different modes of sale – sale by private treaty, saleby tender, sale by auction, sale using a land agent, or dispensing with a land agent.2 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [31].[7] The range of possible orders shows that it is not easy to grant summaryjudgment when it comes to the details of any order for division of the property. In asummary judgment application, the court has to be satisfied on the evidence providedthat there can be only one possible outcome. If other possible outcomes remainarguable, the court cannot grant summary judgment.[8] In this case, there is a strong argument for the sale of the property. But howthe sale is to be carried out is another matter.Background facts[9] The property at 402 Papakura-Clevedon Road is about 2 hectares in area. It isa flat lifestyle block with a three-bedroomed house and a two-bedroom cottage. Thereare also the remains of tunnel houses. The cottage is separately let out. Wayne andLance live in the house. In 2011 there was a court case in which John, Eric and Lanceapplied to have the property sold. Wayne did not take part. The proceeding was settledby a deed made in March 2013, to which John, Eric, Lance and Les were the parties.At the time, Eric was in a difficult financial position. Les agreed to lend him $50,000.The settlement deed records that there would be no interest on the loan and it wouldbe repayable in full when the property was sold. Eric, John and Lance agreed to giveLes a life interest in their respective one-eighth shares in the property. The life interestwould come to an end when Les vacated the property or he died – whichever camefirst. Once Les died or vacated the property, it was to be placed on the market for salewith one-half of the net sale proceeds going to Les or his estate, and the balancedivided equally between Eric, John, Lance and Wayne, except that the loan to Eric of$50,000 would be repaid from his share of the sale proceeds.[10] Les no longer lives in the Clevedon property. He now lives in a rest-home.Because of the settlement deed he accepts that the property must be sold because heno longer lives there. In May 2017, Les, Lance, Eric and John signed a listingagreement with a Papakura real estate agency. That was for a sale with an asking priceof $1.6 million. Commission on a sale at that price would be in the order of $50,000.That listing has since lapsed.[11] Les proposes these orders for the sale of the property:(a) he is to obtain market appraisals from two real estate agent companiesin Papakura;(b) he will provide copies of these to Wayne and the other owners and seektheir agreement to the listing, marketing and sale price;(c) if no agreement can be reached within seven days, Les will take stepsto progress the sale;(d) he will be authorised to sign a listing agreement and an agreement forsale and purchase on behalf of Wayne and the other owners if theydecline to do so;(e) the Registrar of the High Court be authorised to execute anyconveyancing documents on behalf of Wayne and the other owners toenable the sale to proceed and the transaction settled, should theydecline to sign the required documents;(f) the sale transaction and the conveyancing aspects shall be carried outby Les's solicitors, Inder Lynch, Papakura;(g) from three working days after the date of the sealing of the order, Leswill be entitled to exclusive possession of the property including thehouse, the land and buildings, to the exclusion of Wayne and any otherowner, and any others claiming any licence, right or title from Wayne;(h) from the date of sealing of the order, Wayne will ensure that all and anyother persons occupying the property shall vacate that property by thatdate and time;(i) the sole purpose for Les having possession of the property is to carryout the order for sale and he will take all steps necessary to market theproperty after possession has been granted;(j) three working days after the date of the sealing of the order, any chattelsleft at the property shall be disposed of at the discretion of Les,reasonably exercised;(k) Les will be authorised to serve any notices he deems necessary on anyresidential tenants occupying the property under the ResidentialTenancies Act 1982; and(l) The sale proceeds will be applied as follows:(i) in payment of all costs of sale, including land agent'scommission and marketing costs, removal and cleaning costs;(ii) in payment of all legal costs and disbursements associated withthe marketing and sale of the property;(iii) in payment of any outstanding rates or amounts owing inrelation to caveats or other outgoings associated with theproperty;(iv) in payment of legal costs awarded to Les against Wayne, to bededucted from Wayne's share of the sale proceeds; and(v) the balance of the sale proceeds to be divided according to theirownership shares, with Eric to repay Les the $50,000[12] In his notice of opposition, Wayne has consented to the sale but he has objectedto these specific orders: (c), (d), (e), (g), (i), (k), and (l)(iv).Some procedural matters[13] Before I come to the substance of the application, I deal with some proceduralmatters. The copy of the computer freehold register under the Land Transfer Actshows the father as owning a one-half share, and the four brothers each a one-eighthshare. There is an encumbrance to the Papakura District Council. There are also threecaveats – one caveat is against the share of Eric, John and Lance by WaimarieManagement Services Ltd lodged on 10 June 2013; another is a caveat by the LegalServices Commissioner lodged on 12 November 2014 against Wayne's share; and thethird is a caveat by Paul Reid Alexander Ells, lodged on 22 July 2016. I asked aboutthese caveats. Mr Stringer said that they were to secure money interests. Certainlythe caveat lodged by the Legal Services Commissioner is to secure a legal aid charge.Wayne acknowledges that it is for about $3,000. Without having seen it, I assume thatthe caveat over the interests of Eric, John and Lance most likely secures the paymentof funds as well. The caveat lodged by Paul Ells is against the interests of all theowners. As it turned out, Mr Ells came to court today. His interest is different fromthat claimed in the other caveats. Les is well disposed to Paul for assistance that Paulhas given him. In gratitude, he wanted to do something for Paul. Paul says that Lesagreed to gift him a one-eighth interest in the property. The caveat was apparentlylodged to protect that interest. Mr Ells advised me that he supports Les in his wish tosell the property.[14] Wayne advised me that the tenants of the cottage have a one year tenancy.Mr Stringer had assumed that the tenancy could be terminated under the ResidentialTenancies Act by giving them ninety days' notice. Given Wayne's advice that it is afixed term tenancy, I am uncertain whether that assumption is correct.[15] The interests of these people have procedural importance for this proceeding.Section 341(2) of the Property Law Act 2007 says:341 Application for order under section 339(1)(2) Every person who is one of the following must, if not already a partyto the proceeding on that application, be served with a copy of thatapplication:(a) a co-owner of the property:(b) a person who has an estate or interest in the property that maybe affected by the granting of the application:(c) a person claiming to be a party to, or entitled to a benefitunder, an instrument relating to the property.Subsection (3) goes on to provide that the court may change or dispense with serviceon the people who must be served under subs (2). The requirement for service onthose with an interest in the property means that those persons, once served, are to betreated as parties to the proceeding. They are entitled to be heard on the application.Moreover, they can be bound by any orders made, even if they take no steps in theproceeding. And, if they are unhappy with any orders made, they have the right toappeal to the Court of Appeal.[16] It is important, therefore, to show that they are properly parties to theproceeding. That should be done by identifying them as defendants. This proceedinghas named only Wayne as a defendant. Admittedly, the other brothers have beenserved but from their point of view, having been served with the proceedings, it is notclear to them whether they are parties to the proceeding and whether they can or shouldtake any steps in the proceeding. Moreover, none of the caveators were served. Unders 341(3) I dispense with service on the Legal Services Commissioner and on WaimarieManagement Services Ltd. I accept that their interests are monetary and that they haveno interest in opposing a sale.[17] The interest claimed by Paul Ells is quite different. He has an interest in theproperty and therefore he has an interest in saying how the property should be sold.He is entitled to be heard on any orders made for the sale of the property.[18] John and Eric have signed a document recording that they have been servedand they consent to the orders sought by Leslie. It is not clear however that theyunderstand that they will be bound for any other orders which the court might makeon an application under s 339. Lance has been served, but he has taken no steps at all.While he has agreed to a sale of the property in the settlement deed of March 2013, hestill has standing to be heard on any application for sale. He is entitled to be heard onquestions such as the terms of sale, and how the sale is to be arranged.[19] Accordingly, in my view some adjustment to the parties is required. I directthat John, Eric and Lance are all to be named as defendants, as must Paul Ells ascaveator.Substantive matters[20] There is a general agreement that the Clevedon property is to be sold and thatthe proceeds of sale are to be distributed amongst the owners, according to theownership shares but subject to two matters: any payment to Paul Ells for the interesthe has claimed in the caveat, and Eric repaying Leslie the $50,000 lent to him in March2013.[21] Wayne recognises that the property should be sold. He does not agree to theproposed mode of sale. Lance has taken no steps but as he signed the settlement deedof March 2014 which provided that the property was to be sold on Leslie vacating theproperty, and as Lance signed the listing agreement in 2017 I can take it that he doesnot object to the sale. He has taken no steps to suggest otherwise.[22] The difficulty, however, comes in directions for the sale of the property. Lesis sceptical as to Wayne's objections to the mode of sale. Wayne is living in theproperty. He pays the power bill, but it appears that income from the tenants otherwisemeets the expenses of the property. It is convenient for him to remain living therewithout the property being sold. Les is suspicious that Wayne is simply stalling. Evenso, that does not mean that the court can endorse without question the proposals byLes for the sale of the property. Wayne criticised those proposals as being very much"my way or the highway". The proposals, in effect, give Les control of the saleprocess. He can select the land agents. While he is to confer with the other ownersand seek their agreement, if there is an absence of agreement, then he is the one to takethe steps to progress the sale. He will decide whether to sign the listing agreement andany agreement for sale and purchase. That will give him control in selecting the askingprice, and in conducting any negotiations. The other owners are effectively droppedout of the process.[23] The suggestion that Wayne and Lance should vacate the property within threeworking days is disputable. It is rare for the court to order people to move from theirdwelling houses at such short notice. Wayne objects to the likely commission whichthe real estate agent will charge – the indication is in the order of $50,000. Waynenotes that many people sell their properties on Trade Me. He says that will cost only$1,000. He also referred to an advertisement by a South Auckland real estate agentindicating that a commission of $12,000 can be obtained for selling a property of anyvalue.[24] For summary judgment purposes, I cannot say that there is no reasonable basisfor Wayne to contest the orders proposed by Les. There are alternatives which cannotbe dismissed out of hand. Sale on Trade Me is a viable method of selling and mightbe competently carried out, particularly if the parties have skilled advice from propertylawyers. There is no reason why one owner should have the final say for setting anasking price. It is arguable that co-owners ought to be involved in the sales process toa greater extent than is provided for in the orders. Equally, there is an alternative whichI put to the parties: that the court might instead appoint an independent agent (say areceiver) to sell the property. Overall there is no clear way forward on which I canmake orders on a summary judgment basis for the sale of the property. Instead, thosematters can only be resolved in a hearing before a Justice.[25] I direct that this matter be heard before a Justice for one day on Tuesday23 October 2018 at 10:00am. Mr Leslie Lapwood is to file and serve a new statementof claim showing all the owners and Mr Ells as defendants. All are to be served. Theamended statement of claim is to set out the plaintiff's proposed orders for sale, andfor the conduct of the sale, including distribution of the proceeds of sale. Theamended statement of claim may be sent by ordinary post.[26] Within twenty working days after the letter is sent, each named defendant willbe entitled to file and serve a statement of defence. The defendants' statements ofdefence should set out their proposals for the sale of the property, identifying whetherthey agree or disagree with the particular matters proposed by the plaintiff.[27] Evidence is to be by affidavit.[28] The close of pleadings date is 1 August 2018.[29] The plaintiff is to file and serve his affidavit evidence by 27 August 2018.[30] Any defendants who have filed statements of defence are to file and serve theirevidence by 24 September 2018.[31] The bundle of documents and any reply evidence are to be filed and served by8 October 2018.[32] The case will be heard for one day on 23 October 2018 before a Justice.[33] I also record that I have ordered a sale of the property, but that is a generalorder. The terms of sale order need to be decided on 23 October 2018 unless, of course,the parties agree beforehand. I do encourage the parties to confer to see if they canwork out a way forward. Most parties in these cases do find that they can work out away forward.[34] Costs on the application are reserved..Associate Judge R M Bell