GONSALVES v WILLIAMS [2014] NZHC 2376

GONSALVES v WILLIAMS [2014] NZHC 2376 [30 September 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-004993[2014] NZHC 2376BETWEEN MICHELLE NOLA GONSALVESApplicantAND PETER LESLIE WILLIAMSRespondentHearing: 28 July 2014Appearances: James Jackson for the ApplicantDavid Smythe for the RespondentJudgment: 30 September 2014RESERVED JUDGMENT OF MOORE JThis judgment was delivered by on 30 September 2014 at 3:00pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Introduction[1] The applicant, Ms Michelle Gonsalves, is a half share, co-owner of 6 Aquarius Avenue, Glen Eden, Auckland.1[2] The other half share, co-owner is her stepfather, the respondent, Mr Peter Williams.[3] Ms Gonsalves seeks an order to sell the property and share the proceeds equally between herself and Mr Williams.[4] She seeks the order on the grounds that she has tried to resolve the matter with Mr Williams but he has refused to co-operate. Mr Williams wants to continue to live at Aquarius Avenue. He opposes the application on the grounds that hebelieves Ms Gonsalves' interest in the property was improperly obtained and he hasa life interest and is entitled to remain in the property. He is now aged 71 and suffers from a variety of serious health conditions. He wants to continue living at Aquarius Avenue for the rest of his life.Background[5] The property at 6 Aquarius Avenue, Glen Eden, Auckland is a modest ex- State, three-bedroom home. Mr Williams has been living there since it was first constructed. The house was built as part of a new state housing development in the suburb of Glen Eden in 1976.[6] Mr Williams moved into Aquarius Avenue with his new wife, Nola, in August1976. Nola Williams was Ms Gonsalves' mother.[7] Ms Gonsalves and Nola arrived in New Zealand from Australia in late- February 1969. Ms Gonsalves was then aged 9½.1 Certificate of Title NA33D/572 (North Auckland Registry).[8] Seven years later, in 1976, Mr Williams married Nola and six months later the couple moved into their new home with Ms Gonsalves who, at that time, would have been about 17 years old. She lived there with her mother and stepfather for another two years.[9] Although Ms Gonsalves always regarded 6 Aquarius Avenue as her home, she said she went there reluctantly because it was a long way out, she did not have a car and public transport was less than ideal. After a couple of years, Ms Gonsalves left home.[10] Peter and Nola Williams gradually paid the mortgage off. The final paymentcame from Mr Williams' superannuation and a redundancy payment. The house wasinitially owned by the couple as a joint family home.[11] Then, in 1991, after 15 years of marriage, Peter and Nola Williams decided to divorce and the ownership of the house changed to tenants in common. By agreement, the couple continued to live at Aquarius Avenue although in different rooms.[12] The evidence is contradictory about the nature of their relationship after the marriage was dissolved. There can be no doubt it was, at times, fractious although Mr Williams said that after their divorce the relationship improved. He described thecouple as "virtually soul mates". Others, particularly confidantes and friends ofNola, described the marriage as unhappy with Nola describing her predicament as akin to being a prisoner in her own home. It seems to be common ground that Mr Williams, after drinking, was inclined to be verbally abusive.[13] However, a long time friend of the couple, Anthony Williams,2 described the couple as showing a lot of concern for each other. He said he knew they were divorced but, unusually, they lived together in the same house. He described them ashaving something of a "mutuality" when they were living together. They alwaysattended the RSA together and sat and talked together. Anthony Williams said that Peter could be somewhat argumentative at times but that Nola put up with it and if2 Not a relative.he irritated her, she did not hesitate to tell him. He described Nola as someone who"called a spade a spade" but that she was a lovely person and one for whom he had agreat affection as did many others.[14] Anthony Williams said that while many of Nola's comments about herhusband were far from complimentary, if you knew her, you would understand that that was just the way she spoke. When she referred to him in derogatory terms it did not necessarily mean she was criticising him. He said the two of them would laugh about it.[15] Against that account, other witnesses deposed to a level of animosity betweenPeter and Nola Williams. One made the observation that Nola would call her to "let off steam" about Peter. From that she concluded that Nola did not like her former husband.[16] Another witness who had known Nola since the mid-1980's described theuncomplimentary way which Nola referred to her former husband. Despite this, Nola encouraged the witness to maintain her friendship with Mr Williams.[17] Another longstanding friend described confidences he shared with Nola. He said that Nola spoke to him about her unhappy marriage due, primarily, to Mr Williams' drinking and verbal abuse. Apparently the only favourable comment Nola made about him was their shared fondness for animals.[18] However, the fact remains that from 1976 the couple lived together and while their relationship was far from harmonious and could be forthright in the extreme, the impression left is that they shared an understanding and familiarity which comes with decades of living together.[19] In the latter years neither Peter nor Nola Williams enjoyed robust or good health. In 2009 Mr Williams underwent extensive and life threatening throat and tongue surgery following a diagnosis of cancer. He was not expected to survive. A portion of his tongue was removed leaving him with a permanent speech deficit which can, at times, make him difficult to understand. He had a portion of his bowelremoved and is now fed, either wholly or partly, via a gastric feeding tube. He also suffers from a heart condition.3 No doubt because of these serious health issues the couple believed that Peter would die before Nola. However, in July 2012, Nola was diagnosed with a brain tumour. She was admitted to hospital from where she was transferred to a rest home. She never returned home to 6 Aquarius Avenue. She refused treatment and died in October 2012.[20] Shortly after her diagnosis and about two months before Nola died, Ms Gonsalves and her partner, Chris, moved into the home. Before that they had been living in a campervan. Ms Gonsalves said she moved in because her mother asked her to look after the cats because, apparently, Mr Williams was incapable of doing so.[21] In any event, the decision by Ms Gonsalves to move into 6 Aquarius Avenue with her partner met with no opposition from Mr Williams.[22] Neither Ms Gonsalves nor Chris is employed. Chris is aged in his early 70s. Like Mr Williams, he is in receipt of national superannuation. Ms Gonsalves also receives some form of benefit.[23] For the first six months of co-habitation there do not appear to have been any major difficulties between Mr Williams and his new co-habitees. The relationship appears to have been cordial and co-operative. Mr Williams continued to occupy the upstairs bedroom he had been living in. Ms Gonsalves and Chris, despite an invitation from Mr Williams to move upstairs into one of the unoccupied bedrooms, elected to live downstairs in a large converted basement area referred to in the evidence as a rumpus room. The only bathroom in the house was on the floor occupied by Mr Williams.[24] However, in time, the relationship between Mr Williams and Ms Gonsalves began to deteriorate. Mr Williams said he believed it coincided with the time probate was granted; about six months after they moved in. After that, there were numerous unpleasant and confrontational incidents between Mr Williams and3 Atrial fibrillation.Ms Gonsalves. These encounters paint a vivid picture of an extremely unhappy and dysfunctional domestic environment.[25] Mr Williams describes Ms Gonsalves as unreasonable, autocratic and difficult. Ms Gonsalves describes Mr Williams as abusive, threatening and, at times, physically violent. There is little to be gained in describing the incidents referred to in the affidavits and in oral testimony. It is plain that irreconcilable differences now exist between the parties making communal life at Aquarius Avenue intolerable for all.[26] Ms Gonsalves says that she wishes she could leave but feels trapped and unable to do so. Her reasons for wishing to remain are complex and varied. They include the promise she made to her mother to look after the cats, her concerns around Mr Williams' inability to properly maintain the property, her liability as anowner of the property arising from Mr Williams' incapacity and inability to properlymaintain the address, concerns she holds of the dangers to life and property arisingfrom Mr Williams' alleged forgetfulness and latent irresponsibility. However, most significantly, Ms Gonsalves expresses the strong wish to sever all her connectionswith the property. She says she never wanted to be landlady; she has inherited "the consequence of my mother's choice". She says she was prepared to takeresponsibility for her mother's cats but is not prepared to take responsibility forMr Williams and what he might do. She says it is just too stressful. She wants to be free of these onerous responsibilities including the ongoing liability for non- complying building activity, a concern which assumes great prominence amongst her various concerns.[27] Ms Gonsalves impressed me as someone who was bringing this application not out of avarice or greed but because she genuinely wishes to be free of the shackles of sharing the responsibility of house ownership with Mr Williams. However, she does claim she requires her share of the sale to rehome herself and hermother's animals. If the house was sold she also wishes to invest in a business, adecision which will be delayed if the order is not made now. Neither she nor herpartner Chris is young. She is in her early 60's and Chris is in his early 70's.[28] Ms Gonsalves described a number of incidents which gave her reason to be concerned about the threat she says Mr Williams poses to his (and other's) personalsafety as well as to the property.[29] For example, she complained that on occasions Mr Williams smoked in the basement area adjacent to flammable materials.4 She described an occasion when he left a slow cooker on high and another when he left a fan heater going.5 On another occasion she referred to an incident when water leaked through the ceiling of the house. Mr Williams erected a ladder which he placed against the side of the house in order to to access the roof and began to tinker with the hot water cylinder. Ms Gonsalves became very concerned and even resorted to calling the Police for advice on how she might dissuade Mr Williams from trying to fix the problem without exacerbating the domestic tension. Once he was next out of the house she called a plumber who, having inspected the electrical connection, told her it was illegal and suggested she should call a registered electrician. The electrician attended and fixed the connection which he described as having been "hot wired".6[30] Mr Williams, on the other hand, is adamant that he is both able and competent to continue to live in the home he and Nola bought together 38 years ago. He is now aged 71. Plainly he is in poor health. Despite these challenges he is adamant he is able to look after himself and the property. He does not accept theproperty is "a dump" as some others have described it. But he did concede therewere some parts of the property which could do with some maintenance. Heincluded the bathroom as an area which needs some "tidying up".[31] Mr Williams' overwhelming preference is to be allowed to continue to live inthe home he has lived in for 38 years.4 Mr Williams denied this saying he had not smoked in the basement workshop area for six months and, in any event, he asserted there were no flammable or volatile products which might pose a risk.5 Mr Williams disputed Ms Gonsalves' account. He asserted the slow cooker was left on a low settingand never posed a safety risk. In relation to the heater, he accepted he had left it on by mistake; he thought he had turned the switch to off but left it on low.6 Mr Williams said that he was aware of the hot water wiring. It had been wired in that way as an emergency and temporary measure by a friend who was a qualified electrician. This person intended to return to wire the appliance correctly but died before he could do so. Mr Williams intended to have it fixed but had not got around to doing so.[32] He said that if he was forced to sell the house the level of equity releasedwould preclude him from eligibility for a pensioner's council flat. When criticisedfor his failure to make any enquiries into other re-housing options, he responded by asking why should he; he has a house that he paid for.[33] There can be no doubt that 6 Aquarius Avenue and its garden hold a specialplace in Mr Williams' heart. He is a keen gardener. His connection to his house andthe garden is a key component in his reluctance to move elsewhere.[34] Although no sworn evidence was received from Mr Williams' generalpractitioner, a medical certificate from him was produced. Dated December 2013, this records that Mr Williams has been a regular patient at the practice for the last several years. It states that he suffers from the medical ailments referred to earlier, as well as eczema and malnutrition.7 He is on long term medication. Despite this, his doctor described him as fully independent and managing well in the community. He said he does not currently need any home help and is compliant to medications and treatment. I have received no evidence as to why or on what grounds Mr Williams' doctor described him as independent and managing well or whetherthose comments still apply.[35] In evidence, Mr Williams says that he feels healthy enough, describing himself as frail but not sick as such. At present he insists he is coping well. He says he sees his doctor regularly; at least once a month. Additionally, a district nurse from Waitakere Hospital attends him once a month to check on his nutrition and generally assess his well-being. However, while I accept that these strategies assist in monitoring his health and his ability to take care of himself, I do not view them asan accurate or reliable measure of Mr Williams' ability to maintain the property in such a way as to preserve the value of the house.Testamentary promises[36] It is claimed by Mr Williams that he and Nola agreed to make provision in their respective wills to provide the survivor with a life interest in the house. This7 This appears to be due to the fact he is fed wholly or partly via a feeding tube.was apparently designed to provide the survivor with their security of knowing they could live at 6 Aquarius Avenue until their own death.[37] As I understood Mr Smythe, for Mr Williams, the assertion does not amount to a formal claim under the Law Reform (Testamentary Promises) Act 1949. Rather,it provides a context and back drop to respond to Ms Gonsalves' application. It is evidence advanced to support Mr Williams' claim he and Nola wished the other to be able to remain in the home after the other's death.[38] The context is as follows. Ms Gonsalves is the executor of her mother's will.That will, made in 1999, leaves all of her estate, including her interest in 6 Aquarius Avenue, to Ms Gonsalves. Mr Williams claims that he believes Nola executed a subsequent will which left him with a life interest in the property.[39] He said that after Nola died, Ms Gonsalves shredded a large volume of papers which were in a cabinet where he believed the will was kept. The plain inference he seeks to draw is that Ms Gonsalves, probably deliberately, destroyed the subsequent will.[40] In support of a subsequent will favouring Mr Williams, Anthony Williams said that Nola had told him that she and Peter had agreed that they would leave their shares in the house to each other. He assumed she was referring to wills. Mr Williams said that he and Nola expected Peter would die first. Following his cancer diagnosis Nola went to Whitcoulls and purchased a pre-printed will form. Nola told him that she had made a will leaving her share in the house to him. He said that Nola, using the pre-printed form, completed a will for him in early 2012 leaving all his property to her. This is supported by the affidavit evidence of a friend who said that in early 2012, at the local RSA, Mr Williams asked him to witness his signature on his will. There was no discussion about the contents of the will.[41] Ms Gonsalves recalls a conversation with her mother at about this time when Nola mentioned that Mr Williams had made a will but given the numerous errors peppered throughout it, she doubted it was legal. Unsurprisingly, Ms Gonsalvesstrongly rejects the suggestion she destroyed her mother's latest will.[42] In my view there is insufficient evidence to conclude that Mr Williams and Nola executed wills in favour of each other. Furthermore, I am not prepared to infer from the evidence that Ms Gonsalves, either intentionally or inadvertently, destroyedNola's last will.Application[43] This application is made in terms of s 339(1)(a) of the Property Law Act 2007 which provides that the Court may make an order in respect of property owned by co-owners for the sale of the property and the division of the proceeds among the co-owners.[44] In considering whether to make an order under s 339(1), the Court is required by s 342 to take into account certain mandatory, relevant considerations. Section 342 provides as follows: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.[45] I shall now apply those mandatory considerations to the present facts.[46] Nola Williams was registered as tenant in common as to a one half share of 6 Aquarius Avenue. That one half share is now registered to Ms Gonsalves in hercapacity as executor of Nola's estate. This is not a case where one party has aminority interest. Mr Williams and Ms Gonsalves share equally.[47] The property is a family home located in a suburb of West Auckland. Mr Williams has lived there for 38 years. It is noteworthy that after their marriage was dissolved neither Mr Williams nor Nola sought partition orders to separate their respective interests and realise their shares in the property. That neither elected to pursue this option but, instead, continued to live together for another 21 years supports the view that each regarded the other as having a legitimate right to continue to live there for the balance of their lives.[48] On the question of respective hardship, Mr Williams' overwhelmingpreference is to be permitted to continue to live at Aquarius Avenue until he is 75. His health is poor. His interests are limited to gardening and a social life centred around the local RSA. He has a love for animals, including Nola's cats. Althoughhe has taken limited steps to examine alternative accommodation he says his options are few.[49] In contrast, I accept Ms Gonsalves' motivation in seeking the present orders was not primarily driven by financial imperatives or pecuniary hardship. As previously mentioned she wishes to unshackle herself from the duties and responsibilities of joint home ownership with Mr Williams.[50] On the question of the value of any contribution made by any co-owner to thecost of improvements to or maintenance of the property, I note Mr Williams'evidence that since he and Nola moved into the house he has maintained it. He has made some improvements to the dwelling although it would appear that a number involve the construction of non compliant structures.[51] I must also take into account any other matters which I consider relevant.[52] Mr Williams' ability to continue to live safely at 6 Aquarius Avenue is anadditional factor which I regard as relevant. He is in poor health but, as he said himself, he is not frail. I observed him as he gave evidence. I agree with his assessment that he is not frail. He was forceful and direct in his testimony. It is not difficult to see why he is described as argumentative. However, he did not appear to be deluded about his ability to continue to live at 6 Aquarius Avenue. The reality isthat in the reasonably near future Mr Williams will no longer be able to live in his home. In the course of his evidence he conceded that he did not imagine that he would be able to live there past the age of 75, that being a little under four years away.[53] Of the mandatory, relevant considerations listed in s 342 the most influential on the present facts is the assessment of relative hardship. The issue is whether, on balance, the immediate hardship to Mr Williams by making the order is outweighed by the hardship caused to Ms Gonsalves if I was not to make an order with immediate effect. Mr Williams will be required to leave the property. However this is inevitable in the short to medium term and Mr Williams' own evidence is that it isunlikely he would be able to live there beyond the next few years. If I did not make the order Ms Gonsalves, would be forced to wait before she could to benefit from her inheritance. In the meantime, as a co-owner with Mr Williams, she is locked into a dysfunctional relationship with a man who she plainly dislikes and with whom she is unable to sensibly communicate or reason. This is not to say the fault for this chronic state of disharmony lies entirely at the feet of Mr Williams. It does not. Both parties are plainly dominant and forceful personalities who have strong, and no doubt sincerely held, views about how the property is best managed. But that is very much part of the problem. If I was not to make the order sought I would be consigning both parties to a future, almost certainly measured in some years where, by reason of their joint ownership, they would be required to consult and co-operate in the management of the property, but by reason of their social pathology, they cannot. The result will be continuing, if not escalating, levels of animosity with the likely consequence the condition and value of the property will decline as repairs and maintenance are deferred.[54] I do not overlook that the consequence of making the order with immediate effect will require Mr Williams to find alternative accommodation. At his age this will be both emotionally and physically challenging. But even he accepts that such a step is inevitable in the not too distant future. The evidence suggests the house would sell somewhere in the $350,000 to $400,000 range. After real estate, legal and other fees are deducted the parties should receive something in the order of $165,000 to $185,000 each. I have to balance that factor with all its intrinsiccomplications for Mr Williams, with the need to relieve the parties of their continuing animosity, lack of co-operation and intransigence. A clean break needs to be made so that Mr Williams and Ms Gonsalves can go about their lives absent the rancour which characterises their present relationship.[55] Without an order of immediate sale I am unable to order occupation rent be paid to Ms Gonsalves. Mr Williams cannot afford to pay it, although I have given thought as to whether the accumulated rental might be paid to Ms Gonsalves after the home was sold. She would be left with no benefit from the property until sale but would continue to carry significant commitment and liability as a co-owner.[56] In the course of the hearing I raised with counsel the possibility of making an order for deferred sale until, say, Mr Williams reaches the age of 75. I invited supplementary submissions on jurisdiction and, in the event such an order was made, what ancillary orders such as rental payments, insurance, etc might be made.[57] In the supplementary submissions Ms Gonsalves repeats her concerns that unless an order for sale is made she remains a registered proprietor. She continues to be deeply concerned about her continuing liability and exposure to the council for various non-complying structures which Mr Williams has constructed. She repeats her concerns about Mr Williams' capacity and competence to remain living in thehouse, the dangers of which she regards will be exacerbated once she and her partner move out. She also submits that if the sale was deferred until Mr Williams reaches the age of 75 he would almost certainly not have sufficient equity to buy a replacement property after rental compensation and accrued interest is deducted from his share of sale proceeds. Ms Gonsalves submits that rental compensation of $35,000 borrowed at 7.5% interest over four years would cost Mr Williams approximately $45,000. To this, further funds would need to be borrowed to maintain the property. This was estimated at between $10,000 to $15,000 over four years, thereby reducing the value of Mr Williams' share of after sale by $55,000 to$60,000.[58] Whatever the position, if Mr Williams was to pay rental compensation and continue to maintain the property, the cost to him will be considerable and will bededucted from his share of any sale proceeds It will significantly reduce his equity and, as a result, his range of alternative accommodation options when, inevitably, he must find somewhere else to live.[59] Ms Gonsalves produced evidence of examples of affordable, appropriate, alternative accommodation. For instance, a refurbished owner/occupier one bedroom unit in a retirement village in Avondale could be secured for $139,000. A $99.00 weekly service fee covers all utility costs, insurance, maintenance, security and running expenses other than power, telephone and water. This evidenceindicates that if Mr Williams' interest in Aquarius Avenue was liquidated now he would have little difficulty finding and purchasing comfortable, appropriate and affordable accommodation not far from where he presently lives without any borrowings and a sizeable cash surplus.[60] In the additional submissions for Mr Williams, counsel draws attention to Mr Williams' age, his health, the disruption that would be caused to his life, thelongstanding agreement between him and Mrs Williams, that Ms Gonsalves' interestis a 'windfall' and she is not likely to be financially worse off if an appropriate rental is set. These issues were largely canvassed in the original submissions and discussed in more detail above.[61] Overall I am satisfied that the immediate hardship to Mr Williams by making the order is outweighed by the hardship caused to Ms Gonsalves if I was not to make an order with immediate effect.[62] Both counsel submit that the jurisdiction to order a deferred sale exists through the implied jurisdiction of the courts. Due to my finding above I am not required to make a determination on this issue.Result[63] I make the following orders:(a) The property at 6 Aquarius Avenue, Glen Eden, Auckland being that parcel of land in Certificate of Title NA33D/572 (North Auckland Registry) be sold.(b) Counsel are to file joint memorandum by 5:00pm on Friday, 17 October 2014 as to the appropriate ancillary orders which should be made to give effect to (a) on the following issues:(i) the timing of the sale;(ii) the mechanism of sale and agents;(iii) the acting solicitors for the sale;(iv) the distribution of proceeds;(v) any other order the parties believe are necessary to give effect to (a);(vi) Costs.(c) In the event counsel are unable to agree as to (b) counsel are to file memoranda addressing the issues set out in (b) no later than 5:00pm on Friday, 17 October 2014.Moore JSolicitors:J Jackson, AucklandG Presland, Auckland