OFFICIAL ASSIGNEE v HARDING [2022] NZHC 1509

OFFICIAL ASSIGNEE v HARDING [2022] NZHC 1509 [28 June 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-1100[2022] NZHC 1509UNDER Section 339 of the Property Law Act 2007IN THE MATTER of the bankrupt estate of Paul HardingBETWEEN OFFICIAL ASSIGNEE IN BANKRUPTCYOF THE PROPERTY OF PAUL HARDINGPlaintiffAND ANTHONEDA JULIE HARDINGDefendantHearing: 28 June 2022Appearances: R Hindriksen for the PlaintiffNo appearance by or for the DefendantJudgment: 28 June 2022JUDGMENT OF GAULT JThis judgment was delivered by me on 28 June 2022 at 4:00 pmpursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarSolicitors:Mr G Neil and Mr R Hindriksen, Meredith Connell, Office of the Crown Solicitor, Auckland[1] This application for summary judgment by the Official Assignee (Assignee)was listed for first call today. The Assignee seeks orders under s 339 of the PropertyLaw Act 2007 (PLA) that the property at Unit 1E, Morning Star Units, 20 MorningStar Place, Mt Albert, Auckland (the property)1 be sold and the proceeds be dividedbetween the defendant, Ms Harding, and the Assignee.[2] The documents were served on Ms Harding on 16 May 2022. She did not fileany opposition and there was no appearance by or for her this morning.[3] Mr Hindriksen, for the Assignee, sought summary judgment today. He hadfiled a helpful memorandum in support. As he submitted, there is no doubt thatapplications for sale orders under s 339 of the PLA are amenable to the summaryjudgment procedure and summary judgment has been granted in many cases.[4] However, none of the cases he cited involved judgment in a list call. Evenwhere the application is undefended, applications for such sale orders ordinarilyproceed by way of a formal proof hearing. That is because s 339 of the PLA involvesthe exercise of a judicial discretion having regard to prescribed statutory factorsrequiring a judgment with reasons. Such applications are generally not suited to ordersin a busy list court. An exception not requiring a formal proof hearing is Bank of NewZealand v Padamati.2[5] In this case, there was time in the list this morning and I have now had anopportunity to review the statement of claim and affidavits. A formal proof hearing isnot required and would add further cost which, if the orders sought are made, wouldultimately reduce Ms Harding's share of the sale proceeds.Background[6] On 8 October 2014, Ms Harding's husband, Mr Paul Harding, purchased theproperty subject to a mortgage to Bank of New Zealand (BNZ). The property is aresidential unit.1 More particularly described in identifier 302876, legal description Unit F15 and Accessory Unit175 and 1/70th share of Accessory Unit 456-457, 459 Deposited Plan 346086.2 Bank of New Zealand v Padamati [2021] NZHC 45.[7] On 26 March 2019, Mr Harding was adjudicated bankrupt by order of thisCourt on the application of the Commissioner of Inland Revenue.[8] On or about 10 September 2019, Mr Harding advised the Assignee that he hadintended to jointly purchase the property with his wife but as she was unemployed atthe time BNZ required the property to be solely registered in Mr Harding's name. TheAssignee was informed that Ms Harding had intended to be a co-owner of the propertyand that she contributed to the mortgage and other expenses. The extent to whichMs Harding contributed to the mortgage and other expenses appears to be limited tothe last two years. In any event, the Assignee has determined that Mr Harding held ahalf share in the property on trust for Ms Harding and beneficially retained the otherhalf for himself.[9] On 28 May 2020, the Assignee acknowledged to Ms Harding that she wasbeneficially entitled to a half share in the property.[10] The Assignee has identified the half interest in the property as Mr Harding'sonly asset of material and realisable value. Inland Revenue has filed claims in thebankrupt estate totalling $487,242.36 of which $89,761.48 is a priority sum. If theAssignee's half interest in the property is realised, it will be insufficient to cover theentirety of the bankrupt's debts. The property has a current capital value of $340,000.As at 31 March 2022, the debt to BNZ secured by the mortgage was $240,137.41.[11] On 11 April 2022, the Assignee took transmission of legal title to the property.[12] As far as the Assignee is aware, Ms Harding is in sole occupation of theproperty; Mr Harding is in prison.[13] The documents were also served on BNZ on 16 May 2022. BNZ has not takenany steps in the proceeding. No other party has an interest in the property that may beaffected by the granting of the application. Accordingly, all interested parties havebeen served as required by s 341(2) of the PLA.Legal principles[14] Under s 339 of the PLA, the Court may make, in respect of property owned byco-owners, an order for the sale of the property and division of the proceeds amongthe co-owners.[15] In considering an application under s 339, the Court must have regard to thefollowing factors set out in s 342:(a) the extent of the share in the property of any co-owner by whom, or inrespect 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 theorder, in comparison with the hardship that would be caused to anyother person by the making of the order;(e) the value of any contribution made by any co-owner to the cost ofimprovements to, or the maintenance of, the property; and(f) any other matters the Court considers relevant.Analysis[16] In terms of the statutory factors, Ms Harding has a half share in the property,which is a residential unit in suburban Auckland. Ms Harding is the sole occupantgiven Mr Harding's imprisonment, but I accept it may be their family home.Ms Harding has made financial contributions to BNZ since August 2021.[17] Even so, on the basis of the evidence set out in the affidavits in support,particularly the affidavit of Ms Naicker, I am satisfied that the statutory factors weighin favour of the orders sought. This is particularly because:(a) Ms Harding has not opposed the Assignee's claim.(b) Since May 2020, the Assignee has attempted to negotiate withMs Harding and has offered her the opportunity either to purchase theAssignee's half share or to agree to sell the property on the open market.For two years, the Assignee has granted Ms Harding multipleextensions of time. Even allowing for COVID-19 disruption,Ms Harding has been given reasonable opportunity to avoid a Courtordered sale. When the Assignee's representative explained toMs Harding on 6 April 2022 that the Assignee would be takingtransmission of title and enquired as to whether Ms Harding wouldagree to be registered on the title with the Assignee as an equal sharetenant in common, Ms Harding said it was her house and she was notinterested. She then hung up.(c) The hardship that will be caused to the Assignee by refusing the orderoutweighs the hardship caused to Ms Harding by ordering sale.The Assignee has legal duties to Mr Harding's creditors. Sale of theproperty is required to realise the Assignee's half interest for the benefitof Mr Harding's creditor. Ms Harding will receive her share of the netproceeds after costs.[18] The order sought includes a stay for 14 days, as is common in such sale orders,to enable Ms Harding to make an offer to acquire the Assignee's interest.Mr Hindriksen acknowledged that in the circumstances a longer period is appropriate.I consider a stay of 28 days is appropriate to provide Ms Harding with a finalopportunity to purchase (or arrange for the purchase of) the Assignee's half interest inthe property.Result[19] I make orders under s 339 in the terms sought, save for that modification, asfollows:(a) Orders that:(i) the property be sold by public auction with a reserve set at$430,000 under the control and conduct of the Assignee inaccordance with the orders set out below;(ii) the Assignee is authorised to sign any authority to sell,agreement for sale and purchase, memorandum of transfer orother document required to carry into effect the sale of theproperty for and on behalf of Ms Harding;(iii) Ms Harding as occupier is to:(A) maintain the property in good tidy condition up tosettlement;(B) co-operate with the Assignee in the sale and marketingprocess; and(C) permit access to the property as and when required bythe Assignee and/or his appointed real estate agency forthe purposes of photographing and marketing it for sale;(iv) the proceeds from the sale of the property shall be disbursed inthe following priority and manner:(A) in payment of such commission, marketing costs andother sums as are contractually payable to the rest estateagency contracted to sell the property;(B) in payment of other costs of sale, including but notlimited to such reasonable legal costs incurred by theAssignee that are directly attributable to the sale of theproperty, water charges, rates arrears and/or otherapportionments;(C) subject to the order made at paragraph (a)(iv)(D) below,any balance shall be divided equally betweenMs Harding and the Assignee; and(D) from Ms Harding's half share of the net sale proceeds,costs of this proceeding (including those awarded on theinterlocutory application for summary judgment) plusdisbursements as fixed by the Registrar shall bededucted by the Assignee and retained by him.(b) An order that the orders set out in order (a) above be stayed for a periodof 28 days from the date of service of the sealed orders of the Court onMs Harding, to provide her with a final opportunity to purchase (orarrange for the purchase of) the Assignee's half interest in the property.(c) An order reserving the Assignee leave to urgently return to the Courtfor further directions or orders of the Court if the occupier(s) of theproperty do not comply with the above orders or act in a way thatimpedes the sale process.(d) Costs on a 2B basis, together with disbursements as fixed by theRegistrar.________________________________Gault J