BOOL v HAMMOND [2021] NZHC 2749

BOOL v HAMMOND [2021] NZHC 2749 [14 October 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2021-409-000331[2021] NZHC 2749UNDER the Property Law Act 2007IN THE MATTER of the sale of a propertyBETWEEN SUSAN ANGELA BOOLApplicantAND NICHOLA ANNE HAMMOND andKERRY DEAN HAMMONDRespondentsHearing: On the papersCounsel: Z J de Roo for ApplicantJudgment: 14 October 2021JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 14 October 2021 at 3.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] The applicant (Ms Bool), along with her daughter (Mrs Hammond) and son-in-law (Mr Hammond), are registered as tenants in common in unequal shares in aproperty at Rangiora. Ms Bool intends to make an application under s 339 of theProperty Law Act 2007 (the Act) for an order for the sale of the property or,alternatively, that Mr and Mrs Hammond purchase her share at a "fair and reasonableprice". Ms Bool wishes to bring her proceeding by originating application under pt 19of the High Court Rules 2016. A proceeding under s 339 is not one that the High CourtRules contemplate will be brought under pt 19. Ms Bool applies under r 19.5(1) foran order that the Court permit the proceeding to be brought under pt 19.Background[2] In 2010, Ms Bool, Mrs Hammond and Mrs Hammond's then husband(Mr Purdom), purchased a property at 380 Rangiora-Leithfield Road, Rangiora.Ms Bool contributed $100,000 to the purchase price. Mrs Hammond and Mr Purdomcontributed $20,000 and the balance was financed by way of mortgage. The propertywas registered in their joint names with Ms Bool owning a 7/40th share andMrs Hammond and Mr Purdom a 33/40th share.[3] In 2011, the parties entered into a Property Sharing Agreement. It providedthat the parties wished to record their respective interests in the property "in full andfinal settlement of all property claims which each now or hereafter may have againstthe other". The parties were allocated an area defined in a plan attached to the PropertySharing Agreement. Ms Bool's area comprised a granny flat and some surroundingland. It was provided that upon termination of the Property Sharing Agreement or thesale of the property Ms Bool would receive her initial contribution and any increasein value of her allocated area. Mrs Hammond and Mr Purdom were to be responsiblefor payment of outgoings including rates, insurance and maintenance costs. Ms Boolwas to pay her telephone charges and contribute to power. In the event Mrs Hammondand Mr Purdom separated, that would serve as a termination notice under theAgreement in which case there were provisions for the parties to exercise options toacquire the property failing which it was to be sold. There was also provision fordisputes or differences arising between the parties to be resolved by arbitration.[4] In 2012, Mrs Hammond and Mr Purdom separated. A valuation was obtainedin October 2012 of Ms Bool's allocated area and as to any increase in its value sincethe property was acquired in 2010. Ms Bool says that Mrs Hammond and Mr Purdomdid not have the money to pay her what she was then owed. Mrs Hammond thenentered into a relationship and later married Mr Hammond. The share/interest in theproperty owned by Mrs Hammond and Mr Purdom was transferred to Mrs Hammondand Mr Hammond in September 2017.[5] Ms Bool says the parties began to market the property for sale. When thisoccurred is not clear. It then became evident there was a significant issue with theearth bricks used in construction which were failing and needed to be replaced.Ms Bool says this requires the property to be demolished down to its foundations.Mr and Mrs Hammond have attempted to resolve this problem by seekingcompensation from the Waimakariri District Council. Ms Bool deposes they haveobtained a determination from the Ministry of Business Innovation and Employmentthat the Waimakariri District Council should not have issued a Certificate of CodeCompliance for the property, they have attempted to negotiate a settlement with theWaimakariri District Council without success and sought media coverage of the issue.[6] There were periods in 2018/2019 when the parties were not living on theproperty for different reasons, but I understand they have now returned. Ms Bool saysthat her relationship with Mrs Hammond has broken down and cannot be repaired.She sets out grievances in her affidavit that affect her living conditions. She says thatshe contributed all the money she had to the property and that on a pension she doesnot have enough money to move into comfortable accommodation elsewhere.[7] Mrs Hammond's present stance is said to be that if the property was sold itwould be on an as-is basis and the sale price would not fetch enough to repay themortgage. Ms Bool considers the property could be sold for more than expectedbecause of the strong market. Ms Bool also complains about the amount that issecured by the mortgage and says this indicates that Mr and Mrs Hammond have eitherminimised their loan payments or obtained further loans against the security of theproperty.[8] Mrs Bool says that she wants to receive the money she is entitled to as a co-owner and leave the property as soon as practically possible and has no preferencewhether the property is sold on the market or purchased by Mr and Mrs Hammond.Importantly, she says she realises she is entitled under the Property Sharing Agreementto her $100,000 contribution and the increase in value of her share of the property.The principles[9] Rule 19.5(1) of the High Court Rules provides:The court may, in the interests of justice, permit any proceeding not mentionedin rules 19.2 to 19.4 to be commenced by originating application.[10] Resort to r 19.5 is to be "exceptional rather than so common place that itbecomes the rule that leave is granted".1 The overarching test is whether it is in theinterests of justice that a proceeding be allowed to be brought under pt 19. Theinterests of justice means that the Court must secure the just, speedy and inexpensivedetermination of the proceeding. However, it is clear that usually it will not beappropriate to grant leave to bring a proceeding under pt 19 when there is anappropriate and efficient alternative available.2[11] In Hong Kong and Shanghai Banking Corp Ltd v Erceg, Asher J said:3These cases show that the type of proceeding suited to the originatingapplication procedure is a straightforward application, not requiring detailedpleadings or interlocutory orders for its fair resolution. Such a type ofproceeding tends to be an application under a specific statutory provision,where the issue that arises can be clearly defined, and the issues confined. Theprocedure is not well suited to the determination of substantive rightsinvolving the application of common law doctrines as distinct from statutorytests. It is not well suited to cases involving multiple parties, and cases wherethere is the possibility of cross claims or counterclaims.[12] The decisions of the Court dealing with applications to bring proceedingsunder s 339 by originating application go both ways.4 Close attention must be paid to1 Solar Bright Ltd v Martin [2019] NZHC 300 at [18].2 Hong Kong and Shanghai Banking Corp Ltd v Erceg (2010) 20 PRNZ 652 (HC) at [20].3 Hong Kong and Shanghai Banking Corp Ltd v Erceg, above n 2, at [25].4 See for instance Casbolt v Harman [2020] NZHC 1354 and Ling v Liu [2021] NZHC 1810 whereleave to commence such proceedings under pt 19 was refused and Chiswell v Cunynghame [2020]NZHC 1651 and Gallagher v Grant [2021] NZHC 1907 where leave was granted.the facts of each case, the issues that may arise, the complexity of the facts and issues,and the course the proceeding is likely to take on its way to a hearing.5 In Clarkson vClarkson, Cooke J put the matter this way:6[17] When decisions are made on the most appropriate procedural pathwayfor a proceeding the Court should focus on what the issues in dispute in theproceedings seem to be, and the most appropriate procedural pathway fordetermining them .Discussion[13] The issue I must decide is whether, in the circumstances of this case, anddespite the expectation in the High Court Rules that a proceeding for orders unders 339 of the Act will be brought as an ordinary proceeding under pt 5, leave shouldnevertheless be granted in the interests of justice to permit Ms Bool's proposedproceeding to be commenced as an originating application under pt 19.[14] Counsel for Ms Bool argues this case is exceptional because, unlike manyapplications under s 339, the ownership status and contributions of the parties areclearly set out in the Property Sharing Agreement and the substantive dispute betweenthe parties is as to:(a) whether the property should be sold; and(b) if not sold, then the amount Mr and Mrs Hammond should pay topurchase Ms Bool's share.[15] It is submitted that the determination sought is straightforward, the issues arelimited and there is no requirement for full pleadings for the issues to be understood.Counsel submits that it is unlikely any cross-application will be filed by Mr and MrsHammond but if it was to be made it would likely be:(a) that the property would not fetch a high value if sold due to itsconstruction issues; and5 Gallagher v Grant, above n 4, at [15].6 Clarkson v Clarkson [2020] NZHC 2211.(b) as to the value of Ms Bool's share.[16] I do not agree with counsel's assessment that this is a straightforward case withlimited issues. The evidence that has been filed identifies factual issues about whichthere is likely to be substantial dispute. These include, but are certainly not limited to,the nature of the arrangements agreed between the parties following the separation ofMrs Hammond and Mr Purdom, what was agreed as to the amount (if any) owed toMs Bool at that time, the reasons why Mr Purdom's interest was transferred toMr Hammond and why the property was not sold immediately.[17] It appears from Ms Bool's evidence and counsel's submissions there is anassumption that Ms Bool has an entitlement to payment from Mr and Mrs Hammondunder the Property Sharing Agreement. As noted, Ms Bool says she is entitled to hercontribution of $100,000 and the increase in value of her 7/40th share "under theAgreement". It is certainly not clear on what basis Mr Hammond can have anyobligation under an agreement to which he is not a party, but whether he has or notmay depend upon the arrangements made by the parties following the separation ofMrs Hammond and Mr Purdom. What those arrangements were is unclear. However,more fundamentally, if Ms Bool has an entitlement to payment "under the Agreement",then she may recover the amount owing in a claim based on breach of contract andhas no need to resort to s 339. Furthermore, in that instance, any disputes ordifferences arising should be resolved by arbitration.[18] Not only is there the potential for difficult legal issues to arise relating to theapplication of the Property Sharing Agreement, but it is apparent that there will bemuch disagreement between the parties as to whether it is appropriate to make ordersunder s 339 at all and, if so, upon what terms.[19] There is also the real potential for cross-claims to be made against Ms Bool.For instance, Mrs Hammond has asserted the Property Sharing Agreement is "null andvoid" with the consequence that Ms Bool is liable for costs incurred in respect of theproperty which, although unspecified, might include rates and insurance and costsincurred in pursuit of the claim against the Council.[20] In my view, there is a clear need for the discipline of formal pleadings in thiscase. As there is likely to be a lively contest between the parties over a range of bothfactual and legal issues, I consider it is inevitable that discovery will be required andinterlocutory applications will be made. I consider, also, that there are likely to bematters arising where it will not be appropriate that evidence be given by affidavit andthe cross-examination of witnesses will be required.[21] I have not disregarded the fact that Ms Bool says she is suffering hardship andthe situation between her and Mr and Mrs Hammond needs to be resolved as promptlyas possible. In my view, this is a factor in considering where the interests of justicelay. However, adopting a pared procedure in the hope it will lead to a promptresolution may ultimately prove counter-productive. There are other options toachieve a speedy resolution in appropriate cases. Importantly In Hong Kong andShanghai Banking Corp Ltd v Erceg, Asher J said:7While the types of proceedings where the originating application procedurecan be used as of right under r 19.2 have been expanded, and can include thedetermination of substantive personal and property rights, this expansion doesnot create a carte blanche to commence any urgent matter by way oforiginating application. If a party wishes to obtain an urgent hearing and atruncated procedure in such a circumstance, it should file a standardproceeding in the usual way and seek priority, or allocation to the Fast Track,or some other step within the ambit of the standard procedure that will reducetime limits. A party should not treat the originating application procedure asa shortcut for urgent cases.Result[22] For the reasons set out above, the application to commence this proceeding byway of originating application under pt 19 High Court Rules is refused.[23] There shall be no order as to costs._______________________O G PaulsenAssociate Judge7 Hong Kong and Shanghai Banking Corp Ltd v Erceg, above n 2, at [26].Solicitors:Weston Ward & Lascelles, Christchurch