Ryan v M & E Ryan & Sons Limited [2022] NZHC 2110 (25 August 2022)

Last Updated: 18 October 2022

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE

CIV-2021-406-000038 [2022] NZHC 2110

BETWEEN	ANTHONY JOHN GUBBINS RYAN and MARIA ELIZABETH RYAN Plaintiffs
AND	M & E RYAN & SONS LIMITED Defendant

Hearing:	31 May 2022
Appearances:	T G Stapleton QC for Plaintiffs M Radich for Defendant
Judgment:	25 August 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 25 August 2022 at 11.30 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RYAN v M & E RYAN & SONS LTD [2022] NZHC 2110 [25 August 2022]

Table of Contents

Para No

Background	[6]
Property Law Act	[36]
Summary judgment principles	[41]
The plaintiffs’ submissions	[46]
MER’s submissions	[52]
Analysis	[57]
The extent of each party’s share in the property	[58]
Nature and location of the property	[59]
The number of other co-owners and the extent of the shares Hardship to the applicant by the refusal of the order in comparison to the hardship to any other person by the making of the order Contributions made by co-owners Any other matters the Court considers relevant	[60]
	[61]
	[68]
	[69]
The Agreement	[70]
Post-Agreement conduct	[82]
Taxation and compensation	[86]
My conclusion	[95]
Result	[96]

• [1] This is a plaintiffs’ summary judgment application seeking orders under s 339(1)(b) of the Property Law Act 2007 for the division of land that is co-owned by the plaintiffs and the defendant in unequal shares, along with ancillary orders consequent upon the division of the land.¹ The main protagonists are brothers, and the litigation follows the breakdown of family relationships.

• [2] The land in issue is near Seddon and is planted in vineyards. The land is comprised in five titles, with the plaintiffs and the defendant being the registered proprietors of undivided 77.857 per cent and 22.143 per cent shares in the land respectively. Each party has the exclusive occupation/use of an area of the land, but those areas do not reflect their registered interests. It is this fact that is the genesis of the issues arising in this proceeding.

• [3] The plaintiffs seek orders to divide the land according to the parties’ respective areas of occupation on the basis this will give effect to an agreement between the parties of 25 May 2009 by which the defendant acquired its interest in the land.

• [4] The defendant does not oppose a division of the land per se, but says that what the plaintiffs are seeking will result in it receiving a 15.03 per cent divided share of the land, rather than its registered 22.143 per cent undivided share and the transfer of considerable value to the plaintiffs at its expense. It says the plaintiffs must pay compensation for what it will lose. The defendant also argues the case is unsuitable for summary judgment due to the lack of taxation and valuation advice, the many material factual disputes that exist, and in circumstances where the Court exercises a broad remedial discretion which requires a level of factual and legal analysis that only a trial offers.

• [5] The ANZ Bank, which holds a mortgage over the land, and the Marlborough District Council were served but did not ask to be heard on the application.

1. The balance of the orders sought relate to the creation or modification of easements, modification of infrastructure for the supply of water and the restructuring of borrowings on the security of the land.

Background

• [6] The narrative begins with Lillian June Ryan (June) and Anthony Ryan (Tony) who were a married couple and farmers throughout their married lives. They had nine children together. Anthony Ryan (John) and Christopher Ryan (Chris) are children of Tony and June. Tony died in 1990. June continued to farm after Tony’s death.

• [7] John and his wife, Maria Ryan (Maria) are the trustees of Sedgemere Trust (the Trust), which was settled on 5 December 2003. June was a trustee of the Trust until 20 September 2018 when she was replaced by Maria. John, Maria and their children are the beneficiaries of the Trust.

• [8] The defendant, M & E Ryan & Sons Ltd (MER), is a company incorporated by June and Tony in 1957 and the entity through which they (and June after Tony’s death) conducted farming operations. Chris is now the sole director of MER, and the shares in MER are owned by Chris and his wife, Diane Ryan (Diane). June was a director of MER until 19 April 2018 and a shareholder in MER until 19 July 2019, when she transferred her shares to Chris.

• [9] Tetley Brook Estate Limited (TBE) is an incorporated company which is wholly owned by John and Maria as trustees of the Trust. John has been a director since TBE was incorporated in 2005. June became a director at the same time, and remained a director until September 2018, when Maria replaced her.

• [10] In 2000, June purchased a property known as Sedgemere for $650,000. It was then 204.5686 ha of rolling barren land, with no irrigation and limited capacity for carrying stock. Soon after it was purchased, June transferred a half share of the property to John for $296,000, which was recorded as a debt owing by John to June.

• [11] June tells how grape growing developed in the area, resulting in the conversion of grazing land into vineyards. Through her efforts, June was able to bring irrigation to Sedgemere and develop it into vineyards. The majority of the initial development costs were funded through loans from MER.
• [12] The development of the land resulted in a substantial increase in its value. There is evidence that in 2008 the land was valued at more than $32 million. Chris says the vineyards are now worth $70 million, but John does not accept that. It is a feature of the case that neither party put before the Court registered valuations of the land.

• [13] Based on professional advice, June and John decided to transfer Sedgemere into a trust. On 5 December 2003, the Trust was established. Sedgemere was transferred to John and June as trustees of the Trust in March 2004.

• [14] In March 2005, June and John were registered as proprietors of two further parcels of land which took the total area of the Trust’s land holdings to 270.1723 ha.

• [15] By deed of lease dated 28 March 2006, the Trust leased the land and improvements to TBE under a long-term lease.

• [16] In May 2007, the Trust acquired a further 18.2234 ha of land which was not developed as vineyards.² The Trust’s land holdings as at May 2007 were contained in three titles, specifically Title Identifiers 172322, 172323 and 292353.

• [17] Beginning in around 2005, there were discussions regarding introducing Chris to the vineyard business by allowing him to acquire a share of the land. June and John took professional advice about this from the Trust’s lawyers and accountants.

• [18] In October 2006, June and John entered into a building contract for a new house to be built on the land for Chris and Diane. The work was completed in around June 2007. Chris and Diane moved into the house with their family, and they continue to reside there.

• [19] There were various proposals considered as to how Chris would be introduced to the vineyard business. Based on the advice received, it was decided that Chris would be appointed a director of MER, June would transfer the majority of the shares

2. This was referred to by Mr Stapleton as the “additional land” and he submits it should not be taken into account in determining MER’s proposed divided share of the land. Whether this is so or not does not alter my conclusions and it is not necessary for me to determine this issue.

in the company to him, and MER would acquire a share of the land and other assets from the Trust. Important considerations included how this could be achieved without the Trust attracting a liability for capital gains tax as well as ensuring MER and TBE could function independently of each other. There would be work required to achieve this, which included irrigation separation work, building boundary fences and a shed on the land to be occupied by MER. Another important consideration was the need for the land to be used as security for the financial obligations of both the Trust and MER.

• [20] June’s evidence in relation to these matters was as follows:

We were advised that we needed to hold the land as tenants in common in unequal shares as if we were to subdivide the land and sell it to MER we would incur capital gains tax. We were all aware of the tax issue and for this reason agreed that Christopher would contribute $604,000 and would receive

22.143 percent of Sedgemere which would be owned by the three of us (Christopher through MER and John and myself as trustees of the Sedgemere Trust) as tenants in common in unequal shares. John and I on the one hand and Christopher on the other hand wanted to be able to operate to some extent independently so we agreed that an area of the overall property would be available for the use and occupation of Christopher and his family. There was developed vineyard on that area and Christopher and Diane would be able to harvest the grapes from that area and use the income for their own purposes. The balance of the land would be leased by John and me as trustees to Tetley Brook Estate Limited (TBE), an operating company for the vineyard, and we would be able to use the income from that part of the vineyard land for our own purposes.

...

• [21] What eventuated was an agreement of 25 May 2009 (the Agreement), between June and John as trustees of the Trust, TBE, and MER, pursuant to which, amongst other things, MER purchased a 22.143 per cent share in the land as well as improvements on an area of the land of which MER was to have exclusive occupation.

• [22] I set out the relevant terms of the Agreement below:

Background

1. Sedgemere Trust owns the land described in Certificates of Title Identifiers 292353, 172322 and 172323 including improvements other than the improvements owned by TBE (“the Property”).

2. TBE owns all vineyard improvements, plant and equipment, water rights, water company shares and developments for the vineyard

including vines and structures, irrigation and wind machines situated on the Property.

100. Sedgemere Trust has agreed to transfer an undivided 22.143% share in the Property to MER and allowing MER to have exclusive possession of that part of the Property shown on the attached aerial photograph marked “A” and on the planting plan marked “B” being the area outlined in pink (“the MER Land”).

4. Sedgemere Trust will retain ownership of an undivided 77.857% in the Property and have the exclusive possession of the balance of the Property which it will lease to TBE (“the TBE Leased Area”).

5. TBE will sell to MER all the vineyard improvements situated on the MER Land together with all water rights, shares, certain plant and equipment and the house occupied by Chris Ryan and his family, as described in Schedule 1.

6. This agreement records the terms to give effect to the parties intentions herein.

Agreement

1. Sale of land, vineyard improvements, plant and equipment

• 1.1 MER will purchase an interest in the Tetley Brook property from Sedgemere Trust as to an undivided 22.143% share as tenants in common with a right to exclusive possession of the MER Land. MER will furthermore purchase from TBE the improvements situated on MER’s Land and all water company shares, certain plant, vehicles and equipment as described in Schedule 1 on the following terms and conditions:

1. The purchase price will be $6,655,000.00 plus GST (if any) apportioned as follows:

1. Sedgemere Trust $2,851,000.00 plus GST (if any); and

2. TBE $3,804,000.00 plus GST (if any).

2. The purchase price will not be paid in cash but will be satisfied as follows:

1. Sedgemere Trust owes MER the sum of $1,716,000.00 which will be set off against the amount owing under clause 1.1ai;

2. TBE owes MER the sum of $3,076,000.00 which will be set off against the amount owing under clause 1.1aii.

3. MER will take over the liability for 22.143% of the ANZ National Bank debt as at 1 May 2009 (as will be adjusted by the inclusion of income for the year ended 30 April 2009).
4. The remaining balance is to be left owing as an interest free loan from Sedgemere Trust to MER. $604,000.00 of that loan amount will be repaid by MER to Sedgemere Trust if and when the title is subdivided and titles transferred to Sedgemere Trust and MER respectively. Any balance between $604,000.00 and the calculated remaining balance after taking into account the 2009 harvest income is to be adjusted via June Ryan’s current account with MER.

100. The transfer of the assets from Sedgemere Trust and TBE to MER will take place on 1 May 2009 at which date risk will pass to MER for those assets.

4. If the purchase price does not meet Inland Revenue Department “market value” requirements the purchase price will be adjusted to meet that requirement if necessary.

5. The purchase price is subject to adjustment after the grape harvest and income from the same being assessed. Such income to have the effect of reducing ANZ National Bank debt and the adjustments referred to in this clause 1.1.

6. (i) The parties agree that the transaction being the sale by TBE to MER of the improvements constitutes the supply of a taxable activity as a going concern within the meaning of section 11(1)(m) of the Goods & Services Tax Act 1985.

(ii) If any Goods and Services Tax shall at any time be assessed or become chargeable in respect of any supply, any such tax shall deem to be an instalment payment under this agreement and shall be payable by the purchaser upon demand by the vendor.

2. Lease of TBE Leased Area (77.857% of the land)

• 2.1 Sedgemere Trust will lease to TBE and TBE will accept a lease of the TBE Leased Area on the following basis:

1. Term: the lease will be for a term of 20 years commencing on 1 May 2008.

2. Rent: Rent for the first five years will be a market rental to be assessed by Winstanley Kerridge Limited. Such rent will be plus GST payable six monthly in arrears.

• 2.2 Sedgemere Trust may review the rent at five yearly intervals and a ratchet clause will not apply.

• 2.3 TBE will pay the following outgoings:

1. local authority rates and levies;

2. charges for water, electricity, telephone and other utilities or services; and
3. any taxes on the Property or TBE’s use of the Property excluding Sedgemere Trust’s income tax or any tax on capital or Sedgemere Trust’s assets.

Where any outgoings are not assessed separately then TBE will pay a fair share of those outgoings for the Property in which the Property forms part.

• 2.4 A formal deed of lease will be prepared incorporating the provisions of this agreement.

• [23] On 24 June 2009, John and June, as trustees of the Trust, and MER were registered as the proprietors of the land as tenants in common in unequal shares. It appears that from after 1 May 2009, the parties have operated their own vineyard operations substantially independently of each other. Reflecting this, the land occupied by MER is called Redgate, and the land occupied by the Trust is called Sedgemere.

• [24] On 7 April 2015, the Trust’s accountants, Winstanley Kerridge, advised Maria that the land could be subdivided without incurring any tax liability. John arranged for surveyors to visit the land and prepare a scheme plan for its subdivision. On 11 May 2015, an application for resource consent was made by TBE to the Marlborough District Council for the subdivision of the land into five separate lots and titles. Two of the lots related to the land exclusively occupied by MER. The remaining three lots was the land leased by the Trust to TBE.

• [25] The resource consent was granted by the Marlborough District Council on 10 June 2015. Easements were organised to comply with the conditions of consent, and, on 23 February 2016, the relevant titles and lots were registered with Land Information New Zealand. These were Title Identifiers 696924, 696925, 696926, 696927 and 696928.

• [26] There is a dispute as to the extent of MER’s knowledge and involvement in these activities. However, no objection was raised by MER to the subdivision, and it assented to the granting of the easements necessary to comply with conditions of the consent. Also, June, who was still a director of MER at the time, had three payments made by MER to the Trust amounting to $604,000 in repayment of the interest free loan made by the Trust to MER under cl 1.1biv of the Agreement. That interest free

loan was stated to be repayable “if and when the title is subdivided and titles transferred to Sedgemere Trust and MER respectively”. The payments were made on 2 December 2015 ($234,000), 12 September 2016 ($230,000), and 4 August 2017 ($140,000).

• [27] In a letter of 19 May 2016 addressed to the Sedgemere Trust, TBE and MER, the Trust’s solicitors, Gascoigne Wicks, wrote to the parties about the “need to give effect to the [Agreement]” stating:

Currently June and John hold a 77.857% share of all of the titles as trustees of the Sedgemere Trust. M & E Ryan & Sons Limited holds a 22.143% share.

My understanding from the agreement is that Lot 4 and Lot 3 DP 487408 (CT’s 696926 & 696927) are to be transferred to [MER], while the remaining titles (CT’s 696924, 696925 and 696928) are to be transferred to the trustees of the Sedgemere Trust.

Andrew Diack from ANZ is shortly to send through bank documents so that we can complete the transfer of title. He has indicated that the bank will take a new mortgage over CT 696928 (Lot 5 DP 487308 and Lot 1 DP 372290) to be held by Sedgemere Trust) with a priority sum of $20m. ANZ will also take a mortgage over CT 696927 (Lot 4 to be held by [MER]) with a priority sum of $5m. Security will be released from the other titles and the cross guarantee between the entities will be released.

• [28] It is acknowledged that Chris received this letter, but he says he did not appreciate its significance, paid no attention to it and did not before or after agree that MER would divest itself of its 22.143 per cent share of the land.

• [29] In May 2017, as the then trustees of the Trust, John and June resolved:

To take all steps necessary to effect immediate and final implementation of its arrangements and agreements with MER, including

(a) the transfer of sole ownership of the MER land to MER

(b) the transfer of sole ownership of the balance lands to the Trust

(c) the making of any necessary financial adjustments and the obtaining of any appropriate financial reimbursements in respect of outgoings

(d) the refinancing and resecuring by MER and the Trust of their respective financial obligations.

• [30] Steps were taken to implement these resolutions. On 14 July 2017, Gascoigne Wicks wrote to MER purporting to summarise the terms of the Agreement and referred

to certain matters that needed to be resolved to complete transfers. Chris says he never asked for this advice and did not know why it was sent. However, on 10 August 2017, June signed Authority and Instruction forms that were required to: register the discharge of the existing ANZ Bank mortgage over the five titles; effect the transfer of the Trust’s 77.857 per cent interest in titles 696926 and 696927 to MER; transfer MER’s 22.143 per cent interest in titles 696924, 696925 and 69628 to the Trust; and register the Trust’s new all obligations mortgage to the ANZ Bank for a priority sum of $20 million plus interest over 696928.

• [31] Concerned about developments, Chris says he instructed Radich Law to act for MER. There was correspondence between Radich Law, and the Trust’s solicitors, Hardy-Jones Clark, referring to the Agreement and the subdivision, and for the need for an easement for the conveyance of water which had been registered against the MER land to be removed. On 6 November 2017, Radich Law sent Hardy-Jones Clark a draft agreement to surrender the easement for its consideration. On 10 November 2017, Radich Law advised that as soon as the “easement agreement” was signed, “we ought to be in a position to settle”. There was also further correspondence concerning monetary adjustments to be made upon settlement.

• [32] It appears that to this stage matters were proceeding along the lines that the land would be divided upon the basis the plaintiffs now propose. However, that all changed on 30 November 2017, when Radich Law wrote to Hardy-Jones Clark, explaining that a problem had been identified as follows:

Another issue has arisen. The original Agreement of 2009 provided for the company to receive a share of 22.143% of the overall assets of the Trust. It now turns out that the land allocated is more like 15%. Chris has raised this with John and John has told him to get over it. The matter has to be addressed. Something seems to have gone wrong.

• [33] Mr Chris Clark, a partner in Hardy-Jones Clark, responded to Radich Law’s 30 November 2017 letter by email on 12 December 2017, stating the plaintiffs’ position on the issue that had been raised. He wrote:

Peter, I refer to your email of 30 November, which somewhat surprisingly raised for the first time the suggestion that the land and other assets to be transferred to the sole ownership of MER have not been correctly identified.

Since receiving your letter I have researched the background and in doing so have had discussions with John Ryan and Peter Forrest, who as you will see are copied with this email. John and Peter’s recollections are similar, that the division of assets was agreed on the ground first, that agreed values were attributed to all of the assets being divided, and that WK then utilised the agreed division of assets and the agreed values to calculate the overall % of value (not land area) that was agreed to pass to MER. The MER land included two vineyard blocks which were superior to the balance and which had a higher value attributed accordingly.

It is not open to MER to now seek to recalculate the land split, as you appear to suggest.

• [34] The parties have been engaged in further correspondence, and attended mediation, but have been unable to reach a resolution.

• [35] Finally, by way of context, I should mention the family dynamic against which these events have played out. While formerly the family relationships were close and strong, after 2009 they began to fracture as a result of disputes between June on the one hand, and John and Maria on the other. June says John and Maria began to make noises about “booting me out of Sedgemere”, and in 2018, John made an application to remove June as a trustee of the Trust. That litigation was settled but without restoring good relations. In her affidavit, June considers that by this claim, John has “upped the ante on Christopher” and that she does not support the position he has taken. June says:

I am very clear about what I agreed to and what I did not agree to when I was making these arrangements for my two sons. These are the facts:

(a) MER has always had an undivided interest as to 22.143 percent of the whole of Sedgemere land. It has, separately, had the right to exclusive possession of a part of Sedgemere but that area of possession is not equivalent to its 22.143 percent interest in the whole of the property.

(b) There was never any agreement to which I was party in either capacity that MER’s ownership interests in the Sedgemere land were limited to its area of occupation.

(c) The 2015 subdivision was undertaken by TBE and under the direction of John. There was no agreement by MER to relinquish its 22.143 undivided interest in the land in 2015 or at any other time for no additional compensation.

Property Law Act

• [36] A court may order the sale or division of a property under s 339 of the Property Law Act 2007. Section 339 provides:

339 Court may order division of property

(1) A court may make, in respect of property owned by co-owners, an order—

(a) for the sale of the property and the division of the proceeds among the co-owners; or

(b) for the division of the property in kind among the co-owners; or

(c) requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.

(2) An order under subsection (1) (and any related order under subsection (4)) may be made—

(a) despite anything to the contrary in the Land Transfer Act 2017; but

(b) only if it does not contravene section 340(1); and

(c) only on an application made and served in the manner required by or under section 341; and

(d) only after having regard to the matters specified in section 342.

(3) Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.

(4) A court making an order under subsection (1) may, in addition, make a further order specified in section 343.

(5) Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).

(6) An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—

(a) the Land Transfer Act 2017; or

(b) the Deeds Registration Act 1908; or

(c) the Crown Minerals Act 1991.

• [37] The plaintiffs have standing to make this application as co-owners of the land under s 341(1)(a) of the Act.

• [38] Section 342 sets out mandatory relevant considerations in any assessment of an application for an order under 339, which are as follows:

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.

• [39] Further powers of the Court are provided in s 343 as follows:

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:

(a) requires the payment of compensation by 1 or more co-owners of the property to 1 or more other co-owners:

(b) fixes a reserve price on any sale of the property:

(c) directs how the expenses of any sale or division of the property are to be borne:

(d) directs how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied:

(e) allows a co-owner, on a sale of the property, to make an offer for it, on any terms the court considers reasonable concerning—

(i) the non-payment of a deposit; or

(ii) the setting-off or accounting for all or part of the purchase price instead of paying it in cash:

(f) requires the payment by any person of a fair occupation rent for all or any part of the property:

(g) provides for, or requires, any other matters or steps the court considers necessary or desirable as a consequence of the making of the order under section 339(1).

• [40] The leading authority is Bayly v Hicks.³ The Court of Appeal held that s 339 confers a broad discretion to make orders. The discretion is limited by s 339(1), but otherwise turns on whatever factors appear to be relevant. The legislation is remedial with no intention to unduly cramp its scope and efficient operation. The Court said a Judge should consider what is “the most just and practical way through the impasse before the court” which may mean giving directions different from those sought by the parties.⁴

Summary judgment principles

• [41] A plaintiff’s application for summary judgment is brought pursuant to r 12.2(1) of the High Court Rules 2016. It provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

• [42] An oft cited summation of the correct approach to summary judgment applications is contained in Krukziener v Hanover Finance Ltd as follows:⁵

[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, 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 normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in

3. Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 referred to in Robertson v Robertson [2020] NZHC 2272, (2020) 21 NZCPR 875 at [23]; and Hayes v McAuley [2022] NZHC 1386 at [39].

⁴ At [32]-[33].

⁵ Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.

credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently 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 of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel [1987] NZCA 193; (1987) 1 PRNZ 84 (CA).

• [43] The summary judgment procedure is not well-suited to applications under s

339.⁶ In Coffey v Coffey, Associate Judge Osborne considered several authorities under s 339.⁷ He noted that a review of the cases where summary judgment had been granted “does not lead to a conclusion that summary judgment will frequently be available in relation to contested s 339 applications”.⁸ After discussing the cases further, he said:⁹

There will not often be such clear concessions or indisputable facts as to effectively dictate to the Court exactly how the discretion under s 339 of the Act (or in relation to further orders under s 343) should be exercised. The four cases illustrate that there will be situations where such clarity of appropriate outcome occurs. The question I must decide is whether there is such clarity of appropriate outcome in this case. This calls for a careful consideration of the fact relating to the parties’ co-ownership of the property.

• [44] Anderson v Anderson involved a summary judgment application for an order of sale under s 339 of a property owned jointly by siblings.¹⁰ Associate Judge Bell noted that proceedings under s 339 require the Court to exercise a discretion, taking into account a variety of factors which may carry different weight according to the circumstances of each case. He said:¹¹

Because the court’s powers to grant relief under s 339 require a range of matters to be considered, as there is a range of potential outcomes, to grant summary judgment the court has to be satisfied on the information provided on the summary judgment application that there can be only one possible outcome. If other possible outcomes remain arguable, the Court cannot grant summary judgment. The plaintiff must therefore negate all outcomes except that sought in the statement of claim.

• [45] For my part, I would not go so far as to say that the plaintiff seeking relief by way of summary judgment under s 339 must negate all possible outcomes except that

⁶ Bayly v Hicks, above n 3, at [31].

⁷ Coffey v Coffey [2012] NZHC 1765.

⁸ At [21].

⁹ At [45].

¹⁰ Anderson v Anderson [2020] NZHC 788; (2020) 21 NZCPR 22.

¹¹ At [9] citing Carey-Venable v Carey [2016] NZHC 2646, (2016) 18 NZCPR 289 at [6].

sought in the statement of claim. Nevertheless, given the Court’s broad discretion, the variety of factors to be taken into account and the wide variety of circumstances in which orders are sought, summary judgment will frequently not be appropriate in cases for orders under s 339.

The plaintiffs’ submissions

• [46] While the plaintiffs bring their application under s 339, their approach is founded in the law of contract. Put simply, the plaintiffs’ case is that the orders sought are necessary to give effect to what was agreed between the trustees of the Trust and MER under the Agreement.

• [47] Mr Stapleton QC submits the “critical issue” is the correct interpretation of the Agreement in light of all the undisputed contemporary documents and the parties’ conduct before and after 25 May 2009. He argues that MER’s undivided 22.143 per cent share of the land was calculated on a value not a land area basis and, properly interpreted in accordance with settled principles,¹² the Agreement means that if and when the land was subdivided and titles transferred to the parties, the Trust would receive the lands in titles 696924, 696925 and 696928 as its divided share and MER would receive the lands in titles 696926 and 696927 as its divided share of the property.

• [48] The plaintiffs reject MER’s contention that if the land is divided on the basis they propose, MER ought to receive compensation because, they argue, MER is getting what it is entitled to under the Agreement. Further matters are also relied upon in opposition to MER’s compensation claim. First, that MER has not formulated a claim for compensation since the dispute between the parties was first identified in December 2017. Second, a claim for compensation should be brought by way of counterclaim, and no counterclaim has been filed. Third, that the parties’ financial obligations to each other are as set out in the Agreement and cannot be reopened by a

¹² Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand [2014] NZSC 147, [2015] 1 NZLR 432; Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696; and Restaurant Brands Ltd v QST Ltd [2021] NZCA 680, (2021) 22 NZCPR 815.

claim for compensation which, in any event, is a money claim and time-barred under s 11 of the Limitation Act 2010.

• [49] Mr Stapleton also submitted that as MER does not oppose a division of the land (subject to payment of compensation), it would be appropriate to make the orders sought along with an additional order preserving to the parties their rights in respect to any claim for compensation MER might bring in separate proceedings.

• [50] Insofar as MER argues summary judgment should not be granted because of the absence of valuation and tax advice, the plaintiffs argue that as the financial terms of the parties’ “agreements and arrangements” were made 13 years ago and completed in August 2017 by the payment of the final instalment of the interest-free loan, the making of the orders sought cannot give rise to any tax issues. The plaintiffs also argue the evidence relied upon by MER concerning the possibility that a tax liability may arise is inadmissible because MER’s witness, Hamish Matheson, has not given his evidence in compliance with s 26 of the Evidence Act 2006 and the Code of Conduct for Expert Witnesses in sch 4 of the High Court Rules 2016.

• [51] In response to MER’s submission that a summary judgment application is not appropriate in a case where there are clear factual disputes, the plaintiffs submit the following: the Court has before it all of the relevant documents which speak for themselves; insofar as MER has a different interpretation of the Agreement it is not supported by the undisputed contemporaneous documents or the parties’ conduct; MER’s subjective statements of what it understood the Agreement to mean is not admissible as an aid to its interpretation; and the issues can therefore properly be determined by summary judgment.

MER’s submissions

• [52] MER relies on the authorities that note applications under s 339 are generally inappropriate for summary judgment. It says the Court cannot have the necessary high level of assurance of the outcome contended for by the plaintiffs as the correct one legally, factually and in terms of the statutory criteria. This is because there are genuine and credible disputes about the effect and operation of the Agreement, very

different factual narratives between the parties, and because the plaintiffs stand to gain assets of considerable value at MER’s expense if successful.

• [53] MER does not accept the plaintiffs’ interpretation of the Agreement. MER submits that under the Agreement it acquired two distinct interests in the land. First, a 22.143 per cent undivided interest in the whole land and, second, the exclusive occupation of the MER land (as defined by the Agreement). It says the Agreement does not provide that upon a later subdivision, MER is required to accept for its undivided 22.143 per cent share in the land a 15.03 per cent divided share without the payment of compensation. MER notes that such an interpretation is not required by the terms of the Agreement, nor is it consistent with the fact that it has, under the Agreement, met 22.143 per cent of external debt which the Trust and TBE had secured against the land since 1 May 2009. Further, to the extent the plaintiffs cannot rely upon the Agreement, MER argues there is no other agreement in writing for the disposition of the land as required by s 24 of the Property Law Act 2007, nor any act of part performance of any oral agreement the plaintiffs may contend was entered into for the division of the land subsequent to the Agreement.

• [54] MER submits that for the plaintiffs to succeed on summary judgment there would have to be “no doubt whatsoever” that the Agreement conveyed to MER a divided interest in the land, which is represented by, and equivalent to, the area of land to which it has had exclusive occupation. It contends neither the terms of the Agreement, the contemporaneous documents, nor its conduct supports the outcome the plaintiffs seek.

• [55] MER’s position is that given the hostility that exists between the parties, it does not oppose a division of the land subject to it receiving compensation reflecting the fact the plaintiffs seek to convert MER’s undivided 22.143 per cent share into a 15.03 per cent divided share of the land.

• [56] However, MER also submits that there are many steps that are required before any division of the land can be effected. Most important of these is the need to get tax and valuation advice. MER’s accountant, Hamish Matheson, says that if MER’s ownership interest under the Agreement was limited to the area of its exclusive

occupation, that may have significant tax consequences. He also gives evidence concerning the amount MER would lose based on what he understands is the current market value of the land if it was divided on the basis sought by the plaintiffs.

Analysis

• [57] It is for the plaintiffs to establish that MER has no arguable defence to the making of the orders for the division of the land on the basis sought. In considering this application I am required to have regard to the mandatory considerations set out in s 342. I deal with them seriatim.

The extent of each party’s share in the property

• [58] The parties are the legal owners of 77.857 per cent and 22.143 per cent shares in the land respectively. In the High Court decision in Bayly v Hicks, Wylie J said that the “policy of the statute is to respect property rights while seeking to resolve conflicts fairly”.¹³ He considered that the fact the parties in that case owned equal shares in the subject property was a constraining factor that must form the basis for a partition of the property as, “A division which did not recognise in so far as is practicable their equal shares in the property would be neither fair nor reasonable.” I agree generally with that approach and, in this case, consider that it is for the plaintiffs to establish why, for the purposes of division, the parties’ legal registered interests should not be taken to reflect the underlying beneficial interests in the land.¹⁴

Nature and location of the property

• [59] While neither party placed any emphasis on this consideration, it appears to me that it is significant that the land is planted as vineyards and has already been subdivided into five titles reflecting each party’s exclusive area of occupation. Given the hostility that exists between the parties and the fact each considers it desirable that their affairs be separated, this is a factor in favour of the making of an order for division. It does not address, however, the issue of the terms upon which such a

13. Bayly v Hicks [2011] NZHC 920, (2011) 13 NZCPR 568 at [39] referred to in Robertson v Robertson, above n 3, at [51].

¹⁴ See for instance Murphy v Murphy [2013] NZHC 217, (2013) 14 NZCPR 431 at [39].

division might occur, particularly as it relates to the payment of any compensation claimed by MER.

The number of other co-owners and the extent of the shares

• [60] There is only one other co-owner, MER.

Hardship to the applicant by the refusal of the order in comparison to the hardship to any other person by the making of the order

• [61] The issue of hardship has been considered in several cases. In Holster v Grafton, Fogarty J considered the concept in the context of s 342 and said:¹⁵

[50] “Hardship” is a value laden criterion. It suggests an adverse effect which is of significant impact to the applicant. It has to be read consistent with the policy of the statute which respects property rights of tenants in common, but seeks to resolve conflicts fairly.

• [62] In Bayly v Hicks, Wylie J considered that hardship needed to be considered both in the round and by reference to the partition proposals advanced by the parties.¹⁶

• [63] After discussing the authorities in Coffey v Coffey, Associate Judge Osborne said:

[155] While, mindful of the observations of the Court of Appeal in Morrison, not to limit the concept of hardship in s 342 of the Act to severe suffering or privation, I would not view the term as embracing mere inconvenience or disappointment. Such lesser impacts might fall for consideration under “other matters relevant” under s 342(f) of the Act but do not semantically fall within the concept of hardship.

• [64] Mr Stapleton submits that the plaintiffs will suffer hardship if the orders are not made. He refers to John’s evidence addressing the hardship criterion. In many respects John’s evidence is surprising and unconvincing. He appears to be saying that he was unaware of the legal consequences of the Agreement, such as that MER would legally own 22.143 per cent of the land occupied by the Trust and that until separate

¹⁵ Holster v Grafton (2008) 9 NZCPR 314 (HC).

¹⁶ Bayly v Hicks, above n 13, at [61].

titles are transferred to MER and the Trust respectively, the land secures all debts and liabilities owed to the ANZ. All of this should have been known to him.

• [65] John also says that he and Maria are finding it increasingly difficult to cope with the:

... risk, stress and hardship caused to us and our family by Chris’s and Diane’s refusal to complete the agreed division of the [land] in accordance with the past agreements and subdivision and transfer arrangements.

• [66] MER’s case is that John and Maria are not suffering hardship as they are living a wealthy lifestyle which, they say, was acquired at no cost to them. On the other hand, MER contends it will suffer hardship if the orders are made because “John and Maria will take more land from our family without having to pay for it”, and without recognition for the payments made by MER to the Trust’s and TBE’s borrowings since 1 May 2009.

• [67] I accept that a degree of hardship to both parties exists in remaining locked into an ownership position that is hostile and that it is undesirable for that to continue, particularly in circumstances where the parties have given cross guarantees for each other’s borrowing to the ANZ Bank. However, I consider that to order a division on the basis the plaintiffs seek, which fails to address MER’s claim for compensation may well result in much more significant hardship to MER than will be suffered by the plaintiffs should the orders sought be refused.

Contributions made by co-owners

• [68] John says that both the Trust and TBE have incurred substantial costs improving the land they occupy. He says there has been total development expenditure of $1,379,299 incurred since 1 May 2009. John also says that there has been comparatively little development of the MER land since the Agreement. He exhibits to his affidavit a Google map image of the MER land which notes MER capital investment since the Agreement as an “MER drainage pipe installed after 2009 agreement and included right to convey water through ST land in 2015 subdivision of MER and ST Land” as well as an “MER land workshop built 2010 by MER for MER

land vineyard equipment and machinery”. There is no evidence as to what expenditure MER incurred on these works.

Any other matters the Court considers relevant

• [69] There are several other matters to be considered which I discuss under the headings below.

The Agreement

• [70] While at various stages of his submissions Mr Stapleton refers broadly to the “arrangements and agreements” between the plaintiffs and MER, the primary argument advanced (identified as the critical issue) is that the orders sought are necessary to give effect to the terms of the Agreement. The plaintiffs invite me to find that the Agreement means that in any later subdivision of the land, the parties’ interests would be confined to their areas of exclusive occupation.

• [71] The plaintiffs’ focus on the Agreement as the justification for a division of the land on the basis sought is reflected in Mr Stapleton’s submissions that:

The Plaintiffs’ case is that, properly interpreted in accordance with all the undisputed contemporary documents and the parties’ conduct before and after the Agreement, the parties agreed that the Defendant’s undivided 22.143% share of the [land] was calculated on a value, and not on a land area, basis and that if and when the property was subdivided and titles transferred to the parties, the Plaintiffs would receive the lands in 696924, 696925 and 696928 as their divided share, and the Defendant would receive the lands and 696926 and 696927 as its divided share, of the property.

[And]

The interpretation of the Agreement in light of the contents of all those undisputed contemporary documents in their correct sequence removes any basis for the Defendant’s contentions that the undivided 22.143% share was based on land area, not value, and that if and when the property was subdivided and titles transferred to the parties the undivided share would become the same divided share, and results in the conclusion that there are no real questions to be tried between the parties on those issues.

[And]

Contrary to the Defendant’s analysis, this case is not about an oral agreement for the disposition of land and part performance of that oral agreement, but about the correct interpretation in light of all the undisputed contemporary

documents and the parties’ conduct of a written agreement for the acquisition of an undivided interest in land and the divided interest to be acquired for that undivided interest if and when the property was subdivided and titles transferred to the parties respectively.

• [72] There are difficulties with the plaintiffs’ approach, not least of which is the Agreement is largely silent as to what would happen upon any later subdivision of the land. The disposition of property and division of land between the Trust and MER is only provided for to the extent that the interest-free loan from the Trust to MER would be repaid “if and when the title is subdivided and titles transferred to Sedgemere Trust and MER respectively”. Importantly, there is nothing in the Agreement that states that the land would be later divided between the parties on the basis the plaintiffs now contend. There is no mention as to how any later subdivision would be effected and how legal rights would be recognised. This is not surprising given the good relations between the parties at that time, the fact they had been advised the land could not for a number of years be divided without incurring a liability for tax, and the purpose of the Agreement as a contract of acquisition rather than disposition. Indeed, the submission was made for the plaintiffs that I should regard the Agreement as necessarily one of acquisition not disposition.

• [73] In the absence of express words in the Agreement for the result sought, the plaintiffs argue the Court should find as a matter of interpretation that such a consequence was intended. There was no attempt to identify what words in the Agreement might be interpreted in that manner. In my view, the plaintiffs are not asking the Court to interpret the Agreement but to re-write it to include something which was deliberately not previously provided for.

• [74] With regard to Mr Stapleton’s submissions concerning the correct approach to contractual interpretation, I accept that is objective and contextual and rejects the parties’ subjective evidence of intent as irrelevant to what both parties meant.¹⁷ The Supreme Court noted in Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand, that the aim is to:¹⁸

¹⁷ Bathurst Resources Limited v L & M Coal Holdings Limited, above n 12, at [46].

¹⁸ Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand, above n 12, at [60], citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 (HL) at 912 per Lord Hoffmann.

... ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”. This objective meaning is taken to be that which the parties intended. While there is no conceptual limit on what can be regarded as “background”, it has to be background that a reasonable person would regard as relevant. Accordingly, the context provided by the contract as a whole and any relevant background informs meaning.

(footnotes omitted)

• [75] In Bathurst Resources Ltd v L & M Coal Holdings Ltd the Supreme Court noted:¹⁹

The objective approach as articulated in Firm PI is one grounded in the policy objectives identified above: the desirability of providing the certainty needed to facilitate the efficient conduct of commerce; of holding people to the bargains they make; and of supporting access to justice through the efficient and just conduct of proceedings. Giving primacy to the written words of the agreement accords with the policy of providing commercial certainty. It also recognises that since the written contract contains the words the parties chose to record their agreement, the language used to do so has to be important. But by allowing a contextual reading of those words, the Firm PI approach recognises both that words have to be read in context and that the promotion of commercial certainty should not be allowed to defeat what the parties actually meant by the words in which they recorded their agreement. The objective approach to this contextual assessment is a legal construct designed as the best way of reliably determining the true agreement as recorded in the words of the contract. It rejects the parties’ subjective evidence of intent as irrelevant to what both parties meant and is generally unreliable. Rather, the court (embodying the reasonable person) assesses the evidence reasonably available to both (or all) of the parties at the point of contract which could bear upon the meaning of those words.

• [76] While, as the extract from Bathurst makes clear, a party’s subjective evidence of intent is irrelevant as to what both parties meant by the terms of their contract, here there is no dispute that the Agreement simply did not provide for what was to happen upon a later subdivision of the land (except to the extent the interest free loan would be repaid).

• [77] In his evidence, Chris says:

... I understand that what the Agreements says is a matter for the lawyers but I can say that, at the time we entered into the Agreement, we were advised that we could not have any explicit or implicit agreement to later subdivide the Property because of potential tax consequences including those under CB 12

¹⁹ Bathurst Resources Ltd v L & M Coal Holdings Ltd, above n 12, at [46].

of the Tax Act. Those consequences included the possibility that subdividing the property at a later date would be considered a sham and a means of avoiding paying capital gains tax

• [78] John confirms that there was no agreement concerning the later subdivision of the land in these terms:

In 2009, there was no underlying agreement that there would later be a division into the areas of exclusive possession. In 2009, there was no underlying agreement that any later division was always intended to be confined or limited to the areas of exclusive possession. The Trust’s case is that the correct interpretation of the Agreement, the subdivision in 2015 and the issue of the new titles in 2016 to match the vineyard development and the respective entities and businesses, the repayment of the interest free loan of

$604,000 in full by instalments on the dates and in the amounts pleaded in paragraphs 44, 51 and 53 of the Statement of Claim, and the parties’ past agreements and subdivision and transfer arrangements recorded in the Trust Resolution signed by [June] and myself as the Trust’s trustees in May 2017, the Authority and Instruction forms signed by [June] and myself as the Trust’s trustees and one by [June] as a MER director in August 2017, and the draft Agreement to Surrender Easement prepared by MER’s new independent legal advisers and sent to the Trust’s solicitors on 6 November 2017, and all other relevant correspondence, documents and circumstances result in the orders sought in the Plaintiffs’ summary judgement application.

• [79] I have set out what June has to say on the matter at [35] above.

• [80] As all this evidence makes clear, it was not the intention of the parties at the time of the Agreement that upon any later subdivision of the land their respective interests would be confined to their areas of exclusive occupation. Any such intention would have been antithetical to the parties’ primary concern to avoid the imposition of tax.

• [81] The plaintiffs have relied upon the post-Agreement conduct of the parties but only insofar as it is said to inform the interpretation of the Agreement. I do not see how such conduct can be relied upon to give the Agreement a meaning all parties say it was not intended to have at the time it was entered into.

Post-Agreement conduct

• [82] I accept, however, that the parties’ post-Agreement conduct may be relevant to the exercise of the Court’s broad discretion under s 329. This is not the way the case was advanced by the plaintiffs but I will deal with the matter in any event.
• [83] Most of the post-Agreement conduct relates to the participation of MER in the process of subdividing the land and having new titles issued which reflect the areas of the parties’ occupation. This conduct includes June paying the land surveyors, no objection being raised by MER to the granting of resource consent in June 2015, MER’s involvement in the granting of easements in 2016, and the Trust Resolution of May 2017 (while June was a director of MER) to effect the transfers of ownership. Also under this penumbra of conduct was the correspondence between the parties’ respective law firms which, until Radich Law’s letter of 30 November 2017, suggests an acceptance that the division of the land would be as the plaintiffs are seeking. For instance, Radich Law sent several emails concerning the need to address easement issues. Also, a proposed easement surrender agreement of 6 November 2017 states: “In various past Agreements it was agreed amongst [the parties] that the lands held in common would be subdivided and that... the Sedgemere Trust would receive certain lands and [MER] would receive certain lands each to the exclusion of the other or others.” Additionally, the plaintiffs point to the repayment of the $604,000 which, under the Agreement, was only due “if and when the title is subdivided and titles transferred to Sedgemere Trust and MER respectively”. Also, the plaintiffs note the exclusive possession and largely independent operation of the vineyards on the parties’ respective parcels of land.

• [84] However, MER contends neither it nor Chris ever agreed to surrender its

22.143 per cent undivided interest in the property and convert that to an interest solely in the land of MER’s exclusive possession. It considers, and I accept, the subdivision process was driven by John on behalf of TBE. It considers the process was flawed with incorrect information being provided to the Marlborough District Council to obtain subdivision consent and with MER being largely uninvolved throughout. Chris denies he understood the import or meaning of the Gascoigne Wicks letter of 19 May 2016 which recorded the subdivision had been completed, and further steps needed to be taken to give effect to the Agreement and transfer the relevant sections to the appropriate parties. To the extent he was aware of developments, Chris states that he “considered those arrangements were limited to rearranging title lines on paper” rather than being associated with giving up ownership to the property. MER also notes that the repayment of the $604,000 was to account for the purchase of the 22.143 per cent interest, and was done before the required conditions under the Agreement were met

(before the transfer of titles) and the first payment was made before Chris was even aware of the subdivision (2 December 2015). Also, insofar as the correspondence from Radich Law is relied upon by the plaintiffs, there was no consideration given to the question of compensation and that firm had only recently been instructed by MER and was not involved at all in the drafting of the Agreement. The terms of its letter of

30 November 2017 suggest that it had been previously unaware that the “land allocated” to MER did not reflect its legal registered share of the land and its earlier correspondence may need to be considered in that context.

• [85] Therefore, to the extent that the post-Agreement conduct suggests the parties were mutually engaged in a process of dividing the land upon the basis the plaintiffs propose, it is highly contextual and the weight to be given to it difficult to assess in a summary judgment context. Even accounting for the matters the plaintiffs relied upon, I am comfortable summary judgment is inappropriate.

Taxation and compensation

• [86] The next matters are MER’s submissions concerning the possibility of a tax liability if the Court were to accept the plaintiffs’ position to divide the land based on the exclusive areas of occupation under the Agreement and its claim for compensation.

• [87] In respect of both matters, MER relies upon the evidence of Mr Matheson. There is a problem with Mr Matheson’s evidence. The evidence he gives could only be given by an expert. Section 26 of the Evidence Act requires that experts giving evidence in civil proceedings must comply with Court rules relating to the conduct of experts. Rule 9.43 of the High Court Rules requires experts to comply with the Code of Conduct for Expert Witnesses in sch 4, under which the expert must undertake to comply with the Code. Mr Matheson does not qualify himself as an expert in tax matters and his affidavit makes no reference to the Code or his compliance with its requirements. While s 26(2) of the Act provides, “The expert evidence of an expert who has not complied with rules of court of the kind specified in subsection (1) may be given only with the permission of the Judge”, no explanation was proffered for the omission from Mr Matheson’s evidence of any reference to the Code. MER did not seek the Court’s leave to refer to Mr Matheson’s evidence despite the fact the

plaintiffs objected to it, nor suggest that a supplementary affidavit could be filed addressing compliance with the Code. In those circumstances, I do not consider it would be right to have regard to Mr Matheson’s evidence.

• [88] However, even putting Mr Matheson’s evidence to one side, it is incongruent that the effect of the orders would be to reduce MER’s share in the land from an undivided 22.143 per cent share into a 15.03 per cent divided share. The plaintiffs have not put before the Court valuation evidence but the land is plainly very valuable even if Chris’s evidence it is worth $70 million is not accepted. There seems to be no dispute it was worth more than $32 million in 2008 and it could be assumed to have increased significantly in value since then. At any realistic value, there is an arguable case that MER potentially has a great deal to lose if orders are made on the basis sought by the plaintiffs without the payment of compensation.

• [89] There are various counters to such a view that the plaintiffs will no doubt rely upon. I accept there is some evidence the parties’ undivided shares were calculated on value and not a land area basis, but there is no valuation evidence supporting that, nor was Mr Stapleton able to refer me to anything showing how MER’s 22.143 per cent undivided share was actually calculated. I accept also that there is some evidence the MER land was more valuable than the balance of the land and if this is no longer the case it may be a reflection of expenditure made by the Trust and TEB on improvements to the land they occupy. It is also the case that some of the land that is leased to TEB is not planted as vineyards and could be expected to have a lower value for that reason. But the possibility that these matters may provide justification for a division other than on a basis that reflects the parties’ respective registered legal interests is largely speculation in the absence of valuation evidence.

• [90] The plaintiffs argue that any claim MER may have for compensation is a money claim and statute barred under s 11 of the Limitation Act. I consider this submission is misconceived. It wrongly assumes the claim for compensation arises under the Agreement, when in fact any entitlement MER has to compensation could only ever arise upon, and as an incident of, the Court exercising its discretion to order a division of the land under s 339.
• [91] Mr Stapleton submitted that Anderson v Anderson is authority that the “money claim” principles under the Limitation Act apply to applications under ss 339-343 of the Property Law Act²⁰. That case is distinguishable. There, the plaintiff sought orders under s 339 and, in addition, as a separate cause of action, occupation rent as “a claim by a beneficiary against a trustee”. Associate Judge Bell held that in those circumstances the claim for rent could only run from six years before the filing of the proceeding. Here, MER does not seek compensation other than upon the making of an order under s 339.

• [92] I also do not accept the submission that MER must seek compensation as a counterclaim. The claim is clearly raised on MER’s pleading.

• [93] I also do not accept that in light of MER’s position, that it does not object to a division of the land subject to compensation being paid, the Court should order a division reserving to MER the right to seek compensation in other proceedings. MER’s position, which I consider arguable, is that the order for division should only be made upon terms that require payment of compensation. It is appropriate the Court decide whether to order the division of the land and any entitlement MER has to compensation in one proceeding.

• [94] As far as there are said to be any tax implications associated with making of the orders, there is no admissible evidence of those. Even without the evidence of Mr Matheson, it was open to counsel to make legal submissions to support the proposition tax would be incurred, but no such submissions were made. In those circumstances, it is not a matter I can take into account.

My conclusion

• [95] I am satisfied that this application is not suitable for summary judgment. The plaintiffs seek a division of the land upon a basis that does not reflect the parties’ registered legal interests. They have attempted to justify that on what I consider is an erroneous basis that the Agreement means that upon a division of the land the parties were to be confined to their respective areas of exclusive occupation. While ultimately

²⁰ Anderson v Anderson, above n 10.

the plaintiffs may be able to establish that a division of the land on the basis sought is the just and practical method of resolving the dispute between the parties, it is not appropriate for me to make any such determination on a summary judgment application having regard to the numerous disputed questions of fact and the absence of any valuation evidence. I am also satisfied that there is an arguable case that if the division were to proceed as the plaintiffs have sought, MER would be entitled to compensation. I consider that whether the land is to be divided and, if so, any entitlement MER has to compensation should be determined in the one proceeding.

Result

• [96] The plaintiffs’ application for summary judgment is dismissed.

• [97] This is an appropriate case for me to reserve costs and I so order.

• [98] The case is to be set down for a telephone case management conference before an Associate Judge on the next available date. It appears to me the case could be set down for trial immediately and I would expect counsel to confer on an appropriate timetable. Counsel shall file memoranda for the case management conference at least three working days prior to the conference.

O G Paulsen Associate Judge

Solicitors:

Hardy-Jones Clark, Blenheim for Plaintiffs Radich Law, Blenheim for Defendants ANZ Bank New Zealand Ltd for Non-Party

Marlborough District Council for Interested Party