Hayes v Burr HC Auckland CIV 2010-404-2769 [2010] NZHC 1511 (31 May 2010)

Last Updated: 9 September 2010

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2010-404-002769}

IN THE MATTER OF the Land Transfer Act 1952 Section 145A

BETWEEN RICHARD STEWART HAYES Applicant

AND CHRISTINE ANN BURR Respondent

Hearing: 31 May 2010

Appearances: D J Clark for the Applicant

RKM Hawk for the Respondent

Judgment: 31 May 2010

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

31.05.10 at 4:00pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors/Counsel:

D J Clark, Wilson McKay, Remuera – [e-mail]

RKM Hawk, Jackson Russell, Auckland – [e-mail]

RICHARD STEWART HAYES V CHRISTINE ANN BURR HC AK CIV 2010-404-002769 31 May 2010

[1] Mr Hayes wants his caveat over a Parnell, Auckland property, to remain. He applies accordingly. Ms Burr wants it removed. The property is owned by a trust of which she is the trustee and she and Mr Hayes are the two beneficiaries. Mr Hayes and Ms Burr were previously married. Their marriage ended in 2001. They continued to live together in their former matrimonial home. That home is next door to the one owned by the trust and caveated by Mr Hayes.

[2] The property was purchased in 2004 whilst the parties were separated but continued to live in the adjacent property.

[3] The trust deed acknowledges that Ms Burr owns the property in trust for herself and Mr Hayes in equal shares. The trust deed also provided, inter alia:

a) All income received is to be applied in debt reduction and debt servicing.

b) They each would contribute equally to the maintenance, debt servicing, improvements and debt reduction expenditure.

c) In the event of unequal contribution there was to be an adjustment from the sale of the property.

d) Either party could require the property to be sold upon the giving of not less than three months written notice to the other, and in the event of notice the property is to be sold by any method agreed or failing agreement by public auction.

[4] It is clear from the affidavit evidence filed that each party is distrustful of the other. Ms Burr wants the property to be sold. Mr Hayes says there are issues between them regarding contributions made and ownership benefits received. Although both parties wish the property to be sold he wants the opportunity to purchase it but he hints he would not be able to if he had to borrow the full purchase price. Also he is concerned with risks in the selling of a home which has weather

tightness issues. He is concerned about the possibility of claims being made by purchasers post sale.

[5] In short, both parties wish the property to be sold but Mr Hayes appears to want to exert more control in that process.

The issues

[6] Mr Hayes clearly has a caveatable interest in the property. The issue is whether the Court should exercise its discretion to remove the caveat to enable the property to be sold. The Court has a discretion to remove the caveat if it is satisfied that the legitimate interests of Mr Hayes will not be prejudiced. The Court needs assess Mr Hayes’ claims of prejudice if the caveat was to be removed.

Mr Hayes’ opposition to removal of caveat

[7] There is and continues to be a dispute over relationship property issues:

a) Mr Hayes asserts that in order to quantify and to enable him to bid on the property in any sale those issues need to be resolved.

b) He says Ms Burr has not provided any detail regarding the terms of sale.

c) He discounts a claim that she has dealt with the disclosure of weather tightness issues as best she can. He says he does not know what that means or how it will affect the sale process and potential liability for failure to disclose.

d) He says she has failed to follow the notice of sale process which the parties agreed under the provisions of the deed of trust.

[8] Concerning their relationship property dispute he complains Ms Burr has not provided detailed accounts i.e. source documentation to enable him to ascertain what the parties’ respective contributions are to the equity in the property, and what ability

he then has to purchase it. If he is forced to purchase prior to these matters being resolved he will be required to finance the property 100 per cent and then wait for a resolution of their dispute.

[9] Concerning Ms Burr’s intention to sell the property, he complains about the lack of information regarding the terms of sale. He is concerned there is no assessment of the real estate value of the property, nor has any reserve price been indicated. Ms Burr proposes using Barfoot and Thompson. He says they might not be the best agency to sell the property. He says there is no detail about who would hold the sale proceeds (pending distribution to the parties); there is no marketing plan or advertising budget, and; no law firm has been nominated to handle the conveyancing.

[10] Mr Hayes is concerned about the extent of disclosure about weather tightness issues. He says there is a small mention but only of issues around the decks “but quite clearly the parties are aware of potential and significant water ingress problems affecting the property”. Based on Barfoot and Thompson’s advertising material, he said it is clear they have not taken appropriate steps to properly disclose weather tightness issues. He is concerned that failure will expose the vendor to liability under the warranty provisions of an agreement. He fears a flow on impact if potential purchasers seek to recover the proceeds of sale for any deliberate non disclosure where the knowledge of leaks is known by the parties.

[11] He says there should be a properly agreed strategy between them as to how the weather tightness issues should be disclosed, and that a joint instruction be given to an agreed real estate agent.

[12] Mr Hayes asserts that valuations of property worth should be obtained to properly inform the parties as to what affect the weather tightness issues will have on the value of it. This, he says, would enable the parties to make considered decisions about whether the property should be sold, and in what condition.

[13] Mr Hayes asserts that Ms Burr has not given the notice required by their deed of trust. In any event he says Ms Burr has withdrawn what she originally claimed

was the three months notice required under the deed. Therefore, as no other notice has been provided, any ability to sell in accordance with the deed, has not been given. Ms Burr cannot, he asserts, rely upon the Court’s exercise of discretion when she herself has not followed the agreed process about how the property would be sold in the case of dispute.

Considerations

[14] Mr Hayes’ affidavits make claims of a failure to provide adequate information; of significant disparity in their respective contributions to the property; of the withholding of information about Ms Burr’s contributions, and about the benefit she has received from her administration of property ownership. All claims are disputed or discounted by Ms Burr. To some extent there is a dispute about evidence which could impact upon the exercise of this Court’s jurisdiction over the removal of the caveat. However, I do not think that dispute bears on the outcome in this case. Whilst the Court should hesitate to resolve issues concerning a conflict of evidence based on affidavits alone, the fact there is a dispute should not in appropriate circumstances persuade the Court from exercising its discretion. In short, I think Mr Hayes makes much more of these issues that he ought, and regardless, those concerns he identifies can all be resolved by the orderly progression towards sale, and a requirement that sale proceeds be held by a stakeholder pending settlement of the parties’ issues.

[15] Ms Burr has offered to place the proceeds of sale into a stakeholder’s account, on terms already offered, or subject to such terms imposed by the Court. Unless the sale proceeds, Ms Burr is being required to fund the holding cost from her own resources, which amount to about $900.00 per month. She further says there are accumulated rentals of about $20,000 and increasing in the parties’ neighbouring property (also rented) from which Mr Hayes could authorise a transfer of funds to meet the deficit, but he refuses to do so. His only reason for disputing this account of matters relates to his belief about she is behind in the contributions.

[16] Ms Burr’s position is summarised by the concluding paragraph of her affidavit, where she states:

In relation to paragraph 30, I apprehend that Applicant considers he is entitled to have the caveat left in place to make me address issues such as the sharing of tax benefits which is an issue arising in the resolution of our relationship property issues. Whist I have every intention of resolving those issues promptly, I do not wish to do so in the context of an issue arising over the appropriateness of a caveat over trust property. I recognise the Applicant is entitled to be protected by the lodgement of a caveat if he considers on reasonable grounds that I might sell the property and fraudulently make away with the proceeds. Whilst I sincerely hope he does not have that concern, I trust that the proposal to put the proceeds of sale with a stakeholder adequately meets that possibility, whilst also fulfilling his wish to have the property sold, and the opportunity to purchase on a level playing field. This will also relieve me of the ongoing payments to maintain the outgoings on the property, which currently are costing me in the vicinity of

$900 each month.

[17] In my assessment of the affidavit evidence, Ms Burr’s position is supported by reasonably inference.

[18] I have reviewed Mr Hayes reasons why he says the Court should not exercise its discretion to remove the caveat. Mr Hawk submits and I agree that Mr Hayes does not however advance reasons why he would suffer prejudice arising from these issues if the caveat was released.

[19] Mr Hayes' claim that Ms Burr failed to provide detailed accounts appears to be misleading for he relates that claim to an assertion that through her solicitor the only financial information provided was a summary of the accounts but not a “full set of accounts”. In fact as her affidavit attests, the email and attachments she sent to him on 5 May 2010 are much more detailed than he claims. The information she has provided to Mr Hayes, I am satisfied, shows the contributions which each party has made and the movements of those contributions. A reasonable assumption from that information is that the financial accounts could show the respective parties’ contributions to be approximately equal. In that outcome and following the sale of the property the parties would divide any surplus more or less equally.

[20] Mr Hayes has endeavoured to make something of apparent disparities over records provided. Yet, although he advances this matter as one of importance in his claim for potential prejudice if the property is sold (before he knows exactly how much more or less than Ms Burr he will receive from the sale proceeds) he has not

until by his second affidavit dated 25 May 2010 made an appropriate request for any source financial documents.

[21] Ms Burr does not dispute that Mr Hayes is entitled to copies of these source documents. Undoubtedly he has an opportunity to obtain these and check them, if that is what he wants. There is plenty of time for that to be done whilst the sale proceeds are held by a stakeholder on behalf of them both.

[22] Mr Hayes is concerned about a lack of terms for sale. His concerns seem to ignore the obvious, namely as trustee Ms Burr has an obligation to get the best sale price. Further, she has a personal interest to get the best sale price.

[23] Mr Hayes complains about Ms Burr’s intention to list the property with Barfoot and Thompson. It is clear Ms Burr took steps to list the property with Barfoot and Thompson before she became aware of Mr Hayes’ caveat. The listing agreement before then, shows that Ms Burr was seeking to get the best price possible. Mr Hawk submits, and I agree that Barfoot and Thompson are a respected real estate firm and a recognised leader in residential real estate in Auckland. Mr Hayes suggestions that Ms Burr is not committed to obtaining the best sale price, are without merit.

[24] Likewise, Mr Hayes concerns about exposure over weather tightness issues can be discounted. The sale agency agreement refers to problems related to external decks which have since been repaired. Mr Hayes reference to the need for further repairs is detailed in a report which he himself has possession of. He has been invited to go ahead and get that work done which has been estimated to cost $900. He has not done this. Ms Burr’s suggestion that such repairs would be of a minor nature, is not challenged.

[25] For Mr Hayes it is submitted that Ms Burr withdrew her claim that three months notice had been given pursuant to the deed of trust. Clearly she has not. I accept Mr Hawk’s assessment that she recognises there is an issue over whether or not the notice given by her barrister was or was not sufficient. It is nothing more

than that. In any event I am certain that the evidence discloses adequate notice was given in terms prescribed by the deed.

Result

[26] The property was purchased for their joint benefit. The acceptable evidence is that Ms Burr is bearing the burden of sustaining the property but that Mr Hayes does not permit access to other funds of the parties to relieve her of the burden.

[27] Mr Hayes identifies concerns the effect of which can only increase the burden. There is no prejudice to Mr Hayes’ situation if the property is sold and if the parties cannot agree upon appropriate terms the Court will make directions. Mr Hayes can be certain that a Court would not permit distribution of sale proceeds until an agreement or a decision upon the division of surplus sale funds was made. Mr Hayes has plenty of time meanwhile to work out what any likely disparity of division would be, if he needed that information for the purpose of bidding at public auction, to purchase the property.

[28] In the balance any potential for prejudice from Mr Hayes is allayed. Assuming more importance to this Court for the purpose of the decision to be made is the increasing burden borne by Ms Burr because of the delay that has occurred and will continue to occur until the property is sold.

Judgment

[29] a) The application to sustain the caveat is dismissed.

b) The Court directs the proceeds from the sale of the property, after payment of sale costs, be held by Ms Burr’s solicitors, as stakeholders, in an interest bearing account until such time as the parties agree they be disbursed or until further order of this Court.

c) Mr Hayes shall pay Ms Burr’s costs calculated on a 2B basis.

Associate Judge Christiansen