Murphy v Murphy [2013] NZHC 217 (15 February 2013)

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Murphy v Murphy [2013] NZHC 217 (15 February 2013)

Last Updated: 22 February 2013

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2010-463-797 [2013] NZHC 217

BETWEEN CHEYNE DENNIS MURPHY Plaintiff

AND ROBYN STEPHANIE MURPHY Defendant

Hearing: 10 and 11 September 2012 (Rotorua), 21 September 2012 (Auckland) Counsel: J Wynyard for Plaintiff

T Grimwood for Defendant

Judgment: 15 February 2013

_{JUDGMENT OF TOOGOOD J}

This judgment was delivered by me on 15 February 2013 at 3:00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:

J Wynyard, Olphert & Associates, Rotorua: [e-mail]

T Grimwood, Lance Lawson, Rotorua: [e-mail]

MURPHY V MURPHY HC ROT CIV-2010-463-797 [15 February 2013]

Table of Contents Paragraph

Number

Result [1] Brief background [3] The nature of the proceedings [8] The issues [12] Undisputed facts related to purchase [15] Why was the property bought and in what circumstances? [16] Cheyne’s allegations [17]

Mrs Murphy’s position [23] Discussion [27] Conclusion as to reasons for acquisition of property [36] Rebuttal of the presumption of ownership [37] Reasonable expectations? [40] Who occupied the property and when [41] Who paid the outgoings and when? [46] Principal and interest repayments on the bank loan [46] Cheyne’s contribution to the outgoings [52] Conclusion as to contributions [57] Parties’ awareness of co-ownership [58] Conclusion – Cheyne not a beneficial owner [61] Resolution of Cheyne’s claims [62] Proposed orders [64]

Result

[1] This is a sad case in which a mother and her son have fallen out over the ownership of a property at 1 Motoi Place, Ngongotaha, Rotorua, of which they are registered proprietors as tenants in common in equal shares. The son seeks orders under the Property Law Act 2007 to resolve the dispute.

[2] For the reasons given below, I conclude:

(a) At the time of the purchase of the property it was intended that Mrs Murphy, the mother, should be the sole beneficial owner – [39] below;

(b) No step was taken either by Cheyne, the son, or Mrs Murphy after the property was acquired to give Cheyne any reasonable expectation that he had a beneficial interest in the property – [61] below;

(c) Title to the property should vest in Mrs Murphy as sole registered proprietor – [61];

(d) Cheyne should be paid $13,500 compensation for his contribution to the increase in the net equity in the property since the time the property was acquired – [62] below;

(e) Orders should be made accordingly. Counsel are invited to confer over the form of the orders to be made. Costs are reserved – [64]-[66] below.

Brief background

[3] In November 1995, Mrs Murphy agreed to buy a house in Ngongotaha, Rotorua. Her parents lent her the money for the deposit but, in circumstances which are disputed, her son Cheyne also signed the loan contract with the Countrywide

Bank (now the ANZ Bank) (“the Bank”) and the agreement to mortgage and became

a registered proprietor of the property.

[4] Over the ensuing 17 years, Cheyne and Mrs Murphy have sometimes occupied the property together and sometimes on their own; from time to time it has been tenanted or vacant. Each of them has contributed from time to time to paying the outgoings on the property, including making payments of principal and interest due under the mortgage.

[5] The property was bought for $124,000, the entire purchase price having been borrowed. Now, the difference between the estimated market value of the property and the amount owed to the Bank is around $150,000.

[6] Cheyne's step-daughter is living in the property at present, paying rent, but Cheyne wants the property to be sold and for him to receive what he claims is his half share of the net proceeds of sale. He also thinks compensation should be paid to him by his mother to take account of her having occupied the property from time to time, he claims, without paying rent or a share of the outgoings.

[7] Mrs Murphy wants to keep the property and return to live in it. She says Cheyne is an owner of the property in name only and that when he has been occupying the property on his own the outgoings he has paid have been in lieu of rent. Mrs Murphy wants the property to be transferred into her name solely. Subject to possible compensation for some of his contributions to the outgoings, Mrs Murphy says Cheyne should not be paid out any portion of its current net value.

The nature of the proceedings

[8] The registration of the title to the property in the joint names of Mrs Murphy and Cheyne as tenants-in-common in equal shares makes them co-owners for the purposes of the Property Law Act.1 So far as is relevant to this case, that Act

_{provides that the Court may make an order for the sale of the property and the}

1 Property Law Act 2007, s 4.

division of the proceeds between the co-owners2 or an order requiring one of the co- owners to purchase the share in the property of the other co-owner at a fair and reasonable price.3 Partition of the property4 is not practicable and is not sought by either party.

[9] When making one of the orders available under s 339(1), the Court may also make an additional order:5

(a) requiring the payment of compensation by one of the co-owners to the other;

(b) directing how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied between the co-owners and any other person having an interest; and

(c) requiring any person to pay a fair occupation rent for all or any part of the property.

[10] Thus, the Court is given a broad discretion and some flexibility to make a just determination of a dispute between co-owners.6

[11] In exercising its discretion as to the nature of the orders which it makes under s 339 and/or s 343, the Court is required by s 342 of the Act to have regard to the following considerations:

(a) the extent of the share in the property of the co-owner by whom 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;}

2 _{Ibid, s 339(1)(a).}

3 _{Ibid, s 339(1)(c).}

4 _{Available under s 339(1)(c) of the Act.}

5 _{Ibid, ss 339(4) and 343(a), (d) and (f).}

6 Bayly v Hicks [2012] NZCA 589 at [27] and [31]-[33].

(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 the co-owners respectively as to the cost of improvements to, or the maintenance of, the property; and

(f) any other matters the Court considers relevant.

The issues

[12] Since Mrs Murphy and Cheyne have been unable to resolve their differences over the property, I am required to determine:

(a) whether Cheyne should be regarded as a beneficial owner of the property –

(i) by inference from his inclusion on the title as a registered proprietor; or

(ii) by reason of a legitimate expectation arising from the conduct of the parties since the property was acquired;

(b) whether the property should be sold and, if so, what proportions of the value or net sale proceeds of the property should be received by mother and son respectively;

(c) if the property is not to be sold, whether one or other of the co-owners should be required to purchase the interest of the other and at what price; and

(d) whether either of the parties should pay the other compensation or an amount for occupation rental during relevant periods.

[13] In order to come to a view as to the appropriate resolution of this dispute, it is also necessary for me to resolve a number of disputed factual issues including:

(a) the circumstances in which Mrs Murphy and her son became the co- owners of the property;

(b) how the deposit for the purchase was paid and, particularly, whether

Cheyne reimbursed his mother to any extent in that regard; (c) who lived in the property and when; and

(d) who made the payments, over the ensuing 17 years, of the outgoings in respect of mortgage principal and interest, rates, improvements and maintenance.

[14] Each party claims occupation rental from the other in respect of periods when they did not cohabit in the property; Cheyne says his mother is estopped from claiming occupation rental from him.

Undisputed facts related to purchase

[15] The following facts related to the initial acquisition of the property are not disputed:

(a) The deposit of $16,000 for the purchase was borrowed.

(b) The balance of the purchase price of $124,000 was borrowed from the

Bank.

(c) Cheyne signed the loan contract with the Bank and the memorandum of mortgage.

(d) Both Mrs Murphy and Cheyne were initially registered on the certificate of title as joint tenants.

(e) Cheyne was 16 years old at the time of the purchase, but neither the solicitors acting for the purchasers nor any bank official took any such step as would have been appropriate in the circumstances to address the fact that he was too young to enter into any binding contract at that time.

(f) For the first year after the purchase, Mrs Murphy was the sole occupier of the property; Cheyne then lived with her in the property for the next 12 months.

(g) The property is currently valued at around $215,000. At the date of hearing, the Bank was owed approximately $65,000.

Why was the property bought and in what circumstances?

[16] Why Mrs Murphy and Cheyne bought the property is disputed.

Cheyne’s allegations

[17] Cheyne’s written evidence was that, before the purchase, he and his mother had discussed buying a property with the idea of keeping it for a short time as an investment. He said that the opportunity arose to buy the property in a slumped market at its government valuation and that he and his mother both believed that the property would increase in value because they had been advised that the property market had a pattern and a turnaround period of five years. Their joint view, he said, was that when the market picked up they would be likely to sell the property for at least 15 percent above its government valuation.

[18] Under cross-examination, however, Cheyne agreed that it was his mother who found the property, dealt with the real estate agent, arranged a valuation, and applied for the Bank loan. He acknowledged that she needed somewhere to live. He also accepted that it was his mother who told him that the property was “a good buy”, and that it was agreed between them that, when she moved into the property, his mother would meet the mortgage payments.

[19] These acknowledgements contradict the assertion by Cheyne’s solicitors, in a letter to Mrs Murphy dated 23 February 2004, that the intention when the property was first bought was that Mrs Murphy and Cheyne would both live in the property and meet the outgoings jointly. The solicitors recognised in the letter this is no longer the case and that Mrs Murphy was living alone and making the payments.

[20] Cheyne said in evidence he understood that his mother got the money to pay the deposit from a lady he knew as Lorna, who has since died. His evidence to this effect was supported by evidence from his sister, Sonia, but neither of them explained the basis for their belief about the source of the deposit. The evidence is hearsay; it is unsubstantiated, unreliable and of little or no weight. Cheyne said that initially his mother told him that he did not need to contribute to the deposit but that she later changed her mind and asked him to pay her $8,000. He said he borrowed

$4,000 from his father which he paid to his mother during 1997 after he had returned to live in the property. He said he paid the balance of his share of the deposit over time.

[21] Sonia’s evidence was that she had always understood that her mother and Cheyne purchased the property together as an investment. She claimed it was "common knowledge" amongst family members at the time that her mother and Cheyne had purchased the place together as an investment. She provided no evidence to substantiate these claims and it is merely opinion evidence which should be disregarded.

[22] Mr Dennis Murphy, Cheyne's father, was estranged from Mrs Murphy at the time of the purchase. He said in evidence that he did not know that Mrs Murphy and Cheyne had bought the property until about 18 months after it had been purchased. He said that, before he knew about the purchase, Cheyne had approached him and asked him if Cheyne could borrow some money. Mr Murphy said he did not know at the time, but discovered later, that Cheyne needed the money to pay for his half share of the deposit for the house. He said that he gave Cheyne money but cannot remember how much. His evidence was that 12 months after he had given the money to Cheyne, Cheyne told him that his share of the deposit on the house was

$8,000, but Mr Murphy was very vague as to the amount he lent Cheyne, as to the

time of the loan or loans, and as to the purpose. I am far from satisfied by the evidence that Mr Murphy made an advance to Cheyne to enable part-reimbursement of the deposit paid by Mrs Murphy. It may be that he made a loan or loans for other purposes, including to assist Cheyne to contribute to the outgoings on the property, but that is another matter which is addressed separately below.

Mrs Murphy’s position

[23] Mrs Murphy’s evidence was that she acquired the property as a home for herself and two children whom she intended to foster. She said that she had known these two children since they were very young and that they were having problems with their parents. It was agreed that the children would reside with one of their teachers until Mrs Murphy was able to find a home for them all to shift into; at that time she was living with a cousin and his wife in Hamurana.

[24] Mrs Murphy said she wanted to stay in Rotorua as she was nursing at the Queen Elizabeth Hospital there and the foster children’s father also lived in Rotorua, with the mother living in Tokoroa. She said that she had a number of family members living around the Ngongotaha area. Her father suggested she should buy a house and she found one in Ngongotaha which she thought would be ideal for the foster children and her. None of the children of her marriage were living with her at that time; Cheyne was living in Auckland.

[25] This evidence was corroborated by Mrs Murphy’s mother, Charlotte Forsman-Robson. Mrs Forsman-Robson agreed that her husband, Rex, gave Mrs Murphy the idea for buying a house in order to accommodate the foster children. She said that when Mrs Murphy found a suitable place in Ngongotaha her husband and she approved of the purchase.

[26] Although the sale and purchase agreement has been mislaid and could not be produced in evidence, I infer from the circumstances that Mrs Murphy made a conditional offer to purchase the property subject to arranging finance. She had to find a deposit to secure the arrangement. Mrs Forsman-Robson said that she recalled discussing the purchase of the house with her husband and remembers him writing

out the cheque for $16,000 to pay the deposit. She could not remember who the cheque was made out to but she was certain that it had been done. She recalled also that although the amount of the deposit had been intended initially to be a loan to Mrs Murphy, she and her husband agreed later that they would gift the money to her so that it was never repaid. Mrs Murphy denied ever telling Cheyne that he did not need to pay his share of the deposit and that it was a gift from her. She also denied later asking Cheyne to reimburse her for half of the deposit.

Discussion

[27] I accept Mrs Murphy’s account of the reasons for buying the property. She impressed me as being genuine, albeit naive on legal matters, and I found her mother, who supported her account, to be a down-to-earth and credible witness. The explanation that the property was acquired so that Mrs Murphy had a place to live was supported by evidence from Sue Forsman with whom Mrs Murphy had been living at the time of the purchase; it is entirely plausible.

[28] By contrast, I do not find Cheyne’s account credible. He was 16 years old at the time and living away from home as an apprentice boat builder. Given their circumstances at the time, it does not seem at all likely to me that he and his mother would have had a discussion about buying an investment property. Furthermore, the proposition that they believed they were more or less guaranteed a 15 percent increase in the value of the property because of a five-year property value cycle was not supported by any evidence. There was no evidence to support Cheyne's account that the acquisition of the property at the government valuation was a good buy in a slumped market. In fact, the government valuation at the time of the purchase was approximately $85,000, some $39,000 less than the purchase price.

[29] I note in passing in that regard that it was not until some eight-and-a-half years after the purchase, in the letter of 23 February 2004 from his solicitors Rodgers and Co to Mrs Murphy, that Cheyne made any claim to an equitable interest in the property. In the meantime, however, both Mrs Murphy and Cheyne had lived in the property, occasionally together and occasionally separately.

[30] It is more than likely, in my view, that Cheyne became involved only because, in trying to secure the bank loan, Mrs Murphy was unable to meet the means test or income level requirements of the Bank to secure the funding of all but

$16,000 of the purchase price. Mrs Forsman-Robson explained that her husband and she were on holiday in the South Island at the time Mrs Murphy was trying to arrange the financing package. They would have been prepared to act as guarantors but they were not available to sign any documents in Rotorua. So, in those circumstances, as Mrs Murphy said, Mrs Murphy relied on Cheyne to be a co- applicant for the bank loan.

[31] It was Mrs Murphy’s evidence that at the time of the purchase she did not appreciate that Cheyne was going to become a co-owner of the property; she says she thought he was simply signing up with her for the loan. While that may seem an extraordinary proposition for an adult woman to advance, I accept that Mrs Murphy was not experienced in legal matters and may well have misunderstood the full implications of the transaction. Her position is consistent with her evidence that, at least initially, the question of Cheyne paying half the deposit never arose.

[32] Cheyne confirmed that he visited Rotorua only once to sign documents related to the purchase. It is more than probable, therefore, that he was not a signatory to the agreement for sale and purchase. Cheyne also said that the first time he saw the property was the day he visited Rotorua to sign the loan documents. Not signing the sale and purchase agreement and seeing the property only once, immediately prior to signing the loan contract with the Bank and the memorandum of mortgage, is more consistent with Cheyne attending the solicitor ’s office in Rotorua to support his mother for loan purposes only than it is with planning and carrying out a joint investment strategy. It is significant that the only documents executed by Cheyne related to the bank loan, not to the purchase of the property.

[33] It was suggested to me by Mr Wynyard on behalf of Cheyne that it was hardly likely that a solicitor would have acted for Mrs Murphy in this transaction without explaining fully to her the nature of the arrangements, including that Cheyne would be a co-owner of the property. No evidence was given by the solicitor who acted for Mrs Murphy and her son but it seems to me to be probable, given that the

transaction was a straightforward conveyance, that the documents were signed in a somewhat peremptory fashion. I note that the signatures were witnessed by a legal executive rather than the partner conducting the transaction. So peremptory was the execution process, in fact, that no one in the firm of solicitors acting for Mrs Murphy appreciated that Cheyne was only 16 years old at the time of the transaction. I do not think it is necessary, or even reasonable, in those circumstances to assume that ordinary standards of prudent conduct and advice should be ascribed to Mrs Murphy’s solicitors at the time of the transaction.

[34] The fact that Mrs Murphy and Cheyne were initially registered as joint tenants rather than as tenants in common also suggests that Mrs Murphy may not have understood that Cheyne would become an owner of the property with her, even though that might have been very naive of her. The effect of that arrangement was that, if Mrs Murphy died before Cheyne, the property would vest entirely in his name. Mrs Murphy said that would never have been her intention because she had three other children. In her view, she was acquiring the property to provide a home for herself with the view that, if she died, the property would belong to all four of her children.

[35] Accepting that view as genuine, I consider it probable that Mrs Murphy's solicitor did not explain that acquiring the property as a joint tenant with Cheyne would defeat any such long-term purpose. Mrs Murphy’s view is also consistent with her denial of ever telling Cheyne that his share of the deposit was a gift from her. There was no reason for her to treat him more favourably than she treated her other children. I reject Cheyne’s proposition, therefore, that the property was acquired as a short-term investment vehicle for both his mother and him.

Conclusion as to reasons for acquisition of property

[36] I am satisfied on balance that Mrs Murphy purchased the property intending that it should be a home for herself and two foster children; that the deposit was paid for her by her parents (who later gifted that sum to her); and that Cheyne became involved in the transaction only after Mrs Murphy had entered into the sale and purchase agreement and solely for the purpose of supporting his mother’s application

for a bank loan. This view is consistent with Mrs Murphy becoming the sole occupant of the property, with her foster children, until December 1996 when Cheyne moved in to live with her.

Rebuttal of the presumption of ownership

[37] Mr Wynyard argues that s 35 of the Land Transfer Act 1952 guarantees Cheyne title to the property by virtue of his name appearing on the certificate of title and submits that title is guaranteed to him by the combined effect of ss 62, 63 and 64 of the Land Transfer Act. While those propositions are correct, s 339(2) of the Property Law Act provides that the Court’s power under s 339(1) and 339(4) to make orders for the division of the property applies “despite anything to the contrary in the Land Transfer Act 1952”. It is presumed from Cheyne’s status as registered proprietor of the property that he is a beneficial owner, but the presumption is

rebuttable.7 The onus is on Mrs Murphy to show why the legal title should not be

taken to reflect the underlying beneficial interests.

[38] The only evidence of expressed intention is that which is found in the evidence of the plaintiff and defendant at trial; there are no documents contemporaneous with the purchase which contain any expression of intention. As a matter of law, Cheyne’s minority meant that he could never be held legally accountable for the obligations which he would otherwise have undertaken in executing the bank loan application and mortgage document. All of the liability, both as to the refund of the deposit initially lent by Mrs Murphy’s parents and the payments of principal and interest due under the terms of the bank loan, fell exclusively on Mrs Murphy. I have already noted that Cheyne admitted under cross- examination that he believed his mother alone would be responsible for making the loan repayments.

[39] My findings as to the particular and unusual circumstances in which the

_{property was acquired are sufficient to rebut the presumption from Cheyne’s status}

7 Cossey v Bach [1992] 3 NZLR 612 at 627, applying Gissing v Gissing [1970] UKHL 3; [1971] AC 886 at 900,

902 and 910.

as a registered proprietor and to prove on balance that Mrs Murphy was from the outset mutually intended to be the sole beneficial owner of the property.

Reasonable expectations?

[40] I accept that some years after the purchase, however, Mrs Murphy appears to have acknowledged Cheyne’s “ownership” of the property. Those acknowledgements, however, need to be put into the context of how the property was used and how the outgoings were met over the 17 years from the purchase to the hearing of the proceeding. Consideration of the evidence of how the parties behaved will assist to determine whether Mrs Murphy should now be estopped from denying that, by reason of his contribution to the outgoings, Cheyne held a reasonable

expectation that he had become a beneficial owner of the property.8

Who occupied the property and when

[41] There is a substantial measure of agreement between Cheyne and Mrs Murphy as to who occupied the property at various times during the period from the purchase to the present day. Mrs Murphy was sole occupier, with her foster children, from November 1995 to December 1996. Cheyne then moved back to live with her for a year from December 1996; from the end of 1997 to July 1998

Mrs Murphy resumed sole occupation.

[42] For the next two years, until August 2000, the property was either vacant or occupied by tenants. Cheyne said that in August 2000 he evicted the tenants and began living in the property with his then girlfriend. Mrs Murphy thought that this had occurred sometime in 2001; she said that Cheyne agreed to take over responsibility for the mortgage payments in lieu of paying rent. The evidence establishes that the payments of loan interest and principal were paid out of Cheyne’s bank account from August 2000 to June 2002 and I find it probable that Cheyne’s

_{occupation began at the time the payments commenced.}

8 Gillies v Keogh [1989] 2 NZLR 327.

[43] The parties agreed that sometime in 2002 Mrs Murphy moved back into the property and lived there with Cheyne and his new partner for a few months until Cheyne and the partner moved out. It is not entirely clear when in 2002 Mrs Murphy moved in and when in 2003 Cheyne and his partner moved out, but from July 2002

Mrs Murphy began making payments of varying amounts, between $150 and $200, approximately weekly. These payments continued until the end of February 2003. Thereafter, until the date of hearing at least, loan payments were made by Mrs Murphy and Cheyne ceased making any payments until mid-2011. I infer, therefore, that Mrs Murphy moved back into the house and occupied it jointly with Cheyne and his partner between July 2002 and the end of February 2003.

[44] From March 2003 to October 2009 Mrs Murphy occupied the house, Cheyne being absent throughout that period. It seems, however, that Mrs Murphy may have had at least one boarder for several years, a friend named Lola who, according to Mrs Murphy, sometimes paid the power, telephone and food bills but did not pay rent or board.

[45] Mrs Murphy moved out of the house in October 2009 to go and live with her son Justin, leaving the property vacant until Clark Mellor rented the property at the end of January 2010, at a rental of $240 a fortnight which he paid into Mrs Murphy’s bank account until he left in May 2010. The property then remained vacant until Cheyne moved in in circumstances which, Mrs Murphy said, involved him preventing her from occupying it. He then lived in the property from July 2010 until June 2012 from which time, up to the date of hearing at least, the property was occupied by Cheyne’s step-daughter who paid rent of $210 per week which was paid into the bank account which services the loan.

Who paid the outgoings and when?

Principal and interest repayments on the bank loan

[46] There is less agreement between the parties about the payment of outgoings on the property and, from time to time, payments due under the loan agreement with the Bank fell into arrears. Tracking through the Bank records adduced in evidence

and having regard to the evidence of Mrs Murphy and Cheyne where it does not conflict, I find that it is more probable than not that Cheyne made no direct contribution to the loan payments until August 1998 when he paid $1,600 off the arrears. No bank records for this period or the ensuing four months when Cheyne claims to have made the entire loan payments due have been produced. Cheyne did not dispute, however, that until August 1998, all of the outgoings on the property had been paid by Mrs Murphy, although he says that he gave cash to his mother for his share of the mortgage while he was living with her between December 1996 and

1997. I do not accept, on the evidence of the nature of his work and earnings during that time, that he was paying his share of the mortgage but, rather, that he was simply paying board to his mother. I have already rejected the proposition that he paid

$8,000 to his mother as his share of the deposit, borrowing half of that amount from his father. I am not satisfied on the evidence that he not only assisted with periodic mortgage payments from his earnings but also paid his mother the balance of $4,000 which she is said to have claimed as reimbursement of the deposit. The evidence goes only so far as to indicate that, until 2000, Mrs Murphy was responsible for making all of the outgoing payments of both principal and interest, rates and insurance apart from the $1,600 paid by Cheyne in August 1998.

[47] Bank records are available from August 2000 when, on 22 August, Cheyne withdrew the sum of $3,785.46 from the loan account and deposited it into his own current account and then withdrew $3,500 of that sum. It is not clear where that money went but I am prepared to find on the evidence that it was probably paid to the Bank in respect of the loan. He then appears to have made a regular payment of approximately $500 per month to the loan account until those payments ceased in June 2002. During that time Cheyne lived in the property and the payments at a rate of approximately $125 per week would have been roughly equivalent to a fair rental at that time.

[48] In June 2002, at about the time I consider Mrs Murphy moved back into the house to live there for a period with Cheyne and his partner, Mrs Murphy made a payment of $700 into Cheyne’s bank account and paid $100 weekly into that account. That sum increased to varying amounts between $150 and $200 until March 2003 when the regular loan payments made by Cheyne ceased.

[49] In March 2003 Mrs Murphy opened a new account from which all loan payments were made until the date of the hearing. The only deposits to that account from identifiable sources, apart from Clark Mellor’s board in 2010, were made from an account attributed to Mrs Murphy. Mrs Murphy’s evidence as to the source of those payments was confused and Mr Wynyard submitted on behalf of the plaintiff that I should regard the source as unknown. In my view, however, that proposition is unrealistic since Mrs Murphy and Cheyne are the only possible sources.

[50] It is admitted that Cheyne made no contributions to the property between

2002 and 2009 when he was completely estranged from his mother and had nothing to do with her or the property. Mrs Murphy was receiving an income during that period and it is highly probable, if not certain, that she was the source of approximately $10,000 or $11,000 per annum which was paid through that account. I come to that view notwithstanding that Mrs Murphy could not recall having operated a bank account from which the deposits were made. Almost all of the deposits to the account apart from Clark Mellor’s board were identified in the loan account bank statements as having been paid by way of direct credit from “ROBYN STEPHANIE MURP MORTGAGE TBS” and I am satisfied that it is more than probable that there was another account into which her earnings were paid and from which the funds were transferred regularly.

[51] From time to time during this period and between 2010 and the date of hearing, funds were not deposited into the loan repayment account. The result was that the Bank allowed the arrears to accumulate, no doubt satisfied that it had sufficient security to protect its interests in respect of the mortgage. Correspondence from the Bank establishes that there were attempts to put the bank loan and its repayment on a proper footing, but these were thwarted by a lack of co-operation between the parties. There appear to have been occasions on which the arrears were capitalised by adding the sum to the amount of principal owing under the loan and letters from the Bank indicate that it was mindful of its inability to enforce the loan against Cheyne.

Cheyne’s contribution to the outgoings

[52] The schedule of contributions to the outgoings on the property prepared by Mr Wynyard suggests, by reference to the available bank records, that from the date of purchase to the time of the hearing, Cheyne contributed a total of $47,472 to loan payments and other outgoings. The documentary evidence establishes that in the latter half of 2010 Cheyne paid $508 to the Rotorua District Council for rates and various sums totalling $3,892.18 paid for section-clearing and other garden maintenance, general maintenance and repairs in respect of the property, and new carpet. At this time Cheyne was in sole occupation of the property; he made contributions to the loan account of some $5,160 during the period from October 2010 to March 2012.

[53] The total of $9,550.18 paid by Cheyne in respect of the property between July 2010 and June 2012 equates to a weekly rental of approximately $95. During that time Mrs Murphy was required to pay for her accommodation elsewhere and she continued to be in that situation at the date of hearing.

[54] From the $47,472 contribution asserted by Mr Wynyard, I deduct $2,940 paid up to the date of hearing by Cheyne’s step-daughter by way of rent; that could not be regarded as a contribution by Cheyne. Further, I discount the $8,000 deposit which Cheyne claims to have paid, having found that his evidence in that regard is unreliable and not acceptable.

[55] After allowing for the $9,550.18 he paid during the period of occupation in

2010 to 2012, a balance of $26,981.82 can be attributed to Cheyne principally by way of contributions to the principal and interest payments due under the loan. That is the equivalent of $270 per week by way of rental for the 23 months or approximately 100 weeks during which Cheyne occupied the premises with others from August 2000 to July 2002. It is reasonable, in my view, to attribute approximately half of the sum paid to a fair rental and for half of it to be treated as a separate contribution to the servicing and reduction of the Bank loan. On that analysis, Cheyne’s net contribution to the equity in the property, after making a discount for a fair rental during periods of occupation, is approximately $13,500

over the entire period since the property was purchased. That view may be generous because those payments may have been interest payments only. However, responsibility for the loan payments rested with Mrs Murphy and Cheyne is entitled to credit for making them.

[56] That contribution may be contrasted with the payments made by Mrs Murphy in respect of mortgage interest and principal reduction, rates and insurances. The loan payments which can be attributed to her by reference to the bank records from April 2003 total approximately $74,000. In addition there is the uncontested evidence that between November 1995 and August 2000 when Cheyne began making payments to the loan account that Mrs Murphy was entirely responsible for meeting all of the outgoings on the property. It appears also that she made all of the insurance payments.

Conclusion as to contributions

[57] Standing back from the detailed evidence, such as it is, of who occupied the property and when, and who made what contribution to the outgoings and at what times, the overwhelming picture is of Mrs Murphy being responsible for meeting the outgoings, except to the extent that Cheyne made some contributions at times when he was occupying the property alone and his mother was required to pay for accommodation elsewhere. That evidence does not persuade me that Cheyne could have had a reasonable expectation of acquiring beneficial ownership of the property by reason of some implied agreement with his mother.

Parties’ awareness of co-ownership

[58] The evidence does not establish when and in what circumstances Mrs Murphy first became aware that Cheyne was entered on the title to the property as a registered proprietor. It is likely to have been around August 2000 when Cheyne began exclusive occupation of the property, assumed responsibility for contributing to the loan payments, and took out a life insurance policy for the sum of $103,000, the proceeds of which would have assisted to repay the mortgage in the event of his death. The assumption that it is likely that Mrs Murphy became aware of Cheyne’s

“ownership” at that time would be consistent with comments attributed to Mrs Murphy that, as an apparent owner of the property, Cheyne should contribute to the deposit which had been paid.

[59] But it is clear that at around this time Cheyne and Mrs Murphy were no longer on good terms and that Mrs Murphy felt she had been forced to live elsewhere. I have noted that it was not until early 2004 that Cheyne took any formal step to realise what he, by then, claimed to be his share of the ownership of the property. Correspondence from the Bank at around that time suggests that the move to extricate himself from ownership of the property was prompted by his having applied to the Bank for a loan in his own name for the purchase of another property. The claim to beneficial ownership, put in that context and in light of the limited contributions Cheyne had made to the outgoings of the property up to that point, indicate that his claims to beneficial ownership were somewhat opportunistic. That impression is reinforced by the fact that it was not until 2010 that Cheyne took any further step with regard to the ownership of the property.

[60] In February 2010, what was formally the joint tenancy of the property was severed with Cheyne and Mrs Murphy being re-registered on the title as tenants in common in equal shares. The evidence did not establish how that occurred but it is clear that the step was initiated by Cheyne and his solicitors. There is no evidence which would entitle me to infer that Mrs Murphy expressly or impliedly accepted the severance as confirmation that Cheyne was a beneficial owner of at least half the property. Put in the context of difficulties the Bank was having in securing regular payments in respect of the mortgage at that time, compounded by its inability to pursue Cheyne because of his minority at the time of the purchase, I consider that step was merely a tactical manoeuvre to assist with the ultimate division of the property in accordance with Cheyne’s claims to a beneficial share.

Conclusion – Cheyne not a beneficial owner

[61] On the totality of the evidence, therefore, I am satisfied that no step was taken either by Cheyne or by Mrs Murphy after the property was acquired to give

Cheyne any reasonable expectation that he had a beneficial interest in the property. Mrs Murphy is entitled to be sole registered proprietor.

Resolution of Cheyne’s claims

[62] Under s 342 of the Act I am required to take into account certain factors when considering how to resolve Cheyne’s claim under s 339 of the Act.9 I have determined that Cheyne has no beneficial ownership in the property but that he has contributed to the cost of improvements and maintenance of the property and to the increase in the net equity. The property is a residential dwelling in Rotorua which Mrs Murphy wishes to occupy and I am satisfied that she is suffering hardship in having to pay for other accommodation while Cheyne’s step-daughter is a tenant. In my view, Cheyne’s contributions over and above what would have been a reasonable

rental for the periods during which he was in sole occupation can be met by requiring Mrs Murphy to pay appropriate compensation to him. In those circumstances, the competing claims for orders requiring payment of occupation rental do not need to be considered.

[63] In the light of my findings that Mrs Murphy is the sole beneficial owner of the property, it is appropriate to make such orders as will remove Cheyne’s name from the title and allow Mrs Murphy to return to sole occupation.

Proposed orders

[64] I propose to make orders, therefore, which will:

(a) result in Mrs Murphy becoming the sole registered proprietor of the property; and

(b) require Mrs Murphy to pay Cheyne $13,500 by way of compensation under s 343(a) of the Property Law Act.

9 Discussed at [11] above.

[65] I invite the parties to confer as to the form of the orders to be made, including as to the timing of the compensation payment, and to file a joint memorandum for consent orders or, failing agreement, separate memoranda setting out their views.

[66] I reserve the question of costs. My tentative view is that each party has succeeded in part and that costs should lie where they fall, but either party or both may apply by way of memorandum.

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Toogood J