Sillick v Sillick [2018] NZHC 510 (23 March 2018)

Last Updated: 22 May 2018

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY I TE KŌTI MATUA O AOTEAROA WHANGĀREI TERENGA PARĀOA ROHE

CIV-2017-488-000039 - [2018] NZHC 510

UNDER	section 339 of the Property Law Act 2007
IN THE MATTER	of an order regarding division of property amongst co-owners
BETWEEN	FRANZINA DE ANNA SILLICK Plaintiff
AND	BRIAN EARL SILLICK First Defendant DAWN KELLY SILLICK Second Defendant

Hearing:	14 March 2018
Appearances:	Anna Fuiava, for the plaintiff Second defendant in person Robert McDowell, McKenzie friend
Judgment:	23 March 2018

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 23 March 2018 at 3.00pm pursuant to r 11.5 of the High Court Rules.

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Registrar / Deputy Registrar

Solicitors:

Denham Bramwell, Auckland And to Parties:

SILLICK v SILLICK & ANOR [2018] NZHC 510 [23 March 2018]

[1] In this proceeding, under s 339 of the Property Law Act 2007 (the “Act”):

(1) the plaintiff (“Fran”) seeks orders for sale of property she owns as tenant-in-common with the first (“Brian”) and second (“Dawn”) defendants, and division of the proceeds among the co-owners; and

(2) Dawn seeks alternative orders for division of the property in kind among the co-owners.
As co-owners, Fran and Dawn have standing to make such applications.¹

[2] Because the parties have a common surname, and for ease of their reading this judgment, I mean no disrespect by referring to them by their given names, as were used in Court.

[3] Brian has not participated in any aspect of this proceeding, the genesis of which is explained in Hinton J’s interim judgment of 17 August 2017,² and minute of 17 October 2017. Critically, no alternative to the orders now sought has been achievable.

Background

[4] The property is a relatively small rural block on the outskirts of Kaitaia. It belonged to the defendants’ mother, the plaintiff’s grandmother, Lucy Rihi Sillick. Lucy left the property to the parties in her will, as amended. Fran and Brian each have a 37.5 per cent share in the property; Dawn has a 25 per cent share in the property.

[5] The property has a 1 August 2016 rating valuation of $315,000, comprising land valued at $175,000 and improvements valued at $140,000. A registered valuation of the property’s land value only (instructed on the basis the property’s “buildings are significantly derelict, and gaining access to the building [sic] may also be difficult”) at 14 September 2017 was $160,000.

¹ Property Law Act 2007, s 341(1)(a).

² Sillick v Sillick [2017] NZHC 1969.

[6] By June 2018, the parties are forecast to have accrued more than $22,000 in unpaid property and water rates to the Far North District Council. On 1 September 2017, Dawn responded to the Council’s then rates statements, saying “Unfortunately we are unable this time [sic]; we are however in a position to pay a sizeable portion of total outstanding; with the remainder to be paid upon [sic]”. The Council replied:

Your payment proposal is fine. Please let me know what your lump sum payment will be wher [sic] then we can work out an acceptable payment for the outstanding balance and ongoing rates moving forward.

No further communication has occurred.

[7] Fran has no wish to retain co-ownership of the property. Brian presently occupies the property, but has made no contribution to its running costs. Dawn’s attempt to share occupation of the property with Brian was not successful.

The law

[8] Section 339 of the Act 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 1952; 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 1952; or

(b) the Deeds Registration Act 1908; or

(c) the Crown Minerals Act 1991.

[9] Section 342 then sets out mandatory relevant considerations on making orders under s 339(1):

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.

Assessment

[10] Having regard to those considerations (and as I have noted them in the Background section of this judgment):

• (1) of the co-owners participating in this proceeding, Fran has the larger, and Dawn the smaller, share in the property;

(2) Lucy made equal provision for Fran and Brian in her will. By consent, the will was amended to make provision also for Dawn in settlement of her Family Protection Act claim against the estate;

(3) the property is generally neglected, covered with “Gorse, Manuka, self seeded Pines, some old shelter lines with pockets of rank pasture throughout”. Its “soils are of low natural fertility and are poorly drained in their natural state”. The valuer’s report summarised “The property is poorly presented. There is a contingency cost to clear gorse and sow pasture”;

(4) Brian occupies the property under Lucy’s will on the express condition he is responsible for meeting, but has not met and there is no evidence he could meet, outgoings on the property for the period of his occupancy;

(5) neither does Dawn evidence any ability to meet her share of liabilities on the property, let alone a share of the cost of achieving its division;

(6) of the co-owners, only Fran evidences any prospect of meeting liabilities on the property, but has already met significant costs incurred by Lucy’s estate, and cannot afford to continue such expenditure;

(7) Fran and Dawn have each made a small contribution, under $400, to the cost of the property;

(8) Dawn respects the property as family property, which Lucy wished in her will not to be sold and to be retained within the family;

(9) consensual alternatives to the orders now sought have been explored, but have not been achievable;

(10) none of the co-owners evidences any financial ability to purchase the share of any of the others;
(11) there is no more detailed proposal for division of the property between the co-owners. The property comprises a long rectangle with two principal buildings, a house and a barn. There is no evidence of how the property could be divided to give shares equal in value to the co-owners’ tenancies in common;

(12) whether and how the proposed division into three could lawfully or would practically occur is a matter of complete conjecture. Subdivision into two equal parts was estimated to incur costs of some $19,000, before legal costs. There is evidence the cost of subdivision is shortly to increase. And payment of outstanding rates may be a precondition to any subdivision;

(13) refusing the order for sale would render Fran most susceptible to meet any claim for outstanding liabilities on the property, while making the order would reimburse Fran and Dawn for their expenditures, and provide some excess for distribution among all three co-owners in accordance with their shares. Making the order would likely bring Brian’s occupation to an end; and

(14) refusing the order for division would mean any desired retention of only portions of the property by family would not be achievable, while making the order (even if economically and practically feasible) would force all co-owners to continue in individual ownership of smaller pieces of land, in their combination less valuable than their previous whole and without any certainty those smaller pieces would be saleable.

[11] The most influential factor in the present case is my assessment of the parties’ relative hardship under each of the proposed orders. In Gonsalves v Williams, Moore J accepted consigning parties to a dysfunctional future constituted relevant hardship for the purposes of s 342, and justified the “clean break” of a sale order.³

[12] Ultimately, I am similarly satisfied the hardship to Fran and Brian if the property was to be divided between the co-owners outweighs the hardship to Dawn in

³ Gonsalves v Williams [2014] NZHC 2376 at [53]- [54].

not obtaining that outcome. Conversely, I am satisfied the hardship to Brian and Dawn if the property was to be sold is outweighed by the hardship to Fran of continuing co-ownership. None of the other relevant factors upsets those relativities. I do not disregard Mr McDowell’s determined advocacy for retention of the land within the family, but no practical means was (or likely could be) proposed to achieve that result.

Decision

[13] My weighing of the relevant factors comes out in favour of Fran’s application for a sale order.

[14] I order:

(1) the property at 193 Okahu Road, Ahipara, Kaitaia, being all that parcel of land identified as NA37B/107 in the North Auckland Land Registration District, be sold under the Registrar’s supervision, with leave to refer to the Court where necessary;

(2) all outstanding expenses relating to the property and its sale (including, to avoid doubt, expenses of $5,284.38 owed to Fran, and $250.00 owed to Dawn) be paid from the proceeds of sale;

(3) the balance of the proceeds of sale be divided between the parties in accordance with their shares in the property;

(4) the outgoings on the property (but not in relation to its sale) be allocated to Brian for the period of his occupancy of the property after Lucy’s death; and

(5) the balance of the proceeds of sale be distributed accordingly.

[15] I reserve leave to Fran to apply for any necessary consequential orders. While I recognise the practicality of the additional orders sought in written submission, I doubt they are all necessary or desirable to engage the Court’s oversight. In the event orders are to be sought affecting third parties, unless their consent is provided, evidence will be required they have been advised of when, where, and what orders will be sought.

Costs

[16] In my preliminary view, the costs of this proceeding should be fixed at 2B scale, for payment (together with any permitted disbursements) to Fran of 37.5 per cent by Brian, and 25 per cent by Dawn, out of their respective net shares of the sale proceeds. By that division, the proceeding’s expense is borne proportionately by the parties.

[17] If that is not accepted, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served on the other by:

(1) Fran within ten working days of the date of this judgment;

(2) Dawn within five working days of service of Fran’s memorandum; and

(3) Fran strictly in reply within five working days of service of Dawn’s memorandum.




—Jagose J