Stepdaughter landlords and Court ordered property testing

It can be easy to fight over property. It can be easier still to fight with one’s family. Combining the two often produces helpful jurisprudential developments. 

In the recent decision of Trott v Barnett[1] the High Court was able to consider a perfect storm of disharmony in the property and family law spheres and produce some useful guidance on the Court’s power to order the testing of property.

The law

It is a truism that building disputes usually require expert assessment of building structures. In those exceptional cases where access to the subject property proves difficult, parties to litigation in the High Court can avail themselves of Rule 9.34. This provides:

9.34 

Order for inspection, etc

(1) The court may, for the purpose of enabling the proper determination of any matter in question in a proceeding, make orders, on terms, for—

(a) the inspection of any property:

(b) the taking of samples of any property:

(c) the observation of any property:

(d) the measuring, weighing, or photographing of any property:

(e) the conduct of an experiment on or with any property:

(f) the observation of a process.

(2) An order may authorise a person to enter any land or do anything else for the purpose of getting access to the property.

(3) In this rule, property includes any land and any document or other chattel, whether in the control of a party or not.

The dispute

 In Trott the High Court considered an application under HCR 9.34. It came in the context of a lessor – lessee dispute. The property in issue allegedly had weathertightness problems. The backstory is complicated:

• House originally owned by husband and wife (wife being the plaintiff);
• Transferred to husband’s two daughters from a previous marriage (daughters being the defendants) on vendor finance, subject to lease for life to husband and wife. Loan forgiven so daughters obtain property for no valuable consideration;
• Husband dies, disputes erupt over estate between wife and stepdaughters;
• Parties agree that stepdaughters will sell property back to wife;
• Wife takes steps to assess value of property, allegedly discovers issues with Harditex cladding and water ingress to dwelling;
• Wife commences current proceeding to, inter alia, enforce lease obligations on stepdaughters to provide a dwelling fit for occupation.

Initially the plaintiff had sought orders that the defendants had to undertake testing at three locations identified by the plaintiff’s experts, and that the defendants had to pay for that testing. To the Court and the defendants’ consternation, this approach mutated on the day of the hearing to one seeking orders that the plaintiff’s expert carry out the testing, at her cost, which would be recoverable in the cause if she was ultimately successful.

Referring to the power under HCR 9.34, the Court observed that:

"Orders may only be made where necessary to enable proper determination of any question in the proceeding. But once that jurisdictional threshold is reached, the Court’s power to make such orders is discretionary.

…

Given the live issues on the pleadings and the evidential foundation for the need for more invasive testing, I consider that it is necessary to make the orders to enable the proper determination of a matter in question on the proceedings, namely the current water-tightness of the Property. The defendants have not suggested any means of determining that factual issue other than via invasive water-tightness testing." [2]

The Court approved invasive testing by the plaintiff’s expert, and insisted that a strictly limited scope be defined. The Court also gave directions on the right for the defendants’ experts to attend any testing:

"In my view, it is appropriate to restrict the invasive testing at this stage to specifically identified areas, rather than to make a more “open-ended” order as suggested for the plaintiff. Given the content of the second Incodo Report, and those areas of concern described with some particularity at paragraphs 71(a)–(c) of the Probett affidavit, I am minded to make orders that invasive testing may be carried out at those specific locations. However, as the areas identified at paragraphs 71(a)–(c) of the Probett affidavit are (it seems) wider than those identified in the first Incodo Report, I consider it is appropriate to allow the parties a further opportunity to comment on the framing of such an order before it is formally made.

I also consider it appropriate that any party has the right to have their own expert attend and view, but not direct or control, the inspection as it is carried out. With good cooperation and commonsense between the respective experts during the course of the testing, it may be that, if testing of the specific areas indicates that further testing is necessary, the parties may be able to agree this amongst themselves. If they are unable to do so, however, then the plaintiff will need to seek further orders expanding the scope of the invasive testing."[3]

Learnings

There is a clear undercurrent in Trott that in the context of property disputes, matters of testing should be dealt with using common sense and in a spirit of cooperation. 

The Court ordered particular conditions of testing which, it is submitted, will have broad application:

• Property owners to permit access for testing on reasonable notice (not being less than 7 days);
• Testing to be carried out only to specific agreed locations. In absence of agreement expert evidence usually required to identify proposed areas by each side, Court to then decide; and
• Party seeking orders for testing to meet all costs subject to being entitled to seek to recover those costs through the overall proceedings.[4]

Surprisingly the order in Trott did not include the usual condition that any damage be made good following the testing.[5]

[1] Trott v Barnett [2017] NZHC 478

[2] At [20] & [23].

[3] At [32] & [33]

[4] At [34].

[5] See Barge v Freeport Development Ltd HC Auckland CIV 2002-404-1771, 23 April 2004