Smith and his family were allowed to live in the Conifer Grove property in Auckland and the house was to be used by Washikita and his wife Hisako for holidays and their retirement.
The informal deal was that Smith paid the rates and insurance and kept the house in good condition.
In 2003 Smith got into financial difficulty and asked to borrow $110,000 from his friend saying he would pay it back the next month.
That never happened and Smith only made some payments over the years. He said he was still paying the loan in a January 2016 letter to Washikita.
But Smith would later try to claim the money was reimbursement for expenses.
The couple only visited the property three times after they bought it in 1992.
In February 2020, Washikita wrote to Smith and asked him to vacate the property by the end of that year.
“He said that they were going to advise him to do so at the end of 2015 but they had received the letter in January 2016 about the repairs that had been carried out and so decided to let them stay in the house,” Associate Judge Owen Paulsen said in his decision released in December.
“He said Mr Smith had undertaken this work without consulting him, and they could not pay any expenses without a quote or receipt.”
In October 2020 Washikita’s son wrote to Smith saying his elderly father was not well and no one in the family intended to move to New Zealand.
They planned to sell the house and he asked if Smith would like to buy it. Smith said he would love to but did not make any efforts to advance his position.
When a registered market valuation of $1.06 million was obtained in February 2021, Smith said the house was in poor condition before sending Washikita a series of invoices for work he’d done on the property purportedly totalling $1.09 million.
Smith wanted Washikita to pay him $31,000 to take ownership of the couple’s house.
They rejected the offer and gave Smith until February 2022 to vacate the property, which he did not do.
Hisako Washikita applied to the High Court for summary judgment, where the court can make judgment on a case without having a full trial.
Smith argued to the court that he had an equitable interest in the property based on the amount of work he’d done on it over the years, however he’d never sent any invoices to Washikita until he was asked to leave.
As part of his evidence Smith provided invoices from two of his companies for work he claimed to have done on the property while living there, with none from third-party providers.
A forensic computer specialist analysed the invoices which dated back to 1993 and concluded they’d been created in a format of Microsoft Excel that didn’t exist until 2007.
The invoices were also all modified in January and April 2021, after the offer was made for Smith to purchase the property.
The invoices he gave to Washikita’s lawyers totalled just over $750,000 but the actual invoices added up to around $530,000, a discrepancy for which Smith offered no explanation.
Smith said he had an informal agreement with Washikita granting him a right of first refusal to purchase the property and agreeing to reimburse him for all costs incurred in respect of the property.
He said he wanted to buy the house but only if his right to reimbursement was recognised, which Hisako Washikita would not entertain.
Smith also contended that he had an interest in the property by virtue of his contributions to it.
Associate Judge Paulsen said Smith’s argument was “entirely implausible”.
“It involves Mr Washikita having paid Mr Smith for the property, provided him with 30 years rent-free occupation of the property, and now being obliged to transfer it back to Mr Smith along with a substantial payment to reimburse Mr Smith for expenses he says he incurred…”
Paulsen said Smith hinted at aspects of the oral agreement between himself and Washikita in correspondence over the years but hadn’t provided any actual evidence to the court to support those claims.
“None of the correspondence I was referred to in the written submissions or at the hearing provide any meaningful support for that submission,” Paulsen said.
“For instance, it was submitted that Mr Smith provided regular updates of maintenance and improvements he made on the property, but it is clear from the correspondence that reports to Mr Washikita were sporadic and years apart.”
Ultimately the judge ruled that Smith and his family must vacate the property so Hisako Washikita can take possession of it.
Despite the uphill battle to get Smith to leave, Hisako allowed Smith until the end of February to vacate.
The judge said Hisako was entitled to costs and that Smith was entitled to pursue his counterclaims, but that it was not unjust for him to vacate the property in the meantime.
This was because Paulsen considered Smith’s counterclaims were “without merit” and had no realistic prospect of success, that Smith had never offered to pay rent during any period of occupation, and that it could be another 18 months before the counterclaims were heard.
“...meaning Mr and Mrs Washikita will be forced to bear the financial cost of Mr Smith’s occupancy with no assurance of ever being compensated for that.”
The judge also did not accept there was any basis for the submission that the property would be better maintained if Smith continued to occupy it.
“It is notable that despite asserting he has spent more than $750,000 on maintaining the property, in his letter to Mrs Washikita’s solicitors of April 12, 2021, Mr Smith describes a property that is significantly rundown.
“Finally, given their ages and Mr Washikita’s health condition, the lengthy delay until Mr Smith’s counterclaims are heard is so significant it could prevent either Mr or Mrs Washikita from ever receiving any benefit from their property.”
