IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2006-409-002481 [2015] NZHC 1571

IN THE MATTER	the Estate of Marjorie Elizabeth Graham	

BETWEEN	
ELIZABETH JEAN GRAHAM Plaintiff	

AND	
LEWIS ALEXANDER GRAHAM Defendant	

Hearing:	17 June 2015	

Appearances:	
D P Dravitzki for Plaintiff
C D Eason for Defendant	

Judgment:	
7 July 2015	

JUDGMENT OF DUNNINGHAM J

[1]       Mrs Marjorie Graham died on 22 June 1997.  Disputes have arisen between her two adult children and, eighteen years later, her estate remains undistributed.

[2]     Two years before she died, Mrs Graham made a will which appeared unexceptional in its terms.  After payment of her debts, funeral expenses and administration expenses, her assets were to be divided equally between her children, Elizabeth  Graham  (Elizabeth)  and  Lewis  Graham  (Lewis),  the  parties  to  this litigation.

[3]       Both Elizabeth and Lewis were also appointed as executors and trustees of their mother’s estate.  The assets of the estate consisted of the deceased’s residential property at 9 Te Ra Crescent, Diamond Harbour and three undeveloped sections at
29 Council Hill Road, Little River, Banks Peninsula.  Unfortunately, the relationship

between Lewis and Elizabeth deteriorated.   In 2006, proceedings were issued by

GRAHAM v GRAHAM [2015] NZHC 1571 [7 July 2015]

Elizabeth outlining the issues of dispute between her brother and her, and seeking an order appointing the Public Trustee as sole trustee and executor of her mother’s estate in place of herself and her brother.   One of the matters in dispute was that Lewis alleged that he was the sole beneficial owner of the Little River sections and intended commencing proceedings against the estate in relation to the sections.

[4]       The Public Trust was appointed as trustee in place of Elizabeth and Lewis in late 2007.  Staff at the Public Trust then made enquiries of Lewis to determine what evidence he had to support his claim to ownership of the Little River sections.  By late 2010, the Public Trust had decided to issue a notice of disallowance of the claim pursuant to s 75 of the Trustee Act 1956, but the Canterbury earthquakes intervened. No further steps were able to be taken until the Public Trust could recover its files from its former offices.

[5]       On 19 September 2013 a notice of disallowance of the claim pursuant to s 75 of the Trustee Act 1956 was issued to Lewis and copied to his lawyer, Mr Eason, the following day.  No proceedings were filed by Lewis, but he continued to assert his claim to beneficial ownership of the sections.   That led to the current application being brought by the Public Trust seeking an order barring Lewis’s claim pursuant to
s 75 of the Trustee Act 1956.1

[6]       The application is opposed by Lewis who, in turn, seeks an order under s 75(3) extending time for making the claim, and an order requiring the Public Trust to transfer the Little River sections to him on the basis he holds a beneficial interest to those sections by reason of a resulting trust in his favour.

[7]       In this context I must decide:

(a)	whether it is appropriate to make an order barring the claim now brought by Lewis Graham; and, if not

(b)	whether  Lewis  Graham’s  claim  to  ownership  of  the  Little  River

sections pursuant to a resulting trust is established on the evidence.

1	An order was also sought to vest the land owned by the estate in the Public Trust as Lewis refused to sign the requisite authority and instruction forms, but that has now been resolved.

[8]       As  Elizabeth  opposes  the  making  of  the  orders  sought  by  Lewis,  the Public Trust has taken no active position on the applications and abides the decision of the Court.

Section 75 of the Trustee Act 1956

[9]       The  hearing  was  triggered  by  the  Public  Trust  invoking  s  75  of  the Trustee Act  1956  and  serving  notice  on  Lewis  rejecting  his  claim.    Section  75 relevantly provides:

(1)	Where a trustee desires to reject a claim that has been made, or that he has reason to believe may be made,—

(a)        to or against the estate or property that he is administering;
or

(b)        against the trustee personally by reason of his being under any liability in respect of which he is entitled to reimburse himself   out   of   the   estate   or   property   that   he   is administering—

the trustee may serve upon the claimant or the person who may become a claimant as aforesaid a notice calling upon him, within a period of 3 months from the date of service of the notice, to take legal proceedings to enforce the claim and also to prosecute the proceedings with all due diligence.

(2)        At the expiration of that period the trustee may apply to the court for an order under subsection (3), and shall serve a copy of the application on the person concerned.

(3)        If on the hearing of that application that person does not satisfy the court that he has commenced the proceedings and is prosecuting them with all due diligence, the court may make an order—

(a)        extending the period, or barring the claim, or enabling the trust property to be dealt with without regard to the claim; and

(b)        imposing   such   conditions   and   giving   such   directions, including a direction as to the payment of the costs of or incidental to the application, as to the court seems just.

…

[10]     There has been limited consideration on the application of s 75 in previous cases.     The  most   comprehensive   discussion   is   that   of  Master  Venning  in New Zealand Guardian Trust Co Ltd v Lipsitt.2   In that case the respondent had given notice in January 1992 of a claim against her mother’s estate for repayment of nursing home fees that she said she had paid on behalf of her mother.  Although the applicant  requested  that  the  respondent  make  a  claim  by  way  of  ordinary proceedings, no steps were taken and, in November 1997, the applicant issued a s 75 notice to the respondent.  Despite that, no proceedings were issued within the three
month time period and the applicant filed an application to the Court to bar her claim.

[11]     In considering the application, the Court held:3

Section 75 recognises that of (sic) claims are often raised with executors and trustees of a deceased’s estate.  If the executors and trustees do not feel able to accept those claims then s 75 provides a mechanism for giving fair notice to the claimant to issue proceedings and in the absence of such proceedings to obtain an order from the Court barring the proposed claim so that the estate may be administered, despite the threatened claims.

While a Court is reluctant to bar a party from pursuing a claim which may have merit, the period of notice and the requirement of an application of this kind recognises that such may be the outcome in certain circumstances.  It will only be the case where the trustee has not felt able to accept the claim, and despite being requested to issue, a claimant has failed to do so.

[12]     In that case, the Master noted that although the respondent had provided information in support of her claim, the applicant, which was an experienced trustee company, felt unable to accept the claim.  It had urged the respondent to pursue the claim by the issue of proceedings.   Furthermore, the deceased had died almost
10 years ago and the assets in the estate had been realised.  They were available for immediate distribution, but for the threat of her claim.  No steps had been taken by the respondent despite being advised to initiate proceedings and being encouraged to take legal advice.  The respondent had not put any explanation before the Court why
she had not filed her claim.

2	New Zealand Guardian Trust Co Ltd v Lipsitt HC Christchurch P386/91, 14 August 1998.
3	At 4-5.

[13]     While the Court considered giving her a final extension of time, the failures of the respondent to take any action to date meant the Court was not satisfied she would prosecute such a claim with due diligence.  In all the circumstances, the Court held it was appropriate that an order was made barring her claim.

[14]     The discussion in Lipsitt suggests the following principles are relevant to an application under s 75:

(a)       the Court is not required to undertake a substantive assessment of the merits of the claimant’s claim.  However, whether the claim has any merit may be taken into account when considering if it should be barred;

(b)       a lack of action both before and after the three month period will count against a claimant;

(c)       an explanation will be required as to why no steps were taken to initiate proceedings from the time the claimant had knowledge that the trustee was not going to meet their claim;

(d)       evidence that a claim may not be prosecuted with all due diligence will count against a claimant;

(e)       even where the claim is meritorious, and there is an explanation for the failure to initiate one to date, it would only extend the time for bringing a claim on conditions requiring the claimant to initiate his or her proceedings in a specified period of time, failing which it would be barred.

[15]     Section 75 is, therefore, designed to provide a process by which threatened claims  can  be brought  to  a head  and  determined one way or the other so  that administration of the estate or property can proceed with certainty.  While the Court has the power to bar a claim under s 75(3), that would normally only be used when the claim lacks obvious merit or where there is reason to believe the claim will not

be prosecuted diligently.  In other cases, the more appropriate course of action would be  to  make  orders  under  s 75(3)(b)  imposing  conditions,  and  giving  directions, including as to payment of costs, to ensure the object of s 75 is achieved and the claim is disposed of in a finite time period.   That could, of course, include the making of unless orders.

Should the claim be barred?

[16]     In the present case, it is clear that Lewis failed to take any steps to progress his claim within the three month period and there is no satisfactory reason given for that. The only steps which were taken in that period was that Lewis’s lawyer:

(a)       wrote  to  the  Public  Trust  on  30  September  2013  acknowledging receipt of the notice, and requesting that further efforts be made to resolve the matter before proceedings were issued; and

(b)       wrote again, on 16 December 2013, and only three days before the s 75 notice expired, asking when he could expect a response to his letter of 30 September 2013.

[17]     On  15  January 2014,  and  after  the  three  month  period  had  expired,  the Public Trust responded to those letters advising that that responsibility for that estate had been transferred to another office of the Public Trust and the writer would confer with the Trust’s office solicitor who was returning from leave in early February. Lewis explains in his affidavit that he believed that the Public Trust was intending to review its files and to continue discussion on the matters and so he did not anticipate that a s 75 application would be issued.  Once the application to bar his claim was filed in July 2014, Lewis responded with his application to extend the time for making the claim, and to hear and allow his claim to beneficial ownership of the Little River sections.

[18]     While I consider that Lewis was dilatory in his response to the notice of claim,  and  his  failure  to  file  an  application  prior  to  19  December  2013  is unexplained, he has now effectively brought his claim in the context of these proceedings, and has provided full affidavit evidence in support of his claim.  That

being so, and in light of the fact the claim is, on its face, reasonably arguable, I am satisfied that it is appropriate to extend the time for making the claim, and to go on and consider the substantive merits of that claim.

Background to the claim

[19]     Lewis bought the three sections on 21 August 1973 for a sum of around $700. In the early 1970’s, he also met his wife, Ellen, and they married.  They wanted to build a family home, but in order to qualify for the Housing Corporation ballot and for a loan from that body, they could not own any other property.  Lewis says that they decided to transfer the sections into his mother’s name so that they were eligible to participate in the ballot.

[20]     The memorandum of transfer executed on 24 February 1997 recorded that the transfer was “pursuant to an oral agreement and in consideration of a sum of $2,000 paid to me by Marjorie Elizabeth Graham of Christchurch, widow”.  While Lewis recorded the transfer as being a sale for consideration, he said that he never asked for his mother to pay for the sections and she never did.  The transfer of the sections into his mother’s name was registered on 3 June 1977.

[21]     On 9 March 1977, Lewis was advised that he had succeeded in a ballot for a Housing Corporation section in Parklands, Christchurch.  He was offered the right to purchase a section for $8,700 with a deposit of $1,740.  However, his evidence was that, although he and his wife paid the deposit and began clearing and developing the Parklands  section,  they  decided  they  would  be  financially  over-committed  in building a new house on the site.  They therefore relinquished the section and were refunded the deposit and instead purchased an existing house in Stapletons Road, Christchurch. The Stapletons Road property was transferred to them on 2 June 1978.

[22]     Lewis acknowledged that his mother made a payment of $2,000 to his wife and him in 1978 but says it was not for the Little River sections but was for a car. Lewis explains that he and his wife required a $15,000 deposit to purchase the Stapletons Road property, of which they had $13,000 and needed another $2,000. He says that in 1977 his mother’s car became unusable and she needed a car to drive to work.  He gave her use of his 1966 MG car and the registration was transferred to

her on 20 May 1977.  He says that she eventually paid for it by paying him $2,000 and transferring a Jaguar motor vehicle to Lewis to make up the value of the MG motor car which, at the time he accepts, was approximately $3,250.

[23]     Lewis also gave evidence saying that to fund the $2,000 payment, he allowed his mother to raise a mortgage on the Little River sections.   The mortgage was registered and advanced to Ellen and him on 9 May 1978 and on 15 April 1980, she repaid that mortgage to the lender, via her solicitor.  However, he could not explain why it was recorded as a loan from his mother to Ellen and him.  There was also no evidence that Ellen and he repaid it to his mother before she repaid the lender.

[24]     In 1991, Mrs Graham wanted to move to Diamond Harbour and purchase the property at 9 Te Ra Crescent.   The $10,000 shortfall for the purchase price was raised by borrowing against the Little River sections.  However, the loan was again taken out in Lewis’ name and he met the repayments while his mother, as the owner of the sections, guaranteed the loan.  In 1992 a further loan was raised by Lewis on the Little River properties, this time for his own expenses.

[25]     When Lewis and Elizabeth’s mother died on 22 June 1997, her will made provision for repayment of the sum of $9,900 to Lewis which seems most likely to be repayment for the $10,000 Lewis provided to her in 1991 and which allowed her to acquire the Te Ra Crescent property.

[26]     Lewis explains that he never sought to transfer the sections back to him after not proceeding with the purchase of the Housing Corporation section because, throughout  his  marriage, his  wife and  he had  difficulties,  including temporarily separating in around 1990.  He says if the property:

…  had  been  retransferred  to  me  by  my  mother  …  it  could  have  been property acquired during the course of the relationship and would therefore be  subject  to  equal  division  between  myself  and  my  wife,  should  our marriage fail.

[27]     It therefore “suited me to not to have the property retransferred to me so it was in a sense protected”.

[28]     Lewis also gave evidence about why, during the course of a dispute with the Banks Peninsula District Council, he repeatedly disavowed being the owner, saying it was his mother who owned the section.   He explained that when he bought the sections the sale was conditional on him taking over an existing liability from the Council to meet part of the cost of maintenance of the effluent disposal system on one of the sections.  The system served a nearby property owned by the Council and there was a sewage easement over part of the land which Lewis had bought.

[29]     Unfortunately, the effluent disposal system failed after the Council sold that nearby property to new owners, at which point the Council tried to invoke performance of the condition in the sale and purchase agreement.   Lewis, in correspondence and in telephone calls over the dispute, repeatedly said that his mother was now the owner of the property and he did not have liability to meet the expense of paying to rectify the problems which had arisen with the effluent disposal system.  For example, on 28 January 2005, in an email to a Council officer he said “you will also be aware that I sold the land to my mother a few years later and have not owned it since”.  He says eventually the effluent discharge was terminated and the disposal system shut down without him having to meet the Council’s demands.

Basis of claim

[30]     Lewis bases his claim on the well accepted principle that where there is a voluntary transfer  of  property  without  consideration,  the  recipient  will  hold  the property so transferred on a resulting trust in favour of the transferor.

[31]     In the present case, the transfer of the sections to Mrs Graham was said to create a resulting trust because it was a voluntary conveyance from Lewis to his
mother and not a sale, and so led to a presumed resulting trust in his favour.4

4	Re Vandervell’s Trusts (No. 2) [1974] 1 Ch 269.

[32]     However, I must first resolve whether this was a voluntary conveyance or whether, as documented at the time, it was a sale agreement for consideration of
$2,000.   In this regard, the onus is on Lewis to rebut the documented basis of the transfer because, until there is sufficient evidence to establish that the transfer was a voluntary conveyance rather than a sale and purchase agreement, Lewis cannot rely on a presumption of resulting trust in his favour.

[33]     In this case, the onus is on him to contradict the express terms of the transfer, and also to satisfy the Court  that the payment of the sum of $2,000  which he acknowledges  made to  him  at  around the same time,  was  not  payment  for the sections.

[34]     In respect of the description of the terms of the transfer, Lewis explains that he took legal advice as to the best way to divest himself of the sections and that is why it was recorded as a sale to his mother.  He says:

We acted on legal advice or I acted on legal advice in that process and the legal advice that I received was that it would be possible to transfer the title without  selling  the  properties  and  that  would  meet  the  State Advances requirement in terms of making us eligible to ballot for and purchase a piece of land.

[35]     However, he could not explain why, if that were the case, the transfer was not expressed as a transfer whereby Mrs Graham held the property on trust for her son.  I find it improbable that if the intention was that Lewis was to retain the beneficial interest in the property, and that was sufficient for the Housing Corporation’s purposes, an accurate description of the terms of the transfer would not have been used by the lawyer advising on the transaction.

[36]   In terms of the stated purchase price there seems no dispute that the consideration of $2,000 reflected the approximate value of the sections at the time. However, it was a relatively modest amount at the time, being less than the value of the 10 year old car that Lewis transferred to his mother and only a quarter of the value of the section which Lewis and his wife purchased in 1978 in Stapletons Road.

[37]     The next issue is whether Mrs Graham did indeed pay the purchase price.  It is acknowledged that a payment of $2,000 was made by Mrs Graham to  Lewis probably by the mortgage she raised over the sections in 1978. As already discussed, that payment was alleged to be part payment for the MG motor vehicle which Lewis transferred to his mother on 20 May 1977.  Curiously though, the car was transferred to Mrs Graham about a year before Lewis says the payment of $2,000 was made to him to complete the purchase of Stapletons Road in 1978.   He explains that the payment was “deferred” because she did not have funds at the time.  However, she did in due course raise $2,000 on the Little River sections and on-loaned that sum to Lewis and his wife and there is no explanation why this could not have been done at the time the car was transferred to her.

[38]     Overall, I found the evidence that the $2,000 Lewis and his wife received was deferred part-payment for a car, and not a deferred payment for the section, an unsatisfactory explanation.  I was left in considerable doubt as to whether this was the case or whether it was another contrived explanation by Lewis to achieve the desired outcome.

[39]     My doubts were reinforced by the fact that both Lewis and Elizabeth gave evidence that their mother was a careful person who kept good records.   If her understanding of the transaction was that it was a purchase and she had not paid the
$2,000, then, as she recognised other debts in her will, it seems unlikely that she would have overlooked this debt.  Alternatively, if her understanding was that she held the sections on trust for Lewis, that too would have been recognised in her will and  she would  have ensured  that  the sections  were returned  to  Lewis,  and  not allowed them to form part of her general estate.

[40]     I also note that Elizabeth recalls her mother making a comment about what she paid Lewis for the sections, along the lines of “I paid Lew what he paid for them”.   This does suggest that, whatever Lewis’s intentions were, his mother understood the nature of the arrangement to be a sale and purchase.

[41]     Lewis relies in part on a photograph of the sections, with a handwritten note

on the back of it saying “view from Top of Lew’s 3 sections – east side L. River

20.2.90”.  However, I consider this evidence equivocal.  While it could indicate an understanding of ownership, it could also be shorthand for the origin of the sections, which were originally Lew’s.

[42]     Another factor Lewis relied on was an assertion that he paid rates on the section.   He provided two rates assessment notices which were sent to him at his mother’s address of 5 Auburn Avenue and which totalled a little over $65 plus a receipt for another account issued by the Council in 1986 for the Little River water supply to “Mrs L A Graham” for the sum of $52.50, for which again a receipt is attached.  I accept that he may have attended to some of these expenses just as he may have assisted in the management of these sections, although Elizabeth recalls her mother telling her that “grazing fees take care of the rates”.   Certainly the expenses involved with ownership of the sections were modest.  I am not satisfied that  Lewis  paid  all  expenses  of  the  section  from  his  own pocket,  or  that  such assistance which he did give was more than that of an adult child supporting their parent, as opposed to what a beneficial owner might do.

[43]     Importantly, despite Lewis now maintaining ownership of the sections, there was  a  series  of  communications  and  correspondence  with  the  Banks  Peninsula District Council, and in due course with the Ombudsman, where Lewis expressly disavowed ownership and any obligation under the condition of sale that he pays of half the cost of upgrading the effluent disposal system.  The Council recorded in a telephone conversation with Lewis on 20 April 2001 that “as [Mr Lewis Graham] no longer owns the land any obligation has lapsed”.   Similarly, Lewis wrote to the Office of the Ombudsman on 29 April 2001 saying that, “neither party to the original agreement [me and BPDC] are now owners of the properties may be relevant to [who is obliged to pay to remedy the off-site effluent disposal system].

[44]     Similarly, in January 2005, he referred to the agreement he had with the Council to share the costs of him upgrading the effluent system saying “I have legal advice that my obligations ceased when my ownership ceased and as the obligation was not transferred to my mother it would have lapsed”.   Lewis accepted that in

these documents he was clearly representing to the Council that he did not “own the land”, but his response was that he “misrepresented the situation in response to the Council misrepresenting a situation to me”.  Nevertheless, as Lewis acknowledges, “the problem was resolved without me having to meet the [Council’s] demands”.

[45]     In short, therefore, I have the memorandum of transfer recording that the sections had been sold to Mrs Graham.   I also have evidence that on subsequent occasions,   including   in   formal   correspondence   with   the   Council   and   the Ombudsman, this position was reiterated by Lewis.  The evidence to contradict that is ephemeral.   It includes an assertion that he paid rates and other charges on the sections  (but  which  may  have  been  met  from  grazing  fees  in  any  event)  and undertook some other maintenance work on them, and the fact his mother referred to them in a note on a photo as “Lew’s sections”.

[46]     Lewis also accepts that his mother was good at details and “meticulous with record-keeping” including in  recording and  ensuring the debts  she owed  to  her children were repaid in her will.  I find it unlikely that someone who was good at record-keeping and was clearly aware that these sections were held in her name would not, if she understood the sections were beneficially owned by her son, ensure that this was reflected in the will she made.

[47]     Accordingly,  I  am  not  satisfied  that  sufficient  evidence  has  been  placed before me to demonstrate that, on the balance of probabilities, the transfer in 1977 was a voluntary transfer and not a sale.

Relevance of illegal purpose

[48]     Even if I had been satisfied that the section had been transferred for no consideration, this is a circumstance where it was a gift with a fraudulent purpose in view.  In other words, Lewis is obliged to rely on his own fraud in order to rebut the documentary evidence demonstrating this was a sale transaction.

[49]     The initial purpose of the transaction was in order to mislead the Housing Corporation so that Lewis and his wife would be eligible to enter a ballot for a section.  In Potter v Potter, the Court of Appeal stated:5

[20]      As  a  general  principle  a  party  will  not  be  permitted  to  adduce evidence that in transferring legal title to another he or she intended to retain the beneficial interest if the effect of the evidence would be to disclose that the transfer had a fraudulent purpose.  For example it would be fraudulent to hold out that a wife was the beneficial owner if in reality the husband had retained  the  relevant  beneficial  interest.    Accordingly,  in  cases  where property had been transferred by a husband to a wife to gain revenue advantages premised upon her new beneficial interest, the husband has been precluded from averring in later proceedings that his real intention was to retain the beneficial interest, for example, Re Emery’s Investments Trusts [1959] CH 410.  …  In this situation the settlor is the unwilling beneficiary of a compliment to his honesty.   It is assumed that he would not have intended  to  defraud  others  by  pretending  that  his  wife  had  a  beneficial interest when in reality he had intended to retain the beneficial interest all along.

[50]     In Potter v Potter, the parties were in a de facto relationship and, although one of them paid the purchase price for the property, they entered a relationship property agreement recording that they were tenants in common in equal shares in anticipation that a family trust was to be established to which the property would be transferred.  When the relationship broke up the party providing the purchase price asserted his partner held her half share on resulting trust for him.

[51]     In the High Court it was held that the recipient did give consideration for her half share as she made certain concessions in the property sharing agreement that was entered into.6     On appeal it was argued that the recipient was given a half interest only to enable two annual exemptions from gift duty (instead of one) in order  to  better  implement  the  transfer  of  the  property to  the  trust.    The  Court observed:7

The difficulty is that gift duty could have been legitimately reduced only if Ms Potter’s half interest had been a beneficial one.  A bare legal interest as trustee would have provided no basis for personal participation in a gifting programme for the purpose of the Estate and Gift Duties Act 1968.

5	Potter v Potter [2003] 3 NZLR 145 (CA).
6	Potter v Potter HC Auckland CP 126-02, 26 April 2002.
7	At [19].

[52]     In the present case, Mr Dravitzki initially argued that equitable principles precluded Lewis from effecting a transfer to the deceased intending to qualify for a Housing  Corporation  ballot  and  loan  and  then  subsequently  relying  on  that fraudulent purpose to say that the transfer had no effect and that he retained the beneficial interest in the property.  However, in light of the evidence that Lewis and his wife had not proceeded with the offer of a Housing Corporation section and loan, he felt less able to press this argument, noting the more nuanced approach to recognising resulting trusts (particularly in the United Kingdom) even where there had been a fraudulent purpose to the transfer.  In Tinsley v Milligan, the House of Lords, by a majority, held that a contributor to the purchase of property bought in the name of another so as to enable the parties to perpetrate a fraud on the Department of Social  Security,  could  nevertheless  establish  a  beneficial  title  to  a  share  in  the
property even though the fraud had been carried out.8

[53]     However, in Tinsley, the claimant was able to lead evidence of facts, not in themselves involving any impropriety, which raised the presumption of a resulting trust.  Since the claimant could rely on the presumption of a resulting trust she did not  need  to  lead  evidence  of  an  actual  intention  to  retain  beneficial  ownership founded on the improper purpose in order to establish her beneficial title.

[54]     I do not consider this case falls into such an exception.   Lewis relies on evidence of his improper purpose in order to rebut the documentary evidence which records this purchase as a sale.  It is only if I have regard to and accept his evidence that the sale was fictitious that the presumption of a resulting trust arises.  There is no compelling contemporaneous evidence that the transfer was voluntary rather than a sale.

[55]     Furthermore, Lewis was then successful in the Housing Corporation ballot and was allocated a particular section with an offer to purchase.  Even though Lewis and his wife subsequently declined to proceed with the purchase, I do not consider that that changes the position that they obtained the right to purchase a section through  his  improper  transaction.    To  compound  matters,  Lewis  continued  to
maintain that he was not the owner of the section to obtain further improper benefits.

8	Tinsley v Milligan [1994] 1 AC 340.

First, for the duration of his marriage until this claim was made, he relied on the sale to deny his wife the possibility of making a claim against the section should they separate.  Similarly, he used the record of the sale to his mother to deny liability for the costs of upgrading the effluent disposal system under the agreement he had with the Council.

[56]     As was stated by Lord Gough of Chieveley in Tinsley:9

… if A puts property in the name of B intending to conceal his (A’s) interest in the property for a fraudulent or illegal purpose, neither law nor equity will allow A to recover the property, and equity will not assist him in asserting an equitable interest in it.

[57]     While his was the minority judgment, the same principle was endorsed by the majority, saying:

Equity, through the mouth of the Court, then says, “We will not assist you to recover your property, because you have to give evidence of your own wrongdoing in order to succeed”.10

[58]     In the Tinsley case the Court held that the position is different for:11

… someone in the position of Miss Milligan, who has only to show her trust, resulting from the fact (which he must prove or which may be admitted) that the property was acquired wholly or partly by the use of his money … [because] in the latter case the claimant is not relying on his own fraud in order to succeed ...

[59]     That  is  not  the  case  here.    Lewis  is  having  to  rely  on  evidence  of  his fraudulent purpose in order to contradict the documentary record of the transfer being for consideration.  The fact that the transfer was voluntary is neither proven nor admitted  independently of  Lewis’s  evidence.    In  those  circumstances,  I am satisfied that he would be relying on his own fraud in order to succeed and the equitable remedy of a resulting trust is not available to him in those circumstances.

[60]     I also observe that the outcome is not inequitable.   Lewis will still receive half  the  interest  in  those  sections  (which  appear  to  have  increased  in  value
significantly over the intervening time compared with his capital investment in the

9	At 356.
10	At 367.
11	At 367.

early 1970’s) through his mother’s will.   Accordingly, his claim for a beneficial interest in the three Little River sections comprising part of his mother’s estate is declined.

[61]     Costs are reserved.   This appears to me to be a case where 2B costs are appropriate.  If costs cannot be agreed, the Court is to be advised by 17 July 2015 and a timetable for exchange of costs memoranda will be given.

Solicitors:
Malley & Co., Christchurch
C D Eason, Barrister, Christchurch