IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE	
CIV-2017-470-000100
[2018] NZHC 2506	

BETWEEN	GURMINDER SINGH
First Plaintiff

RUPINDER KAUR
Second Plaintiff	
AND	HARVINDER SINGH
First Defendant

JASPAL KAUR
Second Defendant	

Hearing:	20–21 August 2018	
Appearances:	J Delaney for Plaintiffs
R E Kettelwell and M A Urquhart for Defendants	
Judgment:	25 September 2018	

JUDGMENT OF COURTNEY J

SINGH v SINGH [2018] NZHC 2506 [25 September 2018]

Introduction

[1]	This case concerns a rental property in Tauranga. The defendants, Harvinder Singh (Harvinder) and Jaspal Kaur (Jaspal) are the registered proprietors.1 The plaintiffs, Gurminder Singh (Gary) and Rupinder Kaur (Rupinder) say that they contributed 50 per cent of the equity and have contributed to the mortgage repayments and other outgoings, with the result that Harvinder and Jaspal hold it, as to 50 per cent, on a resulting trust for them. Harvinder and Jaspal deny this; they say that they paid for the property entirely and have met the outgoings themselves.

[2]	The only issue is factual; there is no disagreement that if Gary and Rupinder contributed to the purchase Harvinder and Jaspal will hold the property on trust for them as to 50 per cent of its value. The relevant principles are those stated by Lord Brown-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council:2
… A makes a voluntary payment to B or pays (wholly or in part) for the purchase of a property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions.

[3]	Those principles were applied by the Court of Appeal in Chang v Lee, in which the Court said:3

All that is required, where the terms of the advance are not agreed, is to apply the presumption of equitable ownership in the acquired property. The settled principle applies that where the money to purchase the property has been provided by two persons for that very purpose the property is held in proportion to the funds provided.

1	Given the commonality in their names the parties referred to one another by their first names and, for clarity, I do likewise.
2	Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC669 (HL) at 708.
3	Chang v Lee [2017] NZCA 308, [2017] NZAR 1223 at [27].

The purchase of the property

Background to the purchase

[4]	It is convenient to record some contextual facts first. The parties are all part of the same Sikh community in Tauranga and are related in the sense that Gary is Jaspal’s brother. In the past, the couples were on good terms but since 2016 there has been a rift between them which has its roots in a dispute about repayment of a loan that Harvinder and Jaspal made to Gary for his auto repair business. The events that are the subject of the present case occurred in 2007, when the relationship between the couples was still good. The other significant contextual fact is the practice in the Sikh community (referred to by several witnesses) of dealing in cash, including making cash loans to one another without any written record.

[5]	It is common ground that in early 2007 the parties had discussed buying an investment property together, though their recollections differ as to the details. Gary says that Harvinder asked if he was interested in buying a rental property with him and Jaspal but he (Gary) was not keen. He already leased a workshop in Te Puke for his business and was a part-owner of a house in Tauranga. He and Rupinder could not afford more borrowings. But because Harvinder said that he would not be able to buy the house if Gary did not participate, Gary agreed. The arrangement was to be that each couple would contribute $50,000, with the balance funded from a bank loan and the rent applied to repay the mortgage. Gary looked at properties with Harvinder, including the property at 65 Pooles Road, Greerton. He was content for Harvinder and Jaspal to undertake the negotiations because Harvinder was older than Gary and senior to him in the Sikh culture.

[6]	Harvinder’s evidence was that when he and Gary had talked about buying an investment property together, Gary was interested in Te Puke and he (Harvinder) was not. In early 2007, he and Jaspal decided to buy something themselves. They obtained pre-approval for $250,000. They saw the Pooles Rd property and in mid-March 2007 made an initial offer. Harvinder went to Gary and asked if he wanted to be involved but he did not, so Harvinder and Jaspal went ahead themselves.

[7]	It is not possible to resolve this dispute other than by reference to what happened next. So, I turn to the events at the heart of the case.

Funding the purchase price

[8]	Harvinder and Jaspal signed a sale and purchase agreement for the Pooles Rd property on 15 April 2007. The purchase price was $350,000. The agreement provided for a deposit of $35,000 to be paid on 27 April 2007 and settlement on 3 May 2007. A few days before settlement, on 25 April 2007, the deposit requirement was waived and settlement moved to 18 May 2007. Settlement proceeded on 18 May 2007. The purchase price was funded through a bank loan of $250,000 and $100,000 cash.

[9]	It was common ground that the equity contribution was paid in two amounts of $50,000 and $50,005 ($5.00 of which was the fee for a bank cheque). The source of the $50,000 payment is uncontentious; on 18 May 2007, Harvinder and Jaspal obtained a bank cheque for $50,000 by redeeming Bonus Bonds. This transaction is shown on their Bonus Bond statement.

[10]	The other payment was made by a bank cheque drawn on Harvinder’s and Jaspal’s bank account on 18 May 2007. The source of this money is disputed. Gary says that he made cash payments totalling $50,000 to Jaspal in April and May 2007 for the purpose of the purchase so that he and Rupinder provided this part of the purchase price. Harvinder and Jaspal say that it came from their own savings and from redeemed Bonus Bonds.

[11]	Harvinder and Jaspal gave evidence that they had $23,950 in cash at home on 28 March 2007 (from savings and kiwifruit jobs). On 29 March 2007, they redeemed Bonus Bonds worth $26,050 in anticipation of needing money for a deposit, and added that to the cash they had at home. So, when they signed the sale and purchase agreement they had $50,000 in cash at home. They deposited $15,000 of that sum into their account on 16 April 2007 (this deposit is shown on their bank statement). On 30 April, they banked $35,000 from the funds they had at home.

[12]	Mr Delaney, for Gary and Rupinder, submitted that Gary’s account, which I come to next, is the more plausible because it is supported by extraneous evidence and

is consistent with the known chronology and the bank statements of both parties. He argued that, conversely, the account given by Harvinder and Jaspal is not supported by extraneous evidence (except for the redemption of Bonus Bonds), was inconsistent with the available documents and, in some respects, did not make sense.

[13]	Gary says that in April 2007 Jaspal asked him for money for the deposit and on 16 April 2007 he withdrew $15,000 from his and Rupinder’s ANZ account at a branch in Greerton and met Jaspal in Greerton the same day to give her the cash. The withdrawal is shown on the statement for Gary and Rupinder’s account. Gary says that he gave Jaspal a further $35,000 in cash on 27 April 2007 for the purposes of settlement. That $35,000 came from three sources; a loan from a friend, the repayment of a loan by another friend and from savings.

[14]	First, in early 2007, in anticipation of having to fund his share of the equity, Gary asked a friend, Gurwinder Singh Bains, to lend him some money. Mr Bains brought him $15,000 in cash which Gary put in the safe at his workshop in Te Puke. Mr Bains gave evidence that at the beginning of 2007 Gary asked him for a loan because he and Rupinder wanted to buy a house and he took $15,000 in cash to Gary’s workshop in Te Puke. Mr Bains produced his bank statement showing a $15,000 withdrawal on 19 February 2007. The narration is “cheque/withdrawal” but the tenor of the evidence was that Mr Bains had used a cash cheque to withdraw that amount in cash. He said that Gary had repaid the loan later in the year. Gary’s bank statements show a withdrawal of $15,000 in September 2007 which he says was the repayment of Mr Bain’s loan. Mr Kettelwell, for Harvinder and Jaspal, suggested that Mr Bain’s evidence should be regarded as unreliable because of his friendship with Gary but I saw no reason to doubt Mr Bain’s honesty.

[15]	The second source was another friend, Ram Singh. Gary had lent Mr Singh
$15,000 in 2006 to buy a shop and in 2007 asked Mr Singh to repay the loan, which he did. Mr Singh died in 2013. However, his widow, Raghvir Kaur, gave evidence that her husband had told her that he had repaid the loan. There was no reason not to accept that evidence.

[16]	The last $5,000 came from Gary’s bank account. His bank statement shows a withdrawal of that amount on 27 April.

[17]	Gary says that on 27 April (a Friday) he gave the $15,000 from Mr Bains, the
$15,000 from Mr Singh and the $5,000 he had withdrawn from his account that day to Jaspal.   Harvinder and Jaspal’s  bank statement shows a deposit of $35,000 on   30 April 2007 (the following Monday).

[18]	Jaspal disputes receiving any of these payments from Gary and Mr Kettelwell emphasised the lack of documentary evidence to show the payments of money to, for example, Gary from Mr Bains and then from Gary to Jaspal. I do not accept that this is significant, given the practice that I have already referred to of these parties making loans and receiving quite large amounts in cash. Gary’s account is consistent with the amounts and timing of the deposits into Harvinder’s and Jaspal’s bank accounts; Gary withdrawing $15,000 in cash and Harvinder and Jaspal banking $15,000 in cash on the same day (being the day after the sale and purchase agreement was signed) seems an unlikely co-incidence.

[19]	There is, however, one more aspect. Not only is Gary’s account consistent with the deposit of money into Harvinder’s and Jaspal’s bank account, but Harvinder’s and Jaspal’s accounts were actually inconsistent with the known facts as to the source of the second payment of $50,000. Specifically, there was a basis for thinking that they did not use the $26,050 from the redeemed Bonus Bonds for the purchase at all.     Mr Delaney cross-examined them on a Bonus Bonds investment of $26,100 they made on 13 April, less than two weeks after redeeming almost the exact same amount of Bonus Bonds for the purpose of the deposit. They said the money came from the repayment of a cash loan made to a friend. The friend was named, but did not give evidence (although this might be because the point was raised for the first time in cross-examination).

[20]	If Harvinder and Jaspal had received a further $26,100 as repayment of a loan, it would mean (as Jaspal agreed in cross-examination) that she and Harvinder had
$75,000 in cash at home on 29 March 2007. The sale and purchase agreement that they had signed on 15 April 2007 required a deposit of $35,000 to be paid on 27 April

2007. They were not told until 25 April 2007 that the deposit would be waived so on 16 April they must still have been expecting to pay the $35,000 deposit. Yet, they banked only $15,000 into their account. If they were expecting to fund the entire deposit, it does not make sense that on 16 April 2007 they should only have banked
$15,000 from the $26,050 obtained from redeeming Bonus Bonds for the very purpose of paying the deposit. But banking $15,000 is consistent with an agreement by which Gary and Rupinder were to contribute half the deposit.

[21]	I find that the more likely scenario is that Harvinder and Jaspal re-invested the
$26,050 (together with a further $50) in Bonus Bonds on 13 April because they had, by then, obtained Gary’s agreement to participate in the purchase. They therefore needed to find only $50,000, which they did by redeeming that amount of Bonus Bonds on 18 May 2007. The second bank cheque comprised the money paid by Gary to Jaspal.

Payment of outgoings

[22]	The purchase of the property was funded by a $250,000 term loan from the ASB. The Orbit Home Loan account in Harvinder and Jaspal’s name from which the loan repayments were made showed only two sources of regular income.

[23]	The first source of regular income was rent, which was initially $265 a week but soon became $270 a week. By 2012 it was $300 per week. Since 2014, Gary and Rupinder have occupied the house as tenants and paid rent in the usual way. However, since 2016, when the dispute over the loan to Gary arose and Harvinder and Jaspal moved to evict them, Gary and Rupinder have withheld the rent (on legal advice). There are proceedings on foot in the Tenancy Tribunal which are not being pursued until the proceedings in this court are resolved.

[24]	The other source of regular income was $420 a month paid by “BP Workshop Te Puke” and coded as “instalment”. It was common ground that these payments were made by Gary and Rupinder from Gary’s business account. Gary’s accountant, Jyoti Rani, gave evidence. She confirmed, by reference to the Dhillon Autos bank statements (the bank statements for Gary’s auto repair business), that she had coded those payments as personal drawings rather than a business expense. They were $420

every four weeks from June 2007 until July 2014, when the amount was increased to
$450. She also gave evidence that the coding of these payments as a personal expense was the subject of discussion between her and Gary at an annual review in 2008, where he had confirmed that they were personal expenses. In cross-examination, she said that she recalled Gary telling her that the payments were for a rental property that he had bought in joint ownership. She had raised with Gary the need to account for the rental property in his tax and he had responded that his brother-in-law would be taking care of that aspect.

[25]	Harvinder and Jaspal’s account is entirely different. They say that Gary had asked to rent the garage at the Pooles Road property to store car parts and the $420 per month payment was rental for that facility. To support this, Mr Kettelwell referred to the evidence of Mrs Kaur, who said that she had taken cars to the property at Pooles Road to be fixed. I note that this happened twice and there was no evidence of the timing. Mr Kettelwell also relied on Gary’s admission that he did use the property for storage at one point.

[26]	Gary had said that he used a small lean-to shed on the side of the garage to store car parts on the property for a 6 – 12-month period. During this time one of his own mechanics was actually the tenant of the property (which would have meant that he could have used the shed for storage by the agreement of that tenant, completely unrelated to Harvinder and Jaspal. The mechanic’s occupation of the property may also explain why Mrs Kaur took her vehicles to the property rather than to Te Puke. Otherwise, Gary had no need of storage. This was particularly the case after December 2013 when he had built a new workshop at Te Puke that had plenty of room for storage.

[27]	In addition, the tenant who occupied the property between October 2008 and September 2011 gave evidence that Gary had not used the property to park cars or store car parts. He said that he had flatmates living with him at the property and all of the available space was used for their needs. Harvinder and Jaspal did not call any witnesses to contradict this evidence.

[28]	In any event it seems unlikely that Gary would agree to pay $105 a week for the use of a garage for storage when the entire property was being let for $270 a week.

Finally, Gary continued to pay $450 every four weeks into Harvinder and Jaspal’s account, which continued to be coded as “instalment” even during the period he and Rupinder had been occupying the property as tenants when that status would have entitled them to make full use of the garage without any extra payment.

[29]	When I step back to look at the respective accounts, I find that it is not plausible to conclude that Harvinder and Jaspal funded the purchase entirely themselves in respect of both the equity and the ongoing mortgage repayments. I find that Gary and Rupinder did contribute half of the equity in the property and did contribute to the mortgage repayments.

Result

[30]	I make a declaration, as sought, that the defendants hold a half-interest in the property on a resulting trust for the plaintiffs.

[31]	The issue of costs can be addressed by memoranda filed on behalf of the plaintiffs within 14 days and on behalf of the defendants within 21 days, with any reply within 28 days.

P Courtney J