NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980.  FOR FURTHER INFORMATION, PLEASE SEE HTTP;//WWW.JUSTICE.GOVT.NZ/COURTS/FAMILY- COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-000269 [2013] NZHC 862

UNDER	the Property (Relationships) Act 1976 and the Land Transfer Act 1952

IN THE MATTER OF	Caveat No 9199665.1 (North Auckland
Registry) and Notice of Claim No
7506181.2 (North Auckland Registry)

BETWEEN	N G W Applicant

AND	G S Respondent

Hearing:	18 April 2013

Counsel:	G L Harrison and R Keur for the Applicant
D Chambers QC for the Respondent

Judgment:	18 April 2013

[ORAL] JUDGMENT OF WYLIE J

Distribution:
G Harrison: glharrison@xtra.co.nz
D Hollings QC: debchambers@bankside.co.nz

W V S HC AK CIV 2013-404-000269 [18 April 2013]

Introduction

[1]       The appellant, W, has filed an originating application seeking an order that a caveat not lapse.  He also seeks an order that a notice of claim lodged by him under s 42 of the Property (Relationships) Act 1976 be maintained.

[2]       The application is opposed by the respondent, S.  S is the registered owner of the property over which the caveat and the notice of claim have been lodged.

Factual Background

[3]       W was formerly in a de facto relationship with S’s daughter, L S. According to W, the relationship began in 1996 and lasted until November 2006.  That was disputed by L S.   The matter came before the Family Court and in a reserved judgment dated 12 February 2009, Judge Clarkson concluded on the balance of probabilities that the de facto relationship existed from mid 1996 when she found that the parties began to live together until June 2006.

[4]       I acknowledge that Ms Chambers, appearing for S, has advised me that further  information  has  since  become  available,  and  that  it  may  be  that  an application will be made to appeal Judge Clarkson’s decision out of time. Nevertheless, for present purposes, I take the judgment and the finding made by Judge Clarkson as it stands.

[5]       There was one child from the relationship, a son.   He was born in May

1997.

[6]       W was the manager of a construction company.  L S worked as a real estate agent. According to W, the couple supplemented their income by buying properties together, doing up those properties, and selling them for a profit.

[7]       W has deposed that following the birth of their son, he and L S lived in some five different homes.  A large number of other properties were purchased by W and L S.  In an affidavit filed in the Family Court proceedings commenced by W,

he listed  some  26  properties he  said  the  parties owned  in  the  course  of their relationship.  Many of those properties were registered not in the names of one or other of the parties, but rather, in the names of a member of L S’s family.  Indeed, it seems that S owned some of them.  W says in his affidavit that the properties were placed in the names of L S’s family members as a form of “taxation planning”. That description may well be euphemistic.

Riverhead Road Property

[8]       In late 2004, an agreement for sale and purchase was entered into in respect of a property at Riverhead Road, Riverhead.  The purchaser listed in the agreement for sale and purchase was S’s wife, D S and/or her nominee.

[9]       There  is  conflicting  evidence  as  to  the  circumstances  in  which  the

Riverhead Road property was purchased.

[10]     W said in his Family Court affidavit that it was purchased by L S without his  knowledge  or  consent.    He  said  that  when  he  was  finally  informed,  he reluctantly consented.  In his affidavit filed in support of the present application, he asserted that the property was purchased with funds belonging to him and L S, and that the title was taken in S’s name for tax planning reasons advocated by L S.

[11]     Clearly, there are differences between the two different versions of events, but they are not necessarily inconsistent.

[12]     S for his part denies that W was involved in the purchase at all.  He says that he and his wife purchased the property so that they, their daughter, and her son, could live with them.  S says that the funds for the purchase came from the sale of properties he and his wife had undertaken overseas.

[13]     S’s version of events is supported by L S.   She states that she did not

contribute any money to the purchase of the Riverhead Road property.

[14]     There is precious little independent evidence presented by either party.  W has exhibited the agreement for sale and purchase.  As I have noted, the purchaser was D S or her nominee.  He also exhibited a letter dated 12 December 2005 from the Public Trust to L S, warning her about entering into a loan agreement together with S, to be secured over the property.  There is also a letter from the Public Trust dated 25 January 2006 addressed to S and L S, recording that they no longer required the Public Trust to proceed with the refinancing of the Riverhead Road property.

[15]     This evidence, such as it is, is equivocal.

[16]     There  is  also  a  dispute  as  to  who  lived  in  the  property  once  it  was purchased.

[17]     W says that he, L S, and their son, moved into it in June 2005 and that they lived  in  the  house  as  the  family  home,  together  with  L S’s  parents,  until  the relationship came to an end in 2006.

[18]     S says that he and his wife, their daughter and their grandson, moved into the property after it was purchased.  He says that W would come and visit his son, and that occasionally, W would stay over and sleep on the couch.  S says that in November 2006, W forced him and his wife out of the property while L S was overseas.  He says that for the past six and a half years, he and his wife have been displaced from their own home.

[19]     It is common ground that W and his son lived in the property until relatively recently.

[20]     S says that he did not take any steps to remove W from the property for the sake of his and his wife’s grandson.  The grandson is now in the care of S and his wife. As I understand it, W continues to reside in the house.

[21]     W says  that  since  mid  2006,  all  outgoings  and  financial  obligations  in respect of the property have been met by him from monies which belong to him and L S.

[22]     S  says  that  W  contributed  nothing  to  the  household.    S  says  that  he continued to pay the mortgage until late 2007, but acknowledges that W has met outgoings and mortgage payments since that time.

Court Proceedings

[23]     On 24 November 2006, W commenced proceedings in the Family Court against L S, seeking orders determining their respective rights in their relationship property.   It was alleged that the property at Riverhead Road was relationship property, belonging to both of them.  On 16 May 2007, the Family Court directed that  S,  together  with  another  person,  should  be  joined  as  parties  to  those proceedings.

[24]     The Family Court proceedings currently stand adjourned.  This is because the Family Court consider that it is unable to advance the proceedings before it until the status of, inter alia, the Riverhead Road property, is known.  Given the value of the  property,  and  the  nature  of  the  interest  asserted,  that  issue  can  only  be determined in this Court.

[25]   On 16 August 2007, a notice of claim under s 42 of the Property (Relationships)  Act   was   registered   against   the   certificate   of   title   for   the Riverhead Road property by W.  It described his claimed interest as follows:

The said interest claimed by me is by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied or otherwise howsoever.

[26]     The caveat the subject of the present application was registered against the title to the Riverhead Road property on 10 October 2012 by W.   The claimed interest is as follows:

The fee simple estate as a beneficial owner by virtue of a resulting trust between the Caveator above named as Beneficiary of the one part and the Registered Proprietor of the owner above identified, namely [S] a Trustee of the other part.

[27]     In November 2012, W commenced proceedings in this Court against L S and S, along with others.  In those proceedings, he alleged that S held the property at Riverhead Road as trustee for him and L S.

[28]     S has applied to the Registrar-General of Land for the notice of claim and caveat to lapse.  On 9 January 2013, the Registrar-General gave notice to W under s 145A of the Land Transfer Act 1952 that S had applied for the notice of claim and caveat to lapse.  W then commenced the present proceedings seeking an order that the notice of claim and caveat not lapse.

[29]     On 30 January 2013, Associate Judge Bell made an interim order that the notice of claim and caveat not lapse, pending this hearing.

The Notice of Claim

[30]     It is common ground that a notice of claim under s 42(1) of the Property (Relationships) Act may only be lodged in respect of a claim to an interest pursuant to the Act.  Consequently, the claimant and the registered proprietor must have been in a marriage, civil union or de facto relationship, as the Property (Relationships) Act only provides for the division of interests arising as a result of those types of relationship.  S and W are not in such a relationship.  This was acknowledged by Mr Harrison, appearing on behalf of W.  Accordingly, the application to sustain the notice of claim given under s 42 is dismissed.

The Caveat

[31]     I now turn to the application that the caveat not lapse.

[32]     A person may lodge a caveat against dealings in any land, estate or interest arising under the Land Transfer Act.  Such a caveat may be lodged under s 137(1) if

the person claims to be entitled or beneficially interested in the land, estate or interest, by virtue of, amongst other things, any trust expressed or implied.

[33]     When  a  caveat  is  lodged,  the  registered  proprietor  may  apply  to  the Registrar for the caveat to lapse.  The Registrar must then give the caveator notice of the application.  Pursuant to s 145A(3), the caveat then lapses in 14 days, unless within that time, the caveator gives the Registrar notice that an application for an order that the caveat not lapse has been made to the High Court, and also within that time, an order is made that the caveat not lapse and is served on the Registrar.

[34]     Counsel were agreed as to the appropriate approach to applications that a caveat not lapse.  I summarise that approach as follows:

(a)       A caveat should be removed if it is clear that there was no valid ground for lodging it, or that any valid ground no longer exists.

(b)       It is for the applicant to demonstrate a reasonably arguable case for concluding that the interest claimed has, in fact, come into existence. The onus is on the applicant to establish that this is the case.

(c)       The Court has a discretion to order removal of a caveat, even if the caveator establishes an arguable case for the interest claimed, although such discretion will be exercised cautiously.

(d)       Although the summary procedure available under the Land Transfer Act is unsuitable for determination of disputed questions of fact, evidence must meet a threshold of credibility, and there may be cases where the Court can say that the allegations made are baseless.

(e)       A Court will generally allow a caveat to lapse if it is defective and does  not  state  all  of  the  particulars  required  by  s  137  of  the Land Transfer Act.  The Courts have taken a more relaxed attitude to this issue where caveats are lodged pursuant to interests claimed under the Property (Relationships) Act.

Analysis

Reasonably arguable case?

[35]     W claims that S holds the Riverhead Road property on trust for him and L S. No express trust is alleged.  Rather, it is alleged that there is a resulting trust.  W’s name is not on the title, as I have noted.  It may be that a constructive trust can also be asserted, but that is not raised in the caveat.

[36]     A resulting trust will be presumed when legal title to land is vested in someone other than the person who is proved to have provided the money for the purchase.

[37]     The  question  in  the  present  case  is  whether  W  has  demonstrated  a reasonably arguable case for concluding that the interest he claims in fact exists.  In my judgment, he has, albeit by a very fine margin.  I note the following:

(a)       W  has  deposed  that  he  and  L  S  purchased  approximately  26 properties during the course of their relationship, that they did those properties up and that they on-sold them at a profit.  He deposes that the various properties were purchased using funds generated from this joint venture.  This is not denied by L S.  Nor does she deny that the funds used to purchase the properties were joint funds, or that the proceeds of sale were shared between them.

(b)       It is clear from W’s affidavit filed in the Family Court proceedings, and  referred  to  in  the  course  of  his  affidavit  filed  in  these proceedings, that a number of the properties that were purchased and developed by him and L S, were registered in the names of various members of L S’s family.   As I have noted, S was the registered
proprietor of some of the properties.

(c)       W has deposed that the Riverhead Road property was purchased from joint funds belonging to him and L S.  While that is disputed, given the history of property dealing between W and L S, and the history of L S’s involvement, W’s version of events is not inherently implausible.

(d)       It seems to be accepted that W has paid outgoings in respect of the property, at least from 2007.

(e)       It seems to be common ground that since November 2006, W has been residing in the house.   The reason put forward by S for not seeking an order for possession of the property, or otherwise advancing his claim to ownership, does not seem to me, on the face of it, to be particularly convincing.

(f)      The Family Court has made an order joining S to the Property (Relationships) Act proceedings.  It would not have taken that step unless it considered that there was at least a prospect that the Riverhead Road property could be the subject of an order under the Property (Relationships) Act.

(g)       W has been actively pursuing the Family Court proceedings.  Indeed, a fixture date was allocated.   That date was only vacated when it became apparent that it was necessary for W to commence proceedings alleging a trust in this Court.

(h)	S and his wife are parties to the proceedings filed in this Court.

They have taken steps, albeit belatedly, to defend those proceedings. Those proceedings have been allocated a case management conference in May 2013.

[38]     In the circumstances,  I find that W has made out an arguable case for claiming a resulting trust in relation to the Riverhead Road property.  His assertions in this regard cannot be said to be baseless.  I acknowledge that there are significant

factual disputes between the parties in this case.  The summary procedure provided by the Land Transfer Act for removal of caveats is wholly unsuitable for determination  of  those  disputed  issues  of  fact  and  I  make  no  findings  as  to credibility in this judgment.

Section 137

[39]     Ms Chambers QC for S argued further that the caveat ought to be allowed to lapse because it is defective and because it does not comply with s 137 of the Land Transfer Act.    She  relied  in  particular  on  s  137(2)(c)  which  requires,  in mandatory terms, that a caveat must disclose how the land, or estate, or interest claimed is derived from the registered proprietor.

[40]     Ms Chambers submitted first, that the description given in the caveat by W

does not identify what type of resulting trust is alleged to have been created.

[41]     Under existing law, a resulting trust can arise in various circumstances. They were described by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington Borough Council as follows:

(A)        where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of 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.  It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer...

(B)        Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest.

[42]     The circumstances there described can lead to a resulting trust arising.  They do not, however, result in different types of resulting trust.  While there has been some debate in the case law suggesting that there are distinct categories of resulting
trust — presumed and automatic trusts — it seems that these categories have in

recent years lost favour, at least in New Zealand.   In my view, it is far from clear that  there  are  different  types  of  resulting  trust,  and  I  do  not  consider  that Ms Chamber’s submissions in this regard advance matters.

[43]     Ms Chambers also argued that the caveat does not provide particulars as to the date and circumstances in which W alleges that he and L S paid for the property. She argued that this should be a simple matter.

[44]     In my view, any deficiency in that regard is cured by the affidavits and proceedings which have been filed.  They clearly put S on notice of the basis on which the caveat has been lodged, and give detail of the claims made by W.   I observe that this is, for all practical purposes, a de facto relationship property case and  that  the  requirements  of  s  137(2)  have  been  applied  less  strictly  in  such
circumstances.

[45]     Moreover, I record that it may well be possible for the Court to allow the caveat to be amended.  This issue was not directly raised on behalf of W in this case, and I make no finding in relation to it.  I simply note that the possibility of amendment militates against the strict application of s 137(2), at least in a case of this  kind  which  involves  a  de  facto  relationship,  and  where  the  registered proprietor, S, is well aware, both through the Family Court proceedings and the High Court proceedings, of how it is claimed that the resulting trust has arisen. Ms Chambers quite properly accepted that this was the case.

Result

[46]     Accordingly, I find that W has an arguable case for a beneficial interest in the property at Riverhead Road, consequent on a resulting trust.  I order that caveat number  9199665.1  registered  against  the  title  to  the  Riverhead  Road  property NA 62A/10 not lapse until further order of the Court.  I do, however, reserve to S,
leave  to  apply  for  rescission  of  this  order  if  W  does  not  prosecute  both  the

Family Court proceedings to the extent that it is now possible for him to do so, and the High Court proceedings, with all reasonable diligence.

Costs

[47]     W’s application has succeeded by a narrow margin.   However, the papers which have been filed by him are not particularly satisfactory and he has given different, albeit not inconsistent, explanations in relation to the purchase of the property.  Accordingly, I do not award costs in his favour at this point.  Rather, I
reserve costs to be dealt with when the substantive claim comes before the Court.

Wylie J