Albon v Albon
[2014] NZHC 1490
•30 June 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-1238 [2014] NZHC 1490
IN THE MATTER OF the Declaratory Judgments Act 1908 BETWEEN
MARK STEPHEN ALBON Plaintiff
AND
DARCY CHARLES ALBON Defendant
Hearing: 26-28 May 2014 Counsel:
K R Smith for Plaintiff
C J Tennet for DefendantJudgment:
30 June 2014
RESERVED JUDGMENT OF MACKENZIE J
I direct that the delivery time of this judgment is
4.30 pm on the 30th day of June 2014.
Solicitors: P C Gilbert for Plaintiff
F J Handy for Defendant
ALBON v ALBON [2014] NZHC 1490 [30 June 2014]
Background
[1] The plaintiff and the defendant, Mark and Darcy Albon, are two of the four sons of Vivian and Margaret Albon. The other two sons are Jeffrey and Michael. For convenience, and intending no disrespect, I refer to all members of the Albon family by their Christian names.
[2] These proceedings concern a dispute between Mark and Darcy about the ownership of a property at Carey Street, off Holloway Road, Aro Valley, Wellington. The property is about 1.6 hectares. Much of it is in bush and is zoned as conservation land. Some of it is zoned as outer residential land.
[3] Prior to 1971 Vivian owned, as tenant in common in equal shares with Mr Elwyn Williams, an interest in the Carey Street property. They owned just under a half share in the land. The remaining interest, just over a half share, was owned by the trustees of the Adams Trust. There was apparently, as between Messrs Albon and Williams on the one hand and the Adams Trust on the other, an informal arrangement under which each of these two groups occupied separate areas of the land equivalent to their proportionate share in the whole. The title was however not formally subdivided, so that each owned an undivided interest in the whole. The Albon family lived in a house on the land informally allocated to the Albon/Williams share. Mark and Darcy were at that stage still living at home with their parents.
[4] The land was taken in 1971 under the Public Works Act 1928 for university purposes. The Albon family moved to Lower Hutt. The land was not in fact used for university purposes and it had to be offered back to the original owners. There is a suggestion in the evidence that the decision that it was not required for university purposes was taken as long ago as 1978. However, the first advice that an offer back would be made was a letter to Vivian dated 6 May 1999. A formal offer pursuant to s 40 of the Public Works Act 1981 was made by the Crown in March 2000 to Vivian Albon and Elwyn Williams of their former interest in the land. They apparently counter-offered at a lower price, but that counter offer was not accepted by the Crown, so no contract then eventuated.
[5] The Albon family remained interested in acquiring the land and expected that a further offer would be made in due course. Vivian appointed Darcy to handle the negotiations with the Crown’s agents, and signed a document to that effect in September 2000, which I discuss later. Darcy wanted to live in the old family home on the property. In November 2002 he entered into a lease with the Ministry of Education of part of the property, comprising the house and curtilage, an area of 680 square metres. He lived there for several years, and carried out some work on the property.
[6] The offer back process dragged on for several years. Elwyn Williams’ widow, Doreen Williams, was not interested in reacquiring the Williams’ interest in the land and she agreed to assign her right of repurchase to the Albons. Before any offer had been made, Vivian signed a second document, on 7 January 2006, setting out his intentions about the property. In it, he expressed a wish that the property be divided into 200 shares; 125 to go to Mark and 25 to each of Vivian’s other three sons.
[7] Vivian consulted his solicitor Mr Hanning about the offer process. Mr Hanning wrote to the agents acting for the Crown on 8 May 2006, advising that his firm had been instructed to act “for Mr V C Albon and his family in connection with the buyback offer to be made to him for the property at 19 Carey Street.” He later prepared an enduring power of attorney in relation to the property from Vivian in favour of Mark. He also prepared a Deed of Assignment and Renunciation under which Mrs Williams agreed to renounce her rights under s 40 of the Public Works Act 1981 and to assign her right to acquire the interest in the land to Vivian. Both documents were signed in October 2006.
[8] A further offer was apparently made by the Crown in about February 2008. It appears that, so far as the Albon/Williams interest was concerned, the offer was of an undivided one half share in the whole 1.6 hectares, offered to Vivian and Mrs Williams in equal shares. Neither the contract of sale, nor the memorandum of transfer from the Crown to the purchasers, were produced in evidence. Mr Hanning prepared a transfer from Mrs Williams and Vivian to Mark, for registration after the transfer from the Crown had been registered. That transfer was signed by both
Mrs Williams and Vivian. The transfer is dated 4 February 2008. It must have been signed before 12 December 2007, because Vivian died on that day. Settlement of the repurchase from the Crown did not take place until 5 February 2008. Mr Hanning was of the view that because both the repurchase from the Crown and the transfer to Mark were contractually binding before Vivian’s death, the previously executed transfer could be registered without the involvement of Vivian’s estate.
[9] I assume that the transfer was registered on or shortly after 5 February 2008. However, the search copy of the title to the property which was produced in evidence records the date of issue as 17 December 2007 and records Mark as the registered proprietor at that date. There is reference in that copy of the title to a fencing covenant in a transfer registered on 11 February 2008. That was, presumably, the transfer from the Crown, but neither that transfer nor the transfer to Mark is recorded on the search copy of the title. Those matters are not explained in the evidence before me.
[10] Darcy took legal advice. He lodged a caveat against the title in May 2009, and issued proceedings against Mark. There were negotiations, and a mediation in September 2010. A settlement agreement was entered into which recorded that Mark would transfer the property into “a trust or similar vehicle”, the primary object of which would be to retain the property for the benefit and use of Mark and to ensure that Darcy has a place to live for the rest of his life. That agreement was subsequently cancelled by Darcy through his solicitor, on the grounds that Mark repudiated the agreement. The earlier proceedings, and the settlement of them, can therefore be put to one side and I deal with the present proceedings without regard to those earlier proceedings.
The legal basis asserted for Darcy’s claim
[11] Mark commenced these proceedings in June 2013, seeking a declaration that Darcy has no caveatable interest in the property and an order that Darcy remove the caveat. Darcy counterclaimed, claiming that Mark holds half the property as constructive trustee for Darcy, or in the alternative that Mark represented that he was
buying the property for both of them and that Mark is estopped from resiling from that representation.
[12] Before turning to the facts upon which Darcy relies in support of these two legal bases for his claim, I set out briefly the legal principles which apply to these alternative causes of action.
[13] A constructive trust can arise when a party has made a contribution to a property in which the legal interest in vested in another. The cases concerning this type of constructive trust have generally involved parties in de facto relationships, before the statutory regime governing relationship property was extended to such
relationships. The leading case is Lankow v Rose.1 There are two essential
requirements:
(a) that the person claiming an interest contributed in more than a minor way to the acquisition preservation or enhancement of the property concerned; and
(b)that in all the circumstances the parties must be taken reasonably to have expected that the claimant would share in the property as a result.
[14] Estoppel by representation arises where one person has made a representation to another, with the intention of inducing the person to whom the representation was made to act in reliance on the representation. The representation may be made by words or by conduct and may arise by implication from words or conduct, including silence. The party to whom the representation is made must have altered his position detrimentally in reliance on that representation.
Discussion
[15] Much of the evidence on which Darcy relies in support of those causes of action relates to the period before Mark became the legal owner. Before considering
whether Mark has become a constructive trustee of the legal estate which he
1 Lankow v Rose [1995] 1 NZLR 277 (CA).
acquired, or whether he is bound by an estoppel in respect of that legal estate, I must address another possibility. That possibility is that the legal estate which Mark acquired from Vivian and Mrs Williams was already encumbered by equitable obligations in favour of Darcy, created by the dealings involving Vivian and Mrs Williams, in circumstances where those equitable obligations would be binding on Mark, so as to encumber the legal estate which he acquired.
[16] I deal first with Mrs Williams’ interest. Mrs Williams gave evidence. She was very clear and firm in her recollection of events. When the property was offered back, she decided, after consulting with her family, that she was not interested in reacquiring her interest. She offered that interest to Vivian, on the basis that he would pay for and acquire the interest offered to her. Vivian subsequently advised her that Mark was going to buy the property and she offered the property to Mark. I accept her evidence. It is confirmed by Mr Hanning’s evidence, and the documents he prepared. I find that nothing which Mrs Williams did or said could have created any enforceable expectation on the part of Darcy that any part of her interest would go to him.
[17] As to Vivian, I infer from the evidence that he did not wish to reacquire the property himself. He intended that his right of repurchase should be exercised (and the property paid for) by one or more of his sons. His intentions about that changed over time. In 2000 he signed a unilateral document addressed “To Whom It May Concern” which said:
I, V C ALBON in sound body, and mind on the date of 10/09/2000, wish to pass all controlling interests in regard to the property offer of 19 Carey Street Wellington, to my son, DARCY C ALBON. This agreement will be effective from the 10/09/2000, and has no termination date.
[18] The document went on to list a “responsibility schedule” which included negotiating with the Crown and “land distribution to other family members”.
[19] That document does not clearly indicate Vivian’s view about what was to happen to the land. The interests transferred to Darcy were rights in regard to “the property offer” rather than the property itself. The document envisaged that he would handle the negotiations over the repurchase, not that he would himself be the
purchaser. The reference to land distribution to other family members suggests that Vivian’s thinking was that more than one member of the family might be involved in the repurchase.
[20] It is unnecessary for me to consider the exact meaning of the document, because it is devoid of legal effect. It is a unilateral document. Its terms are not sufficiently certain to constitute a contract between Vivian and Darcy and there is no consideration expressed which would support a contract. The document was no more than a statement of Vivian’s intentions at the time, which he was free to change.
[21] Vivian’s intentions did change. He signed a second unilateral document,
addressed “To Whom It May Concern” on 7 January 2006. That said:
I, Vivian Clifford Albon in sound body and mind on the date of 7/01/2006 wish that 19 Carey St, Mitchelltown, Wellington, be divided into 200 shares.
The shares are to be divided into 4 parcels, 125 shares are to go to Mark Steven Albon, 25 shares are to go to Michael John Albon, 25 shares are to go to Darcy Charles Albon and 25 shares are to go to Jeffrey Gordon Albon. The right to those shares are depend[e]nt on the recipient being able to pay for those shares.
If the shares are not taken they will go to Mark Steven Albon who will pay
for those shares…
Shares will not be sold without 1st offering those shares to family members first. This agreement replaces any other letter or agreement made before
06/01/06 and is effective from 7/01/06 and has no termination date.
[22] That document too is devoid of legal effect. It is no more than a statement of Vivian’s wishes. It did not create any rights, enforceable in law or in equity, in favour of any of his four sons. Vivian was not a constructive trustee for Darcy of any part of the interest which he acquired from the Crown on the repurchase.
[23] For these reasons, I find that the legal title which Mark acquired from Vivian and Mrs Williams was not impressed with a trust in favour of Darcy which was binding on him when Mark acquired his interest in the property. I therefore turn to consider whether the unencumbered title which Mark acquired was affected by equitable obligations arising in the manner asserted by Darcy’s claim.
[24] In dealing with the evidence on which Darcy relies, I first consider the issue of contribution by him. I consider whether he has made contributions which could either satisfy the first requirement for a constructive trust, or constitute an alteration of position to his detriment, to support his claim to estoppel.
[25] Darcy claims that he made a contribution to the property by doing work on the property. Some of that work was done while he was living in the house as a tenant of the Ministry of Education. It involved tidying the property, removing rubbish, and carrying out some repairs and improvements. He also had some dealings with the agents acting for the Crown and making other enquiries. I need not describe the work in detail, because none of that work can form the basis for a claim to have made a contribution to the property such as might support a claim for the creation of a constructive trust. Mark did not own the property at that stage. Any expectation that Darcy may have had that he might acquire an interest in the property could not have arisen from anything said or done by Mark, because at that stage Mark had no more claim to an interest in the property than Darcy. The interest which Mark later acquired was not encumbered in any way by anything that Darcy did before Mark owned the property. Darcy did that work on his own initiative. He had no grounds for any expectation that he would acquire an interest in the property as a result of it.
[26] At various stages, Darcy and Mark both lived in the property after the purchase was settled, and Darcy’s evidence is that he carried out some further work. Again, I need not describe it, because I am satisfied that any work carried out by Darcy after Mark acquired the property falls well short of the type of contribution which may give rise to a constructive trust. A constructive trust of the Lankow v Rose type will generally arise only in the context of a de facto relationship, where each party makes substantial but different contributions to the relationship. This is not such a case. While I do not exclude the possibility that a contribution to a property may form the basis for a claim to a constructive trust in circumstances not involving a de facto relationship, the contribution in such a case would have to be very substantial. The work carried out by Darcy, both before and after Mark acquired the property, falls far short of that threshold.
[27] Darcy says that, in anticipation of the repurchase of the Carey Street property, he sold a house he owned at Kiwi Street in Lower Hutt. That was the home the Albon family had moved to when Carey Street was taken in 1971. Vivian had later sold it to Darcy. Mr Hanning referred to that sale in a letter to the agents for the Crown dated 8 May 2006, in which he asked that the offer-back price for the Carey Street property reflect some of the loss and family upheaval which the delay in offering the property back had caused. One of the factors which he raised was the loss to the Albon family following the sale in 2000 of the Kiwi Street property, to release funds for the purchase.
[28] The most that can be said about the Kiwi Street sale is that it suggests that Vivian may have intended in 2000 that Darcy would participate in the repurchase. For the reasons I have given, Vivian’s intentions at that stage do not give Darcy any legally enforceable rights. Further, the sale of the Kiwi Street property can have no relevance as a contribution by Darcy to the property after it was acquired by Mark.
[29] Darcy also relies upon a contribution which he says he made to the deposit which Mark paid on the repurchase of the property. His evidence is that the deposit was $11,000 and that at the time of the repurchase Mark said to him that the deposit was due that day. Mark said that Vivian had loaned $10,000 but Mark could not raise the additional $1,000. Darcy says that Mark asked him if he could raise that additional $1,000. Darcy says that he gave him $240 or $250 which was all that he could get. Darcy says that Mark said he was “off to pay the deposit for us” and did pay the deposit. Mark disputes that. His evidence is that the deposit of $11,150 was paid by Vivian to his solicitors. Mark contributed $2,150 to that deposit and the balance of $9,000 was a loan to him from Vivian. He says that Darcy paid nothing towards the deposit.
[30] I am not satisfied, on that evidence, that Darcy did make a contribution to the deposit. Even if he did pay Mark $250 at about the time the deposit was paid, that is not sufficient to give any proprietary rights in respect of the property. I do not accept Darcy’s evidence that Mark said to Darcy that he was paying the deposit on behalf of both of them. Even if he had, that would fall far short of establishing a common intention that the property be jointly owned.
[31] Darcy also claims that he could have contributed, and should have been given the opportunity to contribute, to raising a loan to buy the property. To settle the purchase, Mark arranged a mortgage, secured against another property which he owned. Darcy asserts that he was not given any opportunity by Mark to participate in any borrowing arrangements. He asserts that he could have participated in a joint borrowing. Darcy also says that he could have undertaken liability as a guarantor to the mortgage arranged by Mark.
[32] I consider that there would have been difficulty in borrowing against the security of the interest which was being purchased. That was a one half interest, the other half being owned by the Adams Trust. That interest would not have been attractive to a lender as security. If Darcy had become a guarantor, it is likely that the mortgagee would have first sought recourse, if that was necessary, against the property owned by Mark against which the loan was secured. In those circumstances, a guarantee by Darcy would be unlikely to have resulted in a joint sharing of the liability under that mortgage. There is also considerable doubt, on the evidence, about whether Darcy had the financial substance to raise a loan or be an acceptable guarantor. He asserts that he was employed at the time. He produced tax summaries for the years ended 31 March 2005 and 2008. There is no evidence of his income in the years in between. His income for the 2008 year was under $31,000. The name of his employer was not given by him in his evidence. On that information, he would not have been an attractive lending prospect.
[33] I am not satisfied that Darcy was in a financial position to contribute equally to the purchase price. But whether or not he was, that is not relevant. Mark was purchasing the property, pursuant to the arrangements that he had entered into with Vivian and Mrs Williams. The question of Darcy’s ability to contribute to that purchase does not arise.
[34] The second requirement for a Lankow v Rose type constructive trust is that both parties must be taken to have expected that the non-owner making the contribution would share in the property. The first requirement for an estoppel by representation is that there be a representation intended to induce the representee to act in reliance on it. The essence of what Darcy must show on these two
requirements is that Mark, by words or conduct, demonstrated an intention that Darcy would be a co owner with him of the property. I turn to consider the evidence relevant to both these requirements.
[35] Mr Tennet places strong reliance upon the document executed by Vivian in January 2006. As I have held, that document did not give rise to any rights, legal or equitable, to any of Vivian’s sons in relation to the purchase of the property. It was no more than a statement of Vivian’s then intention, without legal effect. But even if it did have legal effect, it could be binding only on Vivian, not Mark. That document could not have the effect of giving rise to an obligation binding on Mark that Darcy would have the right to acquire an interest in the property which was subsequently transferred to Mark. That document cannot be construed as a statement of intention by Mark to make him a constructive trustee. It is not a representation on his part which might create an estoppel. There is no evidence that Darcy’s understanding that he was to participate in that buy-back was induced by anything which Mark said to him, or anything Mark did.
[36] Darcy also relies upon a draft affidavit from Jodie Matthews, Mark’s former partner. That draft affidavit was not sworn. I ruled at trial that the statement was admissible as hearsay evidence under s 18 of the Evidence Act 2006. I indicated that the weight to be given to that statement would be a matter for assessment by me. The essence of her evidence is that, in negotiations with Mark over a relationship property settlement he referred to his interest in the Carey Street property as being “my half of the farm”. Mr Tennet submits that the reference to “my half of the farm” is an acknowledgement that Mark had only a half share in that property. Mr Tennet submits that the statement demonstrates Mark’s recognition that Darcy had a half interest in the property. I do not consider that evidence advances Darcy’s case. I do not find the evidence sufficient to establish that Mark did assert to his partner that he owned only a half interest in the share of which he is the registered proprietor. But even if it did, it would be of little assistance to Darcy. What is relevant is evidence of any conduct or words by Mark to Darcy which showed a common intention which amounted to a representation by Mark to Darcy, that they would own the property jointly. Mark’s statements to Ms Matthews about his interest might be relevant to assessing the credibility of any evidence about that, but that does not arise. There is
insufficient evidence from which, if accepted, it could be inferred that Mark and Darcy by their words or conduct formed a common intention, or that Mark made a representation to Darcy that they would jointly own the property. For the reasons I have discussed, the evidence falls well short of establishing any such words or conduct.
[37] There was also considerable evidence about the state of familial relations between Mark and Darcy, and other members of the family. I need not discuss that evidence, because it is not relevant to any issue that I must decide.
[38] On the evidence as a whole, the circumstances were not such that Mark and Darcy must reasonably be taken to expect that Darcy’s contributions would lead to him having a share in the property. There was no representation by Mark that Darcy would have a share in the property.
Result
[39] For the reasons I have given, Darcy’s counterclaim must fail. There will be
judgment for Mark on that counterclaim.
[40] Mark is entitled to the removal of the caveat which he claims. The relief sought in the statement of claim includes an order directing Darcy to withdraw the caveat. I treat that prayer for relief as an application under s 143 of the Land Transfer Act 1952 for an order that the caveat be removed. I order, under that section, that caveat number 8171201.1 lodged on 21 May 2009 by Darcy Charles Albon against identifier 246620 be removed.
[41] Leave is reserved to Mark to apply for any other order necessary to give effect to that order.
[42] Counsel advised that Darcy is legally aided. I reserve leave to the parties to file memoranda if any costs issues arise.
“A D MacKenzie J”
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