| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA498/2014 [2015] NZCA 409 |
| BETWEEN | NGAIRE JANE ELIZABETH AVISON |
| AND | WAYNE JAMES MCFARLANE, NGAIRE JANE ELIZABETH AVISON AND DAVID WILLIAM BUTLER AS TRUSTEES OF THE AVIAN TRUST WAYNE JAMES MCFARLANE |
| Hearing: | 16 June 2015 |
Court: | Cooper, Venning and Williams JJ |
Counsel: | J C Gwilliam for Appellant |
Judgment: | 4 September 2015 at 12.30 pm |
JUDGMENT OF THE COURT
A The appeal is allowed.
BThe appellant is entitled to the following orders by way of summary judgment:
(a)a declaration that the assets of the Avian Trust available for resettlement in terms of cl 8.12 of the Avian Trust deed include Nos 29 and 31 Avian Road; and
(b)an order by way of specific performance against the first respondents as trustees of the Avian Trust requiring them to resettle one half of the assets of the Avian Trust (or their money equivalent) on the Peony Rose Trust.
CThe appellant is entitled to costs in this Court calculated for a standard appeal on a band A basis.
DCosts in the High Court should be dealt with in accordance with this judgment.
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REASONS OF THE COURT
(Given by Williams J)
The appellant appeals against Associate Judge Smith’s refusal in the High Court at Wellington to grant her declarations and specific performance by way of summary judgment against the first respondents, the trustees of the Avian Trust.[1] The orders would have the effect of requiring the trustees to re-settle one half of the trust’s assets (or their money equivalent) on a second trust established by the appellant.
Background
The facts are fully set out by the Associate Judge in his judgment, and we have taken the liberty of borrowing heavily from his comprehensive summation.
The appellant (the wife) and the second respondent (the husband) lived together from 1996. They married in 2006 and separated in 2011. There are no children of the relationship, but the husband had two daughters from a previous relationship.
The husband brought three properties to the relationship — the family home at 33 Avian Road, Upper Hutt and two adjoining sections at 29 and 31 Avian Road. The adjoining sections were paddocks and used for grazing stock, although on one section was located a small cottage.
The husband’s former partner, Annette Galgey (now Annette Mazzeo), owned a half share in the home at 33 Avian Road, but in 1997 the husband and the wife bought out Ms Mazzeo. The wife purchased a quarter share of 33 Avian Road in that process.
On 19 September 1997, the husband and wife executed a deed recording the wife’s purchase of that quarter share for $41,500, and setting out what would happen to the land should they separate. The deed recorded separate certificates from separate solicitors for the husband and wife, certifying that they had given their respective clients independent advice with respect to the arrangement contained…
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- AGLC
- Avison v McFarlane [2015] NZCA 409
- Case
- [2015] NZCA 409
- Decision Date
CaseChat Overview and Summary
The legal issues before the Court were whether the husband's daughters had an interest in 29 and 31 Avian Road, and if the transfer of these properties, and/or the husband's subsequent gifting program, were void for non-compliance with the PRA. The Court was required to determine the nature and extent of the daughters' interest, if any, in the trust properties and whether the husband's actions complied with the PRA.
The Court found that the husband's daughters did not have an interest in 29 and 31 Avian Road, as there was no evidence of a trust being created in their favour. The Court also found that the transfer of these properties and/or the husband's subsequent gifting program did not comply with the PRA, as the husband failed to provide the required notice to the trustees. The Court held that the wife was entitled to a declaration that the assets of the trust included all three properties and an order by way of specific performance directing the trustees to re-settle half of the assets (or their money equivalent) on the wife’s new trust.
In conclusion, the Court ruled in favour of the wife, granting her the declaration and specific performance order sought. The husband's claims regarding his daughters' interest in the trust properties and the validity of the transfer and gifting program were rejected.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Central to this appeal is cl 8.12 of the Avian Trust deed. In the following terms, the clause allowed one or other of the husband or the wife to trigger a mandatory division of the trust assets in the case of separation: 8.12 Separation of settlorsShould the settlors at any time separate either may, by notice in writing (“the Notice”) require the Trustees to resettle half of the assets of this trust at the date of the Notice on a separate trust established by the Settlors giving notice. The Trustees shall upon receipt of the Notice attend to the resettlement as soon as reasonably practical and in such manner and with such assets as they in their sole discretion deem appropriate. The other Settlors shall be deemed by operation of this clause to be the sole Appointer of this trust from the date that resettlement is effected. As noted, the husband and wife separated in 2011. Two years later the wife settled a separate trust and triggered, by notice in writing to the trustees, the asset division process in cl 8.12.[4] [4]The wife’s trust was called the Peony Rose Trust: see the order below at [76(b)]. Around that time, the husband’s adult daughter, Janaya, wrote to the trustees claiming an interest in 29 and 31 Avian Road on behalf of herself and her sister, Carrie. Janaya’s letter provided: These sections were purchased by my father [Mr McFarlane] for myself and my sister. While he never transferred them to us there was a definite understanding that the properties were ours and he was holding them as Trustee on our behalf. I understand that my father transferred the properties into a trust but only to take them out of his personal name in case he ever had financial problems. Even though he held them as trustee for us, it was apparently thought it would provide us additional protection by transferring them to a trust.I contributed to the purchase. My quad bike was sold and the proceeds used to make a payment on the sections.I understand the trust is to be wound up or resettled and on behalf of me and my sister I put the trustees on notice that the sections should be transferred to us immediately. The husband then refused to give effect to cl 8.12. The independent trustee, Mr Butler, advised the husband and wife that he would not take sides in any ensuing dispute. Since the trustees could not act except unanimously, it was necessary for directions to be sought from the High Court. Relying on cl 8.12, the wife then filed an application for summary judgment. She sought a declaration that the assets of the trust included all three properties, together with an order by way of specific performance directing the trustees to re-settle half of the assets (or their money equivalent) on the wife’s new trust. The husband opposed the application on two grounds. First, that 29 and 31 Avian Road were subject to a trust in favour of his two daughters; and second, the transfer of 29 and 31 Avian Road, and/or the husband’s subsequent gifting programme, were void for non-compliance with the requirements of s 21F of the Property (Relationships) Act 1976 (the PRA).