Baldwin v Belcher HC Christchurch CP105/01

[2002] NZHC 821

IN THE HIGH COURT OF NEW ZEALAND
CHRISTCHURCH REGISTRY CP105/01

IN THE MATTER OF the Property Law Act 1952

BETWEEN CHRISTINE MARIE BALDWIN
Plaintiff

AND TERRENCE JAMES BELCHER
Defendant

Hearing: 17th, and 18th July 2002

Appearances:
E J Tait for the Plaintiff
J McCarthy for the Defendant

Judgment: 31 July 2002

RESERVED JUDGMENT OF JOHN HANSEN J

Solicitors:
Malley & Co, for Plaintiff

AT Newman & Associates for Defendant

[1] In these proceedings the plaintiff seeks an order for sale, or partition, of a property situated at Mussel Point, Haast, pursuant to s 140 of the Property Law Act 1952. A further order seeking the direction of the Court as to how the net proceeds are to be applied is sought, and an application for division of chattels has been abandoned. An alternative cause of action, based on a constructive trust arising from the de facto relationship is also pleaded.

[2] The defendant denies all allegations, and counter claims alleging a constructive trust in his favour over the entire property, and seeking that it be transferred to his name. The plaintiff resists the counter claim.

[3] In earlier pleadings, in the District Court, the claim was simply based on a constructive trust arising from the de facto relationship and contributions. It also included a claim to a share of the defendant’s business, which is no longer pursued, notwithstanding the accounts of that business show a significant loan due by the business to the plaintiff

BACKGROUND

[4] The parties first met in December 1988 at Karamea. The plaintiff was a 24 year old American backpacker, and the defendant a 56 year old operating his own helicopter business. Notwithstanding the age differences, a relationship quickly evolved, and the parties entered into a de facto relationship in December 1988 that continued until January 1997.

[5] Initially, the parties lived at Karamea in a house owned by the defendant. In March 1992 that property was sold, and the parties moved to Haast, initially living in a rented property. In 1993 the parties jointly entered into a written agreement to purchase a property at Mussel Point, Jacksons Bay Road, Haast. Subsequently, a house and a helicopter hangar were erected on this land. The title is in the name of both parties as joint tenants. Both at Karamea and Haast the defendant operated his helicopter business, by deer shooting and venison recovery, ferrying fishermen and trampers, and other associated work.

[6] There is a significant dispute between the parties as to their respective financial and other contributions to the Haast property.

[7] It does seem to be at least common ground that at the commencement of the relationship the plaintiff had US$5,800, of which approximately US$5000 was in travellers cheques. The defendant owned a property at Karamea, had a half share of a helicopter recovery business, the assets of which were principally a helicopter, a wild game recovery licence, a chiller, and a utility truck.

[8] The Karamea property was sold in March 1992, and the net proceeds were approximately $85,000. The plaintiff alleged that these were used to purchase a half share from the defendant’s son in the deer recovery business for $50,000, and a further $22,000 of the proceeds of sale went to put a new engine in the helicopter. A further $13,000 was spent on living expenses over a 2 year period.

[9] In his affidavit the defendant accepts the plaintiff’s allegations as correct. He also refers to an investment in a nominee company with a firm of solicitors of $20,000 being uplifted, and being applied into business and domestic expenses. It can be seen, therefore, there can be little or no money from these sources for the purchase of the land, or the construction of the house and hangar, although the business has benefited to an unascertainable degree.

[10] In relation to the land being purchased as joint tenants, the plaintiff states that in early 1993 she and the defendant walked up a hill looking down on land and wondering whether it would be for sale. They made enquiries and found that Landcorp would sell the land. She stated:

“When we sat together on the hill we discussed buying the land together. It was just something that seemed natural and appropriate as we were living together. There was absolutely no discussion about buying it in our joint names to help my application for residency. I already had residency at that time.”

[11] On the other hand, the defendant alleges that the land was put in joint names to assist the plaintiff’s immigration status.

[12] The plaintiff alleges that while at Karamea she entertained fishermen, loaded and unloaded the helicopter and took fuel to it. She assisted with kayaking, rafting and fishing. In the commuting to Haast she was engaged mainly as a truck driver and a cook. She said that they moved from Karamea because the defendant had lost commercial work, as the surrounding area status was changed to a national park affecting his access. When in Haast she said she made the following contributions to the business:

“19. When we moved to Haast in 1991 the work that I carried out for the business included:

(a) shooting deer;

(b) gutting deer and field dressing deer;

(c) storing meat in the freezer;

(d) loading animals onto the freight truck 3 times a week;

(e) cleaning the chiller and chiller pad;

(f) removing offal;

(g) attending to sale and other transactions;

(h) obtaining fuel from Luggate and obtaining other supplies and carrying out other work.”

[13] She made the following contributions to the relationship:

“20. My contributions to the relationship included:

(a) general household and domestic duties

(b) entertaining business and private guests

(c) attending to many of the accounts in relation to both the building of the house and hangar and the business

(d) grew vegetables and sold vegetables

(e) physical work on the construction of the house and hangar

(f) monetary contribution from work and capital.”

[14] As well, she operated a modest aerobics class in Haast. She accepted that during the Karamea period she only worked some 15 to 20 hours per week.

[15] In November 1996 the overdraft was increased to $28,000 to allow a Robinson helicopter owned by the business to be repaired, and this was secured by a mortgage over the property.

[16] In relation to the construction of the house, the plaintiff alleged she carried the following work:

“17. As to the work I did on the house. Generally I was the labourer. I did whatever Phil Studholme instructed me to. This included:

(a) Preparing the pad for the concrete hangar, digging trenches for foundations for house and hangar, putting damp coursing on the bottom of the frames.

(b) Helping with framing and lifting, sanding, all painting and staining and varnishing of all timber inside and out including outside weather boards and batons, inside rafters, all doors, and door frames. I fitted the black paper to exterior of the house, punching and filling, helped to gib.

(c) Several feature walls were Rimu tongue and groove. I helped to put these walls up and to sand and varnish them.

(d) Painted all rooms (except living area), helped secure outside cladding, helped but windows in, helped put roof on, put batts in, helped with hearth and fireplace, helped carry and fix kitchen joinery and bathroom joinery.

(e) Selected and ordered chattels, hung curtains, assisted with boxing, drilled holes for dyna bolts, helped erect main steel frame, put in place and bolted all timber purloins to the main steel frame of the hangar, helped clad with colour-steel, assisted putting windows on.

(f) Landscaping. I spread truck loads of soil, created and maintained all vegetable and flower gardens, built all stone and retaining walls, assisted with concrete paths, helped build fences (timber and netting), planted trees and shrubs, collected and planted plants.

(g) I have marked in pink in my diary reference in my diary to work that I carried out on the home.”

[17] On the other hand, the defendant minimises the contributions of the plaintiff to both the business and the construction of the house and hangar. He insists the joint tenancy only arose because of immigration problems faced by the plaintiff.

[18] The defendant gave background evidence of the purchase of the property at Karamea, and his entry into the venison industry. He also gave evidence of the dangers of that industry, which one is sympathetic towards, but it is hard to understand its relevance in a proceeding of this sort.

[19] At 8(a) of his affidavit he set out a table of the history of helicopter ownerships:

Date of Purchase	Type	Date - Circumstances of Disposal	Injuries
1978/79	Hughes 300	Purchased	Nil
Robinson R22	1989 crashed 2 times damaged and repaired	Nil
Gibson Air	1995 crashed Destroyed, insurance pay out $108,980.00	Nil
Robinson R22	1996 crashed/rebuilt	Broken hip joint
Robinson R22	1997 crashed uninsured - written off	Right shoulder smashed

[20] He alleges that by the time he met the plaintiff he was winding down his business and was having a more lifestyle focused existence.

[21] It is the defendant’s contention that the move to Haast from Karamea was occasioned by the fact that the plaintiff did not get on with his son and daughter-in-law. He also alleges that the move to Haast meant he had less work available to him. He states that during the time at Karamea, although the plaintiff did assist him, her contribution was minimal.

[22] Apparently the defendant only had one combined business and personal account with a bank in the name of “Belcher Helicopters”. I understand the bank account has been discovered, but it has not been produced to the Court. When they rented the property in Haast between 1991 and 1993 drawings from this account met rental payments.

[23] The defendant also referred to money he received from his father’s and uncle’s estates, which he stated was contributed to the business. He said all the capital for Haast was introduced by him, and the property was subject to a mortgage to the National Bank. He maintains that all the plaintiff ever did was to work about 10-15 hours a week, leaving aside the aerobics classes.

[24] He said the money for the Haast land and the survey costs came from the business account, although the bank accounts have not been produced. A combination of the two gave a total cost for the land of $11,000.

[25] He alleges that the plaintiff’s description of the work carried out on the house is “significantly exaggerated”, and claims he does not recall her contributing $10,000 to the cost of the house, and he confirmed that the money came mainly from his business account, together with the mortgage advance from the National Bank. He did not accept the two of them combined to build the house. He said there was a professional builder to build the foundation and framing stage, and it was always the defendant’s intention to complete the work.

[26] He further alleges that the plaintiff simply cooked for herself, inferring that he did his own cooking and caring for himself. Housework was shared, but he did accept the plaintiff paid $2000 for a log burner. He points to the fact that the New Zealand residency of the plaintiff was only achieved through proof of the de facto relationship with him, although the relevance of that is unclear.

[27] The defendant alleges that when the plaintiff left she took electric blankets, rugs, diving gear, cash, bed covers and other items, but he did accept he continued to have possession of the house, hangar, and property. He said the business was not sold, and that the principal asset, the Robinson R22, was crashed and written off on the 21st December 1997, when it was uninsured. There must be some remaining assets of the business, but obviously they will be minimal.

THE LEGAL POSITION

[28] The starting point is s 140 of the Property Law Act:

“140 In action for partition Court may direct land to be sold

(1) Where in an action for partition the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the land to which the action relates request the Court to direct a sale of the land and a distribution of the proceeds, instead of a division of the land between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale accordingly . . .

141 Proceeds of sale, how applied

(1) All money received under any such sale may, if the Court thinks fit, be paid to trustees appointed by the Court, and applied, as the Court from time to time directs,-

(a) In the discharge of any encumbrance affecting the land directed to be sold; and, subject thereto,

(b) In the payment of the residue to the parties interested.

(2) Where the Court so directs, the trustees (if any) may in their discretion apply the money in manner aforesaid; and where no such direction is given any party interested may apply to the Court for an order that the money be so applied.

(3) Until the money can be applied as aforesaid it shall be from time to time invested in such securities as the Court may approve, and the interest and dividends thereof shall be paid to the parties interested.”

[29] As the learned authors of Trapski’s Family Law (Vol 1A, Ch 2, De Facto Property 2.1 to 2.3) note at 2.3.01:

“In the absence of evidence to the contrary, it is assumed that the way the parties have organised the legal title is intended to reflect their underlying beneficial interests. If the property is held in both partners’ names, there is a rebuttable presumption of equality: L v P 29/11/94, Hammond J, HC Auckland, CP81/93; CP 98/93; Coleman v Mears 22/11/95, Anderson J, HC Auckland HC243/94.

The onus of showing why the legal title does not reflect the underlying beneficial interest is on the party seeking to rebut that inference: Gissing v Gissing [1971] AC 886; [1970] 2 All ER 780 (HL). Fisher J stated, in Cossey v Bach [1992] 23 NZLR 612; (1992) 9 FRNZ 300; [1992]NZFLR 674, at p 677; p 688, that where the title is in both names, that approach must apply with at least as much force to a joint owner seeking more than the half interest to which he or she is entitled under the legal title.”

[30] In Gormack v Scott (1995) 13 FRNZ 43, [1995] NZFLR 289 CA at 47; p 293, a case that came very close to being one of express common intention, Cooke P, said that if there is “an express common intention applicable to the circumstances that have arisen it is unnecessary to fall back on reasonable expectations”. However, if the common intention was too vaguely expressed to receive implementation as such, the evidence bearing on common intention may still be relevant in considering the reasonable expectations of the parties.

[31] It follows that the first matter that falls for determination was the intention of the parties when they took title to the land as joint tenants.

[32] If the presumption is rebutted, it is then necessary to consider the position then arising. Both counsel were in agreement that the leading authority was that of Lankow v Rose [1995] 1 NZLR 277. That requires a consideration of the parties’ reasonable expectations, and the contributions made.

[33] There needs to be demonstrated a causal relationship between the contributions and the acquisition, preservation, or enhancement of the defendant’s assets. In Lankow v Rose (supra) Tipping J, stated at page 294:

“. . . it is not enough for the claimant to show a contribution to the relationship. In order to be awarded a beneficial interest in property owned in law by the defendant, the claimant must first show some contribution, direct or indirect, to the property at issue. A contribution to the relationship will not qualify unless it is also, as will often be the case, a contribution to that property.”

[34] Reference to 2.3.04 of the text mentioned above, shows the very wide scope of contributions that can be considered in a case such as this. Those contributions can be in domestic services. (See Lankow v Rose (supra) page 285, per Hardie Boys J.)

[35] Furthermore, the contributions must manifestly exceed the benefits, in that they must have been to the plaintiff’s detriment, or have resulted in the enrichment of one party to the jurisdically unjustified deprivation of the other. (See Lankow v Rose (supra) page 282, per Hardie Boys J).

[36] Fraser J, in Fleming v Beavers [1993] NZFLR 13, considered that a plaintiff had made a sacrifice by committing herself to a life with a man 17 years older than her without formal marriage. She had foregone both the possibility of marriage to someone else, the building and sharing of matrimonial assets, and the possibility of living alone and building up such assets.

[37] The contributions do not have to be direct contributions to the property in question, and indirect contributions are sufficient. (See Copeland v Hunter [2001] 2 FRNZ 149 (CA)). A trial Judge is also entitled to take a global approach to the question of contribution.

[38] In Gormack v Scott [1995] 13 FRNZ 43 (CA), the Court recognised that one party had contributed much more to the property in purely financial terms, but weighed that against the sacrifice of the other party in establishing and sharing a common home.

THIS CASE

[39] Having observed the witnesses, and having considered their evidence, where there is conflict, I prefer the evidence of the plaintiff to that of the defendant. She struck me as open and honest. There is an implication in the defence case that she is some sort of “gold digger”. When one reads her diaries before this relationship commenced, it is clear that nothing could be further from the truth. She was clearly an assiduous keeper of her diary, and I accept it as accurate contemporaneous notes of what occurred. I accept her explanation of the Rasmussen evidence.

[40] As noted above, it is the defendant’s contention that the property was only put in the parties’ joint names to assist the plaintiff with her immigration difficulties. That is denied.

[41] The date of the purchase of the land is unclear. The contract is undated. However, the backing sheet indicates the payment of a deposit on the 3rd July 1992. The plaintiff and defendant came onto the title on the 12 July 1994.

[42] It is apparent in a letter from the Immigration Service that the plaintiff was approved for residency in New Zealand on the 10th July 1990, and on that date her passport was endorsed with a residents permit and returning residents visa valid to 10 July 1994.

[43] I do not accept the evidence of the defendant that the joint tenancy arose for immigration purposes. Mr Belcher accepted in cross examination that the plaintiff would have told him when she received residency status. In this regard, I accept the evidence of the plaintiff referred to above about the decision to buy the property jointly. In the course of the relationship, as she noted, it was natural. I have no doubt that it was the intention of the parties that they jointly buy this section together and construct a house and hangar on it with the intention of equally sharing the property and their lives. I reject the allegations relating to immigration, and therefore the presumption is not rebutted on that basis. On the facts I am satisfied that the title reflects the parties’ intentions.

[44] However, in the event I am wrong, I will consider contributions, as I conclude that it is inescapable that the plaintiff had an expectation of a share in the property.

CONTRIBUTIONS

[45] As indicated above, where there is dispute I prefer the evidence of the plaintiff to that of the defendant. I have no doubt that she has worked long and hard in both the defendant’s business and in assisting in building the house. As well, she carried out normal household duties during that time. It is quite clear that she carried out manual work in both the construction of the house and hangar, and in the business that one would not normally expect of a woman. The position was best summarised by the onsite builder, Mr Studholme, who described Ms Baldwin as a good a labourer as he has ever had, then or since, and that she was very helpful. He was asked to compare the efforts in input for the building of the house between the plaintiff and the defendant. He answered:

“They were both on the job when they weren’t flying. They were always there to help me. For quite a bit of the time I was on my own until they employed a man who wasn’t very satisfactory. They spent a lot of time both of them working with me on the job itself.

Q. Would you say the input of one of them was more than the other.

A. “Not really no it was pretty much an equal thing, when something had to be done they both got in and helped.”

[46] He also gave evidence that she kept the house, cooked meals for Mr Studholme and any sub-contractors. His evidence makes a mockery of the suggestions by the defendant that he had to cook for himself because the plaintiff only cooked pasta, and was vegetarian. Reference to the diary also shows this as wrong. Mr Studholme was also asked about what she did in relation to the business:

“Q. Now, whilst you were living in Haast do I take it you would have had an opportunity to observe Christines efforts and input as far as the business was concerned.

A. With the helicopter yes.

Q. Again in your own words what did you observe Christine doing as far as business was concerned.

A. Very early starts in the morning to wake me up, and going shooting with Terry, cleaning the animals when they came back hanging them in the chiller and working with the deer.

Q. Are you able to compare her input in the business with Terrys input in the business from what you observed.

A. At the time I was there Chris done a lot of shooting. I went out once or twice with Terry but he didn’t get me in the right place for the deer but I had a lot of fun with Terry when I did it, Chris was a far better shot than I was because they always came back with more deer than when I did it.

Q. Look at an average day whilst there in Haast for Christine.

A. When the weather was fine it would be a dawn start, for an hour and a half 2 hours whatever, sometimes they would go back out to hook up deer left on the hill and they would come back and clean and hang them up, she would cook lunch, she come over and give me a hand if I needed a hand as would terry, and then if the weather was still fine in the evenings they would go shooting again and be back around dark.”

[47] Rather than exaggerate her contribution, as the defendant claims, I consider the plaintiff has correctly stated the contribution she has made to the business, and also to the construction of the house and hangar. Her contribution was at least the equivalent of the defendants, if not more. I find the only exaggeration in the evidence is that of the defendant, where he minimises the enormous effort of the plaintiff. Few women would have made the contribution the plaintiff did. Furthermore, by contributing to the business she has made an indirect contribution to the property and its acquisition, and the construction of the house and hangar. This is because it is the position the defendant takes that sums came from the business, and her contribution to the business must have indirectly contributed to that. I accept her financial contribution. While she should have revealed her retirement savings in the USA, I am satisfied this was inadvertence. In the overall context of this matter, the sums are not significant.

[48] She has also made a significant direct contribution to the construction of the house and the hangar.

[49] The position taken by the defendant is that he contributed some $133,000-00 to the building, and the balance came from National Bank borrowing and, perhaps, some money he received from two estates. I have found it difficult trying to understand where this money came from. It clearly did not come from Karamea, because that money was spent as outlined above. The defendant accepts that. It does not appear to have come from the $20,000-00 invested with the solicitors, because the defendant states that was applied for business and domestic expenses. Perhaps some of it indirectly came in through the business, although that is hard to ascertain in the absence of the necessary bank accounts.

[50] From reading the financial accounts of Belcher Helicopters there was no significant sale of assets during the relevant time that can account for the money said to have been contributed by the defendant.

[51] Furthermore, the invoices exhibited to establish the sum of $133,000 are by and large dated as paid between March 1993 and February 1994. In fact, they only total $118,037.66, and of that $102,152.06 was paid by February 1994. The vast bulk, $95,774.17, being between September 1993 and February 1994.

[52] For the year ended 31 March 1993 the cash profit before depreciation was approximately $16,000. There was some $36,000 at the end of that year in the National Bank. For the year ending 31 March 1994 the cash figure was less than $6000, and there was $26,000 shown in the National Bank. I asked Mr Belcher about the amount shown for contracting in his accounts, and he did not say that had anything to do with the construction of the house and hangar. It is difficult, if not impossible, to see on those accounts where the sum of $133,000, or the actual figures, came from in the period between March 1993 and February 1994.

[53] As regards money received from the estates, it appears the defendant received $4,489 from the estate of Charles Ernest Pye. From his father’s estate he appears to have received just over $13,000 in two cheques issued in September 1994 and September of 1996. He appears also to have received $3,750 on the 8th December 1994. Again, that is after the period when the bulk of the payments were made.

[54] The only other explanation may have been from the substantial insurance cheque he received after he crashed a helicopter in Greymouth. The difficulty with that is that it occurred in 1995, and, again, is not within the period when the substantive payments for the property were made. For reasons given earlier the proceeds from Karamea and the $20,000 invested with the solicitor have been accounted for, although some of the latter may have gone into the business. On the accounts the funds not appear to have come from selling capital items belonging to the business.

[55] It is for the defendant to rebut the presumption. In my view, he has failed to do so. On the information provided to the Court it is difficult to understand where the claimed $133,000 came from. If it did, in fact, come from income from the business then I am quite satisfied that the plaintiff made an equal contribution to that business during the relevant period. However, it is hard to see on the financial accounts provided to the Court that the money could, in fact, have come from that source.

[56] The presumption as to joint tenancy has not been displaced. In my view, it was the intention of the parties to share equally in this property, which is why they placed it in their joint names. Furthermore, on the available evidence the contributions to it in physical terms were equal. The defendant’s position, which he has not established, is that the cash contribution came from the business . If it did, I am satisfied it could have only come from business income which was equally contributed to by the plaintiff during the relevant period. I find her contributions, direct and indirect, equal to the defendant’s.

[57] There are other issues that should be briefly mentioned. After the separation, the defendant had the benefit of a loan from the National Bank for his business purposes only because the plaintiff agreed to an increase of the mortgage over the property. On the accounts she is still owed $13,000 by the business. This arises from a taxation situation where she was paid money by Mr Belcher which enabled him to be in a lower tax bracket. She immediately advanced that money back to the business. The sum was $17,000 and she has only benefited to the extent of $4000. The balance remains owing to her, although no claim is made in relation to it. Indeed, her counsel specifically advised the Court she abandoned all claims to that and to the business. The claimed advantage to her in having a motor vehicle purchased for her around the time of the separation is outweighed by that. In my view, it is also unnecessary to go into the situation relating to the Land Cruiser for that reason.

[58] It follows that the counter-claim is dismissed.

[59] Having determined the presumption has not been displaced and that the plaintiff has an interest to the extent of one moiety it is inevitable that an order for sale must follow. Partition is impractical, indeed, impossible, in this situation, and under the section if the Court does not order partition it must direct sale. (Pillar v John Odlin & Co Ltd [1951] NZLR 220).

[60] Accordingly, there will be the following order:

(a) The property situated at Mussel Point, Jacksons Bay Road, Haast, being all the land in Certificate of Title Vol 8A Folio 1260 (Westland Registry) and being Lot 1 DP 3083 Block IX Okura Survey District, is to be sold by public auction on a date six weeks after the handing down of this decision.

(b) If the parties cannot agree on an appropriate auctioneer, the auctioneer is to be appointed by the Registrar of the High Court at Greymouth.

(c) The parties did not address me as to a reserve price. Memoranda relating thereto should be filed within 3 working days of the handing down of this decision.

(d) In the event of either party refusing to sign the necessary documentation to effect the sale the Registrar of the High Court at Greymouth is authorised to sign the documents.

(e) The net proceeds of sale are to be divided equally between the plaintiff and the defendant.

(f) There will be liberty to both parties to bid at auction.

[61] Memoranda as to costs are to be filed within 7 days of the handing down of this judgment.