Basher v Basher
[2013] NZHC 1334
•6 June 2013
IN THE HIGH COURT OF NEW ZEALAND
NAPIER REGISTRY
CIV-2012-441-805 [2013] NZHC 1334
BETWEEN WAYNE JOHN BASHER
Appellant
AND ELLISHA NICHOLE BASHER
First Respondent
AMANDA STACEY BASHER Second Respondent
Hearing: 4 June 2013
Counsel: JF McDowell for Appellant
A McEwan for Respondents
Judgment: 6 June 2013
JUDGMENT OF RODNEY HANSEN J
This judgment was delivered by me on 6 June 2013 at 4.00 p.m.,
pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ...............................
Solicitors: John McDowell, Napier
Langley Twigg, Napier
Introduction
The first respondent (Ellisha) and second respondent (Amanda) are the
appellant’s daughters. Suing through their litigation guardian, they sought to recover from their father payments by way of wages and gifts paid to each of them by their maternal grandparents. These wages and gifts were paid into bank accounts operated by their father and their late mother. After a defended hearing in the District Court at Napier, Judge Rea entered judgment for Ellisha and Amanda against their father in the sums of $11,154.98 and $9,226.08 respectively. Mr Basher appeals against the decision.
Background
At the time of the District Court hearing, Ellisha and Amanda were
respectively aged 18 and 15 years. As young children they had been employed on weekends and school holidays doing odd jobs in their maternal grandparents’ joinery business. They were each paid a wage that was recorded in the business records and declared for tax purposes.Their father (who also worked in the business) and his wife set up bank
accounts in the names of the two girls. Each had their own bank account and there was a third account in the names of the two girls jointly. All three accounts were operated by their parents. Cheques for wages were given to Mr Basher who deposited the money into these accounts. The girls also each received a gift of $1,000 from their grandparents, which was paid into the accounts.As Judge Rea described it, Mr Basher and his wife operated the accounts in
an unconventional manner. They used all three accounts for their own purposes, including share trading. The girls’ wages and gifts were not kept separate from other money deposited in the accounts by Mr Basher and his wife. However, the grandparents kept careful business and banking records, making it relatively easy to identify the sum that each of the girls received from them.Mrs Basher died in 2005. Relations between Mr Basher, his two daughters
ultimately, responsibility for the custody and care of the girls was awarded to the grandparents.
In 2008, Ellisha and Amanda discovered that the bank accounts in their
names had been closed by their father and that he had retained the funds. He was asked about the money. He replied by email on 18 July 2008 as follows:“The money in the savings account WILL be returned upon Ellisha turning 25, not BEFORE!! As requested by her mother and father when this account was set up, the purpose of this account was when the girls were old enough to act more mature and know how to handle the money – not at 14 yrs old!! The money was removed from this account as the bank advised Wayne, that at 14 yrs old, the children can remove it without Waynes consent, so back in January, Wayne remove the money, knowing Ellisha was about to turn the age where she could have access to it. It has been placed into a separate account for the day the girls turn 25.
However, Mr Basher’s position later changed. He claimed he was under no
obligation to account to his daughters for the monies in the accounts. He said he had used the money in those accounts for their benefit, and it was quite proper for him to have done so. At the District Court hearing he modified his position somewhat by acknowledging that he would be happy to pay each of his daughters $1,500 when they were “more mature”. He said that would occur when they were twenty. The sum he is prepared to pay them coincides with the amount he intends to pay the other children who are part of his current relationship.
District Court decision
Judge Rea said he was satisfied from the records of the grandparents that the
amounts claimed by the plaintiffs were sums each of them had earned or received by way of gift. He said there was no evidence to suggest that Mr Basher or anyone else had the right to use the funds that had been paid to the plaintiffs. Judge Rea noted Mr Basher’s acknowledgment to that effect in July 2008.Judge Rea referred to submissions on behalf of the plaintiffs that the monies
were held for them on either a resulting trust or a constructive trust. He rejected a
breach of trust. He also rejected the plaintiffs’ claim based on a resulting trust because the money paid into the bank accounts had not come from their father.
Without saying so expressly, he appears to have accepted the plaintiffs’ alternative submission that the money was held on a constructive trust for the girls. He said:
[16] In my view this is a case where the reality of what has actually
happened should not be masked by any particular categorisation or label. The evidence is overwhelming that the Defendant has knowingly retained wages and gifts paid to the Plaintiffs by their maternal grandparents and has justified his retention of those funds by stipulating an age at which he is prepared to return the money. Put simply it is not his money and now the time has come for him to return it to his rightful owners. The money is owned by the Plaintiffs and now through their litigation guardian they are demanding its return and they are entitled to have it now.
He then entered judgment for the plaintiffs, including interest and costs. Grounds of appeal
Mr McDowell, for Mr Basher, argued that the elements necessary to establish a constructive trust were not present. He submitted that in order to succeed, the plaintiffs had to show the existence of a fiduciary relationship, a breach of a duty arising out of that relationship, and an improper gain or unjust enrichment derived from the breach. He contended that the relationship of parent and child did not by itself establish a fiduciary relationship and the Judge did not explain how such a relationship could arise in the circumstances of the case. He said there was no suggestion that Mr Basher had acted dishonestly. Further, he had not improperly benefitted from any breach as the money had been spent on the care and maintenance of the children.
Mr McDowell further submitted that, even if the elements required to establish a constructive trust existed, not all of the money in the bank accounts should be subject to the trust. He said expenditure on holidays to Australia for the children and lavish gifts for them should be excluded.
Mr McDowell also relied on a submission not addressed by Judge Rea that
disposed of was contrary to s 12 of the Wages Protection Act 1983 which provides as follows:
No employer shall impose any requirement on any worker as to any place or manner in which or any person with whom that worker shall expend wages received by that worker, or dismiss any worker on account of any place or manner in which or any person with whom that worker expends those wages.
Discussion
To take the last point first, I do not see how s 12 of the Wages Protection Act could apply. There was no requirement or direction as to the way in which the wages should be spent. The money was not paid to the children because they were too young to operate a bank account. Instead, payment of their wages was made to their father on condition that it was paid into an account and held for them until they were older.
As Ms McEwan, for Ellisha and Amanda, submitted, the existence of a fiduciary duty is not a necessary pre-requisite to the imposition of a constructive trust, although a constructive trust may arise where a fiduciary makes an improper profit from his or her fiduciary position.[1] However, I am not sure that this is really the issue. As the Judge seems to have intuited, the way in which the case was argued for the respondents/plaintiffs ended up complicating what was really a simple claim.
[1] Andrew Butler, Equity and Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) at [13.2.2].
On the facts as found by the Judge, an express trust came into existence. The money was paid to Mr and Mrs Basher to be held on trust and paid to the girls when they were old enough to manage their own affairs. The three certainties are present.[2] There is certainty of intention:[3] the grandparents gave evidence of their intention that the money would be held on trust and Mr Basher accepted in his July 2008 email that he had an obligation to hold the money until his daughters were older. There is
no issue concerning certainty of object. There is certainty of subject matter. The wages and gifts over which a trust was declared were clearly identified, being the amounts of cheques written by the girls’ grandparents. Although those sums ended up becoming intermingled with other funds, it was always intended that the money should be kept as a separate fund for the benefit of the girls. The following passage in Henry v Hammond summarises the position:[4]
It is clear that if the terms upon which the person receives the money are that he is bound to keep it separate, either in a bank or elsewhere, and to hand that money to be so kept as a separate fund to the person entitled to it, then he is a trustee of that money and must hand it over to the person who is his cestui que trust. If, on the other hand, he is not bound to keep the money separate, but is entitled to mix it with his own money and deal with it as he pleases, and when called upon to hand over an equivalent sum of money, then, in my opinion, he is not a trustee of the money, but merely a debtor.
There is not in this case the element that there was in Lyell v Kennedy of the moneys being in fact kept separate. I am aware that, if the defendant was bound to keep the money separate, the fact that he did not do so cannot assist him; he has committed a breach of his obligation.
[2] It is well established that, for the creation of an express trust, there must be certainty of intention[3] The test for certainty of intention is that of the overall intention of the settlers:[4] Henry v Hammond [1913] 2 KB 515 at 521.
On this basis, Mr Basher is in breach of trust in failing to account to his daughters for the money. He is liable for the misapplied funds. The judgment against him must be upheld.
Result
The appeal is dismissed. The respondents are entitled to costs on a category 2 band B basis.
of the person creating the trust, certainty as to the subject matter of the trust, and certainty as to the objects of the trust: Knight v Knight (1840) 3 Beav 148, 49 ER 58 (Ch); Official Assignee v Wilson [2007] NZCA 122, [2008] 3 NZLR 45.
In re Adams &
the Kingston Vestry (1884) 27 Ch D 394 (CA). Technical language is not necessary; a trust may be created by any language demonstrating that intention: Royal Forest and Bird Protection Society of New Zealand Inc v Nelson City Council [1984] 2 NZLR 480 (CA).
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