BFP Trustees No. 1 Ltd and BFP Trustees No.2 Ltd v Currin HC Whangarei CIV 2010-488-167

[2010] NZHC 515

IN THE HIGH COURT OF NEW ZEALAND

WHANGAREI REGISTRY

CIV-2010-488-000167

BETWEEN  BFP TRUSTEES NO. 1 LTD AND BFP

TRUSTEES NO. 2 LTD AS TRUSTEES OF THE BIRCHES NO. 1 TRUST Applicants

ANDWARREN ANDREW CURRIN AND NICOLA JANE CURRIN

Respondents

Hearing:         21 April 2010

Appearances:  A Gilchrist for Plaintiff

P Magee for Defendant

Judgment:      22 April 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors/Counsel:

Dyer  Whitechurch  (M  C  Bhanabhai/L  M  Nicholson),  PO  Box  5547,  Wellesley  Street, Auckland

Thomson Wilson, PO Box 1042, Whangarei

A Gilchrist, PO Box 5444, Wellesley Street, Auckland

BFP TRUSTEES NO. 1 LTD AND BFP TRUSTEES NO. 2 LTD AS TRUSTEES OF THE BIRCHES NO. 1

TRUST V WARREN ANDREW CURRIN AND NICOLA JANE CURRIN HC WHA CIV-2010-488-000167
22 April 2010

[1]      This  is  an  application  about  a  caveat. The  Court  made  an  order  without notice sustaining the caveat.  The registered proprietors then sought a hearing on the matter  with  a  view  to  having  the  caveat  removed. They  said  that  they  were negotiating  the  sale  of  the  property  and,  as  it  turns  out,  they  have  a  conditional agreement  for  the  sale  of  the  property. They  were  keen  to  have  the  matter determined so that they can know whether the caveat stands or not.  In the event that agreement has been put in evidence and it shows that the agreement is conditional and a new condition has been inserted into the agreement which relates to whether the caveat can be sustained or not.

[2]      The parties to this proceeding are, on the one hand, the caveators who are the trustees of the Birches No. 1 Trust, and, on the other hand, Warren Andrew Currin and Nicola Jane Currin who are the owners of a property at 303 Three Mile Bush Road, Kamo, in Whangarei. The caveat put on the title is 8419202.1. It was lodged

on 17 February 2010.   The property is a 1.094 hectare property, Lot 1 DP 315443, identifier 60799.

[3]      The interest claimed in the caveat is:

Pursuant  to  an  implied  trust  in  respect  of  matters,  including  the  land contained in the aforementioned Certificate of Title and made between the registered  proprietors,  Warren  Andrew  Currin  and  Nicola  Jane  Currin  as trustees, and the caveator as beneficiary.

[4]      It  is  necessary  to  refer  to  some  background  history  for  the  matter  to understand how this arises.

[5]      The former trustees of the Birches No. 1 Trust were George Hull and Yvonne Hull.  They commenced a relationship in 1984 and married in 1990.  They were the original trustees of the Birches No. 1 Trust.  That trust acquired a property at 3 Mile Bush Road in December 1998 and in about 2000, they began a subdivision of that. Under  that  subdivision  the  property was  divided  into  three  titles.   The  property in issue  in  this  case  is  lot  1  of  that  subdivision. The two other  lots  are  referred  to informally as the Greagh Gardens. Title issued in October 2005.

[6]      It does not seem to be disputed that Mr Hull’s health was deteriorating and the issue arose of transferring lot 1 to Mrs Hull’s son, Warren, one of the defendants. The  intention  seems  to  have  been  that  Warren  and  his  wife,  Nikki,  should  be encouraged to take lot 1 and build a home there to allow them to live close to their mother, given that Mr Hull expected at that stage that he might not have long to live.

[7]      In May 2007, the Birches No. 1  Trust  transferred  the  title  to  lot  1  in  the subdivision to the Westridge Family Trust, which is the family trust of Warren and

his  wife,  Nikki. No money passed  hands for that  transfer. However,  it  was  a transaction which was subject to GST. Obviously, the Birches No. 1 Family Trust had  acquired  the  land  subject  to  GST and  the  transfer  to  an  associated  person attracted GST at the market value. At the time, a desk top valuation by Quotable Value  was  obtained  and  the  property was  held  to  have  a  deemed  market  value  of $240,000 and GST was paid on that, apparently by the transferees.

[8]      The  other  circumstances  relating  to  the  transfer  are  in  controversy. The registered proprietors regard this transfer as an outright transfer to them, free of any interest back  to the transferor  and they point to  the absence of  any documentation that would support any interest back in favour of the Birches No. 1 Trust.   In that they are supported by Yvonne Hull, who has also sworn an affidavit in their support as well.

[9]      George Hull contends otherwise.  He says that in arranging the transfer, while there  was  an  intention  to  create  a  lot  where  Warren  and  Nikki  Currin  could  live, ultimately there would be subdivision in the future.  On that subdivision Warren and Nikki Currin on their family trust would have to account back to the Birches Family Trust to the extent that they had more than just a house lot.  He refers in his evidence to  a  letter  of  intent  that  was  prepared  before  the  transfer,  seemingly at  the  end  of 2006, which has a schematic drawing showing an area which would be reserved back to the transferor, and there is reference to that being secured by a mortgage as well.

[10]     What Mr Hull is asserting, it seems to me, is that although there was a transfer from the Birches Family Trust to the Westridge Family Trust, it was not an absolute transfer in the sense that  title  was  to  pass  absolutely. He  is  saying  that

whereas the presumption of advancement would ordinarily arise, this is a case where that presumption can be rebutted and he points to certain matters that happened in that time to support the fact that something was intended to be held back. He points

to the letter of intent.   That letter of intent was signed by himself and Nikki Currin alone. It   was   not   signed   by   Warren   Currin   or   his   mother,   Yvonne   Hull. Nevertheless, it is evidence that points towards an intention that something would be held back by way of an alleged implied trust.

[11]     Similarly, his accountants have produced a file note that was prepared on 19

February 2007 by the trustees’ accountant, Mr Couch.  That file note shows that Mr Hull went to the accountants and discussed this transaction and Mr Hull apparently told his accountant that Warren was contemplating building on the block and might potentially subdivide the one hectare into smaller lots.  The note goes on to say:

The intention is that he would pay back to the trust when he got and sold the titles.  The amount is around $600,000.

And then further on the note goes on to say:

Even if Warren does not subdivide in the future he may not have to repay the amount that becomes part of George of Yvonne’s estate planning.

And also:

However, they do want to have an IOU or acknowledgement of debt in place

in case anything untoward happens.

[12]     I read those instructions to the accountant as evidencing an intention that the transfer to Warren and Nicola or the family trust has not been an absolute one but is pointing towards some form of trust.   As it happens, and the parties are agreed on this,  nothing  was  formally  documented  to  support  any  interest  back.   However,  I accept  the  point  made  by  Mr  Gilchrist  that  this  was  a  family  transaction  where people  might  have  elected  to  proceed  relying  on  trust  and  good  faith  without insisting on having every legal point tied down.

[13]     I find accordingly that Mr Hull has an arguable case. That is all he has to show on a caveat application. There are also  indications  to  the  contrary  in  the evidence which go against the case that he mounts and those are matters which can

be raised by the registered proprietors.   I note in particular in submissions for them that  they  have  referred  to  the  dicta  of  Asher  J  in  the  case  Capital  Merchant Investments  (In  Receivership)  v  Russell  Management)  (2009)  10  NZCPR  199  at 14[?] where he says:

The Court is not in a  position  in  a  caveat  hearing  to  resolve  disputed questions of fact. That does not mean, however, that the Court has to accept all assertions by deponents on face value.  The Court is able to apply its own analysis and judgment to undisputed facts to decide on what inferences, if

any, can safely be drawn.

[14]         I regard that dicta as useful guidance in this case.   I bear in mind, of course, the Court’s caution to accept bare assertions without proper foundations but in this case I am not taken to the stage where I could say conclusively that I am satisfied, just  on  the  evidence  before  this  Court  today,  that  the  plaintiff  trustees  have  no interest  in  the  land. There  are  still  issues  of  fact  and  conflicts  in  the  evidence between  the  parties  which,  in  my  view,  can  only  fairly  be  resolved  by  everyone coming to Court, giving evidence and being cross-examined. Findings of fact can only be made after everyone has given evidence in full.

[15]     Accordingly, I make an order  that  the  caveat  is  to  be  sustained  to  be  on condition  that  the  plaintiffs  are  now  to  issue  proceedings  in  this  Court. The proceeding is to be directed solely at obtaining relief recognising the interest claimed in the land, and any ancillary orders, but is not to raise any other causes of action, even though there may be other differences between this trust and the other parties relating to the breakdown of the marriage between Mr and Mrs Hull.  Those matters should not clutter this proceeding.

[16]     This proceeding should be kept within a confined compass so that it can be brought on for hearing quickly. The parties addressed me on balance of convenience.

I do not think I have to address that in particular but I do see that other proceedings are under way between Mr and Mrs Hull in the Family Court.   It does not look as though those proceedings are going to be resolved ahead of these proceedings which I  am  directing  should  be  issued  now,  and  so  this  proceeding  can  also  be  run conveniently in tandem with the Family Court issues.

[17]     I  direct  that  the  plaintiffs  are  to  issue  their  proceedings  within  21  days  of today,  that  is  15  working  days,  and  I  also  direct  that  the  defendants  are  to  file  a statement of defence within a further 15 working days.  I also direct that this matter is to be given a telephone conference for 12:30  pm on 14 June 2010.   But  I will expect that once the pleadings are exchanged, the parties to be able to move ahead quickly  with  discovery  so  that  the  matter  can  be  disposed  of  as  quickly  as  time resources in this Court allow.

[18]     It also follows from this that the plaintiffs are entitled to recover their costs

on this application. I award costs to the plaintiffs on a 2B basis.   I invite counsel to confer as to the calculation.  I am sure that counsel will be responsible about that but

if no agreement is reached, I will accept memoranda.   I do strongly urge counsel to

reach agreement.  Disbursements are to be approved by the Registrar, if necessary.

R M Bell

Associate Judge