Buxton v Buxton
[2017] NZHC 131
•10 February 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2016-409-000855 [2017] NZHC 131
IN THE MATTER of the Land Transfer Act 1952 AND
IN THE MATTER
of an application to sustain a caveat
BETWEEN
TERRANCE GEORGE BUXTONE Applicant
AND
JILLIAN GALE BUXTON AND JOHN EDWARD BUTLER
Respondents
Hearing: 2 February 2017 Appearances:
Applicant in person
H D P van Schreven for RespondentsJudgment:
10 February 2017
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
Introduction
[1] The applicant, Mr Buxtone,1 and the first-named respondent, Mrs Buxton, married in December 1969, and remain married, though they are now estranged. For much of the time since 1996 they have lived in a house at 60 Andover Street, Christchurch. The house is now owned by a trust called Trust 60 which was created by deed dated 19 December 2005. Mrs Buxton and the second-named respondent, Mr J E Butler, are the trustees of Trust 60 and are the registered proprietors of the property.
[2] On 17 June 2016 Mr Buxtone lodged against the title to the house a notice of claim of an interest pursuant to s 42(2) of the Property (Relationships) Act 1976
1 Mr Buxtone changed his name from Buxton recently.
BUXTONE v BUXTON AND BUTLER [2017] NZHC 131 [10 February 2017]
(PRA). On 18 August 2016 the Registrar General of Land gave notice to Mr Buxtone of an application to lapse the notice. Mr Buxtone applies for an order that the notice be sustained and not lapse.
[3] The form of the notice lodged by Mr Buxtone provides for a statement to be given of the way in which Mr Buxtone says he derives an interest in the property from the registered proprietor. On this point he simply states that he is the husband of Jillian Gale Buxton. In the portion of the document titled “Relationship Details”, Mr Buxtone states that under the PRA, “an interest is claimed by virtue of the marriage with the above spouse or partner”, this being a reference to Mrs Buxton.
[4] In his application Mr Buxtone relies on two principal grounds. First, he says he has an interest in the property by virtue of his marriage to Mrs Buxton. Secondly he says that although Mrs Buxton and Mr Butler are trustees of Trust 60, the owner of the property, “by virtue of the marriage to the applicant, the applicant has a sustainable interest in the land”. There is further reference to notice to lapse the caveat being improperly given as it was signed by one trustee only, but this point was not pursued and there is evidence before the Court that the notice was given on behalf of both trustees.
[5] The trustees oppose the application. The thrust of their opposition is that they own the property as trustees of Trust 60, that it is not and never has been relationship property to which the PRA applies, that since the property was first purchased by Alpine Springs at the beginning of 1994 it has been owned by that company and, subsequently, by a succession of trusts, and that it has never been owned by either Mr Buxtone or Mrs Buxton personally. Mr Buxtone is neither a settlor, trustee nor discretionary beneficiary of Trust 60.
Principles of law applying to registering, and to an application to sustain, a notice under the PRA
[6] Section 42 of the PRA provides, to the extent presently relevant:
(1) A claim to an interest, pursuant to this Act, in any land subject to the Land Transfer Act 1952 shall be deemed to be a registrable interest for the purposes of that Act.
(2) Notice of a claim under subsection (1) shall be effected by lodging a duly completed notice in the prescribed form with the District Land Registrar.
(3) Every notice so lodged shall have effect as if it were a caveat lodged pursuant to section 137 of the Land Transfer Act 1952 and the provisions of that Act. ...
[7] Section 137(1) of the Land Transfer Act 1952 states:
137 Caveat against dealings with land under Act
(1) Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person –
(a) claims to be entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or
(b) is transferring the land or estate or interest to any other person to be held in trust.
[8] A claim to an interest under the PRA in any land which is subject to the Land Transfer Act is deemed to be registrable for the purposes of that Act.2 Accordingly a claim to an interest by Mr Buxtone under the PRA is a registrable interest, and the question of whether it can be sustained is to be determined in accordance with the principles which apply to caveats lodged under the Land Transfer Act.
[9] A claimant under the PRA is entitled to give notice of a claim on a broader basis than a person who is claiming an interest in land outside that Act. In Huang v Chung, Associate Judge Bell observed:3
Under cl 3, the person lodging the notice claims an interest under the Property (Relationships) Act. The person lodging the notice is entitled to do so even before any proceedings have been started under the Act, and even if there is no dispute between the parties. That shows that the claim is for an interest that might be created later on a division of relationship property, either by agreement or by court order. At the time of lodging the notice, the claim may be inchoate only. The interest of the person lodging the claim need not amount to a caveatable interest under s 137(1)(a) of the Land Transfer Act. In that respect, s 42 gives a claimant more extensive protection than a caveat.
2 PRA s 42(1).
3 Huang v Chung [2015] NZHC 686, (2015) 30 FRNZ 188 at [46].
[10] Although Mr Buxtone has not yet brought proceedings under the PRA he expresses an intention to do so. He is a person who is entitled to lodge a notice of claim in accordance with the principles stated in Huang v Chung, but it can only be sustained if it can be sufficiently shown that Mr Buxtone may have an interest in the property pursuant to the PRA.4
[11] I adopt, to the extent relevant to the present case, the statement of principles to be applied on an application to sustain a notice of interest under the PRA set out in X v Company A in the following terms:5
(a) The burden of establishing that the applicant has a reasonably arguable case for the interest described in the notice of claim is upon the applicant.
(b)The summary procedure involved in an application of this nature is not suitable for the determination of disputed questions of fact. An order for removal of a notice of claim will not be made unless it is clear that the notice cannot be maintained either because there was no valid ground for lodging it, or, if there were such a ground, it no longer exists.
(c) When an applicant has discharged this burden there remains a discretion in the Court on whether to remove the notice of claim, which will be exercised cautiously, and
(d) The Court has jurisdiction to impose conditions when making orders.
[12] These reflect principles enunciated in other cases and are consistent with the principles applicable on applications to remove caveats, enunciated by the Court of Appeal in SM v ASB Bank Ltd.6
[13] In considering the application of these principles it must always be remembered that the claimed interest must be one which is pursuant to the PRA.7
4 PRA s 42(1).
5 X v Company A [2014] NZHC 2126 at [43].
6 SM v ASB Bank Ltd [2012] NZCA 103.
Ownership of 60 Andover Street
[14] The property was purchased by Alpine Springs Resort Limited, a company in which Mr Buxtone says he owned all the shares, in 1994. Neither Mr Buxtone or Mrs Buxton moved into the house until 1996. By that stage their two children had left home. On 4 October 2000 Mr Buxtone and Mrs Buxton set up two trusts, the Andover Street Trust and the Andover Trust. The trust deeds for these trusts were produced in evidence. In each case Mr Buxtone is the settlor and he and Mrs Buxton are the trustees. The only discernible difference between the two trust deeds is that in the former, the definition of “appointor” is blank, whereas in the latter the appointor is stated to be Mr Buxtone. For present purposes, this difference is immaterial. Mr Buxtone and Mrs Buxton took title to the property in 2001. On the evidence before the Court it is not possible to tell whether they did so as trustees of the Andover Street Trust or as trustees of the Andover Trust, but it is common ground that they took title as trustees of one or other and did not take title as owners of the property in their personal capacities.
[15] Under each of these trusts the trustees may appoint the capital of the trust fund for the benefit of such of the discretionary beneficiaries as they shall think fit. The discretionary beneficiaries are described as Mr and Mrs Buxton’s children, Sophie and Garth, together with their issue, and “any other person who is related to the Discretionary Beneficiary by blood, marriage or adoption of any degree and of any kind and whether now living or born after the execution of this deed”.
[16] It follows that Mr Buxtone and Mrs Buxton were both persons to whom the trustees might together decide to appoint the capital of the Trust. In that way they had full control over who might receive the property, including themselves.
[17] On 27 April 2005 Mr Buxtone ceased to be a trustee of whichever of these trusts owned the Andover Street property. In his place, a company called Garphie Trustees Limited (Garphie), was appointed to be a trustee along with Mrs Buxton. Mr Buxtone had been the sole director and shareholder of Garphie but in March
2005 he had resigned as a director and a Mr E J Robinson had been appointed in his
7 Section 42(1).
place. In December 2005 Mr Buxtone transferred his shares in Garphie to a company called Trans Tasman Trustee Services Limited which is a trustee company associated with Canterbury Legal Services, a law firm of Mr Clive Cousins, which acted for Mr Buxtone at the time.
[18] After that Mr Buxtone did not have any other formal role in Garphie, either as a shareholder or a director, until January 2014 when the shares in the company were transferred to Rineheart Corporation Limited, a company registered in Belize, which Mr Buxtone says is a company of his. By that point, however, Garphie had ceased to have any involvement in any trust which has at any point owned the Andover Street property.
[19] On 28 February 2006 the property was transferred by Mrs Buxton and Garphie, to Garphie solely, presumably as Mrs Buxton had resigned as a trustee, and on the same day Garphie transferred the property to 60 Trustee Services Limited which was then the sole trustee of Trust 60. Whether this transfer was by way of sale from the relevant Andover named trust to Trust 60, or by way of resettlement of the property on Trust 60, is not known, or relevant. What is clear, however, is that between December 2005 and February 2006 Mr Buxtone divested himself of any interests he may have had in the property as a trustee (either through Garphie Trustees Limited, or personally), or as a discretionary beneficiary in one of the Andover trusts. Since 28 February 2006, as a result of these actions by Mr Buxtone and Mrs Buxton, the property has been held by Trust 60.
[20] Trust 60 was settled on 19 December 2005 by Mr E J Robinson and the sole trustee was, at that point, 60 Trustee Services Limited. The final beneficiaries are defined as Sophie and Garth Buxton, and they are also discretionary beneficiaries along with Mrs Buxton, any wife, husband, widow or widower of the final beneficiaries, and certain trusts or superannuation schemes, of no present relevance. Significantly, Mr Buxtone is not a final beneficiary or a discretionary beneficiary. He does not therefore have any interest in the property pursuant to Trust 60. As noted, this is a situation brought about by the transactions undertaken between December 2005 and February 2006. Although he was not a trustee of either of the Andover named trusts at that time, or a director of Garphie, Mr Buxtone accepts that
he was aware of and agreed with these transactions; indeed, he undertook one of them (transfer of his shares in Garphie) himself.
[21] Since that time there have been a number of changes of directors of
60 Trustee Services Limited. An initial director, Mr Clive Cousins, retired in October 2009 and a Mr R M Blakely was appointed in his place. He resigned in November 2010 and a Mr R C McCandish was appointed. In November 2011
Mr McCandish resigned and Mr J E Butler was appointed as a director.
[22] In February 2014 60 Trustee Services Limited retired as a trustee of Trust 60 and pursuant to her power of appointment in the trust deed Mrs Buxton appointed herself and Mr J E Butler as new trustees of that Trust. The property was transferred to them in that capacity at that time, and they continue to hold the property as trustees.
[23] The property was damaged in the Canterbury earthquake sequence in
2010/2011. Claims to EQC and the insurer of the property were handled by Mr Buxtone. He told me that this was pursuant to a Power of Attorney granted to him, though the precise basis on which he had any involvement in this is unclear. In any event he achieved a settlement, and insurance and EQC payments were received by Trust 60. It seems that even after that Mr Buxtone has some involvement in dissipation of these monies, perhaps pursuant to the same authority given by the then trustee.
[24] Mr Buxtone had also contracted on behalf of Trust 60 with a company called Proclaims Management Limited to assist with the insurance claim, but he had not arranged for the Trust to pay that company’s account. It had later gone into liquidation and the liquidator sought reimbursement. Mrs Buxton arranged for this debt to be cleared from the proceeds of the insurance payment.
The case for Mr Buxtone
[25] In written submissions filed on behalf of Mr Buxtone in accordance with Court directions, and relied on by Mr Buxtone when representing himself on the application, his former counsel presents three arguments. First, Mrs Buxton retains
an interest in the home which is relationship property. He says this interest is primarily based on Mrs Buxton having extensive trust powers under the trust deed for Trust 60. Secondly, Mrs Buxton has disposed of relationship property to Trust
60, a trust of which Mr Buxtone is not a beneficiary, but she is, and therefore the property is relationship property even though owned by Trust 60. Thirdly, Mr Buxtone arguably has an interest in the home under a constructive trust.
[26] Developing the first argument, counsel relies on Clayton v Clayton.8 Both the Court of Appeal and the Supreme Court in Clayton v Clayton, held that the powers held by Mr Clayton were relationship property.9 Mr Clayton held a power of advancement, power to distribute the trust capital on the vesting day, or earlier, and power to resettle the trust. These powers allowed him to favour himself. As the Court observed:10
If he [Mr Clayton] brought forward the Vesting Day to a date of his choosing and had appointed all the trust capital to himself, that would give him both legal and beneficial ownership of the trust capital and the [trust] would be at an end.
[27] In Unkovich v Marbeck, the High Court applied Clayton and said:11
Her power as settlor of that trust to appoint and remove beneficiaries, quite apart from trustees, is capable of being [relationship] property; and its value is to be fixed by reference to the property held in trust.
[28] Mr Buxtone’s counsel says in his written submission that it is reasonably arguable that Clayton applies, given the powers held by Mrs Buxton, but that in any event this is not the forum to finally assess the point; it is sufficient for the Court to find it to be arguable.
[29] The second argument advanced on behalf of Mr Buxtone in counsel’s written submissions is derived from ss 44 and 44C of the PRA. These provide, respectively, for a disposition of property to be set aside in certain circumstances, and for compensation to be given by the Court for property disposed of to a trust. For
Mr Buxtone it is said that Mrs Buxton has disposed of relationship property to Trust
8 Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293 (CA).
9 Clayton v Clayton [2016] NZSC 29, [2016] 1 NZLR 551.
10 At [54].
11 Unkovich v Marbeck [2015] NZHC 742 at [27].
60, with the effect of defeating a potential relationship property claim by Mr Buxtone, by her transfer of the home to the present trustees of Trust 60. It is said that the specific disposition which has potentially defeated Mr Buxtone’s rights is the removal of the independent trustee, 60 Trustee Services Limited, from its role as trustee, and the appointment of Mr Butler personally as a new trustee in its place. It is said that Mr Buxtone had “some control” over 60 Trustee Services Limited, but he has none over Mr Butler, and thus he lost any control he may have had over the home. Counsel says that to qualify under these sections the disposition in question must have the effect of defeating rights under the PRA, and he accepts there is an onus on Mr Buxtone to prove that the disposition was made with the intention of defeating his rights under the Act. This intention, he says, may be inferred from all the surrounding circumstances.
[30] The third argument advanced in written submissions for Mr Buxtone is that he has a claim for an institutional constructive trust based on his contributions to the property, in accordance with the principle in Lankow v Rose.12 It is not disputed that Mr Buxtone has made financial contributions to the property over the years. Counsel says he also had an expectation of an interest in the property, as the home both he and Mrs Buxton lived in, and this expectation was reasonable. He says Mrs Buxton should reasonably expect this to yield him an interest, a point which should be tested at trial whilst the protection of the notice remains on the title.
The issues
[31] The arguments presented for and by Mr Buxtone raise three issues for decision:
(a) Do the powers Mrs Buxton has under the Trust 60 deed arguably amount to relationship property in which Mr Buxtone may arguably have an interest?
(b)Has there been a disposition of property such as to arguably give rise to rights preserved by ss 44 and 44C of the PRA?
12 Lankow v Rose [1995] 1 NZLR 277 at 282.
(c) Does Mr Buxtone arguably have a claim to an interest in the property under a constructive trust?
Discussion
First issue - Do the powers Mrs Buxton has under the Trust 60 deed amount to relationship property in which Mr Buxtone may arguably have an interest?
[32] Under the trust deed for Trust 60 Mrs Buxton is a discretionary beneficiary. The deed provides in clause 6 that the trustees may at any time apply the whole or any part of the capital of the Trust to or for the benefit of any of the discretionary beneficiaries, as they shall decide. This is not a power vested solely in Mrs Buxton. It is a power vested in both trustees. Likewise, by clause 8 of the trust deed, both trustees may resettle the trust within certain parameters. Again, this power is given to both trustees.
[33] Significantly, however, by clause 12 it is provided that:
... no person who for the time being is both a trustee of any of the trusts hereof and a beneficiary hereunder may exercise the discretionary powers contained herein in his or her own favour AND the remaining trustee or trustees alone shall have the power to exercise the said discretionary powers in favour of a Discretionary Beneficiary who shall for the time being be a trustee hereunder.
[34] Mrs Buxton is a trustee and a discretionary beneficiary. She cannot, therefore, appoint the assets of the Trust to herself, nor resettle the Trust in any way which favours her. Only Mr Butler, the present remaining trustee, has these powers.
[35] A further limitation on the power of Mrs Buxton is set out in clause 14.2(a). Although Mrs Buxton has power to appoint new trustees under clause 13, her power to remove trustees is exercisable only in conjunction with the appointment of a new trustee or new trustees if the removal of a trustee would result in the number of continuing trustees being reduced below two. The effect of this provision is that there must at all times be at least two trustees, ensuring the limitations on Mrs Buxton’s powers in clause 12 cannot be avoided.
[36] It follows, therefore, that Mrs Buxton is not in a position, as Mr Clayton was in relation to his trusts, to bring forward the vesting date to a date of her choosing, and then appointing all the Trust capital to herself. Thus she cannot by her own actions take steps to give herself both the legal and beneficial ownership of the Trust capital and bring Trust 60 to an end. She is constrained from so doing by the clear express terms of the Trust. In these material respects the trust differs from the trust which was before the Court in Clayton.
[37] In this context it is relevant also that in taking the steps which he took, in conjunction with steps by Mrs Buxton, between December 2005 and February 2006
Mr Buxtone divested himself of any degree of control of, or interest in, the Andover Street property. He placed it into the hands of a new trust in which he had no interest whatsoever, and in which Mrs Buxton only had rights which were circumscribed by the terms of the trust deed in the ways I have outlined. This must be assumed to have been a deliberate act on his part, and indeed it is not suggested otherwise.
[38] Given this, I do not find it to be sufficiently arguable, for the purposes of sustaining a notice under s 42, that Mr Buxtone has any claim under the PRA in respect of the interest of Mrs Buxton in Trust 60. He is not a beneficiary, and although Mrs Buxton is a discretionary beneficiary, she does not have power to take any step which might bring about her receipt of the Trust assets. She cannot resettle the Trust in such a way that this alters. This situation was brought about with Mr Buxtone’s knowledge and cooperation.
Second issue - Has there been a disposition of property such as to give rise to rights preserved by ss 44 and 44C of the PRA?
[39] The argument presented by Mr Buxtone’s former counsel is that there has been a disposition of property in order to defeat his claim, entitling him to an order under s 44 and/or s 44C of the PRA. Specifically, in his written submission, counsel says:
The disposition which has potentially defeated Terry’s rights is the removal of the independent trustee from 60 Trustee Services Limited (of which Terry had some control) and the appointment of John Butler personally as new trustee. That transfer removed any control Terry might have had over the home.
[40] To recap, 60 Trustee Services Limited was the trustee of Trust 60 from the time it was set up by deed dated 19 December 2005 by E J Robinson until it retired on 4 February 2014. The deed of that date records that the retiring trustee wished to retire as a trustee and that Mrs Buxton, who held power of appointment of new trustees, appointed Mr Butler and herself as new trustees of the Trust.
[41] When Trust 60 was set up, the shares in 60 Trustee Services Limited were held by Trans Tasman Trustee Services Limited, and that did not change whilst it remained a trustee of Trust 60. Its initial director was Mr C J Cousins, solicitor, and there were four resignations and appointments culminating in Mr J E Butler being appointed director in November 2011. At no point was Mr Buxtone a director. Nor at any point did he own shares either in 60 Trustee Services Limited or in Trans Tasman Trustee Services Limited. It is not clear, therefore, why counsel submitted that Mr Buxtone had “some control” of 60 Trustee Services Limited unless this was by way of some undisclosed arrangement he had with Mr Cousins or one or more of the succeeding directors of that company. There is no evidence that was the case, nor any reason, therefore, to draw an inference that Mr Buxtone had any control over
60 Trustee Services Limited either before or after the appointment of Mr J E Butler as its sole director. There is no foundation, therefore, for the submission that the appointment of Mr J E Butler and Mrs Buxton removed control from Mr Buxtone over the Trust assets.
[42] Nor, in any event, would it be relevant if that had occurred. The steps I have described were changes of trustee, not changes in the beneficial ownership of the property. There was no disposition of property involved in this transaction. Prior to it occurring, the beneficial interest in the Trust property was held by the beneficiaries of Trust 60 on the terms contained in the trust deed. This was also the position after the transaction.
[43] For these reasons I find that Mr Buxtone has not established that he has an arguable case that there has been a disposition in terms of s 44 and s 44C of the PRA.
Third issue: Does Mr Buxtone arguably have a claim to an interest in the property under a constructive trust?
[44] The first and most obvious difficulty with the proposition that Mr Buxtone’s notice of interest is based on his having an interest under a constructive trust in his favour is that an interest under a constructive trust is not “an interest pursuant to” the PRA, as required by s 42(1) if notice of an interest is to be capable of negotiation.13
[45] The principal argument advanced by Mr Buxtone’s former counsel in his written submissions is based on the principles in Lankow v Rose.14 Although the above point is sufficient to decide the third issue, I will deal with this briefly, and for the sake of completeness. It is said that Mr Buxtone made direct contributions to the property and that he held an expectation of an interest in it which was reasonable, and one which the trustees should reasonably expect to yield to. In Lankow v Rose Tipping J said that if a claimant can demonstrate each of these points, equity will
regard as unconscionable a defendant’s denial of a claimant’s interest and will impose a constructive trust accordingly.15
[46] The evidence arguably establishes that Mr Buxtone made direct contributions to the property over the years that he and Mrs Buxton lived in it. The difficulty with the proposition that a constructive trust might be imposed lies in the question of whether Mr Buxtone had an expectation of an interest in the property which was reasonable. The argument for Mr Buxtone is that he and Mrs Buxton lived in the Andover Street property as their family home and that it is reasonably arguable that both Mr Buxtone and Mrs Buxton agreed to the various ways in which the property was owned in order to gain respite from creditors, for the benefit of both of them. It is said that as Mrs Buxton was equally responsible, because she was a party to the
arrangements, she should not obtain the benefits of them, solely.
13 In X v Company A (above n 5) there is an extensive discussion of the principles relating to claims to relationship property under constructive trusts, and the application of these principles to the facts of that case (paragraphs [44]-[89]). The Court found that an arguable case for a constructive trust had not been established. It appears that both counsel proceeded on the erroneous assumption that the notice under s 42 in that case could be sustained if an arguable case for a constructive trust were made out. As a result it does not seem that argument was presented on the point.
14 Lankow v Rose, above n 13.
15 At 294.
[47] Prior to the transactions which took place between December 2005 and February 2006, one of the Andover named trusts owned the property and Mr Buxtone was a discretionary beneficiary. These transactions, however, had the effect of completely eliminating him from having any interest in the property at all, a position from which he now seeks to demur. In the meantime, however, he has had the benefit of these transactions because in October 2008 he was adjudicated bankrupt. Had he held an interest in the property it would have fallen into his estate in bankruptcy and been dealt with by the Official Assignee. That did not occur. By taking his present stance Mr Buxtone is alleging an interest which he took active and successful steps to renounce.
[48] If Mr Buxtone seeks to establish a constructive trust at a substantive hearing of any claim he may bring alleging property rights to the Andover Street home it will be necessary for him to adduce evidence to support his alleged reasonable expectation, contrary to the position which he took and from which he has derived a benefit. He will not be permitted to lead such evidence. In Potter v Potter the Court
of Appeal, dealing with a transaction entered to avoid death duty, said:16
... a party will not be permitted to adduce evidence that in transferring legal title to another he or she intended to retain the beneficial interest if the effect of the evidence would be to disclose that the transfer had a fraudulent purpose. For example it would be fraudulent to hold out that a wife was the beneficial owner if in reality the husband had retained the relevant beneficial interest.
And further:
... in cases where property had been transferred by a husband to a wife to gain revenue advantages premised upon her new beneficial interest, the husband has been precluded from averring in later proceedings that his real intention was to retain the beneficial interest ... The same principle applies where a husband has put property into his wife’s name as a protection against creditors ...
[49] The rationale underlying this rule, as expressed by the Court of Appeal, is that where the person claiming a beneficial interest is the architect of the scheme:17
... [he] is the unwilling beneficiary of a compliment to his honesty. It is assumed that he would not have intended to defraud others by pretending
16 Potter v Potter [2003] 3 NZLR 145 (CA) at [20].
17 At [20].
that his wife had a beneficial interest when in reality he had intended to retain the beneficial interest all along.
[50] Whilst these passages refer to slightly different circumstances they are materially the same as those applying in the present case, as the plain effect, which must be assumed to have been intended, of the transactions to which I have referred is that Mr Buxtone did in fact defeat his creditors. There are major difficulties, therefore, standing in the way of his claim that he has an interest in the property under a constructive trust. He will not be permitted to adduce evidence to that effect for the reasons given.
[51] For Mr Buxtone it is said that Mrs Buxton was equally a party to these transactions, and on the evidence that possibility cannot be discounted. Whilst in her affidavit she expresses a lack of knowledge about the various transactions that took place, Mr Buxtone does not accept that, and the point cannot be decided on the
present application.18 I observe, however, that she was a party to the transfer of the
property from whichever of the Andover trusts held it to Trust 60, which was the step by which Mr Buxtone ceased to have any potential beneficial interest in the property. As Mrs Buxton continues to hold an interest in the property as a discretionary beneficiary in Trust 60, the property having survived the bankruptcy of Mr Buxtone unscathed, she has herself retained a potential interest as a discretionary beneficiary in the property as a result of the transactions which, on the face of the papers, both she and Mr Buxtone undertook.
[52] The difference between the positions of Mr Buxtone and Mrs Buxton, however, is that whilst Mr Buxtone seeks to introduce evidence to the effect that despite the transfer to Trust 60 he retained an interest in the property, Mrs Buxton is not in that position. Rather, her position is that she has a discretionary interest in the property under Trust 60 as she did under one of the Andover trusts before that. That is what the Trust documents provide. She is not, therefore, in a position where she would have to lead evidence at any subsequent hearing to the effect that a different
position in fact prevails.
18 See the first principle in X v Company A, at [11] above.
[53] In my view very real difficulties stand in Mr Buxtone’s way in attempting to establish an interest in the Andover Street property under a constructive trust given the actions he has taken in relation to the property in the past, which are entirely inconsistent with the position he now asserts. However, even if he does have a sound basis for asserting such an interest, it would be an interest arising under a constructive trust and not “an interest pursuant to” the PRA, as required by s 42(1).
Outcome
[54] For the reasons given I find that Mr Buxtone has not demonstrated an arguable case to an interest arising under the PRA.
[55] The application is dismissed.
[56] Mr Buxtone submitted that the costs on this application should lie where they fall. Mr van Schreven says that if Mrs Buxton succeeds, this would dispose of the current proceeding and costs should be awarded. I have considered these positions. Mrs Buxton has succeeded, and the present proceeding is at an end. I do not consider there is any basis on which not to award costs now, and I apply the general principle that costs should follow the event.
[57] Accordingly, Mr Buxtone will pay to the defendant trustees costs on a 2B
basis plus disbursements fixed by the Registrar.
J G Matthews
Associate Judge
Solicitors:
Dowthwaite Law, Rotorua
Clark Boyce, Christchurch
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