Chinappa v Narain
[2022] NZCA 183
•12 May 2022 at 9 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA526/2021 [2022] NZCA 183 |
| BETWEEN | AJNESH NARAIN CHINAPPA and VILASHNI VANDANA CHINAPPA |
| AND | ANGELINE DEEP NARAIN |
| AND | KANIAMMA WINTER |
| Hearing: | 24 March 2022 |
Court: | Kós P, Woolford and Dunningham JJ |
Counsel: | NTC Batts and OCS Rose for Appellants |
Judgment: | 12 May 2022 at 9 am |
JUDGMENT OF THE COURT
AThe appeal is allowed in part, to the extent stated at [76] and [77] below.
BCosts are to lie where they fall.
____________________________________________________________________
REASONS OF THE COURT
(Given by Dunningham J)
| Table of Contents | |
| Para No | |
| Introduction Submissions Discussion Was it open to the High Court to find that Angeline made other cash contributions towards the property? Submissions Did the Court err in finding that the Chinappas hold a 50 per cent share of the property on constructive trust for Angeline despite her cash contribution to the purchase amounting to approximately 20 per cent of the total purchase price? Submissions Did the Court err in leaving open the possibility of Mrs Winter pursuing her claim as to a life interest in the property, despite the Court’s conclusion that she had not contributed any funds towards the property? Submissions Result | [1] [48] [55] [70] |
Introduction
Many people dream of a Lotto win. Even a modest win might lift a family’s circumstances and relieve financial pressure. In this case, a Lotto win seemed, at first, to do just that. It allowed a family to put down a deposit on a large house in South Auckland in which they could all live together.
Unfortunately, a division arose within the family. The appellants, Ajnesh Chinappa and his wife, Vilashni, in whose names the house had been registered, insisted the other two family members move out. The evicted family members, Ajnesh’s sister, Angeline Narain, and their mother, Kaniamma Winter, claimed Angeline had a 50 per cent equitable interest in the property based on her contribution to the purchase price from her Lotto winnings. In a judgment issued on 26 July 2021, Hinton J upheld Angeline’s claim and concluded that the Chinappas held a 50 per cent interest in the net value of the property on constructive trust for Angeline.[1]
[1]Narain v Chinappa [2021] NZHC 1886 [Judgment appealed].
The Chinappas appeal that outcome. They challenge a number of findings in the High Court’s decision. First, they reject the finding that Angeline was the Lotto winner and therefore the one who contributed funds towards the purchase, saying this finding was not open on the evidence or was plainly wrong. If that finding is set aside they accept the matter may need to be remitted back to the High Court to determine whether Mrs Winter has a life interest in the property as a result of contributing some of the Lotto winnings and, if so, what the value of any such interest should be.
In the event the finding that Angeline was the Lotto winner is upheld, the Chinappas challenge the conclusion that she has a 50 per cent equitable interest in the property. At most, they say she is entitled to an interest commensurate with her contribution to the purchase price of the property, which was roughly 20 per cent.
Principles on appeal
The principles applying to such an appeal are well understood. This Court must come to its own view on the merits.[2] The weight to be given to the decision of the High Court Judge is a matter of judgment. If this Court reaches a different conclusion from that of the court appealed from and, therefore, considers that the decision is wrong, it must act on its own view.[3]
[2]Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3].
[3]At [3].
In reaching a view on whether the first instance court was wrong, no deference is required to that Court’s decision beyond the customary caution appropriate when seeing the witnesses provides an advantage where, as here, witness credibility is important.[4]
The factual background
[4]At [13].
The parties to this litigation were a close-knit family. When Angeline shifted to Auckland from Hastings in January 2008, she moved in with her mother, brother and sister-in-law in their Housing New Zealand rental property in Panmure, Auckland. The support these family members gave each other had already been demonstrated in relation to a property at 903 Kotuku Street, Hastings (the Hastings property). Mrs Winter and her second husband had agreed to purchase this property in 2002, under a time payment arrangement. When Mr Winter died in 2003, it became increasingly difficult for Mrs Winter to maintain those payments, and Ajnesh in particular provided both financial support and assistance with maintenance to enable her to retain the Hastings property. On 1 August 2006, Mrs Winter informally assigned the original sale and purchase agreement to Ajnesh. The Hastings property was later formally gifted by Mrs Winter to Ajnesh.
In January 2009 the winning Lotto ticket was purchased. There is a dispute as to whether Angeline or her mother purchased the Lotto ticket. What is agreed is that on 24 January 2009, Mrs Winter and her daughter-in-law, Vilashni, went grocery shopping, and they checked the Lotto ticket at Panmure Stationery and Lotto Shop and found it had won a prize of $250,000. Mrs Winter, with Vilashni’s assistance, completed the Lotto prize claim form on the spot. Mrs Winter says the ticket was Angeline’s, and she had been asked to check it. However, she proceeded to fill out the prize claim form in her name. She did not have any ID with her, nor could she remember her bank account number off the top of her head, so Vilashni’s bank account details were put on the form. However, Mrs Winter signed her name next to the affirmation that she was lawfully entitled to claim the prize money.
On 27 January 2009, the Lotto Commission paid the prize sum of $250,000 into Vilashni’s bank account. All four family members then went to the ANZ bank to open a joint bank account for Angeline and Mrs Winter, and Vilashni transferred the bulk of the Lotto winnings, plus interest earned on it, into the new joint bank account. However, Vilashni retained $30,000 in her bank account from the Lotto prize. There is a dispute over whether this was intended to be a gift from Mrs Winter to the Chinappas. A document gifting this sum to the Chinappas was prepared by Vilashni, and its signing was witnessed by a family friend, Mr Singh, on 9 February 2009. The Chinappas rely on this document to say this amount (at least) was a gift. Angeline, on the other hand, says this was done to satisfy the bank that the Chinappas had access to a deposit in order to meet the bank’s funding requirements for a loan, noting Vilashni subsequently withdrew the $30,000 from the Chinappas’ account and paid it into the joint bank account on 10 March 2009.
After the Lotto win, the family started looking for a suitable property that could accommodate the extended family.[5] They eventually decided to purchase 7 Ferndown Avenue, a six-bedroom property in Papatoetoe (the property), and attended the auction for its sale on 21 February 2009. Mrs Winter conducted the bidding. The Chinappas allege that she went to a level higher than they were comfortable with, but on the basis she would contribute to the difference in purchase price. However, Mrs Winter says she only bid to the amount the Chinappas told her to. The property was purchased for $360,000. The deposit of $36,000 was paid from Angeline’s and Mrs Winter’s joint bank account. Angeline says the payment of $36,000 was made on the basis she would be entitled to an interest in the property. The Chinappas, however, say Mrs Winter gifted this sum to them, and the $36,000 bank cheque stood in place of the earlier $30,000 gift recorded in the declaration of gifting. Mrs Winter denies this.
[5]The Chinappas say it was to house them, Mrs Winter and guests, while Angeline and Mrs Winter say it was for all of them to live in.
The Chinappas then borrowed $288,000 towards the purchase costs. On 6 March 2009, shortly before settlement, a bank cheque was paid from the joint bank account to the solicitors handling the transaction, in the sum of $37,046.70. This payment met the balance required to complete settlement, along with the solicitor’s fees for the conveyance. The Chinappas accept the second amount was different from the $36,000, which they say is a gift, and they acknowledge a moral, rather than legal, liability to repay this amount. The property was, however, registered in the Chinappas’ names alone.
Settlement of the property purchase occurred on 11 March 2009, and the whole family moved into the property, although the Chinappas say it was not planned that Angeline move in, but rather, when they returned from a holiday in Fiji, they found both Angeline and Mrs Winter had moved into the property.
In August 2009, Mrs Winter formally transferred the Hastings property to the Chinappas in a deed of family arrangement, and they became the registered owners shortly afterwards. On the same day, the Chinappas entered into a declaration of bare trust which recognised Angeline had a 20/166th share in the Hastings property.[6]
[6]This was a reduction on the one-third share Angeline was to get in the draft deed of family arrangement prepared in 2008, but no one could really explain the reasons for this reduction.
The family lived in relative harmony in the property until early 2012, when Angeline’s partner, Daniel Prasad, moved in, and the relationship between her and the Chinappas broke down. Angeline then claimed she had an interest in the property, but the Chinappas denied this. Solicitors were engaged by both sides and Angeline registered a caveat against the title to the property on 5 April 2012, claiming an equitable interest in the property as a result of the financial contributions she made to its acquisition.
In June 2012, relationships had deteriorated to the point where the Chinappas issued a trespass notice against Angeline and Mr Prasad. However, Angeline did not move out until 23 July 2012, when matters appeared to come to a head and the police attended. A further trespass notice was issued against Mrs Winter on 3 December 2012 given, it seems, she sided with Angeline over her claim to an interest in the property.
In May the following year, Angeline applied to the High Court for an order to sustain her caveat after the Chinappas had applied for it to lapse and, in September, following a hearing, the High Court granted her application.[7] There was then a hiatus for a number of years where no further action was taken. Angeline says the family had reconciled and she was assured her interest in the property would be recognised when Ajnesh was in a better financial position. However, the Chinappas say no such reconciliation occurred and no agreement was reached. In November 2019, the Chinappas applied to remove the caveat, leading to these proceedings being issued by Angeline.
[7]Narain v Chinappa [2013] NZHC 2286.
Angeline’s claim was heard in April 2021 and, as outlined in the judgment, Mrs Winter was joined as a plaintiff during the hearing.[8] An amended statement of claim was filed on 16 April 2020 claiming, in the alternative, that the interest in the property belonged to Mrs Winter and/or that she had a life interest by virtue of investing the Lotto winnings. This was done at the Judge’s suggestion because she considered those arguments arose out of the evidence. However, as the Judge observed, because Mrs Winter disclaimed ownership of the Lotto ticket, Mrs Winter’s claim to an ownership interest was redundant.[9]
The High Court judgment
[8]Judgment appealed, above n 1, at [5].
[9]At [5].
The High Court judgment traversed the history of the dealings between the parties and made the following relevant findings.
While the Chinappas claimed Mrs Winter owned the Lotto ticket, and so the money contributed to the property was not Angeline’s, the Judge found it was Angeline’s ticket and she won the prize.[10] The Judge accepted that Lotto tickets were regularly purchased by Angeline and not as often by Mrs Winter. Mrs Winter filled out the claim form simply because she was the one on the spot and wanted to see the claim made. Furthermore, Vilashni provided her bank account details for receipt of the winnings, and this was consistent with a family that lived together and where Mrs Winter behaved like “something of a matriarch”.[11] The fact the money went into a bank account in the joint names of Angeline and Mrs Winter supported the conclusion that Angeline had won the money. Angeline and Ajnesh’s older brother, Avinish, whom the Judge found to be a credible witness, also understood that the win was his sister’s and said it was his sister who gifted him $15,000.[12]
[10]At [44].
[11]At [45]–[46].
[12]At [47]–[48].
The Judge placed little weight on the document acknowledging a gift of $30,000 from Mrs Winter. She considered it was drafted to meet the bank’s requirements, saying she had “no doubt the bank would have required proof of funds ‘belonging’ to the Chinappas”.[13] She found the two bank cheques for $36,000 and $37,046.70 were drawn and delivered by Angeline to the Chinappas and not by Mrs Winter.[14] Furthermore, it was Angeline who spent or gifted the winnings, not Mrs Winter, and this was consistent with the money being Angeline’s. The Judge also preferred Angeline’s evidence over the Chinappas. She considered the Chinappas disclosed an “attitude of entitlement” which drove their evidence, which she found to be lacking in veracity.[15]
[13]At [49].
[14]At [52].
[15]At [53]–[54].
The Judge found the $30,000 was not intended to be a gift and this was clearly demonstrated by the fact that, shortly after the loan was approved on 3 March 2009, Vilashni returned the $30,000 in full.[16] Similarly, she was satisfied that neither the $36,000 or $37,046 were gifts, noting the complete absence of documentation as to this, despite Vilashni’s assertion she was meticulous about such things.[17]
[16]At [56].
[17]At [60].
In assessing Angeline’s claim of an agreement as to 50/50 ownership, the Judge reiterated that she preferred Angeline’s evidence over the Chinappas. She also did not put much weight on Vilashni’s claim that she always insisted on documenting property dealings as they did with the Hastings property transaction. The Judge concluded where the Chinappas had something to gain, they might be concerned to document the transaction, but she was not persuaded the opposite would apply. In the end, she found there “would have been a discussion about the 50/50 ownership, but there is insufficient evidence to establish a binding agreement was reached”.[18]
[18]At [62]–[65] and [68].
In terms of whether Angeline had an equitable interest in the property by way of a constructive or resulting trust, the Judge considered the circumstances did give rise to a constructive trust having regard to the requirements for establishing such a claim as set out in Lankow v Rose.[19] The Judge acknowledged the cash sum Angeline paid of $73,000 was only 20 per cent of the gross price of the property, but decided, weighing up other factors, including the importance of the deposit to the purchase, that Angeline had a reasonable expectation of a 50 per cent share in the current value of the property, after deducting the amount of the original loan of around $280,000.[20]
[19]At [71]–[80], citing Lankow v Rose [1995] 1 NZLR 277 (CA) at 294.
[20]At [80].
On the issue of whether Mrs Winter had a life interest in the property, the Judge did not make a final decision. While at the outset she said, as a result of her findings, Mrs Winter’s claim “becomes redundant”, she was more equivocal in the later part of the judgment where she said:[21]
I consider Mrs Winter may have a claim in this regard and it may be of some value. Whatever its value, and I do not currently have evidence to support that, it would presumably have to be met equally by the Chinappas and Angeline so that the Chinappas would have to pay an even greater sum than the formula payment to Angeline.
[21]At [82]. Compare at [5].
In the end, the Judge reserved the question of any final determination regarding a life interest and the value of it, presuming that if the parties were able to finalise matters on the basis of her judgment, Mrs Winter would either formally abandon her claim, or receive some settlement from her children.[22]
[22] At [82]–[83].
Finally, the Judge rejected the Chinappas’ assertion that the claim could be defended on the grounds of delay or laches, finding the delay between lodging the caveat and pursuing the underlying claim was justified. There had been some form of reconciliation between the parties in the interim and, in any event, the Chinappas were unable to point to any real prejudice arising to them as a consequence of the delay in bringing the proceedings.[23]
The issues
[23]At [87] and [89].
The parties were agreed that there were four main issues to be determined on appeal. These are:
(a)whether the finding that Angeline was the Lotto winner and source of the cash funds used for the property was available on the evidence;
(b)whether the finding that Angeline made other cash contributions towards the property was available on the evidence;
(c)whether the High Court erred in finding that the Chinappas held, on constructive trust for Angeline, a 50 per cent share of the property, despite the cash contribution to the purchase amounting to approximately 20 per cent of the total purchase price; and
(d)whether the High Court erred in leaving open the possibility of Mrs Winter pursuing her claim to a life interest in the property, despite the Court’s conclusion that Mrs Winter had not contributed any funds towards the property.
In respect of each issue, the parties identified subsidiary findings by the Court which were relevant to the identified issue, and which the Chinappas took issue with.
Was Angeline the winner of the Lotto prize?
The Chinappas, both in the High Court and here, challenged Angeline’s claim that the Lotto winnings were hers.
In this regard, the Chinappas placed considerable weight on the evidence of Mr Singh, who witnessed the execution of the document which records a gift of $30,000 from Mrs Winter to the Chinappas. Counsel for the Chinappas, Mr Batts, submits the Judge was wrong to dismiss Mr Singh’s evidence in the way she did, and to conclude the document was “of no moment to the parties” when they had gone to the trouble of arranging for Mr Singh to come to their home to independently witness it. Mr Batts also submits Mrs Winter’s denial of signing it is implicitly an acknowledgement of its significance.
Mr Batts was also critical of the Judge dismissing Mr Singh’s evidence that Mrs Winter had personally told him she had won Lotto. He says there was no evidential foundation for the Judge to conclude that Mr Singh might have heard that from someone else or been confused on this point. When it was expressly put to Mr Singh in cross-examination that someone else had told him that Mrs Winter had won Lotto, he clearly denied this.
The Chinappas also are critical of the Judge’s finding that the gifting document was a sham, and of the Judge rejecting their evidence that the repayment of the $30,000, followed by payment of $36,000, occurred only because Mrs Winter unexpectedly bid higher at auction than the amount on which they had agreed. In their submission it was logical, when a $36,000 deposit needed to be paid, that the $30,000 was refunded and a single cheque made out for $36,000, rather than have two separate cheques written from two separate accounts. The evidence did not support the conclusion that the document did not reflect the true agreement between the parties.[24] Furthermore, it would set a concerning precedent for the Court to rule that a gifting document of the sort commonly relied on by the banks was a sham.
[24]Citing NZI Bank Ltd v Euro-National Corporation Ltd [1992] 3 NZLR 528 (CA) at 539.
Other evidence relied on by the Chinappas to say it was more likely that Mrs Winter won Lotto include:
(a)The sale and purchase agreement for the property was signed only in the Chinappas’ names, despite Angeline being present at the auction and delivering cheques for the cash contribution to the solicitor.
(b)While Angeline says she was not on the title because she had a bad credit record and could not get a loan, there is no explanation for why this prevented her from being a registered proprietor of the property.
(c)When Angeline first asserted an interest in the property, her lawyer asked the Chinappas to confirm how much they had received from her towards the property. As only two payments were involved, Mr Batts says had she in fact contributed those funds, she would have readily remembered this and would not have needed to make this request.
(d)Angeline initially said that a third cheque for $15,000 had also been contributed to the property purchase. However, at trial, she said it was a gift to her brother, Avinash Narain. Again, this suggests Angeline did not actually know what payments had been made and to whom.
(e)Mrs Winter unequivocally denied signing the gifting document and maintained the signature on it was not hers. However, the Judge characterised these denials as Mrs Winter having “no recall of it”. By describing her claims in this regard as forgetfulness, rather than untruthfulness, Mr Batts says the Judge avoided dealing with the fact Mrs Winter had consistently lied about her involvement in signing the gifting document.
(f)Mrs Winter’s credibility was challenged in other ways, including her denial of having seen the deed of family arrangement which had been witnessed by her lawyer, or of being aware of her first affidavit, filed in relation to the caveat dispute in May 2013.
Mr Batts buttresses his challenges to the Judge’s findings by saying there are indications the Judge was “pre-disposed against the [Chinappas]”. In that regard, he points to:
(a)The Judge’s finding that Ajnesh’s claim that it was he who had chosen to gift Angeline the 20/166th share in the Hastings property was “clearly incorrect and indicative of a sense of entitlement on the part of the Chinappas generally”.[25]
(b)The Judge’s finding that the Chinappas had made life “impossible” for Angeline and Mrs Winter.[26]
(c)The Judge’s uncritical acceptance of Angeline’s oral evidence that she had paid for improvements to the property when that was not in Angeline’s written brief of evidence, nor was there any documentary evidence to support it.
(d)The Judge describing Vilashni’s evidence, given during cross‑examination, that Vilashni had proposed repaying Mrs Winter the funds transferred in excess of the initial $30,000 gift, as a “sudden and convenient claim”, which had not been put to Mrs Winter, and concluding “I would consider such an action inconsistent with the attitude of the Chinappas generally”.[27] Mr Batts contrasted this response to the Judge’s more favourable treatment of Angeline’s evidence given during questioning of paying for improvements to the property.
(e)The Judge saying, irrelevantly in the Chinappas’ view, that she was “unimpressed with the conduct of the Chinappas in evicting [Angeline and Mrs Winter] from [the] house”.[28]
(f)The Judge concluding that the fact mortgage repayments fell into arrears for a time after Angeline and Mrs Winter left the property supported Angeline’s claim that she assisted with household expenses, while not taking into account that the Chinappas now had to pay for childcare, meet the cost of legal fees arising in relation to the dispute, and acquire items to replace those that Angeline and Mrs Winter had taken from the house.
Discussion
[25]Judgment appealed, above n 1, at [25].
[26]At [33].
[27]At [28] and [54].
[28]At [54].
The question of who won the Lotto prize is critical. If the money was not Angeline’s to start with, she would have no basis to claim that she had made a contribution to the purchase price of the property.
While Mr Batts thoroughly traversed the evidence that supported the Chinappas’ claim that proceeds of the Lotto win belonged to Mrs Winter, on balance, we consider the Judge’s finding was correct. The Judge was faced with completely contradictory narratives and had to decide which was the more probable.
We accept the finding that Mrs Winter “behaved like something of a matriarch”.[29] The fact she exercised some control over the money, first by filling out the claim form and, second, by having the money deposited in a joint bank account in her and her daughter’s name, was therefore unsurprising. This was a family that operated communally, with a great deal of trust, and there would have been nothing unusual in the mother claiming the funds on her daughter’s behalf, nor in trusting her daughter‑in‑law to receive the funds into her bank account then later transfer them into the joint bank account. In the circumstances, we agree the evidence that Mrs Winter claimed the prize was not determinative of ownership.
[29]At [46].
We acknowledge the gifting document was evidence which, on its face, supports the Chinappas’ claim that Mrs Winter owned the prize money. However, we do not consider this evidence is conclusive. For a start, this document was prepared by Vilashni with no legal input, and we accept the Judge’s finding this was likely done to meet the bank’s requirement that the Chinappas had a sufficient deposit to support their application for a home loan. Indeed, Vilashni confirmed in evidence the bank wanted the gifting document done before it would consider approving a loan.
Although we accept Mrs Winter’s continued denial of signing the document was implausible, we do not consider that necessarily reflects on who owned the funds. First, we consider there was an evidential foundation for saying Mrs Winter simply did not recall signing that document. She equally did not recall signing affidavits in the caveat proceedings, nor the deed of family arrangement in respect of the Hastings property. Alternatively, if she was lying, it could just as easily be because she did not want to admit signing the document in Angeline’s absence and when she had no authority to do so, rather than, as Mr Batts submits, because the document contradicted her denials of ownership.
We do not consider Mr Singh’s evidence regarding who owned the funds should necessarily be given great weight. He clearly had had a falling out with Mrs Winter but has continued living in the house with the Chinappas rent-free ever since. Furthermore, Mr Singh’s evidence, under cross-examination, was far less clear than in his written brief. He was unsure exactly what was on the document at the point he signed it, and he did not recall Mrs Winter saying anything about the purpose of the document except “I’m getting a debt”, which was inconsistent with the suggestion she was gifting money.
While there was no express pleading that the document was a sham, it is implicit from the pleaded denial of the gift to the Chinappas that the document was either a forgery or a sham, and the Judge was entitled to come to the latter conclusion on the evidence.
Like the Judge, we agree that the return of the sum of $30,000 is most consistent with it not being a gift, but rather a transaction to give the bank comfort that the Chinappas had access to a deposit. It is implicit in the Judge’s finding that she was satisfied the document did not reflect the true agreement of the parties, as is required to establish the document was a sham.[30]
[30]NZI Bank Ltd v Euro-National Corporation Ltd, above n 24, at 539.
We do not consider the fact the property was purchased in the Chinappas’ names alone, or that Angeline could not recall what her contributions were, are particularly relevant to the question of ownership. As already noted, the family worked on trust, as displayed when the winnings were deposited in Vilashni’s bank account. If the money was Mrs Winter’s, then equally it could be asked why her name was not on the title. Angeline’s explanation that she was not good with money, which is why she had poor recall of the details of the transactions, was also entirely plausible given the evidence of her poor financial management.
We also reject the submission that the Judge was “pre-disposed” against the Chinappas. Rather than evidencing a “pre-disposition”, it is clear to us that these were views formed as a consequence of seeing and hearing the witnesses give evidence. For example, Ajnesh’s evidence that it was his decision to gift a portion of the Hastings property to Angeline was clearly inconsistent with the fact Mrs Winter had, in 2008, instructed her lawyer to prepare a draft deed of family arrangement which would give Angeline a one-third share in the Hastings property. Similarly, it is clear on the evidence the Chinappas had made it intolerable for Angeline and Mrs Winter to stay in the property. In our view, the Judge’s findings as to credibility were clearly open to her on the evidence, and we do not consider they affect the correctness of the Judge’s decision on the issues raised on appeal.
Given all the parties were partisan, we look to the evidence that is either undisputed, or at least somewhat independent, from the parties, to decide who owned the Lotto winnings. In that regard, the most compelling evidence is the evidence of who controlled the funds. Had the win been Mrs Winter’s win, we cannot see why she would have placed the funds in a joint account with her daughter (which was done in the presence of the Chinappas) and allowed her daughter to have virtually sole control of how the account was used, including making payments toward purchases while they were living in the property, gifting funds to her brother Avinash, funding her honeymoon, and funding a car and tyre machine for Ajnesh. We also note, as an aside, that it was implausible Mrs Winter would have, in the same year, gifted the Hastings property to her son (with a net value of at least $80,000) and then also given him $72,000, without also benefitting her daughter, whom she was close to. It seems more likely that, knowing Angeline had the Lotto winnings, Mrs Winter was happy to gift the Hastings property to her son with only a limited interest being reserved to Angeline.
The fact Angeline won Lotto is also supported by Avinash’s evidence. He confirms that Angeline gifted him $15,000, and it was always his understanding that it was her Lotto win.
We are satisfied Angeline has established her entitlement to the Lotto sum on the balance of probabilities.
Was it open to the High Court to find that Angeline made other cash contributions towards the property?
The Chinappas take issue with the Judge’s finding that Angeline paid “a reasonable sum on account of expenses, upgrade works and other items while she and Mrs Winter lived in the property”.[31] This finding relied on the evidence, gleaned from bank statements, that the Chinappas’ main expenses seemed to be paying the mortgage and purchasing some general items like food, while there were multiple withdrawals from the joint bank account, mostly around $1,000, which Angeline said were used for improvements to the property such as adding blinds, upgrading the bathroom, and installing an outside kitchen.
[31]Judgment appealed, above n 1, at [78].
The Chinappas submit the bank statements were simply insufficient evidence on which to reach this conclusion. This claim was only made when giving oral evidence, without any supporting documentation, and Angeline could not provide any meaningful indication of the value of the improvements, nor when they were undertaken. The mere fact of withdrawals from the joint bank account was not enough to support this claim, particularly when Angeline gave evidence that she also spent the prize money on other things including paying off debts, upgrading a restaurant, buying a vehicle, funding family holidays, and paying for a wedding in Fiji.
Mr Batts points out it was simply impossible for the Judge to assign any particular value to the alleged contributions of Angeline. Furthermore, he submits the Judge was wrong to infer that Angeline had made contributions towards household expenses from the fact that the Chinappas fell into arrears with their mortgage repayments after she moved out. That was equally explicable by the increased costs they faced for childcare, legal fees and replacing chattels removed by Angeline.
Discussion
We accept the claim that Angeline made other financial contributions towards the property was raised as an afterthought and, as a consequence, was poorly supported by the evidence. That said, it was a logical inference from the absence of such payments being made from the Chinappas’ bank account that these expenses, albeit unquantified, were met from the prize money in the joint account.
The Judge did not attempt to quantify these contributions; she simply recorded that Angeline would have paid “a reasonable sum on account of expenses, upgrade works and other items while she and Mrs Winter lived in the property”.[32] In short, there was no finding that a specific sum had been invested in the property, but rather that Angeline had contributed generously to furnishing and upgrading the property, and this was a factor supporting the claim that contributions were made to the property which gave rise to an expectation of an interest in it. That finding was clearly open to the Judge, and we will not disturb it.
[32]At [78].
Equally, we do not consider the Judge was wrong to support her conclusion that Angeline made contributions towards household expenses by reference to the fact the Chinappas fell into arrears with their mortgage payments once she moved out. The Judge accepted there were also other reasons contributing to their inability to meet expenses but saw this as supporting the conclusion Angeline contributed to household costs.
Again, we see no error in the Judge’s conclusions in this regard.
Did the Court err in finding that the Chinappas hold a 50 per cent share of the property on constructive trust for Angeline despite her cash contribution to the purchase amounting to approximately 20 per cent of the total purchase price?
If the Chinappas do not succeed in overturning the finding that Angeline was the Lotto winner, and therefore was the source of contributions to the acquisition of the property, the Chinappas say the Court was wrong to quantify that interest at 50 per cent when the financial contribution was approximately 20 per cent of the total purchase price.
In that regard, the Chinappas also say:
(a)the High Court was wrong to assign any significance to the finding that the “discussions” concerning 50/50 ownership were relevant when considering Angeline’s reasonable expectation of an interest in the property;
(b)the Court was wrong to place significance on the fact Angeline’s contribution was a cash contribution, as opposed to the Chinappas’ being a borrowed financial contribution, when assessing Angeline’s reasonable expectation of an interest in the property; and
(c)the Court was wrong to take into account Angeline’s contribution to household expenses and upgrades when considering her reasonable expectation of an interest in the property, particularly when these were unquantified.
In support of the second point, Mr Batts submits there should be no distinction between the source of the funds, as whether the funds were a cash contribution or derived from lending is irrelevant. For example, in Read v Almond, where siblings and parents collectively contributed to the purchase and maintenance of a property, the High Court determined that each individual was to benefit in proportion to the amounts they had contributed.[33] The fact that the contribution by one of the siblings was, at least in part, funded by way of mortgage, had no bearing whatsoever on the percentage interest assigned to that sibling. Here, the Judge wrongly put weight on the fact Angeline had contributed all the equity in the property as at the date of the purchase. The Judge should not have differentiated between the cash and borrowed contributions.
[33]Read v Almond [2015] NZHC 2797 at [241]–[252].
Mr Batts also submits the Judge was wrong to take account of the fact the Chinappas had the benefit of occupying the property throughout, saying to do so confuses Mrs Winter’s separate claim to a life interest with Angeline’s claim to an equitable interest in the property.
Discussion
In deciding Angeline should have a 50 per cent interest in the net value of the property, the Judge explained her reasoning as follows:
[77] While in some circumstances the Chinappas would be given credit for payments made under the mortgage, I consider that unnecessary here. Interest on the original debt would likely have been below a fair market rent. The Chinappas have had the benefit of occupation. Angeline and Mrs Winter, quite wrongly, have not. To the extent the mortgage instalments involved any principal repayment, the Chinappas will have the benefit of that, as in calculating Angeline’s entitlement I will deduct the mortgage principal at the date of purchase.
…
[80] The cash sum Angeline paid of $73,000 was 20 per cent of the gross price of the property. I have decided, weighing up the other factors above, that she had a reasonable expectation of a 50 per cent share in the Ferndown Avenue property. As noted, in calculating Angeline’s share, the mortgage debt is to be taken as the debt at the date of purchase of the property, which was $280,000.00. The Chinappas have apparently borrowed more since the purchase which should in no way be brought into account, nor should any unpaid mortgage instalment or other charge. To make that clear, if the Ferndown Avenue property is worth $1 million, Angeline would receive $360,000 being 50 per cent of $1 million less $280,000. The Chinappas would receive the same amount but be liable for any surplus mortgage over $280,000 and any other outstanding charges, out of their share. The figures will obviously change depending on the actual value of the property.
We note, therefore, in practical terms, Angeline will receive less than 50 per cent of the market value of the property. If the property is worth $1 million, she will receive a 36 per cent share of the market value, but that share could be more or less, depending on the actual market value of the property.[34]
[34]The current rating value of the property is $1.2 million, but that is, of course, only an estimate of value, not a formal market valuation.
If this Court upholds the finding that the contributions to the purchase of the property were Angeline’s, there is no challenge to the finding that a constructive trust should be recognised. That, in our view, is appropriate. As the High Court found, Angeline contributed a large cash sum and, without this, the Chinappas would not have been able to buy the property. Angeline had a reasonable expectation of an interest in the property which the Chinappas should reasonably expect to recognise.
While the Judge found there was no agreement that the property would be owned 50/50, she decided Angeline should have a 50 per cent share in the net equity in the property after deducting the mortgage at the date of purchase of $280,000.[35] In deciding this, the Judge appears to have taken account of the importance of Angeline’s initial contribution to the purchase and the fact that the Chinappas had the benefit of occupation throughout, including after evicting Angeline and Mrs Winter.[36] Furthermore, the Judge took account of the fact Angeline (and Mrs Winter) contributed both financially and in other respects to the household. However, we do not accept, as the Chinappas submit, that the Judge placed weight on the discussions of 50/50 ownership to decide on the amount of equity Angeline should have in the property. Rather, the Judge referred to those discussions as simply supporting the fact there was an expectation of an interest in the property.
[35]In fact, the sum was $288,000.
[36]See Judgment appealed, above n 1, at [77].
Where, as here, a party claims an entitlement to a beneficial interest in a property, they must demonstrate that their contributions justify the claimed entitlement. Both direct and indirect contributions are to be considered. As Tipping J said in Lankow v Rose:[37]
The interest must broadly reflect the contributions. Arithmetical precision will generally be unattainable and is in any event not necessary. The Court must, however, do its best to reflect in the assessed shares the value of the claimant’s contributions. That value will represent, if uncompensated, the amount of the unjust enrichment accruing to the defendant, which in turn is the amount of the claimant’s sacrifice. … In the end the Court must assess as closely as reasonably possible what weight the claimant’s contributions have had against the contributions of the defendant in the acquisition, improvement or maintenance of the property or its value.
[37]Lankow v Rose, above n 19, at 295.
While indirect contributions are often focused on in the context of a relationship property claim (where direct contributions are less likely to have been made), we consider the starting point here is the direct financial contributions. In that regard, we accept Mr Batts’ submission that no distinction should be made between the cash contribution of Angeline and the borrowed financial contribution of the Chinappas. Neither could have acquired this property without the other’s financial contribution. Here, the Chinappas contributed $288,000, while Angeline contributed $72,000, a 20 per cent contribution to the acquisition of the property.
In our view, subject to what we say below about compensation for the Chinappas’ exclusive occupation, we are not satisfied Angeline’s indirect contribution to the property was materially greater than the Chinappas’ such that it warranted an adjustment from a 20 per cent interest to a 50 per cent interest in the net value, as was done by the Judge. As part owner, Angeline was bound to contribute her share to repairs, maintenance and upgrades. While Angeline did, as the Judge found, contribute to upgrading the property, it simply reinforces her claim of an expectation to an interest in the property. However, Angeline has not shown she contributed materially in excess of her 20 per cent responsibility such that we might either adjust that proportion or (more probably) direct compensation to be paid by the other beneficial owners who have profited. The appeal will be allowed on this ground.
That then leaves to be considered how Angeline should be compensated for being denied occupation of the property since 2012. While she had a 20 per cent share in the property, and a reasonable expectation that she could occupy it, she has instead been removed from it and has had to pay rent elsewhere for the past 10 years. In those circumstances, we consider she should receive a consequential adjustment to her entitlement to an ownership share by requiring the Chinappas to pay her occupation rent for the period she was out of the property.
While occupation rent tends to be the domain of disputes between co-owners (see s 343 of the Property Law Act 2007) and relationship property,[38] we are satisfied it is within this Court’s jurisdiction to apply the remedy to Angeline’s circumstances. The English Court of Appeal in Dennis v McDonald made clear the powers of courts at equity to order occupation rent when it commented:[39]
… the true position under the old authorities was that the Court of Chancery and Chancery Division would always be ready to inquire into the position as between co-owners being tenants in common either at law or in equity to see whether a tenant in common in occupation of the premises was doing so to the exclusion of one or more of the other tenants in common for whatever purpose or by whatever means. If this was found to be the case, then if in order to do equity between the parties an occupation rent should be paid, this would be declared and the appropriate inquiry ordered.
[38]See, for example, Ronayne v Coombes [2016] NZCA 393, [2016] NZFLR 672.
[39]Dennis v McDonald [1982] Fam 63 (CA) at 70–71.
This was reiterated in In re Pavlou (A bankrupt):[40]
I take the law to be to the following effect. First, a court of equity will order an inquiry and payment of occupation rent, not only in the case where the co‑owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid.
[40]In re Pavlou (A bankrupt) [1993] 1 WLR 1046 (Ch) at 1050.
In our view, the decision to deny Angeline the ability to occupy the property in which she had an equitable interest was inextricably linked to denying the interest itself, and should be remedied as part of determining her ownership share. Angeline had a reasonable expectation she would both own a share in the property and be able to occupy it. As she said in evidence, the Chinappas wanted her and her partner to move out of the property “which I thought was unreasonable as I owned the property too and should have been able to live in the property with my partner”. We consider, therefore, that she should be compensated for the loss of occupation rights of her 20 per cent share in the property. Accordingly, we direct the Chinappas to compensate Angeline by paying her occupation rental, calculated at 20 per cent of the market rental for the property, for the period of her exclusion.
Did the Court err in leaving open the possibility of Mrs Winter pursuing her claim as to a life interest in the property, despite the Court’s conclusion that she had not contributed any funds towards the property?
The Chinappas are critical of the Judge for leaving open the question of Mrs Winter having a life interest in the property despite finding that she had not contributed any funds towards the property. They say that cultural or family expectations alone cannot support the finding of the existence of a life interest in real property.[41] Furthermore, they say the Judge’s position seems inconsistent. She acknowledges the claim to an ownership interest by Mrs Winter became redundant at the outset of her judgment, but then, in conclusion, suggests Mrs Winter “may have a claim in this regard and it may be of some value”.[42] However, the Judge did not articulate on what basis the claim would be pursued and acknowledged that she did not “currently have evidence to support [it]”.[43]
[41]Citing Li v Wu [2019] NZHC 2461 at [109]; and Chang v Lee [2016] NZHC 1040 at [43]–[44].
[42]Judgment appealed, above 1, at [82].
[43]At [82].
Mr Kashyap, for Angeline and Mrs Winter, however, says the Chinappas conceded that Mrs Winter had a life interest claim on the basis of cultural expectations, and the only claim that became redundant was the claim that Mrs Winter had an interest arising from the contribution of the Lotto prize. In support, he points to the content of Vilashni’s brief and the following evidence in chief:
QOkay. In your brief as well you go on and you say: “it was always understood that Mrs Winter could stay with us when she wanted to”. Now can you explain to us was that understanding because of the gift or was it for a different reason?
…
ASo in our Indian culture it’s always understood that the mother or the parents would live with their youngest son, so that’s how it always works within the Indian family, and also that she had given us some additional money, we allow her to come and stay with us whenever she wanted …
…
QNow, putting the Lotto winning and any gifting to one side, had you purchased a home that was within your means, would you have expected Ms Winter to be able to stay with you?
AYes.
Thus, in the respondents’ submission, the reserving of leave to determine the question of whether Mrs Winter has a life interest, its value, and any related issues, was separate and distinct from the claim for a resulting trust arising out of Angeline’s contributions from the Lotto winnings towards the purchase of the property.
Discussion
The ability to pursue this claim must find its genesis in the pleadings. As already noted, an amended statement of claim was filed during the hearing to join Mrs Winter as the second plaintiff. In it, the claim is made by Angeline as the first plaintiff or, in the alternative, by Mrs Winter as the second plaintiff, that if the Lotto winnings were Angeline’s, they would result in an interest in the property, but if they were Mrs Winter’s, she would benefit from a life interest in the property. The only basis forwarded for the life interest was the contribution of Lotto winnings. Accordingly, we do not consider the Judge was correct to leave open the opportunity to pursue a claim for compensation for loss of the life interest. She was right to consider Mrs Winter’s claim was made redundant when she found that Angeline made the financial contributions to the purchase of the property.
The appeal is allowed on this ground. The decision to reserve leave to Mrs Winter to pursue her claim for a life interest, its value, and any related issues, is revoked.
Result
The first and second grounds of appeal are dismissed.
The third ground of appeal is allowed in part. We find that the appellants hold, on constructive trust for the first respondent, a 20 per cent share of the full market value of the property. In addition, we direct the appellants to compensate the first respondent for her loss of occupation of the property by paying her occupation rental, calculated at 20 per cent of the market rental for the property for the period since she was forced out on 23 July 2012. If the parties are unable to agree on this sum, it is to be fixed by the High Court. We note the prospect of increased or indemnity costs being awarded if parties act unreasonably in resolving this final issue.
The fourth ground of appeal is allowed. The leave which was reserved to the second respondent to pursue a claim to a life interest in the property is revoked.
Costs
The parties have had mixed success, so costs are to lie where they fall.
Solicitors:
Haigh Lyon Lawyers, Auckland for Appellants
Aaron Kashyap, Auckland for Respondents
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