Cleaver v Bond
[2024] NZHC 1117
•8 May 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-000343
[2024] NZHC 1117
BETWEEN KEVIN RAYMOND CLEAVER
Plaintiff (Applicant)
AND
KRYSTALL ERIKA CLEAVER BOND
Defendant (Respondent)
Hearing: 1 May 2025 Appearances:
J Rushton for the Plaintiff/Applicant
No appearance for the Defendant/Respondent
Judgment:
8 May 2024
JUDGMENT OF ROBINSON J
This judgment was delivered by me on 8 May 2024 at 9:00 am pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors:
J Rushton, Hamilton
Copy to: K E C Bond (Defendant/Respondent)
CLEAVER v BOND [2024] NZHC 1117 [8 May 2024]
Introduction
[1] The plaintiff, Mr Cleaver, was the executor and sole beneficiary of his mother’s estate. She died in 2019. The defendant, Krystall Bond, is Mr Cleaver’s daughter.
[2] Following realisation of the estate’s assets, payment of expenses and settlement of an unrelated court proceeding, the estate’s solicitors, Rodgers & Co, held approximately $215,000 in their trust account, available for distribution.
[3] The plaintiff is functionally illiterate. He does not use internet banking services.
[4] On 11 August 2020, acting on Mr Cleaver’s instructions, the estate’s solicitor transferred the sum of $215,284.74 into ANZ Bank account number [redacted] (the ANZ account) held by Ms Bond. The ANZ account was not the transaction account ordinarily used by Ms Bond. The funds paid into the ANZ account have been kept separate from Ms Bond’s money, save that she has paid $20 per month (a total of $840) into the account.
[5] Mr Cleaver claims that Ms Bond is holding the funds in the ANZ account on trust for him. He alleges that Ms Bond has failed or refused to return his money to him on request. Amongst other things, Mr Cleaver seeks damages for breach of trust, and an order that Ms Bond account to him in full in respect of the funds in the ANZ account. Mr Cleaver also seeks an order that ANZ Bank transfer the funds in the ANZ account to him.
[6] On 8 December 2023, Mr Cleaver obtained a freezing order over the ANZ account on a without-notice basis.1 The Court made ancillary orders requiring the ANZ Bank to provide copies of relevant bank statements; and directing that Mr Cleaver could serve Ms Bond using her current email address.
[7]Ms Bond has been served with the proceedings but has taken no steps.
1 Cleaver v Bond [2023] NZHC 3588.
[8] In accordance with its terms, the freezing order expired on 1 March 2024. By then, ANZ Bank was aware of Mr Cleaver’s claim. No further withdrawals have been made from the account after the freezing order expired. On 17 April 2024 Becroft J set the matter down for an urgent formal proof hearing.
Evidence
[9] Mr Cleaver has filed two affidavits in support of his claim, together with an affidavit from his former counsel, Mark Jepson. The exhibits include Mr Jepson’s email correspondence with Ms Bond and the estate’s solicitors. There are also Mr Rodgers file notes, and bank statements for the ANZ account provided by ANZ Bank.
[10] There is also an affidavit of service from Adam Blake dated 7 March 2024 confirming that, on 11 December 2023, Ms Bond was served by email with all relevant documents. That affidavit also attaches email correspondence from Ms Bond via that email address to Mr Cleaver’s lawyers as recently as 29 February 2024. However, as noted above, Ms Bond has taken no steps in this proceeding.
Factual background
[11] Having reviewed that evidence and heard from Ms Rushton for Mr Cleaver, I find the relevant facts to be as set out below.
[12] Mr Cleaver’s mother died on 2 July 2018. As noted, he was the executor and sole beneficiary under her will. Probate was granted.
[13] The estate realised its assets, paid its expenses and settled a claim by a third party. This left a sum of money available for distribution to Mr Cleaver. His evidence is that he intended to use those funds to purchase a home. He intended to leave it in Mr Rodgers’ trust account until then.
[14] In July 2020, Mr Rodgers advised Mr Cleaver that the administration of the estate was complete and funds should be paid to him to his nominated bank account. Originally, Mr Cleaver thought about putting the money into a Kiwisaver account, but
he also wanted the money to be readily available for when he decided to purchase a house. After discussion with Ms Bond, he agreed the money could be paid into an account in her name, separate from the account into which her wages are paid and from which she pays her expenses.
[15] In a letter to Mr Cleaver dated 23 July 2020, Mr Rodgers recorded his concern that Mr Cleaver wanted his funds paid to Ms Bond, rather than into an account in his own name. Mr Rodgers’ file note of his discussion with Ms Bond dated 27 July 2020 records that she called and sent him a text advising that Mr Cleaver wanted his money to go into her account, and that she confirmed she would not touch it. Understandably, Mr Rodgers required written instructions.
[16]On 10 August 2020, Mr Rodgers received a handwritten note as follows:
I Kevin Raymond Cleaver give Barry Rogers [sic] permission to transfer the balance of the estate in Barry Rogers [sic] trust account into K.E.C.Bonds ANZ account: [redacted]
Kevin Raymond Cleaver
[17]Mr Cleaver had signed the note. It appears to have been written by Ms Bond.
[18] On 11 August 2020 $215,284.74 was transferred from Mr Rodgers’ trust account to the ANZ account.
What has become of the funds?
[19] Mr Cleaver’s evidence is that he thought the Covid pandemic would lead to house prices going down. He waited for the best time to buy, but found prices kept increasing. He left his money in Ms Bond’s account in the meantime.
[20] In June 2021, Mr Cleaver instructed Mr Jepson on unrelated matters. Mr Jepson’s evidence is that Ms Bond came with Mr Cleaver to their meetings as his main support person. In relation to payment of Mr Jepson’s fees, he deposes that Mr Cleaver and Ms Bond both told him that Mr Cleaver had an inheritance from his mother in a bank account looked after by Ms Bond. They told Mr Jepson that Ms Bond
was looking after the money for Mr Cleaver, and that she would pay his invoices online from that money.
[21] Mr Jepson confirms that he sent all his invoices to Ms Bond by email. Mr Cleaver does not have an email address and, as noted previously, does not know how to use internet banking.
[22] Mr Cleaver confirms that he authorised Ms Bond to pay Mr Jepson’s invoices. He also authorised her to pay veterinary bills.
[23] For her part, Ms Bond paid $20 a month by way of automatic payment into the account as required by ANZ Bank. It appears this was to ensure it earned interest at a premium rate. The relevant bank statements show that in total Ms Bond has paid $840 into the account.
[24] Sadly, around November 2023, the relationship between Mr Cleaver and Ms Bond deteriorated. They had previously been living together, but Ms Bond moved out. Mr Cleaver understands Ms Bond may be living with her partner’s parents.
[25] Before she left, Mr Cleaver asked Ms Bond to repay his money. He says she told him “I can’t get the money now”.
[26] Mr Cleaver took legal advice, initially from Mr Jepson. On 16 November 2023, Mr Jepson emailed Ms Bond. He recorded that that he understood she was holding approximately $200,000 on Mr Cleaver’s behalf, and that Mr Cleaver wanted the money to be transferred back to him.
[27]Later that day Ms Bond replied:
Hi Mark,
Regarding the money it was transferred directly to me. It’s solely in my account not linked to Kevin nor is it in a joint account. It was never in Kevin’s name nor account to begin with. I’m genuinely concerned about Kevin’s state of mind and mental/physical health.
[28] There was further email correspondence between Mr Jepson and Ms Bond. Amongst other things, she advised that she wanted to see copies of all her grandmother’s earlier wills. She said she wished to ensure that her grandmother’s wishes had been “taken on board”. Mr Jepson sent her a copy of the will in respect of which probate had been granted. He pointed out that the will had been drafted by her grandmother’s lawyer; it revoked all previous wills; and left the entire estate to Mr Cleaver. Again, Ms Bond advised that she wanted to ensure her grandmother’s wishes were respected and protected, and apologised “for any inconvenience in being a bit slow and cautious”.
These proceedings
[29] Mr Cleaver issued these proceedings on 8 December 2023. He applied without notice for the freezing and ancillary orders which Harvey J granted later that day.
[30] In accordance with Harvey J’s orders, ANZ Bank has provided statements for the ANZ account. These show that:
(a)$215,284.74 was paid into the ANZ account on 11 August 2020;
(b)as at 8 December 2023, $188,543.44 remained in the ANZ account;
(c)$31,974.26 has been transferred out of the ANZ account to Ms Bond’s transaction account; and
(d)as noted, Ms Bond has deposited $20 per month ($840 in total) into the ANZ account.
[31] Mr Cleaver’s evidence is that of the $31,974.26 transferred to Ms Bond’s transaction account, only $24,358.91 was authorised by him. These related primarily to his legal fees and veterinary bills. He says transfers in the total amount of $7,615.35 to Ms Bond’s transaction account were not authorised by him, after giving credit for her $840 deposit.
[32] Amongst other things, Mr Cleaver seeks damages of $196,158.79 (being the ANZ account balance of $188,543.44 as at 8 December 2023 and the unauthorised deductions of $7,615.35). He also seeks orders that Ms Bond (or alternatively ANZ Bank) transfers the balance of the funds in the ANZ account into his solicitor’s trust account.
Discussion
[33] I am satisfied that Ms Bond holds the funds in the ANZ account as bare trustee for the benefit of Mr Cleaver. The evidence shows that Ms Bond received the funds into her account knowing they were the proceeds of Mr Cleaver’s inheritance. Ms Bond received those funds on the basis that she was to hold them for Mr Cleaver’s benefit, and only deal with the funds in accordance with his instructions. There appears to be an express trust; if not there is an institutional constructive trust.2
[34] It appears Ms Bond may subsequently have become concerned about whether her grandmother’s will accurately reflected her wishes. The basis for any such concern is unclear. However, as Mr Jepson pointed out, the will was drafted by lawyers acting for Ms Bond’s grandmother, and probate has been granted in respect of it.
[35] In any event, any concerns Ms Bond may have had (or developed) about the terms of the will did not affect the basis upon which she received and held Mr Cleaver’s money in August 2020. She knew it was her father’s money, and that she held it for him to his order.
[36] Mr Cleaver’s evidence is that he asked Ms Bond to return the funds before she left home on 13 or 14 November 2023. This is consistent with Mr Jepson’s email correspondence with Ms Bond on 16 November 2023 in which he advised that Mr Cleaver wanted her to return the funds. Despite that request, Ms Bond did not return the funds and has still not done so. Instead, she pointed out that the ANZ account is solely in her name and began making inquiries about the terms of the will. At that point, I consider Ms Bond to have acted in breach of her obligations as bare trustee to
2 Fortex Group Ltd (in Rec & Liq) v MacIntosh [1998] 3 NZLR 171.
Mr Cleaver. Ms Bond is obliged to return the funds to Mr Cleaver, in accordance with his instructions, but has not done so.
[37] On the evidence before me I am also satisfied on the balance of probabilities that of the $31,974.26 Ms Bond transferred out of the ANZ account to her transaction account, $7,615.35 was transferred without Mr Cleaver’s authority and therefore in breach of Ms Bond’s obligations to Mr Cleaver as trustee. That is obviously $6,775.35 excess of the $840 Ms Bond has paid into the ANZ account.
[38] As noted, Mr Cleaver seeks an order that ANZ Bank be directed to transfer the funds from the ANZ account to his solicitor’s trust account if Ms Bond fails to do so. I discussed with counsel whether the Court has jurisdiction to direct ANZ Bank to take those steps in circumstances where it is not party to the proceeding. During an adjournment, ANZ Bank provided written confirmation to counsel and to the Court that it would abide by any such order regardless of whether or not it was formally joined as a party.
[39] In those circumstances I am satisfied it is appropriate to make the orders sought.
Result
[40] I make a declaration that Ms Bond received and holds the funds in ANZ Bank account number [redacted] as bare trustee for Mr Cleaver who is the sole beneficiary of that trust.
[41]I enter judgment against Ms Bond in favour of Mr Cleaver in the amount of
$196,158.79.
[42]In partial satisfaction of that judgment I direct:
(a)A freezing order is made in respect of ANZ bank account [redacted] in the name of ‘Miss K E Bond’, except that the ANZ Bank shall permit Ms Bond to transfer the remaining balance held in ANZ bank account
[redacted] of $188,543.44 plus all net interest accrued since 8 December 2023, into Mr Cleaver’s solicitor’s trust account.
(b)Ms Bond shall make this transfer within 72 hours of service of sealed orders by email, to the same email address noted in the Freezing Order dated 8 December 2023 [redacted].
(c)In the event that Ms Bond does not comply with this direction within the timeframe, then the ANZ Bank is directed to make that transfer.
Robinson J
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