Dillon v Dillon
[2023] NZHC 949
•3 May 2023
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2022-419-67
[2023] NZHC 949
BETWEEN CHRISTOPHER DILLON
Plaintiff
AND
HAYDEN DILLON
First Defendant
LISA DILLON
Second DefendantTULLYCRINE LIMITED
Third Defendant
Hearing: 20 April 2023 Counsel:
S McKenna for the Plaintiff
W D Hofer and E McNicholas for the First and Second Defendants
Judgment:
3 May 2023
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 3 May 2023 at 3.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel: McKenna King, Hamilton Tompkins Wake, Hamilton
DILLON v DILLON [2023] NZHC 949 [3 May 2023]
Introduction
[1] The plaintiff, Christopher Dillon, is the father of the first defendant, Hayden Dillon. The second defendant, Lisa Dillon, is married to Hayden Dillon. Christopher Dillon’s wife, the mother of Hayden Dillon, is Glen Dillon. She is not a party.
[2] The third defendant, Tullycrine Limited (Tullycrine), is a company that was incorporated by Hayden and Lisa. It has since been removed from the Companies Register. Christopher has recently filed a separate proceeding seeking an order restoring Tullycrine to the Register, so that he can pursue his claims against Tullycrine in this proceeding.
[3] In 2010, Tullycrine purchased a farm in the Waikato. The intention was that the farm would be utilised to provide accommodation for Hayden, Lisa and their children, together with Christopher and Glen, and to operate Tullycrine’s racehorse agistment business (the business). The extended Dillon family lived together on the farm from 2010 until 2018.
[4] On 20 December 2011, the family met with a lawyer at the offices of Tompkins Wake to attempt to agree various matters relating to the arrangements between them. The meeting resulted in a letter from Tompkins Wake to Hayden and Lisa dated 21 December 2011, and various handwritten notes which were included with that letter. Some of the handwritten notes were signed by the parties.
[5] From 2010 to 2018, Christopher contributed his services to the business. A residence was built on the farm for the purpose of accommodating the extended family. Christopher and Glen paid $17,000.00 for a development consent fee for construction of the residence. Christopher alleges other contributions to the development of the property. Christopher and Glen also assisted by looking after their grandchildren.
[6] By 2018, the relationship between Christopher and his son had irreparably broken down. Christopher and Glen left the farm in mid-2018 and the farm was subsequently sold.
[7] The legal nature of the arrangements between Christopher and the defendants is in dispute.
[8] After Christopher and Glen left the farm, Christopher commenced a claim in the Employment Relations Authority, seeking to recover wages for the period that he assisted in operating the business. The Authority determined that Christopher was not an employee of Tullycrine and his claims were dismissed.1
[9] Christopher challenged that determination in the Employment Court. The Employment Court upheld the Authority’s determination that Christopher was not an employee of Tullycrine, adding that the Employment Court and the Authority had no jurisdiction to deal with other legal issues between Christopher and Tullycrine.2
[10] A full background to the dispute between the parties is set out in the judgment of the Employment Court.3 It need not be repeated here.
[11] In early 2022, Christopher commenced this proceeding. His claims are now set out in his amended statement of claim dated 2 August 2022 (the pleading). In its current form, the pleading does not comply with r 5.17 of the High Court Rules 2016 (HCR), which provides:
5.17 Distinct matters to be stated separately
(1)Distinct causes of action and distinct grounds of defence, founded on separate and distinct facts, must if possible be stated separately and clearly.
(2)If a party alleges a state of mind of a person, that party must give particulars of the facts relied on in alleging that state of mind.
(3)A state of mind includes a mental disorder or disability, malice, or fraudulent intention but does not include mere knowledge.
The non-compliance is discussed further in this judgment.
1 Dillon v Dillon [2018] NZERA Auckland 334 at [89].
2 Dillon v Tullycrine Ltd [2020] NZEmpC 52 at [48].
3 At [5]–[28].
[12] It is evident from the pleading that Christopher alleges that he has the following claims, expressed in general terms:
(a)a contractual right to be paid $500 for each week that he contributed his services to the business;
(b)a beneficial interest in the proceeds of sale of the farm; and
(c)an entitlement to repayment of the $17,000 paid for the development consent fee.
[13] Hayden and Lisa apply for the proceeding to be struck out, or alternatively for defendant summary judgment.
Strike out principles
[14] Pursuant to r 15.1(1) of the HCR, the Court may strike out all or part of a pleading if it:
(a)discloses no reasonably arguable cause of action; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the Court.
[15] The principles governing strike-out applications are summarised in the Court of Appeal decision in Attorney-General v Prince,4 as endorsed by the Supreme Court in Couch v Attorney-General:5
4 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267.
5 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
(a)A strike-out application is to proceed on the assumption that the facts pleaded in the statement of claim are true unless those pleaded facts are entirely speculative and lack any foundation.
(b)It is only where, on the facts alleged in the statement of claim, however broadly they are stated, no private law claim of the kind or kinds advanced can succeed that it is appropriate to strike out the proceedings at a preliminary stage.
(c)The threshold for strike out is high. Before a proceeding may be struck out the causes of action must be so clearly untenable that they cannot possibly succeed.
(d)The jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material.
(e)The fact that an application to strike out raises difficult questions of law, and requires extensive argument, does not exclude the jurisdiction.
Summary judgment principles
[16] Rule 12.2(2) of the HCR provides that the Court may enter judgment against a plaintiff if the defendant satisfies the Court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[17]The test for summary judgment is set out by the Court of Appeal in
Stephens v Barron:6
(a)The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually this will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim.
(b)An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate
6 Stephens v Barron [2014] NZCA 82 at [9] citing Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).
determination turns on a judgment able to be properly arrived at only after a full hearing of the evidence.
(c)The Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment is not to be arrived at on a fine balance of the available evidence as would be appropriate at a trial.
(d)The residual discretion of the Court to refuse summary judgment would be properly invoked to avoid the oppression which would otherwise result if an application by a defendant for summary judgment would pre-empt a plaintiff exercising the right to amend the pleadings.
(e)Summary judgment should not be applied for unless the substantive merits of the case are clear and capable of summary disposal.
The claim for $500 for each week that Christopher contributed his services to the business
First cause of action: breach of contract
[18] In his first cause of action, Christopher pleads that a contract was formed in 2010, including a term that he would be paid $500 per week for his services rendered to the business.
[19] There are issues with the form of this cause of action, which I will deal with after addressing the arguments advanced by the first and second defendants for strike out or summary judgment. Hayden and Lisa advance four arguments:
(a)The contract claim is an abuse of process because it seeks to relitigate matters already dealt with by the Employment Court.
(b)No reasonably arguable cause of action is disclosed because the pleading does not adequately plead the fundamental requirements for the formation of a contract, citing a presumption of fact against an intention of creating legal relations in a family context.
(c)If a contract was formed, it must have been with Tullycrine, and that company has been removed from the Register.
(d)Alternatively, Hayden and Lisa are entitled to summary judgment based on Hayden’s evidence that no contract was ever formed.
[20] The decision of the Employment Court does not give rise to any issue estoppel or res judicata. The Employment Court held that it did not have jurisdiction to determine legal issues between the parties and upheld the Authority’s determination that Christopher was not an employee of Tullycrine. On that basis, none of the claims now advanced by Christopher could have been brought in the Employment Relations Authority or the Employment Court.
[21] Counsel for Hayden and Lisa relied on the High Court’s decision in Sawyer v Vice-Chancellor of Victoria University of Wellington.7 In that case there was an employment relationship, and the Authority and the Employment Court had jurisdiction to hear the plaintiff’s claims. The plaintiff subsequently reframed those claims and sought to advance them in the High Court. Grice J held that the plaintiff could not bring claims in the High Court which had been comprehensively dealt with in the Employment Court’s jurisdiction.8
[22] Sawyer is distinguishable and does not assist Hayden and Lisa because in the present case the Authority and the Employment Court did not have jurisdiction to hear the claims now advanced by Christopher.
[23] The breach of contract cause of action alleges that the contractual obligation to pay Christopher for his services was owed by “the defendants”. No distinction is made between Hayden and Lisa, and Tullycrine. It is common ground that the work performed by Christopher was for Tullycrine, and if a contract was formed, it must have been with Tullycrine. The cause of action for unpaid consideration can only be directed at Tullycrine. The pleading is broad enough to encompass that claim, however, any claim in contract against Hayden and Lisa should be struck out.
[24] The claim in contract against Tullycrine is capable of repleading, subject to Christopher being successful in his application to restore Tullycrine to the Register. It
7 Sawyer v Vice-Chancellor of Victoria University of Wellington [2019] NZHC 2149.
8 At [65]–[66].
appears likely that Christopher will be able to establish the requisite grounds for restoration.
[25] According to Companies Office records, Tullycrine was removed from the Register on 4 March 2022. The Registry advises that this proceeding was accepted by the Registry for filing on 30 March 2022. However, Christopher has a strong argument that at the time of removal, the Registrar of Companies did not have reasonable grounds to believe that there was no proper reason for the company to continue in existence, given the pending claim.
[26] If necessary, any repleaded claim against Tullycrine can be stayed until Christopher’s application for restoration of Tullycrine to the Register is dealt with.
[27] That leaves the claim for summary judgment. I have concerns regarding the affidavit evidence filed in support of the application for summary judgment. Summary judgment in favour of a defendant is not granted lightly. The defendant has the evidential onus of establishing that none of the causes of action can succeed.
[28] In this case, Hayden has not filed a substantive affidavit averring to all of the facts which the first and second defendants rely upon in seeking summary judgment. Instead, he has produced as exhibits two unsworn witness statements previously filed in the Employment Court. One of those witness statements is by the plaintiff. Hayden’s affidavit does not include an averment that his own witness statement from the Employment Court is true and correct in all respects. This Court is uninformed regarding the process that was followed in the Employment Court for adducing evidence, and whether there was any cross-examination. That is an unsatisfactory start to a defendant’s application for summary judgment.
[29]Hayden does state in his affidavit that:
… the truth is that no contract was ever entered into between my father and Tullycrine, or anyone else. The arrangement we had was a partnership based on the familial relationship between myself, my wife, my father and my mother.
[30]Christopher’s witness statement from the Employment Court states that:
In terms of wages, we agreed that I would be paid $500 per week in addition to the accommodation and other benefits listed above.
[31] The handwritten notes from the meeting at Tompkins Wake on 20 December 2011, signed by the parties, state:
If the circumstances of the farm permit, Hayden & Lisa will look to increase the level of remuneration paid to Chris and Glen for their work.
[32]Hayden’s witness statement from the Employment Court states:
The budgets demonstrated what would be required to generate a profit, in the form of $500.00 a week. This was over and above paying for their living costs. We discussed the fact that he would take that, before Lisa and I took any share of the profit if things went well.
[33] In respect of the breach of contract claim for $500 per week, the evidence does not meet the threshold for summary judgment in favour of the defendants. It remains reasonably arguable that a contract for services was formed between Christopher and Tullycrine, including a term that Christopher would receive consideration at the rate of $500 per week. Whether Christopher will be able to establish the facts at trial to succeed with this cause of action remains to be seen. However, the position is not sufficiently clear at this stage of the proceeding for the defendants to be granted judgment on the basis that there is indisputable evidence that a contract was not formed.
[34] Finally, there is the issue of limitation. Section 11 of the Limitation Act 2010 provides:
11 Defence to money claim filed after applicable period
(1)It is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the claim is based (the claim’s primary period).
(2)However, subsection (3) applies to a money claim instead of subsection (1) (whether or not a defence to the claim has been raised or established under subsection (1)) if—
(a)the claimant has late knowledge of the claim, and so the claim has a late knowledge date (see section 14); and
(b)the claim is made after its primary period.
(3)It is a defence to a money claim to which this subsection applies if the defendant proves that the date on which the claim is filed is at least—
(a)3 years after the late knowledge date (the claim’s late knowledge period); or
(b)15 years after the date of the act or omission on which the claim is based (the claim’s longstop period).
[35] In this case, the primary period commenced on the date of any breach of the contract by Tullycrine. A breach would have occurred on each occasion that Tullycrine failed to pay the weekly payment of $500, assuming services were provided. Given that the claim was accepted for filing by the Registry on 30 March 2022, any weekly payments of $500 that fell due for payment before 30 March 2016 are out of time.
[36] Christopher alleges that he is entitled to weekly payments up until approximately mid-2018, so there is a period from 30 March 2016 until approximately May 2018 during which any weekly payments contractually due to Christopher are not time barred. That may amount to a very modest claim in the vicinity of approximately five to six thousand dollars.
[37] If this cause of action proceeds, it requires repleading. The cause of action cannot be advanced against Hayden and Lisa and should be pleaded against Tullycrine only. The pleading presently includes unnecessary allegations or particulars which are not relevant to this cause of action, such as:
(a)Christopher leaving behind a job in Australia;
(b)promises made to Christopher which led him to believe that Tullycrine would be run in order to make a profit;
(c)Hayden and Lisa intentionally running Tullycrine at a loss; and
(d)Christopher being induced to enter into the contract by misrepresentations.
[38] If Christopher wishes to advance a cause of action for pre-contractual misrepresentation, it must be pleaded as a separate cause of action. However, any such
cause of action is out of time. The cause of action would have accrued when the contract was formed in 2010, or at the latest in 2011, if the contract was varied at the meeting at Tompkins Wake.
[39] Allegations relating to Christopher’s expectations about the arrangements, and steps taken by him in reliance on promises made, may be relevant to the second cause of action, promissory estoppel. Allegations regarding conduct by Hayden and Lisa intended to ensure that Tullycrine made no profit may be relevant to an equitable cause of action. The alleged contribution of services to the business may be relevant to the third cause of action for a constructive trust.
Second cause of action: promissory estoppel
[40] Christopher’s second cause of action is also directed at recovery of $500 per week for Christopher’s services for Tullycrine, on the basis of promissory estoppel. The cause of action for promissory estoppel is also pleaded against Hayden and Lisa, together with Tullycrine.
[41]A claim in promissory estoppel requires three elements to be satisfied:
(a)a representation or assurance must be made to the claimant;
(b)reasonable reliance on it by the claimant; and
(c)detriment to the claimant in consequence of their reliance.9
[42] Based on the pleadings in the first cause of action, it appears that Christopher claims that he has suffered detriment by abandoning more favourable circumstances in Australia to reside on the farm. Currently, there is no pleading that the detriment is supplying unremunerated services, in other words, the failure to receive $500 per week for his services for Tullycrine.
9 Thorner v Major [2009] UKHL 18, [2009] 1 WLR 776 at [29].
[43] Hayden and Lisa seek strike out of the promissory estoppel cause of action on the basis that there is no pleading of a clear and unequivocable representation. They also argue that, as a matter of law, any reliance by Christopher could not be reasonable. Finally, they contend that the evidence is sufficiently clear such that summary judgment can be entered in their favour dismissing this cause of action as not made out, or if made out then barred by the Limitation Act.
[44] Although the cause of action based on promissory estoppel is not at present adequately pleaded, I do not accept that the claim is untenable as a matter of law. The claim is legally tenable if:
(a)Christopher was promised financial reward for his services, without conditions related to the profitability of the business, and in circumstances that did not create a contract;
(b)Christopher reasonably relied on the promise in deciding to move to the farm and to provide his services to Tullycrine; and
(c)as a result, Christopher suffered detriment, particularly if that detriment focuses on the lack of compensation received rather than some sort of comparison with a state of affairs that might have existed in Australia.
[45] Hayden and Lisa cannot discharge the onus on them in respect of summary judgment on this cause of action for similar reasons that apply in respect of the contract cause of action.
[46] Regarding limitation, the cause of action for promissory estoppel would have accrued when Christopher suffered detriment. Any detriment arising from Christopher leaving the farm occurred from 2018. If the detriment was the ongoing failure to receive $500 per week, then at least part of Christopher’s claim is arguably within time, on the same basis as his contract claim.
The constructive trust claim and other possible equitable claims
[47] In his third cause of action, Christopher seeks the imposition of a constructive trust over the proceeds of sale of the farm. He says that he made direct and indirect contributions to the development of the farm and residence, creating an expectation of a beneficial interest in the property. The alleged contributions include improvements to the original house on the property, which was sold and removed when the new residence was built; painting of the new residence; paying for the construction of a circular horse yard and stable yards; and landscaping.
[48] Constructive trusts arise by operation of a rule equity, without reference to the actual or assumed intention of the parties.10 Generally, a constructive trust will arise where it would constitute a fraud for the party in question to deny the trust.
[49] Broadly, there are two types of constructive trust: institutional and remedial. The former is treated as a substantive institution, recognised by the court in a declaratory way upon a claimant successfully establishing its existence by reference to a category of case law where constructive trusts are said to arise.11
[50] Constructive trusts based on reasonable expectation comprise one such category. Reasonable expectation trusts most commonly arise in the context of a breakdown of a de-facto relationship not subject to the Property (Relationships) Act 1976, but have also been considered in the context of other family units, including as between child and parent.12 In either context, the claimant must satisfy each of the following factors listed by Tipping J in the leading case of Lankow v Rose:
(a)contributions, direct or indirect, to the property in question;
(b)the expectation of an interest therein;
(c)that such expectation is a reasonable one; and
10 Commonwealth Reserves I v Chodar [2001] 2 NZLR 374 (HC) at [36].
11 Fortex Group Ltd (in rec and liq) v MacIntosh [1998] 3 NZLR 171 (CA) at 172–173.
12 See Stapylton-Smith v Stapylton-Smith [2014] NZHC 1314 and Lai v Huang [2019] NZHC 1822.
(d)that the defendant should reasonably expect to yield to the claimant an interest in the property.13
[51] To justify equity’s intervention, the courts have emphasised that the claimant’s contributions must be more than minor,14 made towards the acquisition, preservation or enhancement of the defendant’s property,15 and should manifestly exceed any benefits derived from the defendant.16
[52] Hayden and Lisa argue that the constructive trust claim is out of time, relying on s 49 of the Limitation Act, which provides:
49 Trust property possessed or converted by trustee
(1)A claim’s longstop period or Part 3 period does not apply to the claim if it is one by a beneficiary of a trust to recover from the trustee either or both of the following:
(a)trust property, the proceeds of trust property, or both in the trustee’s possession:
(b)trust property, the proceeds of trust property, or both previously received by the trustee and converted to the trustee’s use.
(2)It is a defence to a claim whose Part 3 period is disapplied by subsection (1), and that does not have a late knowledge period, if the defendant proves that the date on which the claim is filed is at least 3 years after the date on which the claimant gained knowledge (or, if earlier, the date on which the claimant ought reasonably to have gained knowledge) of the trustee’s breach of the trust.
(3)Sections 44 to 47 apply to the 3-year period prescribed for a claim by subsection (2) of this section as if that period were a Part 3 period.
[53] Section 49 applies to constructive trust claims, because the Limitation Act defines “trust” to include a constructive trust.17
[54] On behalf of Hayden and Lisa, it is submitted that any cause of action for a constructive trust accrued on 9 August 2017, when Tullycrine sold the property to
13 Lankow v Rose [1995] 1 NZLR 277 (CA) at 294.
14 Wakenshaw v Wakenshaw [2017] NZCA 252, [2018] NZAR 532 at [25].
15 Vervoort v Forrest [2016] NZCA 375, [2016] 3 NZLR 807 at [47].
16 Wakenshaw v Wakenshaw, above n 14, at [25].
17 Limitation Act 2019, s 4 definition of “trust”, para (e).
Hopeton Trustee Company Limited (Hopeton) as trustee for the Dillon Family Trust. They say that Christopher must have known of that transaction by May 2018 at the latest, when evidence was filed in the Employment Relations Authority which referred to the transaction.
[55] Christopher did not file his claim until March 2022. Hayden and Lisa argue that this was more than three years after the date on which Christopher gained knowledge of the alleged breach of the constructive trust.
[56] However, Hopeton was not an arms-length purchaser. Hopeton is a trustee of the Dillon Family Trust. Hopeton’s directors are Hayden and Lisa. This raises the possibility of knowing receipt of trust property.
[57]There are three elements to establishing liability for knowing receipt:
(a)there is a transfer of property in breach of trust;
(b)the defendant beneficially receives that trust property; and
(c)the defendant has the required level of knowledge that the transfer was in breach of trust.18
[58] New Zealand’s position on the level or type of knowledge required to establish liability for knowing receipt is unsettled. What can be said with certainty is that the guiding question is whether the recipient’s state of knowledge was such that it would be unconscionable for them to retain the benefit of the receipt.19 That reflects the accepted basis for knowing receipt: unconscionability.20
[59] If the Dillon Family Trust received the farm with knowledge that the property was subject to a constructive trust in favour of Christopher, then it is reasonably arguable that Hopeton is also a constructive trustee in favour of Christopher.
18 Scott v ANZ Bank New Zealand Ltd [2020] NZHC 906, [2020] 3 NZLR 145 at [101].
19 Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 (CA) at 455.
20 McLennan v Livaja [2017] NZCA 446, [2018] NZAR 405 at [40].
[60] According to Hayden’s evidence, Hopeton did not sell the farm to an arms- length purchaser until 28 June 2021. If that transaction was in breach of Hopeton’s duties as a constructive trustee, and if Hopeton has failed to account to Christopher for a share of the proceeds of sale, then the cause of action accrued on 28 June 2021. A claim against Hopeton is still within time.
[61] Further, there is presently no evidence before the Court regarding the nature of the transaction between Tullycrine and Hopeton, or the sale price achieved on the on- sale to the arms-length purchaser on 28 June 2021. There is no evidence of what became of any net proceeds of sale in June 2021, and whether funds passed back to either Tullycrine, or Hayden and Lisa. It remains reasonably arguable that Christopher has a constructive trust claim and a right to trace the proceeds of sale into the hands of Hopeton, Tullycrine or Hayden and Lisa.
[62] In his witness statement filed in the Employment Court, Hayden repeatedly refers to the arrangement with his parents as one of “partnership”. On his own evidence in the Employment Court, Hayden accepts that Christopher was entitled to a share of the profit of Tullycrine, although he says that there was no profit. It is reasonably arguable that there was a fiduciary relationship, either between Tullycrine and/or Hayden and Lisa as the fiduciary, and Christopher as the beneficiary of the duty.
[63] The allegation from the first cause of action, that Hayden and Lisa intentionally ran Tullycrine at a loss, implies that Tullycrine and/or Hayden and Lisa deliberately thwarted Christopher’s entitlement to a share of the profit. This allegation might be better directed as a claim of breach of fiduciary duty.
[64] If the equitable causes of action available to Christopher are properly pleaded, limitation defences may still be available. However, it is difficult to consider those defences until the causes of action are properly pleaded and more facts are before the Court.
Christopher’s payment of $17,000 for the development consent fee
[65] The fourth cause of action, for breach of contract, seeks to recover this payment as an advance by way of loan. In an earlier part of the pleading, it is pleaded that the loan was due to be repaid when the farm was sold.
[66] This cause of action names Hayden, Lisa and Tullycrine as defendants. The payment of $17,000 was for the benefit of Tullycrine, but it is conceivable that the loan was made to Hayden and Lisa, who then advanced the funds to Tullycrine. There is insufficient evidence before the Court to resolve that issue.
[67] Hayden and Lisa jointly, and Tullycrine, cannot both be the contracting party. If the individuals and the company are both pursued in contract, then alternative causes of action are required.
[68] Whether limitation is assessed at the time of the sale by Tullycrine to Hopeton in 2018, or the sale by Hopeton to the arms-length purchaser in 2021, the claim in contract is within time.
[69] The letter from Tompkins Wake to Hayden and Lisa dated 21 December 2011 includes handwritten notes signed by the parties which record:
$17,000 WDC Payment
If property is sold, and no acceptable arrangements made for Chris & Glen, then payment will be made on sale. Otherwise the payment will not be required to be made by Hayden & Lisa.
Hayden and Lisa’s position is that the $17,000 was a contribution to the cost of the residence, and not a loan. There is insufficient evidence before the Court to make that factual finding. Even if that evidence was accepted, it is reasonably arguable that the
$17,000 was a contribution that should be taken into account in any constructive trust claim.
[70] The same can be said of the alleged contribution of Christopher’s services to Tullycrine for no consideration.
[71] If the plaintiff wishes to include these contributions in the constructive trust cause of action, then the relevant facts need to be pleaded in that cause of action.
An overview
[72] Taking a step back, Christopher has tenable equitable claims that are not time- barred. Repleading is required. Consideration should be given as to whether some of the equitable claims are properly framed as alleged breaches of fiduciary duty. Consideration should be given as to whether Hopeton should be a party.
[73] At present, the cause of action for a breach of constructive trust is brought against Hayden, Lisa and Tullycrine. Hayden and Lisa have never been the legal owners of the farm. Any claim based on knowing receipt of trust funds will need to be separately pleaded.
[74] As I have already noted, there is presently no evidence regarding the sale prices for the property achieved by Tullycrine and Hopeton in 2018 and 2021. There is no evidence regarding the price paid for the property in 2010. There is no evidence as to the level of debt that was secured against the property, both at the time of purchase and the time of the sales. It is not possible to form a view on the quantum of the equitable claims of Christopher. However, the claim could be within the jurisdiction of the District Court, and a transfer to the District Court may be appropriate at some point.
Costs
[75] The application for strike out or summary judgment has largely failed, however the application had its genesis in a pleading that does not comply with the HCR, and which requires substantial amendment. The parties have had mixed success, and costs should lie where they fall.
Result
[76] The interlocutory application by the first and second defendants for an order striking out the plaintiff’s causes of action, or alternatively for an order for summary judgment, is dismissed.
[77] The plaintiff is required to file an amended statement of claim that complies with the HCR by 22 May 2023.
[78] The plaintiff is given leave to name Tullycrine Ltd as a defendant, notwithstanding that Tullycrine Ltd is presently removed from the Companies Register.
[79] Tullycrine Ltd is not required to file a statement of defence pending determination of the plaintiff’s originating application for an order restoring Tullycrine Ltd to the Register.
[80] The first and second defendants shall file and serve a statement of defence to the amended statement of claim by 12 June 2023.
[81] The proceeding is adjourned for a Case Management conference on 23 June 2023 at 11.30 am.
[82]Costs for all steps in respect of the interlocutory application lie where they fall.
Associate Judge Brittain
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