Franklyn v Green
[2019] NZHC 2632
•15 October 2019
IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY
I TE KŌTI MATUA O AOTEAROA TŪRANGANUI-A-KIWA ROHE
CIV-2017-016-000151
[2019] NZHC 2632
BETWEEN DEBORAH ANNE FRANKLYN
Plaintiff
AND
TRACEY MARIE GREEN
Defendant
Hearing: 8 October 2019 (Heard at Wellington) Appearances:
S A Keall for the Plaintiff
T M Green (Self-represented Defendant) in Person
Judgment:
15 October 2019
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 15 October 2019 at 4.30 pm pursuant to r 11.5 of the High Court Rules.
Deputy Registrar
Counsel: S A Keall, Auckland
Copy To: T M Green, Gisborne
FRANKLYN v GREEN [2019] NZHC 2632 [15 October 2019]
[1] This is a dispute between sisters over approximately $47,000 held in a solicitor’s trust account. That sum is the remaining balance from the proceeds of sale of a house in Gisborne (the Property) which was sold by mortgagee sale.
[2] The plaintiff, Ms Franklyn, seeks a declaration that her sister, Ms Green does not hold any interest in the proceeds of sale. Ms Green asserts an interest on the basis of an agreement with her sister, and contributions she says she made to the house.
[3] The case has followed a difficult procedural path to get to the High Court. It started out as a claim by Ms Green for summary judgment in the Gisborne District Court in relation to belongings that Ms Green said had been stolen by Ms Franklyn and others. Ms Franklyn denied that claim and counterclaimed against Ms Green in the proceeding seeking the declaration now before this Court.
[4] The claim for summary judgment was dismissed,1 and the substantive claim was struck out after Ms Green took no steps.2 However, the District Court Judge determined that the District Court did not have jurisdiction to make a declaration and so transferred the case to the High Court.
[5] Originally, the proceeding was set down to proceed by way of formal proof, but in the course of the proceeding, Ms Green indicated an intention to defend the proceeding and so it was set down for a one-day trial before me.
The facts
[6] There is a great deal in dispute between the parties to this case. To the extent those disputes are relevant to the issues in this proceeding, they are addressed later in this judgment. The non-contentious facts are as follows.
[7] Ms Franklyn was the registered proprietor of the Property. It was transferred to her sole name following a divorce from her husband on 17 April 2014. The Property was subject to a mortgage in favour of Westpac New Zealand Ltd (Westpac).
1 Green v Green [2017] NZDC 28567 (Result); Green v Green [2018] NZDC 3780 (Reasons).
2 Green v Green [2018] NZDC 23067.
[8] In 2016, the Property was rented to Ms Vanessa Pohio. Ms Franklyn and Ms Pohio entered into an agreement on 28 April 2016 (the “Rent to Buy” Agreement). It is common ground that Ms Green arranged for Ms Pohio to enter into the Rent to Buy agreement.3 It appears that at some point in time, Ms Green began living at the Property and paid Ms Pohio rent.
[9] On 7 October 2016, Ms Pohio received a letter purporting to terminate the Rent to Buy Agreement. That letter was purportedly signed by Ms Franklyn. Ms Pohio commenced proceedings for breach of the Rent to Buy Agreement in the Disputes Tribunal. At the hearing, Ms Pohio and Ms Franklyn reached an agreement which was approved by the Disputes Tribunal referee. The Tribunal’s reasons for approving the settlement include a finding that Ms Franklyn did not breach the Rent to Buy agreement because it was Ms Green who had caused Ms Pohio to leave the Property. The Tribunal referee said:
1.…The evidence leads to the conclusion that Ms Green fraudulently wrote a tenancy termination letter to Ms Pohio and signed it using Ms Franklin’s [sic] name and signature. That document was the reason Ms Pohio left the property and caused her lost opportunity to buy the property.
….
3.It appears that Ms Green has been fraudulently signing documents using Deborah Franklyn’s signature. Tracey Green has falsely applied to the Tenancy Tribunal against Ms Pohio lodging the application in Deborah Franklin’s [sic] name …
4.Ms Green’s actions have seriously affected the financial situation of both Ms Pohio and Ms Franklyn and Ms Green and she should be held to account.
5.These are matters for the NZ Police to consider. They are not in the jurisdiction of the Disputes Tribunal.
[10] It appears that Ms Green commenced proceedings in the Tenancy Tribunal against Ms Pohio. Ms Franklyn says they were commenced without her knowledge or authority. The claim that Ms Green had an interest in the Property first surfaced in an affidavit filed in the Tenancy Tribunal proceedings. Ms Green referred to an agreement with Ms Franklyn regarding ownership of the Property. This is a
3 NOE, p 11, line 22.
handwritten document dated either 4 or 9 October 2016 (for ease of reference I shall refer to it as the agreement). The terms of this agreement are reproduced in full at [14] below. The witness to this agreement, Wayde Morris, is Ms Green’s son. Ms Franklyn says this agreement is forged, and she did not sign it.
[11] Ms Green lodged a caveat over the Property on 24 March 2017. A copy of the caveat was not produced in evidence, but it appears that the claimed interest was on the basis of the agreement.
[12] Ms Franklyn fell into arrears on her mortgage, and the Property was sold by way of mortgagee sale on 20 October 2017. Ms Green’s caveat was removed to allow the sale to proceed.
[13] The surplus from the proceeds of sale, being $47,190.18, are held in the trust account of Westpac’s solicitors. The solicitors have indicated that they will not release the funds until title to the surplus funds is determined. Ms Franklyn commenced proceedings for a declaration accordingly
Was there an agreement between the parties in relation to the house?
[14] The first issue to consider is whether the parties agreed that Ms Green had an interest in the house. Ms Green relies on the handwritten agreement, which provides as follows:
[15] The agreement purports to be signed by Ms Green, Ms Franklyn, and by Ms Green’s son as a witness. The only date on the agreement is underneath Ms Green’s signature. It is difficult to make out, and could be either a “9” or a “4”. Ms Green says it is a “4” and that is the date the agreement was prepared, signed, and witnessed.
[16] Ms Green says this agreement reflected a promise that she made to Ms Franklyn at the time the Rent to Buy agreement with Ms Pohio was signed. That promise was that if the Rent to Buy agreement fell over, Ms Green would step in and take it over. Ms Green subsequently became concerned about Ms Pohio’s ability to fulfil the Rent to Buy Agreement and that is what triggered her to prepare the agreement reflecting her earlier promise.
[17] Ms Green said that she prepared the agreement in the early hours of 4 October 2016. She was in her motorhome, parked outside Ms Franklyn’s house in Palmerston North waiting to travel to Gisborne that day. Ms Green said that she texted her son early that morning and he came around and witnessed the signatures to the agreement before he went to work.
[18] Ms Franklyn denies signing this agreement and denies any knowledge of it. She says her signature is forged. She denies having a conversation with Ms Green about her taking over the Rent to Buy agreement if it fell over. She also denies Ms Green spent the night in her motorhome parked outside her house in Palmerston North.
[19] I am not persuaded that this agreement supports a claim by Ms Green that she has an interest in the Property. My reasons are as follows.
[20] First, I find Ms Franklyn to be a more credible and reliable witness than Ms Green. She answered the questions directly and accepted some of the propositions put to her by Ms Green even when they did not necessarily favour her case. For example, she accepted that Ms Green had assisted in arranging the Rent to Buy agreement with Ms Pohio. She was also able to offer a plausible explanation for her denials. For example, she refuted Ms Green’s contention that she had parked her
motorhome outside her property on 3 October 2016 or any other night because it was not possible to park a vehicle there given the trees planted on the berm.
[21] In contrast, Ms Green’s evidence was confused at times and difficult to follow. She could not recall specific dates and she was unable to produce any other evidence to corroborate her account. That evidence was available. For example, Ms Green’s son attended the trial and Ms Green indicated that she intended to call him to give evidence on her behalf. On that basis, he was excluded from the Court during Ms Green’s evidence regarding the signing of the agreement. After her evidence had been completed, Ms Green elected not to call her son.
[22] Second, Ms Green’s evidence regarding the terms of the agreement shifted during questioning. For example, in her evidence in chief, she had estimated the value of the work she had done on the Property to be approximately $10,000. Later, when cross-examined by Mr Keall, she said that the $18,000 figure referred to in the agreement was made up of her contributions to the house, time spent arranging tenants and other matters on behalf of Ms Franklyn, and money owed in relation to a trailer and a bus. This then shifted again when she said that the money in relation to the trailer was $8,000. There was no further mention of the bus, or the other contributions in terms of time spent in relation to the house. Those inconsistencies cast doubt on the truthfulness of Ms Green’s evidence.
[23] Third, Ms Green’s evidence regarding this agreement is internally inconsistent. Ms Green says that the agreement reflected a promise she made to her sister to take over the Rent to Buy agreement with Ms Pohio should it fall over. That Rent to Buy agreement is typed, plainly classified as a Rent to Buy Agreement, with the obligations clearly identified. Ms Franklyn agreed to sell the Property to Ms Pohio (or a nominated person) within two years of commencing rental. The rent to be paid was
$400 per week, with a 10 per cent late penalty payment. The agreed purchase price was $220,000. That purchase price was to be reduced by $100 per week of the number of weeks rental paid representing a share of the Purchaser’s deposit. The terms of the agreement also stipulate when it would terminate and the consequences that would flow.
[24] In contrast, the agreement Ms Green relies on is a short, handwritten document that is not linked to the Rent to Buy Agreement she said she was taking over. It does not specify any obligation on Ms Green to pay rent in relation to the purchase of the house at all. Although Ms Franklyn’s bank statement records three payments being made on 28 November 2016 on behalf of Ms Green and her former partner, there is nothing to indicate that these are rental payments, and no other evidence of rental payments being made by Ms Green at all.
[25] The Disputes Tribunal’s findings that Ms Green had forged the termination letter add support to Ms Franklyn’s contention that Ms Green had forged the termination letter to Ms Pohio. But I put little weight on that evidence. Those findings were not made after hearing Ms Green and appear to follow an agreement reached between Ms Pohio and Ms Franklyn at the hearing.
[26] Considering the evidence in its totality, I accept Ms Franklyn’s evidence that her signature on the agreement was forged and that she never made any agreement with Ms Green in relation to the Property. Ms Green cannot establish any interest in relation to the Property on the basis of this Agreement.
Contributions
[27] Ms Green also claims an interest on the basis of contributions she made to the Property. As previously noted, Ms Green’s evidence regarding these contributions shifted somewhat during trial, but the evidence appeared to centre around the work performed by Ms Green at the Property, and reimbursement for a trailer.
[28]In terms of work around the Property, Ms Green said she did the following:
(a)Unblocking the drains and sewage systems. This involved breaking up the concrete, digging up the drainage pipes, installing inspection chambers, and re-concreting the back.
(b)Installing a hot water cylinder and associated plumbing and electrical work.
(c)Electrical work both upstairs and downstairs, including wiring all power points.
(d)Painting and plastering, including removing a pond.
(e)Landscaping, including building raised gardens.
(f)Converting part of the Property into a sleep-out.
(g)Arranging tenants to stay at the Property to ensure the mortgage and rates were paid on time.
[29] As to the trailer, Ms Green says that Ms Franklyn and her partner borrowed her trailer, and they then loaned it to someone else. The trailer was subsequently stolen, and Ms Green says that Ms Franklyn and her partner received approximately $8,000 from their friends as compensation for the stolen trailer. That money, Ms Green says, was put towards the mortgage when it should have been paid back to her. As a result, that sum was included in the $18,000 contributions referred to in the agreement.
[30] Ms Franklyn denies that Ms Green carried out any of this work. She said that she and her ex-husband did a lot of work doing up the Property. However, in the period between 2014 and 2017, she could only recall the oven being replaced. She also recalled the installation of a hot water cylinder but was not certain that was between 2014 and 2017. She says this work was undertaken by a registered electrician and was not undertaken by Ms Green. She also denies Ms Green’s evidence regarding the trailer.
[31] I turn first to the evidence regarding the alleged work contributions. It is plausible that Ms Green undertook some work at the Property as she is a builder by trade. But there is no evidence corroborating what she said she did: there is no evidence regarding the extent of any work carried out, the date that it was completed, or the value of the work.
[32] Similarly, there is no evidence to corroborate Ms Green’s account regarding the trailer. Given my concerns about Ms Green’s credibility and reliability (as outlined
above), the absence of corroborating evidence means I am not prepared to accept her evidence regarding the contributions or the trailer.
[33] In any respect, even if proved, these contributions would not, on their own, be enough to give rise to a proprietary interest in the proceeds of sale. Ms Green would need to show that these contributions were made in reliance on a belief or expectation created by Ms Franklyn that she would one day own the Property.4
[34] But Ms Green does not put her case on this basis. The only evidence relied on by Ms Green to establish any sort of expectation that she would one day own the Property is the agreement. For the reasons already discussed I am not persuaded that this agreement is either valid or enforceable.
[35] To conclude, Ms Green cannot establish an interest in the proceeds of sale based on contributions she says she made to the Property.
Should the declaration be made?
[36] It follows from the findings I have made that I am not persuaded that Ms Green has any interest in the proceeds of sale.
[37] Ms Franklyn was the registered proprietor of the Property and as such is entitled to the full proceeds of sale held in the solicitor’s trust account less any deductions for reasonable fees and disbursements (which Westpac’s solicitors have fixed at $1,500 plus GST for a total of $1,725.00).
[38] It is appropriate to make a declaration in those terms, and I do so at the end of this judgment. That declaration should be sufficient for Westpac to distribute the net proceeds of sale and it is not necessary to join Westpac as a party to this proceeding for that purpose.
4 These are pre-requisites to an equitable estoppel or constructive trust claim. See Vervoort v Forrest
[2016] NZCA 375 at [46]-[47] and [80].
Result
[39] I find in favour of Ms Franklyn. I declare that Ms Green has no interest in the proceeds of sale.
[40] Ms Franklyn is entitled to an award of costs on at least a schedule 2B basis for steps taken in this Court. Steps taken in the District Court are to be calculated according to the District Court scale.
[41] If the quantum of costs cannot be agreed, then Ms Franklyn shall file and serve a memorandum of counsel as to costs within 10 working days of the delivery of this judgment. Ms Green shall file a reply memorandum within five working days after that. The memoranda filed shall not exceed three pages in length. Costs shall be determined on the papers.
Edwards J
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