Grantham v Moates
[2025] NZHC 2206
•7 August 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2024-485-788
[2025] NZHC 2206
BETWEEN JEANETTE DALGLEISH GRANTHAM and MALCOLM DAVID CAMPBELL
Applicants
AND
VALERIE MARY MOATES as executor of the estate of Margaret Elizabeth Ryan Respondent
Hearing: 2 May 2025 Appearances:
D Pine for Applicants
D Livingston for Respondent
Judgment:
7 August 2025
JUDGMENT OF ASSOCIATE JUDGE SKELTON
Introduction
[1] This is an application by Jeanette Grantham and Malcolm Campbell for final orders that Caveat 13090013.1 (the Caveat) against the property at 74 Ponsonby Road, Wellington (the Property), not lapse. The estate of Margaret Ryan (the Estate) is the registered proprietor of the Property.
[2] The applicants claim caveatable interests on four bases. They claim a constructive trust arising from a common intention and promissory estoppel. They also claim a testamentary promise by Margaret during her lifetime as a basis on which to sustain the Caveat. In submission, counsel also contended that allowing the Property to remain in the Estate would give rise to manifest injustice under s 55 of the
GRANTHAM v MOATES [2025] NZHC 2206 [7 August 2025]
Land Transfer Act 2017 (the Act). The applicants seek a final order that the Caveat not lapse and costs.
[3] The respondent, Valerie Moates, in her capacity as the executor of the Estate opposes the application.1 She seeks orders that the Caveat lapse in her favour. Alternatively, if it is not yet to lapse, she seeks that a condition of the Caveat is that the applicants urgently file their substantive pleadings so that the matter can be scheduled for a final and substantive hearing. She also submits that costs for the Caveat should be reserved pending the final outcome.
Background
[4] The applicants are the children of David and Ida Campbell.2 They grew up at the Property, which was built by David. Ida passed away on 8 August 1973. David married Mary Campbell (née Ryan) in 1981 and the Property was settled pursuant to the Joint Family Homes Act 1964 on 24 May 1983.
[5] Margaret (Mary’s niece) moved into the Property in approximately 1990. The applicants characterise this decision as being precipitated by Margaret having a back injury and not having a home. Evidence filed by the respondent is that Margaret was invited by David to move in, due to his health.
[6] David died in June 1994 seemingly without a will, although the applicants suggest that one exists despite it not being located. The applicants say that David had indicated that it was his intention for Mary to remain at the Property for the duration of her life, after which it would be transferred to the applicants. Their evidence is that a meeting was held with Mary and Margaret, following David’s death, affirming that belief. The respondent contends that no evidence exists supporting that the Property was intended to be transferred to the applicants and that the Property became Mary’s by right of survivorship and never formed a part of David’s estate.
1 I note that this Court has made an order permitting Ms Moates to step down as executor of the Estate, and be replaced with the named back-up executor, Richele McKenzie: Re Moates & McKenzie HC Wellington CIV-2025-485-262, 13 June 2025. At the time this issue was heard, however, Ms Moates remained the executor and therefore I proceed on that basis for the purposes of this judgment.
2 I use first names for the purposes of clarity.
[7] Mary passed away on 12 May 2019, at which point ownership of the Property transferred to Margaret in accordance with Mary’s will. The applicants say they met with Margaret after Mary passed away, but before title to the Property was registered in Margaret’s name. They agreed that they would allow Margaret to continue to occupy the Property for life and in return, Margaret would transfer the Property to the applicants on her passing. The applicants submit that they relied on this promise in choosing not to contest Mary’s will.
[8] Margaret passed away on 31 May 2024. Her will directed that the Property, forming part of her residuary estate, would be passed in equal parts to Ms Moates, Richele McKenzie, and Stephen and John Moore (the Beneficiaries).
[9]The applicants lodged the Caveat on 21 August 2024 in the following terms:
The registered owner, Margaret Elizabeth Ryan (deceased) holds the land as trustee of a constructive trust and/or pursuant to the Law Reform (Testamentary Promises) Act 1949 for the benefit of the Caveators being Jeanette Dalgleish Granthaml [sic] and Malcolm David Campbell.
[10] In November 2024, Ms Moates then applied for the lapse of the Caveat under s 143 of the Act. An interim order was made that the Caveat not lapse.3 The issue is now whether I should make a final order that the Caveat not lapse.
Legal principles
[11]Section 138(1) of the Act provides:
138 Caveat against dealings with land
(1)A person may lodge a caveat against dealings with an estate or interest in land (a caveat against dealings) on the basis that the person—
(a)claims an estate or interest in the land, whether capable of registration or not; or
(b)has a beneficial estate or interest in the land under an express, implied, resulting, or constructive trust; or
3 Grantham v Moates HC Wellington CIV-2024-485-788, 2 December 2024.
…
[12] Where, as in this case, an application is made to lapse a caveat, the caveator may apply for an order that the caveat not lapse under s 143.4
[13] In Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, the Court of Appeal confirmed the following core principles in respect of an application for an order that a caveat not lapse:5
[80] The core principles covering applications to sustain caveats under s 143 of the LTA are those set out in this Court’s decision in Philpott v Noble Investments Ltd (drawing in turn on our earlier decision in Sims v Lowe):
(a)the onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;
(b)it is enough if the applicants put forward a reasonably arguable case to support the interest they claim;
(c)the summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and
(d)where an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.
[14] The Court of Appeal noted the difference between the Land Transfer Act 1952 and the Act. The latter now places “the onus squarely on the person who imposed the caveat to apply to sustain it, rather than requiring application by the person seeking removal”.6
4 Land Transfer Act 2017, s 143(3) and (4).
5 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218 at [80], citing Philpott v Noble Investments Ltd [2015] NZCA 342 at [26] and Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660. Philpott was referred to with approval by the Supreme Court in Melco Property Holdings (NZ) 2012 Ltd v Hall [2022] NZSC 60 at [56].
6 Green & McCahill Holdings Ltd, above n 5, at [82]. See Land Transfer Act 2017, s 143(3).
[15] The Court doubted that there is any material difference between the “reasonably arguable” test for sustaining a caveat and the “serious question to be tried test” for an interim injunction.7 However:8
… balance of convenience considerations do not ordinarily enter the picture with caveats, save that the court has a residual discretion not to uphold a caveat where it could serve no useful purpose or alternative protection is available.
[16] The Court confirmed that the “summary process does not permit close engagement with contested facts”.9 However, “the court must still assess the arguability of the asserted case of a proprietary right realistically and interrogate the documentary record”.10 An earlier decision of the Court of Appeal held that where there is a conflict between the affidavits, the Court will generally prefer the evidence of the caveator.11
[17] The Court also confirmed that conditions may be attached to an order sustaining a caveat, for example that the caveator initiate and prosecute with diligence substantive proceedings to sustain its alleged proprietary rights.12
Issues
[18]The issues for determination are as follows:
(a)Have the applicants established a reasonably arguable case that they hold an interest in the land sufficient to support the Caveat?
(b)If so, should I exercise my discretion to remove the Caveat or allow it to lapse?
(c)If the Caveat is sustained, should any conditions be attached?
7 At [82].
8 At [84].
9 At [83].
10 At [83], referring to Eng Lee Yong v Letchumanan [1980] AC 331 (PC) at 341.
11 Bethell v Rickard [2013] NZCA 68 at [22].
12 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 5, at [86]. See also Raiser Developments Ltd v Trefoil Properties Ltd [2008] NZCA 73.
[19] In considering the issues, I will deal first with the common intention constructive trust and promissory estoppel arguments. I will then deal with the testamentary promise argument and claim of manifest injustice under s 55 of the Act.
Common intention constructive trust
[20] A distinction is drawn between two types of constructive trust – “institutional” and “remedial”:13
The difference between the two types of constructive trust, institutional and remedial, is that an institutional constructive trust arises upon the happening of the events which bring it into being. Its existence is not dependent on any Order of the Court. Such order simply recognises that it came into being at the earlier time and provides for its implementation in whatever way is appropriate. A remedial constructive trust depends for its very existence on the Order of the Court; such order being creative rather than simply confirmatory.
[21] A caveatable interest must be a present rather than potential interest. As a remedial constructive trust does not exist until created by the Court, it cannot sustain a caveat prior to the order.14
[22] The applicants contend that there is an institutional constructive trust in this case in the form of a common intention constructive trust arising from the intention that was formed between the parties.15 To support the Caveat, the applicants must establish a reasonably arguable case that:16
(a)There was a common intention that, on Margaret’s death, the Property would be transferred to them;
(b)The applicants relied on this common intention;
13 Fortex Group Ltd v MacIntosh [1998] 3 NZLR 171 (CA) at 172–173.
14 See DW McMorland and others Hinde, McMorland and Sim: Land Law in New Zealand (looseleaf ed, LexisNexis) [Hinde, McMorland and Sim] at [10.009(d)].
15 See Laboyrie v Mills [2020] NZHC 700; Waikene Station Ltd v Kydell Downs Ltd [2023] NZHC 1937 at [28]–[37]; Hinde, McMorland and Sim, above n 14, at [10.009(d)].
16 Lankow v Rose [1995] 1 NZLR 277 (CA) and Chambers v The New Zealand Guardian Trust Co Ltd [2023] NZHC 2084 at [144].
(c)The applicants contributed in a more than minor way to the maintenance, preservation and improvement of Margaret’s assets (in this case the Property);
(d)The applicants suffered detriment; and
(e)Overall, it would be unconscionable for Margaret’s estate to retain and distribute the Property, and it should be transferred to the applicants.
[23] Mr Livingston, for the respondent, submits that while circumstantial evidence may support a caveat, the applicants have not put forward any evidence and their case for a common intention relies on “pure assertion”. Secondly, Mr Livingston submits that “the forbearance of a bogus legal claim, is no contribution at all”. He says that the applicants were “devoid of any plausible legal claim” against Mary (due to her right of survivorship), and Mary (and then Margaret) held indefeasible title. He further contends that the applicants have “improperly, hinted at fraud on the part of Mary in that they suspect she hid David’s will”. Mr Livingston says this contention is also misguided, as David had no right or power to bequeath the Property to the applicants because it was held in a joint tenancy and never formed part of his estate. Mr Livingston further submits that Mary’s cooperation was required to establish a trust or downgrade her property rights to a life interest. He submits that the fact that David and Mary took no steps to establish a trust together means that any proceedings against Mary’s estate would have been “doomed to fail”. This, he argues, means there cannot have been a contribution to the Property by the applicants or forbearance that was a detriment to themselves. Mr Livingston submits that there is no unconscionability arising, because the applicants never had a viable claim against the Property; it is, in his words “purely an emotional” case. He says that, rather, it is unconscionable to mire the respondent, who is 93 years old and bedbound, in litigation, denying her of a gift from her lifelong friend.
[24] Mr Livingston submits the applicants are not entitled to the presumption that the alleged conversations with Mary and Margaret occurred and it is open to the Court to summarily determine the applicants’ claim because:17
(a)The threatened proceedings were meritless;
(b)The lack of evidence of agreements that should have been recorded is telling;
(c)Margaret and Mary’s carer discussed succession, and the purported promises were never raised;
(d)Long-standing neighbours and friends note that Margaret clearly stated the property was not designated for the applicants;
(e)Neither Mary and Margaret’s family solicitor nor Margaret’s close confidants were consulted about the purported promises;
(f)Friends and assistants of Mary were aware that Margaret was always intended to inherit the Property from Mary; and
(g)Circumstantial evidence suggests the promises never occurred; in particular, based on how David and Mary managed their affairs and what was said to those who knew them.
[25] Mr Livingston also submits that the applicants are putting forward a claim of fraud and dishonesty on the part of Mary and Margaret because they are alleging denial of a common intention which is fraudulent conduct.18
17 Mr Livingston refers to Cowan v Cowan [2022] NZSC 43 at [22] as authority for the proposition that the Court can summarily determine the validity of the claimed caveatable interests. While the Supreme Court acknowledged that “circumstances may permit summary determination”, the Court also said that “[s]uch circumstances are rare” and the example given was where “all that is in dispute is the construction of a particular document”. That is not the position in this case.
18 Laboyrie v Mills, above n 15, at [68] citing Avondale Printers & Stationers v Haggie [1979] 2 NZLR 124 (SC).
[26] Referring to Schmidt v Pepper New Zealand (Custodians) Ltd, Mr Livingston submits that the test to sustain the Caveat in respect of the common intention constructive trust argument is therefore a prima facie case rather than a reasonably arguable case.19 In that case, the Court of Appeal commented:20
Allegations of fraud or dishonesty are very serious. They must be pleaded with care and particularity. As the authors of Bullen & Leake & Jacobs Precedents of Pleadings emphasise, counsel must not draft any originating process or pleading containing an allegation of fraud unless they have reasonably credible material which, as it stands, establishes a prima facie case of fraud — that is, material of such a character which would lead to the conclusion that serious allegations could properly be based upon it. Fraud cannot be left to be inferred from the facts — fraudulent conduct must be distinctly alleged and as distinctly proved. General allegations, however strong the words may be, are insufficient to amount to a proper allegation of fraud.
[27] However, as the learned authors of Hinde McMorland & Sim: Land Law in New Zealand put it, the comments in Schmidt v Pepper New Zealand (Custodians) Ltd:21
… were not put forward as a qualification to the reasonably arguable standard. The better view is that the seriousness of the allegations made by the caveator is a matter to be taken into account in assessing whether the reasonably arguable standard has been met. In Paugra Holdings Ltd (in liq) v Harvestfield Holdings Ltd22 a caveator claimed an interest arising from an institutional constructive trust as a result of fraud. The Court of Appeal upheld the caveat, holding that the caveator had put forward a “reasonably arguable case”.23
[28] I agree. Even where there is an allegation of land transfer fraud (dishonest conduct) by the registered owner,24 the appropriate test for a caveatable interest is a “reasonably arguable case” as confirmed by the Court of Appeal in Paugra Holdings.25 But the seriousness of the allegations is to be considered in assessing whether that standard is met.
19 Schmidt v Pepper New Zealand (Custodians) Ltd [2012] NZCA 565.
20 At [15] (footnotes omitted).
21 Hinde, McMorland and Sim, above n 14, at [10.020(b)].
22 Paugra Holdings Ltd (in liq) v Harvestfield Holdings Ltd [2014] NZCA 164.
23 At [37]–[38].
24 Land Transfer Act 2017, s 6.
25 Paugra Holdings Ltd (in liq) v Harvestfield Holdings Ltd, above n 22, at [33]–[44].
[29] Further, Mr Pine, for the applicants, firmly refuted the proposition that the applicants are alleging fraud. Rather, he says the plaintiffs are alleging breach of common intention. In my view, it is not apparent the applicants are alleging land transfer fraud involving dishonest or other reprehensible conduct. Rather, the applicants’ case focuses on unconscionable conduct which is categorised separately as “equitable fraud”.26
Analysis
[30] As a preliminary matter, I accept Mr Pine’s submission that, contrary to the characterisation by Mr Livingston of the applicants’ case, the applicants have put forward a case that is beyond bare assertion. The applicants’ affidavit evidence is supported by the affidavit evidence of other family members. Further, they rely on the chronology of events as being contextual support for their case, particularly their failure to contest Mary’s will prior to her death.
[31] I consider, on the information before me, it is at least reasonably arguable that there was a common intention that the Property would return to the applicants, first, upon Mary’s death and, in turn, on Margaret’s death. Both the applicants’ affidavits detail meetings after David and Mary’s deaths, during which it was agreed that they would take ownership of the Property following Mary and Margaret’s deaths respectively. Three of Mary’s nieces/Margaret’s cousins confirm this is consistent with their understanding. The evidence of Teresa Polhill for example is that:27
13.My mother and Mary were very close.
14.It was my mother who first told me, sometime before David passed away, that upon David’s passing Mary would be allowed to continue to reside in the Ponsonby Road Property until Mary passed way. My mother told me that once Mary passed away the Ponsonby Road Property would be returned to Jeanette and Malcolm.
26 See the discussion in Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2823 at [42]– [48].
27 I note that affidavit evidence adduced by both parties arguably contains hearsay statements: Evidence Act 2006, s 4. No objections have been raised by either party. I am content to admit the hearsay statements in the circumstances of this application, when the makers of the relevant statements are deceased and when the applicants’ evidence is only seeking to establish a reasonably arguable case to sustain the caveat. See Evidence Act 2006, ss 17, 18 and 20; and High Court Rules 2016, rr 19.10 and 7.30; Sampson Property Developments Ltd v DMST Internationals Ltd [2024] NZHC 3652 at [22].
15.This arrangement was well-known by the entire family
…
17.When Mary passed away, I expected Margaret to move out of the Ponsonby Road Property knowing that it was going back to Jeanette and Malcolm.
18.Jeanette and Malcolm were very generous to let Margaret stay in the house on much the same terms as Mary did (until she passed away). While Margaret had enough wealth to find a new house, she was very attached to the Ponsonby Road Property. Margaret was particularly opposed to going to a retirement village.
19.I always understood that, in light of Jeanette and Malcolm’s generosity, Margaret would pass the Ponsonby Road Property back to Jeanette and Malcolm when she passed away.
[32] Evidence has also been adduced by the respondent, including from Margaret’s neighbours, Grenville Gaskell and Patricia Heath, who record that:
Margaret said she had no intention of giving 74 Ponsonby Road to David Campbell’s family… [and] told us this in person on several occasions after Mary Campbell passed in 2017 including during 2023 and possibly early 2024.
[33] A friend of Margaret’s (who is one of the Beneficiaries), Ms McKenzie, also states that Margaret “was very clear and vocal that the house was not going to go to Jeanette and Malcolm or her cousins”. Other evidence, including the respondent’s own evidence, records that neither Mary nor Margaret mentioned any intention for the Property to be left to the applicants.
[34] This case is difficult in that there is a distinct lack of documentary evidence when it might be expected that the arrangements or agreements referred to in the evidence would have been recorded in some way. However, the evidence of the applicants and other family members is certainly not so “equivocal, lacking in precision … or inherently improbable”28 that it can simply be disregarded as the respondent would have me do. The affidavit evidence before me raises a factual contest as to common intention which can only properly be determined by assessing the credibility of the witnesses after their evidence is tested at trial.
28 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 5, at [83].
[35] On a similar basis, I consider it reasonably arguable that the applicants relied on the alleged common intention or reasonable expectation that they would receive the Property, in electing not to contest Mary’s will which left the Property to Margaret despite their father’s alleged intention. The evidence of the other family members as described above is consistent with such reliance.
[36] As to contribution to the respondent’s assets, Mr Pine, consistent with the applicants’ evidence, describes the contribution as follows:
The applicants’ contribution in this case took the form of forbearance—they chose not to contest Mary Campbell's will and allowed Ms Ryan to continue living in the Property for the remainder of her life. That forbearance constitutes a significant contribution, as it allowed Ms Ryan to enjoy undisturbed possession of the Property, which was particularly valuable to Ms Ryan given her health and age after Mary’s passing.
[37] I have not been referred to any authorities that establish that failure to exercise a potential legal right (such as bringing a proceeding to contest a will), for example, is a contribution that will support a common intention constructive trust. In considering a Law Reform (Testamentary Promises) Act 1949 claim, this Court accepted that in some circumstances forbearance to pursue a claim may amount to the provision of a service.29
[38] It is clear from Lankow v Rose that contributions may be indirect and need not be in money but “may be in services or in any other respect”.30 There must be “causal relationship” between the contributions and the acquisition, preservation or enhancement of the defendant’s assets.31 The contributions need not have been made to particular assets, “but certainly to the defendant’s assets in general”.32 This can be recognised by the imposition of a trust over “a particular asset or particular assets” which “may in turn be quantified or satisfied by a monetary award”.33
29 National Heart Foundation of New Zealand v Palmer [2014] NZHC 1740 at [31].
30 Lankow v Rose, above n 16, at 282 (emphasis added) and Wakenshaw v Wakenshaw [2017] NZCA 252 at [25].
31 Lankow v Rose, above n 16, at 282.
32 At 282.
33 At 282.
[39] As noted above, Mr Livingston contends there was no forbearance in this case and any claim was “doomed to fail” because the Property never formed part of David’s estate. Rather, Mary’s cooperation was required to establish a trust or downgrade her property rights to a life interest. However, I note there is some evidence before me that David had “talked of having set up a trust” for the applicants, although no copy of any trust deed has come to light. The applicants also argue that, even if Mary was entitled to the Property by right of survivorship, the imposition of equitable obligations on the registered proprietor remains possible. They submit that any suggestion that the applicants never had a viable claim to leverage against Mary therefore mischaracterises the position.
[40] In the context of this application, I am not in a position to make a finding that the potential challenge to Mary’s will was entirely without merit.34 I cannot rule out that it is at least reasonably arguable that forbearance in contesting Mary’s will constituted the requisite contribution to the acquisition, preservation or enhancement of Margaret’s assets.
[41] Further, it is reasonably arguable that the applicants have suffered detriment by foregoing the opportunity to contest Mary’s will and assert their claim to the Property at an earlier stage. They have not realised their alleged proprietary interest in the Property and there is a risk that they will not be able to do so because they have to compete with the Beneficiaries.
[42] Finally, I consider it is reasonably arguable that it would be unconscionable for the Beneficiaries to receive the Property when it appears from the evidence that they had no prior expectation of receiving it. Meanwhile, the applicants’ case is that Margaret agreed she would leave the Property to them.
[43] In conclusion, I am satisfied that the applicants have established a reasonably arguable case for a common intention constructive trust.
34 National Heart Foundation of New Zealand v Palmer, above n 29, [2014] NZHC 1740 at [31].
Promissory estoppel
[44] Mr Livingston submits that promissory estoppel was not advanced in the caveat instrument and therefore cannot be relied on to sustain the Caveat. He says that the applicants are strictly bound to address the interest (and no other) as claimed in the caveat instrument itself.35
[45] Regarding the promissory estoppel argument, I disagree. In oral submission, Mr Pine confirmed that he sought to advance the promissory estoppel argument as another basis for the imposition of a constructive trust. As found in Clear White Investments Ltd v Otis Trustee Ltd:36’
[56] An equitable estoppel may be the basis for a constructive trust. Accordingly nothing turns on the fact that the caveat does not expressly refer to an interest arising from estoppel. …
[46] I note that, at least in New Zealand, all types of equitable estoppel (including promissory and proprietary) are regarded as examples of a single overarching doctrine.37 There is also considerable flexibility as to the relief ordered.38
[47] I consider it at least reasonably arguable that promissory estoppel may be the basis for a constructive trust supporting a caveat and therefore this argument can be advanced by the applicants.39
[48] The next issue is whether the applicants have made out a reasonably arguable case that they had:40
35 See Re Peychers’ Caveat [1954] NZLR 285 at 286. Mr Livingston relies on Colin Adams Ltd v Baker CA 178/98, 5 May 1999 and Dixon & Anor v Laurie McGoverne Ltd HC Christchurch M NO 254/00, 6 October 2000.
36 Clear White Investments Ltd v Otis Trustee Ltd, above n 26, at [56]. See also Culliford v Thorpe
[2018] EWHC 426 (Ch).
37 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at [4.6].
38 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [72]–[124].
39 It is unclear whether the constructive trust would arise by operation of law on the happening of the relevant events or whether it can only be created as a remedy by the Court.
40 Gillies v Keogh [1989] 2 NZLR 327 (CA) and Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 38, at [44].
(a)a belief or expectation that has been created or encouraged through Margaret’s words or conduct;
(b)to the extent an express representation is relied upon, it is clearly and unequivocally expressed;
(c)the applicants reasonably relied to their detriment on the representation; and
(d)it would be unconscionable for the Estate to depart from the belief or expectation.
[49] Mr Livingston repeats his submissions in respect of the constructive trust ground. He argues there is no clear promise given the lack of evidence and no detriment given any claim contesting Mary’s will would have been “completely untenable”. Therefore, he submits that no injustice arises. He submits that the applicants have not lost the opportunity to pursue their case at an earlier time, as there is no evidence of anything beyond bare assertion at any point in time.
[50] On the basis of the evidence discussed above in respect of common intention constructive trust, I consider it is reasonably arguable that Margaret’s words and conduct encouraged a belief or expectation that the Property would be distributed to the applicants upon her death.41
[51] Further, I consider it is reasonably arguable that, to the extent an express representation or promise is relied on by the applicants, it was clear and unequivocal. The applicants’ evidence is that there was an agreement between them and Margaret that she would be able to stay in the Property for life on the basis that she would leave it to them in her will. This appears clear and unequivocal. In some cases, an “understanding” between the parties or impression about a party’s future conduct is sufficient to satisfy this requirement.42 The evidence indicates that the agreement was the basis for a shared familial understanding of the intention for how the Property
41 See above at [31]–[34].
42 Harris v Harris (1989) 6 FRNZ 1 at 32 and Burbery Mortgage Finance & Savings Ltd v Hindsbank Holdings Ltd [1989] 1 NZLR 356 (CA) at 364 as cited in Butler, above n 34, at [19.3.4].
should be dealt with. I consider that, based on the evidence before me — particularly the evidence of Margaret’s cousins — it is at least reasonably arguable there was a shared understanding between the parties that the Property would be left in Margaret’s will, to the applicants.
[52] For the reasons discussed above,43 it is also reasonably arguable that the applicants relied on the representation to their detriment.
[53] Finally, it is reasonably arguable that it would be unconscionable for Margaret’s estate to depart from the promise given the family history attaching to the Property. This is bolstered by the applicants’ expectation which they say was fostered by their father, Mary and Margaret, and which is corroborated by other family members.
[54] I turn then to whether it is reasonably arguable that the applicants’ claim in promissory estoppel is sufficient to give rise to a proprietary interest through a constructive trust.44 I consider it is reasonably arguable that, taking the representation, detrimental reliance, and unconscionability alleged as a whole, a proprietary interest though a constructive trust is proportionate and appropriate. This is particularly so given the family history with the Property.
[55] In conclusion, I am satisfied that the applicants have established a reasonably arguable case for a constructive trust based on promissory estoppel.
Other grounds
[56] As I have found that the applicants have a reasonably arguable case for constructive trust, either on the basis of common intention constructive trust or promissory estoppel, it is not necessary for me to determine the applicants’ further arguments for a caveatable interest in the Property. However, for completeness, I will consider them.
43 See above at [35] and [41].
44 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 38, at [113]–[124] and Clear White Investments Ltd v Otis Trustee Ltd, above n 26, at [56]–[65].
[57]Regarding the Law Reform (Testamentary Promises) Act claim, the authors of
Hinde, McMorland & Sim: Land Law in New Zealand state:45
A claim under the Law Reform (Testamentary Promises) Act 1949 is not a caveatable interest. The terms of s 3(1) of that Act indicate that the claimant’s essential right under the Act is not a right to particular property, but to payment of an amount reasonable in all the circumstances of the case. The fact that the Court may, in its discretion, instead of awarding a reasonable sum, make an order vesting particular property in the claimant does not give the claimant any right to such property prior to the exercise of the Court’s discretionary jurisdiction.
Sometimes the circumstances that give rise to a claim under the Law Reform (Testamentary Promises) Act 1949 may also give rise to a claim founded on a trust. If so it may be possible for the claimant to lodge a caveat as beneficiary under the trust.
[58]In Wakenshaw v Wakenshaw, the Court of Appeal noted:46
… Mr Chambers submitted that Jan has a reasonably arguable caveatable interest on the basis of prospective claims that she or her daughters may have under the Law Reform (Testamentary Promises) Act 1949 or the Family Protection Act 1955. During the course of oral argument, however, Mr Chambers appeared to accept that prospective claims of this nature could not found a caveatable interest in property. The law is clear that a mere right to apply to the Court for an order vesting property in an applicant does not in itself give rise to a caveatable interest. …
[59] Accordingly, I do not consider the Law Reform (Testamentary Promises) Act argument advanced by the applicants provides a valid basis on which to sustain the Caveat.
[60] The applicants also seek to establish a caveatable interest on the basis of manifest injustice under s 55 of the Act. The first difficulty here is that the wording of the Caveat does not refer to manifest injustice under s 55 of the Act. The applicants have lodged the Caveat claiming an estate or interest in the Property on certain bases, and are now saying that, if none of those bases are upheld, they seek to defend the Caveat on another basis. That is not appropriate.47
45 Hinde, McMorland and Sim, above n 14, at [10.010](f) (footnotes omitted).
46 Wakenshaw v Wakenshaw, above n 30, at [47] (footnote omitted).
47 See Lee v Oceania P&D Ltd [2022] NZHC 3257 at [51]–[55] and Mau Whenua Inc v Shelly Bay Investments Ltd [2019] NZHC 3222 at [23] and [54].
[61] Second, while the Court may be able to sustain a caveat on the basis of an arguable case under ss 54–57 of the Act,48 an order can only be made if a person has been deprived of an interest in land “by registration under a void or voidable instrument”.49 Manifest injustice in itself does not trigger the Court’s discretion under s 55.50 This Court has found that it is apparent s 54 was designed to ameliorate the position of a person who has lost an interest in land or suffered damage by fraud (as defined in s 6 of the Act), or some other legal defect, not amounting to fraud.51 That is not what is alleged by the applicants in this case. As noted above, Mr Pine made it clear that the applicants are not alleging land transfer fraud involving dishonesty or other reprehensible conduct.
[62] Therefore, I do not consider that the manifest injustice argument advanced by the applicants provides a valid basis on which to sustain the Caveat.
Discretion
[63] The applicants have established a reasonably arguable case that they hold an interest in the land sufficient to support the Caveat. However, I have a residual discretion to allow the Caveat to lapse where it could serve no useful purpose or alternative protection is available.
[64] Mr Pine submits that I should exercise my discretion to sustain the Caveat. This is because, if the Caveat is allowed to lapse and the Property is sold, the applicants will suffer irreparable harm, as the unique property with family connections cannot be replaced. However, if the Caveat is sustained and the applicants’ substantive claim ultimately fails, the respondent and the other beneficiaries will only have suffered delay in realising their interests in the Property. He says it seems they were not expecting to receive the Property in any event, and sustaining the Caveat is therefore unlikely to have any significant financial effect. Mr Pine submits there is no evidence of prejudice to the respondent beyond the typical inconvenience of resolving a legitimate legal dispute. He says the applicants acted promptly in lodging the Caveat
48 Mau Whenua Inc v Shelly Bay Investments Ltd, above n 47, at [70]–[72]
49 Land Transfer Act 2017, s 54(1).
50 Mau Whenua Inc v Shelly Bay Investments Ltd, above n 47, at [63]–[64]
51 At [63]–[69].
and bringing the application which demonstrates their diligence in protecting their claimed interest.
[65] Mr Livingston submits the Caveat is now “miring the last years of the respondent (who is 93 years old and bedbound) in litigation and denies the Beneficiaries the gift designated by their lifelong friend”. He submits that a substantive hearing would significantly delay the sale of the Property and the respondent may never live to see the benefit of the gift.
[66] Weighing these competing interests, I consider it is appropriate to exercise my discretion to sustain the Caveat. It will serve a useful purpose in preventing sale of the Property until the applicants’ substantive claim is determined. This approach avoids the risk that the Property may be lost to the applicants and their wider family. It is not apparent that there is any alternative protection available to the applicants.
[67] I consider the concerns raised by Mr Livingston can be adequately addressed by imposing appropriate conditions as to commencement and prosecution of the substantive claim.
If the Caveat is sustained, should it be subject to conditions?
[68] As indicated above, I consider this is an appropriate case to impose conditions regarding prompt commencement and diligent prosecution of the substantive proceeding. Mr Pine confirmed in oral submissions that the applicants accepted that such orders would be appropriate. I consider the applicants should be required to commence proceedings within 20 working days, and prosecute the proceedings diligently in accordance with an expedited timetable.
Result
[69] I make a final order under s 143(4)(a) of the Land Transfer Act 2017 that caveat no. 13090013.1 lodged against Record of Title WN497/177 not lapse.
[70]The order in [69] is conditional on:
(a)the applicants issuing proceedings against the estate of Margaret Ryan in this Registry within 20 working days of the date of this judgment;
(b)counsel for the parties conferring and agreeing an expedited timetable for the proceedings; and
(c)the applicants prosecuting the proceedings in accordance with that timetable with due diligence.
[71] Because the order in [69] is conditional, leave is reserved for any party to apply at any time for rescission or variation of these orders.
Costs
[72] My preliminary view is that this is an appropriate case for costs to be reserved pending the outcome of the substantive hearing.52 This will be the order as to costs unless, within 10 working days, either party files a memorandum (not exceeding three pages, excluding costs schedules) seeking an alternative order. If they do so, the other party is to file a memorandum in response (not exceeding three pages, excluding costs schedules) within a further five working days, and costs will be determined on the papers.
Associate Judge Skelton
Solicitors:
Clendon Webb, Auckland for Applicants
Livingston & Livingston, Wellington for Respondent
52 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 5, at [87] and [133].
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