Halliday v Hannah

[2024] NZHC 1747

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2343

[2024] NZHC 1747

IN THE MATTER OF

a Bare Trust and the Trusts Act 2019 and the Land Transfer Act 2017

BETWEEN

KERRI-ANN MAREE HALLIDAY

Plaintiff

AND

SHANE CHRISTOPHER HANNAH

First Defendant

JASON HANNAH

Second Defendant

Hearing:

13-17 May 2024

Appearances:

N W Woods and T T Fayomi for Plaintiff M I S Phillipps for First Defendant

J W Howell and G T Coleman for Second Defendant

Judgment:

1 July 2024

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 1 July 2024 at 10 am pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors:

Rice Craig, Auckland

Vicki Ammundsen Trust Law Ltd, Auckland Lance Lawson Ltd, Mt Maunganui

HALLIDAY v HANNAH [2024] NZHC 1747 [1 July 2024]

[1]                 The plaintiff, Kerri-Ann Halliday, has brought a claim against her ex-partner Jason Hannah (Mr Hannah) and his brother Shane Hannah (the Bare Trustee) concerning the property at 58 Morey Street, Rotorua (the Property).

[2]                 On 2 June 2010, Ms Halliday, Mr Hannah, and the Bare Trustee entered into a Deed of Bare Trust, which provided for the Bare Trustee to own and hold an undivided half-share in the Property on trust for Ms Halliday as the sole beneficiary (the Deed of Bare Trust). On 3 June 2021, without consultation with or consent from Ms Halliday, the Bare Trustee transferred the title held by him to his brother Mr Hannah, who is now the sole registered owner of the Property. The dispute is primarily about whether that transfer was done in breach of the Bare Trustee’s obligations and, if so, what remedies are available (if any) against the defendants to address those breaches.

[3]                 The plaintiff’s claim was commenced as an application for summary judgment. On 19 August 2022, Associate Judge Sussock declined that application. The Court held that matters could not be determined on a summary judgment basis, because of disputed factual issues and the need to make findings of credibility.1 Even if there had been a breach of trust, there were disputed issues about whether an order for sale was available.

[4]                 The plaintiff subsequently filed an amended statement of claim dated 5 April 2023, to which the defendants have each filed separate statements of defence. The second defendant raised various counterclaims. There were also cross-claims between the defendants, but those were withdrawn prior to the substantive trial.

Issues

[5]                 The issues at the time of the summary judgment hearing were captured at a very high level:2

(a)Has there been a breach of trust as alleged?

(b)Is an order for sale available?

1      Halliday v Hannah [2022] NZHC 2066 at [52] and [54].

2 At [10].

[6]                 Reflecting the more detailed issues at trial, my analysis will examine the following interrelated issues and sub-issues arising in the claims and counterclaims:

(a)Terms of Bare Trust: What were the terms of the Deed of Bare Trust and did this have the effect that Ms Halliday was still entitled to a beneficial undivided half-share in the Property by the time of the 2021 transfer? In particular, this must address the following affirmative defence arguments:

(i)Implied extinguishment: Was there an implied term attaching conditionality to Ms Halliday retaining her beneficial interest, requiring her to remain  in  the  de  facto  relationship  with  Mr Hannah and herself be paying contributions towards the outgoings?

(ii)Implied time limit: Alternatively, was there a two-year time limit attached to the Bare Trustee’s obligations?

(iii)Implied crystallisation: Alternatively, was there an implied term that any beneficial interest would crystalise upon separation, if Ms Halliday did not remain living in the Property contributing to outgoings? If the net equity in the Property was zero at the time of crystallisation, does this have the effect of extinguishing the beneficial interest so the Bare Trustee could legitimately transfer title to Mr Hannah on 3 June 2021?

(iv)Discretionary power: Did cl 2.1 of the Deed of Bare Trust permit the Bare Trustee to transfer the equitable interest in his discretion, so long as there were no overriding instructions from Ms Halliday as beneficiary?

(b)Settlement, estoppel or abandonment: Did Ms Halliday extinguish any beneficial interest by her conduct from around August 2012, by silence or inaction after that time, or by statements made to Mr Hannah from

January to June 2012 that she would not be contributing to the mortgage and other outgoings, allegedly with words to the effect of “Get fucked, your house, your problem.”?

(c)Outgoings and expenditure on the Property: Is it relevant that, post-separation, Mr Hannah met mortgage expenses, paid insurance, maintained the Property and incurred expenditure to improve the Property from the date of separation until the 2021 transfer? Does this operate as a defence or found a counterclaim for an implied trust, institutional constructive trust, or remedial constructive trust?

(d)Family Court exclusive jurisdiction: Is there a problem that the relief sought is properly within the exclusive jurisdiction of the Family Court, either in whole or in part?

(e)Breach of trust: Depending on the answer to (a) above, was a breach of trust  committed  when  the  Bare  Trustee  transferred  his  title  to  Mr Hannah, without consultation or discussion with Ms Halliday?

(f)Causation of loss: If so, has any loss been caused by a breach of trust, in circumstances where there was no equity at the date of separation and the Property is still held by Mr Hannah?

(g)Good faith and trustee relief: Did Mr Hannah and the Bare Trustee act in good faith in transferring the interest to Mr Hannah in 2021? If so, does this provide a defence to the claims and/or is the Bare Trustee entitled to relief under s 131 of the Trusts Act 2019 because he has acted reasonably in the circumstances?

(h)Trustee Indemnity: If not, is the Bare Trustee entitled to an indemnity from Ms Halliday for any liability (with cross-claims between the defendants not being matters for my determination)?

(i)Appropriate relief: If not, what is the appropriate form of relief (if any)?

Factual background

[7]                 For a long time  prior  to  12  March  2007,  the  Property  was  owned  by  Mr William Field. Mr Field is the stepfather of Ms Halliday, but she thinks of him as her father. The house at the Property is modest but tidy, with three bedrooms and one bathroom. The Property also has a double garage and workshop.

[8]                 Ms Halliday first met Mr  Hannah  when  she  was  around  17  years  old.  Mr Hannah is more than seven years older. They met around 1999 or 2000. Shortly after, Ms Halliday fell pregnant. Ms Halliday and Mr Hannah then went to live with Ms Halliday’s mother and Mr Field.

[9]                 After their first daughter was born  in  2002,  they  continued  to  live  with Ms Halliday’s mother and Mr Field. At that time, Mr Field’s house at 58 Morey Street was empty and Mr Hannah asked whether he and Ms Halliday could move into the Property and rent it. Given that they had a new baby, Mr Field agreed to this and supported them by renovating one of the bedrooms as a nursery.

[10]             From 2002 until around 2005 or 2006, Ms Halliday and Mr Hannah lived at the Property as a family, paying rent at around $200 per week. During that period, their second daughter was born.

[11]             After around four to five years, Mr Field wanted to move into the Property with Ms Halliday’s mother, to do it up with a view to selling it. This triggered a discussion between Ms Halliday and Mr Hannah about whether they could find a way to buy the Property themselves. The problem was they had no savings to use as a deposit.

[12]             Mr Field was reluctant at first, but over time and following numerous conversations, arrangements were eventually put in place for Mr Field to sell the Property to Ms Halliday and Mr Hannah, which was only possible because of his assistance with vendor finance. Mr Field agreed to this because of his family relationship, to provide Ms Halliday and her daughters (effectively his granddaughters) with the stability of a home.

[13]             They agreed on a sale price of $162,000. No first-tier lenders were prepared to provide finance, but Ms Halliday and Mr Hannah were able to secure a loan offer from Liberty Finance, who lent a total of $138,902. This left a funding shortfall. The gap was met by Mr Field as documented by the following:

(a)A Deed of Acknowledgement of Debt dated 12 February 2007 recording an advance from Mr Field to Ms Halliday and Mr Hannah of

$17,000 to enable them to purchase the Property.

(b)A second mortgage to secure the loans outstanding to Mr Field, ranking behind the first mortgage to Liberty Finance.

(c)There were some discrepancies about how the remainder of $6,198 was met, namely whether this was effectively gifted by Mr Field or whether payment was merely deferred. Those issues are immaterial for present purposes.

[14]On 12 March 2007, the sale was completed, and the transfer registered.

[15]             Ms Halliday and Mr Hannah lived together in the Property with their children from that time. However, their relationship faced difficulties. From time to time they separated and reconciled.

[16]             Some time during 2009, Shane Hannah visited the Property and stayed with them. The evidence of Shane Hannah and his partner was that his partner visited too, but Ms Halliday did not now recall that. Again, I did not ultimately find these factual details material to the issues requiring determination.

[17]             At the beginning of 2010, the relationship problems between Ms Halliday and Mr Hannah escalated. Mr Hannah moved out with one of their daughters for approximately three weeks. During this time, both Ms Halliday and Mr Hannah instructed separate lawyers to advise them on separating and the potential division of their relationship property.

[18]             By now, it was around three years since they had purchased the Property. The original fixed interest term of the loan from Liberty Finance was for three years, and the deadline for repayment had arisen in respect of Mr Field’s vendor finance.

[19]             Meanwhile, the relationship between Ms Halliday and Mr Hannah was so difficult that pick-ups and drop-offs of their children were occurring outside the Rotorua police station.  Then on  4 February 2010, Mr Hannah served  papers on   Ms Halliday seeking a custody order and furniture and occupation orders in relation to the Property.

[20]             On 17 February 2010, Mr Hannah obtained his own valuation to assess whether it was possible to refinance the debt owing on the Property.

[21]             On 17 February 2010, a mediation conference was held in the Rotorua Family Court and interim care arrangements were made by consent.

[22]On 23 February 2010, Mr Field’s lawyers sent a letter in respect of his loan for

$70,000, noting that the principal plus interest was overdue for payment.

[23]             Around April 2010, Ms Halliday and Mr Hannah reconciled and together they explored options for refinancing their commitments on the Property.

[24]             There is a dispute between the parties as to the nature of the options realistically available. Ms Halliday gave evidence that Mr Field might have been persuadable to extend his vendor finance, to help Ms Halliday and her children. Alternatively, she suggested her brother could have assisted. Mr Hannah’s evidence was that neither of these options were realistically available and he would have refused any assistance from Ms Halliday’s brother. The refinancing option eventually put in place was achieved with the support of Shane Hannah.

[25]             Mr Hannah’s position is that it was impossible for them to borrow on their own from a first-tier lender, because Ms Halliday’s income and credit history could not support borrowing at the level they required. Shane Hannah had a good income, so his involvement as borrower and guarantor made a refinance possible.

[26]             Ms Halliday disputes that she had a poor credit rating and says that the bank documents  later obtained on discovery support her position that the bank did  not,   in fact, have any problem with her remaining on the title and being a co-borrower, along with Shane Hannah and Mr Hannah. While that might be the case, I accept that the bank was only prepared to lend with Shane Hannah’s involvement (or someone with his equivalently reliable income). Disputes about whether Ms Halliday could have remained on the title too are now irrelevant. Ms Halliday agreed to a refinance with Shane Hannah’s assistance, believing they might lose the Property if they did not find some solution.

[27]             Lawyers were instructed to assist with these refinancing arrangements. The legal representation was as follows:

(a)Mr Hannah’s lawyer was Matthew Shaw of Davys Burton. To achieve the refinance, Mr Shaw proposed that Shane Hannah should take a quarter share of the Property, leaving Mr Hannah with a quarter share, and maintaining Ms Halliday’s one half share of the Property.

(b)East Brewster acted for Ms Halliday, primarily through Peter Clayton, a legal executive. Arising from Shane Hannah’s insistence that he needed to hold a half-share interest in the Property, East Brewster Lawyers drew up the draft Deed of Bare Trust as a solution. Eventually that document was executed on 2 June 2010.

(c)Mr Shaw advised Shane Hannah to seek independent advice, but he never did so.

(d)Mr Field’s lawyers were McKechnie, Quirke & Lewis.

[28]             Between 4 and 10 June 2010, the refinancing arrangements were put in place. Mr Field’s lawyers initially advised that the total repayment for his vendor finance loan was $23,212.50, but this was subsequently reduced to $22,600. BNZ lent a sum of $163,350 which was used to repay Liberty Finance and Mr Field. The title was transferred to Mr Hannah holding an undivided one half share and to Shane Hannah

as Bare Trustee on the terms of the Deed of Bare Trust. The loan from BNZ was secured by a first ranking mortgage.

[29]             The relationship between Ms Halliday and Mr Hannah continued to face difficulties from June 2010 but they remained living at the Property together for most of the following 18 months. During that time, Mr Hannah was responsible for payment of the mortgage, rates, and other expenses of the Property because he was the main earner in the relationship. Ms Halliday contributed with household expenses paid for from her part-time work and (among other things) by looking after the two children. On or around 1 January 2012, Ms Halliday and Mr Hannah finally separated.

[30]             Upon separation, Ms Halliday left the family home, taking both children with her. She wanted to collect some furniture, including the children’s beds, toys, clothes, bikes, and other possessions. There is a dispute in the evidence about how the household furniture was divided. Mr Hannah maintained the children’s bedrooms largely intact because he wanted them to have those things when they stayed with him. Mr Hannah kept both of the family cars — at that time a 1990 Mazda Uno and a 1999 Mazda Altezza.

[31]             Mr Hannah relies on expert evidence to say that the market value of the Property at this time of separation was $130,000, whereas the amount owed to BNZ as mortgagee at the time of separation was $161,119.94. Accordingly, he says there was no equity in the Property. Ms Halliday does not necessarily accept that valuation, and in any event she says the Property was important to her as a family home (including when it was held by Mr Field as she was growing up).

[32]             Between January to June 2012, Ms Halliday and Mr Hannah shared the care of their two daughters. Interactions between them were problematic, so they again reverted to handovers taking place outside of the police station. Mr Hannah’s evidence is that during this six-month period, at the handover of the children, he would ask  Ms Halliday to contribute to the mortgage and other outgoings on the Property.     Ms Halliday refused to do so. This is when Mr Hannah says Ms Halliday used the words, “Get fucked, your house, your problem”, although she disputes this. For his

part, Mr Hannah accepted that he did not make any further demands for payment towards the mortgage or other outgoings after June 2012.

[33]             Ms Halliday and Mr Hannah instructed separate lawyers about relationship property matters. After an exchange of letters between their lawyers on 20 June 2012 and 8 August 2012, no further correspondence took place about relationship property issues. No agreement was ever reached under s 21 of the Property (Relationships) Act 1976 (PRA), nor was any settlement ever confirmed between them.

[34]             From that point, Mr Hannah continued to live in the Property, meeting the mortgage and other outgoings. He also made various capital investments in the Property and incurred maintenance costs.

[35]             By 2017, Shane Hannah as Bare Trustee was finding that his commitments were inhibiting his own ability to borrow. He asked his brother whether he could be released from his Bare Trustee obligations, but nothing changed.

[36]             In 2020, Shane Hannah was unable to borrow funds for his own purposes and again raised this with his brother. On 3 March  2020,  Mr  Hannah  instructed  Rogers & Co to advise whether it was possible to release Shane Hannah from his obligations. Tony Jensen was the solicitor that took those instructions.

[37]             Mr Jensen gave evidence about what Mr Hannah must have told him, leading to Mr Jensen drafting the deed that was left on the file in 2020. While Mr Jensen did not recall the client meeting, his emphatic evidence was that he would not have drafted the deed in the terms he did if he had been told about Ms Halliday’s beneficial interest or that there was a Deed of Bare Trust dated 2 June 2010 (which he was not provided with). In contrast,  Mr Hannah alleged that he  did  describe this background, and  Mr Jensen said he did not need to see the Deed of Bare Trust. On this starkly conflicting evidence, I find Mr Jensen’s evidence entirely truthful and reliable, and I reject Mr Hannah’s evidence as untruthful. The best evidence of what Mr Jensen was told is what he recorded in the draft deed, namely that the Bare Trustee had only ever held title for his brother. Unbeknownst to Mr Jensen, this was entirely untrue. Having heard the witness evidence and based on the wording of the deed drafted by Mr Jensen,

I find that Mr Hannah decided not to tell Mr Jensen about Ms Halliday’s interest, because he intended to defeat it. Therefore, he needed to tell his lawyer a fictitious story that Shane Hannah’s legal interest had been held beneficially for Mr Hannah all along. Mr Hannah knew or believed that if he told his lawyer the true facts, then he would not be able to achieve his objective without agreement from Ms Halliday. This might also explain why Mr Hannah used a new lawyer, rather than his existing lawyers who already had a copy of the Deed of Bare Trust and knew of Ms Halliday’s beneficial interest. At this stage, the document simply remained as a draft on the file, because by 9 June 2020, BNZ advised it was not prepared to refinance based solely on Mr Hannah’s income, so the issues were parked.

[38]             On 31 March 2021, Mr Hannah was more confident of being in a financial position to arrange a refinance, so he re-engaged with Rogers & Co to seek advice. By that time, Mr Jensen was no longer with the firm, so Jill Crowe (a legal executive) assisted him. She saw the deed drafted by Tony Jensen on the file. This is the document that was executed on 12 April 2021. It is called “Declaration of Bare Trust and Distribution to Beneficiary”  (Declaration  of  Bare  Trust  and  Distribution).  Ms Crowe gave evidence that she believed from discussions with Mr Hannah that the contents of that document represented the true factual position. She was not told about any family law disputes or that Ms Halliday originally had the beneficial interest. Had this been disclosed to her, the conveyance would  have been  outside the  scope of Ms Crowe’s authority within the firm (as a legal executive) — she would have involved a family law specialist within the firm. Again, I find Ms Crowe’s evidence entirely credible and reliable, and I reject any evidence of Mr Hannah that contradicts her position.

[39]             As a result, unbeknownst to Ms Halliday, Mr Hannah and Shane Hannah signed the Declaration of Bare Trust and Distribution and the refinancing arrangements were put in place at the end of May/early June, resulting in the transfer of title from Shane Hannah to Mr Hannah occurring on 3 June 2021. This involved the execution of a new loan with the BNZ of $154,183 and a separate facility for

$30,000, both secured by a first mortgage on the Property. The $30,000 BNZ loan was used by Mr Hannah to buy a vehicle.

[40]             Shane Hannah gave evidence he simply signed the Declaration of Bare Trust and Distribution without reading it or worrying about what it said. He instead relied on his brother saying that it was an appropriate document to sign, and that Ms Halliday no longer claimed any interest in the Property. Shane Hannah did not seek any legal advice about whether it was consistent with his trustee  duties,  whether  from  Rogers & Co or from his own independent legal advisers.

[41]             In October 2021, Ms Halliday contacted Shane Hannah’s partner to ask about the Property. She was told that Shane Hannah had recently had his name removed from the title, so Ms Halliday would have to contact Mr Hannah about that.

[42]             Rice Craig were instructed to act for Ms Halliday in respect of this development. On 20 October 2021, they lodged a caveat claiming an estate or interest pursuant to the Deed of Bare Trust. On 2 November 2021, they wrote to Mr Hannah alleging a breach of trust making demand in respect of Ms Halliday’s half-share. On 8 November 2021, Rice Craig wrote to Shane Hannah alleging breaches of his obligations as Bare Trustee.

[43]             After receiving no satisfactory responses, Ms Halliday commenced the current proceeding on 8 December 2021.

Legal principles

Express trusts

[44]             A valid express trust must have certainty of intention, subject matter, and objects.3

[45]             A trust of land must also comply with certain formal requirements. As the Deed of Bare Trust was entered into in June 2010, the requirements in the Property Law Act 2007 apply.4 The trust must be created in writing and signed by the settlor if

3      Proprietors of Wakatu v Attorney-General [2014] NZCA 628, [2015] 2 NZLR 298 at [147]; and Trusts Act 2019, s 15(1)(b).

4      Property Law Act 2007, s 2. That Act came into force on 1 January 2008, and therefore applies to trusts created after that date.

it relates to land and it is to take effect in the lifetime of the settlor.5 Therefore, unlike the position prior to the 2007 Act, evidence in writing of the creation of the trust after the fact will not suffice.6

[46]             A trust can be described as a “bare” or “simple” trust where a trustee has no active duties to perform apart from the transfer of the property to the beneficiaries when required to do so.7 A bare trustee assumes legal ownership of the trust property but has no beneficial interest in it. The trustee’s only obligation is to hold an asset and transfer it at the discretion of the beneficiary.8 The obligation to transfer is subject to any unsatisfied right of the trustee of indemnity from the trust assets.9

[47]             Ultimately, the nature and extent of a trustee’s obligations and discretions are ascertained by reference to the terms of the instrument establishing the trust, assessed in the context of all relevant surrounding circumstances and the obligations imposed on trustees by law.10

[48]             The plaintiff refers to the rule in Saunders v Vautier. A sole beneficiary of a trust can require the trustee/s to terminate the trust and transfer the property to them, despite any directions to the contrary in the trust document.11 That rule derives from the fact that the sole beneficiary, being the person ultimately entitled to the trust property, is, in equity, the absolute beneficial proprietor of the trust property. The effect is to convert the trust into a bare trust of the property called for.12 That rule has been encapsulated by s 122 of the Trusts Act, that allows for beneficiaries to vary the terms of the trust where there is unanimous consent.13

5      Section 25(2) (formerly governed by the Property Law Act 1952, s 49A).

6      Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Brookers Ltd, Wellington, 2009) at [4.4.3]. The learned authors explain that s 49A(2) of the Property Law Act 1952 did not require the trust to be created in writing, all that was required was that there was some evidence of creation of the trust in writing.

7      Garrow and Kelly Law of Trusts and Trustees (8th ed, LexisNexis, Wellington, 2022) at [2.16]−[2.17].

8      Commerce Commission v Harmoney Ltd [2018] NZHC 1107, [2019] 2 NZLR 81 at [41].

9      Auto Net v Tyler [2020] NZHC 2459 at [16], referencing Lynton Tucker, Nicholas Le Poidevin QC and James Brightwell Lewin on Trusts (20th ed, Sweet & Maxwell, London 2020).

10     Burns v Steel [2006] 1 NZLR 559 (HC) at [62], quoted with approval in Commerce Commission v Harmoney Ltd, above n 8, at [43].

11     Saunders v Vautier (1841) 41 ER 282.

12     Auto Net v Tyler, above n 9, at [18].

13     Trusts Act, s 122. See also Law Commission Review of the Law of Trusts: Preferred Approach

(NZLC IP31, November 2012) at [P39].

Institutional constructive trusts

[49]             One of Mr Hannah’s arguments (in the alternative) is that he is entitled to an institutional constructive trust for the other half of the Property, based on the principles in Lankow v Rose.14 That case requires that he prove:15

(a)contributions, direct or indirect, to the property in question;

(b)the expectation of an interest in the property;

(c)that such expectation is a reasonable one; and

(d)that the defendant(s) should reasonably expect to yield to the claimant an interest in the property.

[50]             The quantification of the claimant’s contribution is a matter for the Court based on evidence. The contributions made are then assessed against the benefits that the person in question has received.16 To sustain an institutional constructive trust interest, the person claiming it must establish “more than a minor contribution” and that both parties must be taken reasonably to have accepted that the claimant would share in the assets as a result.17

Relationship property

[51]             As explained in s 1C of the PRA, that Act is mainly about how the property of married couples and civil union couples, and couples who have lived in a de facto relationship, is to be divided up when they separate or one of them dies. In those circumstances, the PRA allows applications to be brought for a range of orders. The orders are primarily to do with determining the respective shares of each spouse or partner in relationship property and dividing that property.18

14     Lankow v Rose [1995] 1 NZLR 277 (CA).

15     At 294.

16     Hinds v Song [2022] NZHC 3017 at [21].

17 At [22].

18     Property (Relationships) Act 1976, s 25.

[52]             The definition of “relationship property” in s 8(1) of the PRA includes (among other things): (a) the family home whenever acquired; and (l) any income and gains derived from, the proceeds of any distribution disposition of, and any increase in the value of, any property described in s 8(a)–(k). An asset must generally be acquired and classifiable as relationship property by the date of separation if it is to qualify as relationship property at all, subject to special discretions in ss 9(4) and 20E.19

[53]             The general provisions for the division of relationship property are contained in ss 11–11B of the PRA. The starting position in s 11 is that each of the spouses or partners is entitled to share equally in the division of relationship property, including the family home and family chattels.

[54]             There is scope to make adjustments under s 18C, within the following overall framework:20

(a)Overall aim: The Court’s overall aim should be to achieve a just division of relationship property between the parties having regard to the purposes and principles of the Act set out in ss 1M and 1N.

(b)Presumption: Since 1976, under s 2(2) and then (from 1 February 2002) s 2G, the presumption under the Act has been for valuation at the date of hearing. That presumption was strengthened by the introduction of ss 18B and 18C.

(c)Basis for s 2G(1) presumption: The presumption reflects the basic premise of the Act that parties share equally in the “product” of their marriage or relationship, and that the value of that product is to be assessed by the Court at contemporary and not historic values, because otherwise equal sharing would not be achieved. Specifically, delivering the judgment of the Supreme Court in Burgess v Beaven, William Young J observed:21

The general approach, however, was that hearing date values were conducive of equity and in particular that both parties should usually share increases in values associated with inflation (as opposed to personal effort).

(d)Onus: The onus of persuading the Court to depart from the default or presumptive position in s 2G(1) rests on the party contending for a different valuation date. In that respect we agree with Fisher on Matrimonial Property, notwithstanding the observation of  Robertson J in this Court’s judgment in M v B that “notions of onus of proof fit uncomfortably within [the Act]”.

19     RL Fisher (ed) Fisher on Relationship Property (online ed, LexisNexis) at [11.11].

20     GFM v JAM [2013] NZCA 660, [2014] NZFLR 418 at [35] (footnotes omitted).

21     Burgess v Beaven [2012] NZSC 71, [2013] 1 NZLR 129, [2012] NZFLR 670 at [24].

(e)Use of ss 18B and 18C rather than the s 2G discretion: Section 2G is not expressly subject to ss 18B and 18C. Nevertheless, where a court desires to attribute to one party the benefits or losses that party has brought about post-separation, that is “more directly” achieved under ss 18B and 18C respectively, and “there is less need than in the past to depart from the default position of hearing date valuation”.

[55]             There is now well-established High Court authority that s 18B of the PRA confers jurisdiction to grant compensation for occupation rent to the non-occupier. This is on the basis that the non-occupier is effectively contributing their share in the capital of the family home, with the occupying party receiving the benefit of continued occupation and therefore avoiding the financial burden of relocating to another home. The overall decision must balance all of the relevant circumstances, including who pays the outgoings, how long the period of occupation was, and whether the non-occupying party has foregone a higher standard of living or suffered the detriment of being deprived of the capital in the house. The form of any compensation payable is in the discretion of the Court including the method of calculating it, but it would typically reflect the differential impact in terms of market rent or interest on the non-occupying party’s capital. Those relative benefits and burdens commonly include an offset.22

[56]             As noted below, outside the context of relationship property disputes, both the common law and s 343(f) of the Property Law Act contains similar powers to order payment of a fair occupation rent for all or any part of the property, when ordering a division among co-owners.23

Family Court jurisdiction

[57]             Section 4 provides that the PRA applies as a code for claims within its ambit, instead of the rules and presumptions of the common law and equity.24 Section 4A provides that every enactment must be read as being subject to the PRA, unless the other enactment expressly provides to the contrary. Whether an application is one under the PRA or another enactment or cause of action is a question of substance rather

22     Devery v Manukonga HC Auckland CIV-2003-404-5871, 21 May 2004 at [9].

23 See [65]–[68] below.

24     See Lobb v Ryan [2023] NZHC 1297 at [37]–[39].

than form.25 Accordingly, all questions relating to relationship property between spouses and partners, and any other person in any court proceedings, must be decided as if they had been raised in proceedings under the PRA.26

[58]             Section 22(1) of the PRA provides that “[e]very application under this Act” must be heard and determined in the Family Court. This provision is given further effect in s 11(1)(e) of the Family Court Act 1980, which provides that the Family Court must hear and determine all proceedings “that are to be heard and determined by the court under or by virtue of any of the provisions of” the PRA. It follows that the High Court generally has no jurisdiction over any application under the PRA.27

[59]             This does not mean the Family Court has exclusive jurisdiction over every type of civil proceeding between spouses or partners. Nor does it mean the Family Court has exclusive jurisdiction over every proceeding in which the PRA may have some application. There is a long line of authorities, beginning with Jew v Jew, to the effect that the exclusive jurisdiction of the Family Court applies only where a party has applied for orders under the PRA.28 The High Court retains a jurisdiction to make orders under the Property Law Act or the Companies Act, notwithstanding the wide scope of the Family Court’s exclusive jurisdiction. Such jurisdiction is regularly exercised whether the relief sought is the sale or partition of real property,29 or concerns third party interests.30

Analysis

Terms of bare trust

[60]             The terms of the bare trust were set out in the Deed of Bare Trust executed by Shane Hannah (as Trustee), Ms Halliday (as Beneficiary), and Mr Hannah (as Partner),

25 Property (Relationships) Act, s 4(4); Martin v Martin [2023] NZHC 2162, [2023] NZFLR 601 at [25]–[27], referencing Kake v Napier [2022] NZHC 2395 at [24]; and Lobb v Ryan, above n 24, at [39].

26 David Hicks Laws of New Zealand Matrimonial and Relationship Property (online ed) at [11].

27 Martin v Martin, above n 25, at [22].

28 Martin v Martin, above n 25, at [23], referencing Jew v Jew [2003] 1 NZLR 708 (HC) at [41]; and other subsequent authorities.

29 This is the distinction drawn in Gledhill v Gledhill HC Palmerston North M73/96, 8 March 1997.

30  Such as Martin v Martin, above n 25, at [27]–[29], in which the Court recognised the separate legal personality of the companies, and the difference in substance between a claim to a company’s assets as opposed to a claim to shares.

in  each  case  with  their signatures witnessed.    The background section contains paragraphs A through to K, including:

B. The Beneficiary owns the property situated at 58 Morey Street, Rotorua (“the property”) with the Partner who is the brother of the Trustee. The Partner and the Beneficiary currently own the property as joint tenants;

…

E. The Beneficiary and the Partner currently reside in the Property and  agree to meet all obligations and outgoings in respect of the Property and together with the Trustee, agree to continue to be personally responsible and liable to perform and observe all the outgoings in respect of the Bank’s mortgage secured against the property.

[61]             Although they are contained in the background section, paras G through to K contain substantive terms and conditions under which the trustee agrees to hold the Property on trust for the beneficiary. Paragraphs G to K are incorporated by cross-reference in cl 2.1 of the operative provisions of the Deed.

[62]The substantive clauses are set out in five parts.

(a)Part 1 is entitled “Declaration of Trust”. It includes the operative obligation in cl 1.1 that: “…The Trustee’s interest shall be held on trust for the Beneficiary”.

(b)Part 2 is entitled “Trustee may Act”. It provides:

In the absence of Instructions from the Beneficiary, the Trustee may act as he sees fit and the Beneficiary will be bound by the acts of the Trustee in this regard provided that any act by the Trustee is not in conflict with provisions G to K as set out in this Deed.

(c)Part 3 is entitled “Beneficiary to Pay”. It provides (among other things) that the Beneficiary and the Partner will pay all outgoings payable in respect of the Property as and when necessary. Clause 3.6 contains a trustee acknowledgement that he had been advised to seek independent legal advice as to the effect and implications of signing the Deed and his liabilities arising from its covenants and the mortgage.

(d)Part 4 is entitled “Notification of Notices”. It imposes an obligation on the Trustee to notify the Beneficiary and her Partner of all notices, assessments, claims or demands which the trustee receives in respect of the Property.

(e)Part 5 contains the following indemnity:

The Beneficiary and her Partner will keep the Trustee indemnified at all times against all loss and liability of any kind arising out of the Trustee acting as Trustee of the property in consideration of the Beneficiary and her Partner residing in the property.

[63]             I find that the above provisions are clear in imposing bare trustee obligations. The terms referring to the obligation of the beneficiary and her partner to meet all outgoings and liabilities in respect of the Property reflect the simple nature of the trustee obligations, rather than any particular allocation of responsibilities as between Ms Halliday and Mr Hannah. In other words, the beneficial owners agree that the Bare Trustee is not responsible for those matters. The Bare Trustee’s duty is merely to hold title for the beneficiary and comply with his other express obligations (including transferring the Property to the beneficiary as and when she requires).

[64]             Any disputes about responsibility for allocation of the liabilities as between beneficial co-owners is governed by other legal concepts.

[65]The learned authors of Hinde McMorland and Sim Land Law in New Zealand

state:31

13.002 The rights of co-owners as between themselves

Because co-owners have unity of possession, they are all concurrently entitled to use and enjoy the land, or, if they are not in occupation of it themselves, to receive the rents and profits in appropriate shares. While co-owners share in the occupation and use of the land, and apportion the associated expenses and, if any, profits, few difficulties arise. But when this no longer happens, disputes can arise between the co-owners.

… If the parties are able to reach agreement as to future use and occupation of the land, the past financial difficulties can be resolved by

31     DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (looseleaf ed, LexisNexis) at [13.002] (footnotes omitted).

an action of account or for contribution to jointly owned debts. If such agreement is not possible, it may be necessary to determine the co-ownership by bringing proceedings for partition or sale, which may also include an application for an accounting adjustment.

[66]             In any application for orders for partition or sale under s 339 of the Property Law Act, the Court may make orders under s 343.32 Under s 343, there is scope for an order to be made for all or any of the following:

(a)requiring the payment of compensation by one or more co-owners of the property to one or more other co-owners;

(b)fixing a reserve price on any sale of the property;

(c)directing how the expenses of any sale or division of the property are to be borne;

(d)directing how the proceeds of any sale of the property, and any interest on the purchase amount, are to be divided or applied;

(e)allowing a co-owner, on a sale of the property, to make an offer for it, on any terms the court thinks reasonable; and

(f)requiring the payment by any person of a fair occupation rent for all or any party of the property.33

[67]             The discretion of the Court under s 343(f) is wide and unfettered, but cases applying the common law right are relevant to assess when the power is appropriately exercised.34

32 Property Law Act, s 339(4).

33 See Hinde McMorland and Sim Land Law in New Zealand, above n 31, at [13.002](a) for a discussion of the situations in which such an order might be appropriate, including where it is necessary in order to do justice between the parties, or where it would be unreasonable to expect the co-owner who is not in occupation to exercise his or her right to take occupation.

34 At [13.002](a) and n 19, referencing Dyas v Elliott (2010) 11 NZCPR 252 (HC) at [18]; and Vallance v Vallance [2014] NZHC 699, (2014) 16 NZCPR 107. See also Mills v Laboyrie [2021] NZCA 450, [2022] 2 NZLR 258at [69]–[71], where it was upheld on appeal that the legal owner and trustee lived in the house on the basis that he made payments on his own account for the mortgage, rates and insurance, in lieu of paying rent to the Trust.

[68]             In Jacobson v Guo,35 following the separation of a de facto couple in circumstances where some interests in the property they had purchased were held by a family trust, detailed sale orders were made under s 339 of the Property Law Act for the sale to occur by auction (under an agreed process), or otherwise by the Registrar of the High Court. From those proceeds, one de facto partner who had continued in occupation of the home was ordered to pay (by deduction) occupation rent to the other de facto partner.36

Implied terms in trust documents

[69]             I now address the four arguments on which the defendants rely for saying that Ms Halliday no longer had any beneficial interest at the time of the 2021 transfer.

[70]             The first three arguments rely on implying terms that were not expressed in the Deed of Bare Trust.

[71]             The terms of any trust must be read subject to the  requirements  of  the Trusts Act. That Act contains some mandatory requirements, with sch 2 listing the sections in the Act that may be modified by the terms of the Trust.37 Some may be modified or excluded without any restriction. Others as indicated may only be modified or excluded to a limited extent.

[72]             The indemnity clause contained in cl 5.1 of the Deed of Bare Trust must be read subject to ss 40–41 of the Trusts Act. Such an indemnity cannot protect a trustee from liability for a breach of trust arising from the trustee’s dishonest, wilful misconduct, or gross negligence.38

35     Jacobson v Guo (2008) 9 NZCPR 850 (HC).

36 At [19].

37     Trusts Act, s 5(4).

38     Section 41. Section 44 of the Trusts Act sets out the relevant factors to which the Court must have regard when deciding whether a trustee has been grossly negligent.

[73]             Apart from overriding provisions in the Trusts Act, it is now clear that the principles that apply to the interpretation of contracts also apply to trust documents.39

[74]             It is well accepted that context (including the factual matrix) is a necessary element of the interpretative process, and the focus is on interpreting the document rather than particular words, but the text remains centrally important.40 Traditionally, a strict legal approach was taken to the interpretation of executed trusts (as opposed to executory trusts).41 However, the executed/executory distinction is of less relevance now because the terms of a trust will always be construed so as to give effect to a trust’s purpose.42

[75]             In Bathurst Resources Ltd v L & M Coal Holdings Ltd, the Supreme Court concluded that the five conditions listed in BP Refinery (Western Port) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings remain a useful tool to test whether an implied term is appropriate.43 Conditions (4) and (5) must always be met before a term will be implied, namely: (4) it must be capable of clear expression; and (5) it must not contradict any express term of the contract. Conditions: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract; and (3) it must be so obvious that it goes without saying, can be viewed as analytical tools which overlap and are not cumulative.44

39 Law of Trusts and Trustees, above n 7, at [8.20] and [8.24], referencing (among other cases) Manukau City Council v Lawson [2001] 1 NZLR 599 (HC) at [13], Bulley v Attorney-General [2012] NZHC 615 at [48]; and New Zealand Māori Council v Foulkes [2014] NZHC 1777 at [71]−[72]. See also Holland (As Trustees of  the  Tauranga  Energy  Consumer  Trust)  v  Jonkers [2021] NZHC 3469 at [109].

40 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [63], approved in Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85.

41 Law of Trusts and Trustees, above n 7, at [8.38], referencing re Bostock’s Settlement; Norrish v Bostock [1921] 2 CH 469.

42 Trusts Act, s 4; and Law of Trusts and Trustees, above n 7, at [8.46], referencing Enright v Enright

[2019] NZHC 1124 at [43]–[44].

43 Bathurst Resources Ltd v L & M Coal Holdings Ltd, above n 40, at [116(f)]; and BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 (PC).

44 At [108]. See also Kingsbeer Transport Ltd v Martin-Brower New Zealand [2023] NZCA 385 at [47]–[50].

Implied extinguishment

[76]             I begin by considering the alleged implied term attaching conditionality to  Ms Halliday retaining a  beneficial interest.  That is, requiring her to remain in the  de facto relationship and herself be paying contributions towards the outgoings. This does not satisfy the BP Refinery requirement of not contradicting the express terms, nor is it reasonable and equitable in the circumstances.

[77]             As recorded in the background section of the Deed of Bare Trust, Ms Halliday already owned the Property with her partner, as joint tenants. She was entitled to that undivided half-share even if it was her partner himself meeting outgoings on the Property because he was the main income earner of the family. Under the terms of the PRA, she would remain entitled to this half-share of the family home even if the     de facto relationship came to an end and she was not paying the outgoings. In fact, it is those potential circumstances that are specifically protected by recognising shared beneficial interests in the family home, whether under the PRA, or by the express terms of this bare trust. The outdated concept that the less-resourced partner should lose all proprietary interests in the family home if the relationship comes to an end has long been recognised as unfair. There is nothing in the factual matrix to indicate that Ms Halliday intended to relinquish her statutory PRA entitlements or attach any conditionality to the full effect of the trust obligations set out in the Deed of Bare Trust naming her as the sole beneficiary of a half interest. Indeed, I can see no reason why she would do so.

[78]             The defendants rely on the references in the Deed of Bare Trust to the beneficiary and partner both being responsible to meet any outgoings payable in respect of the Property. This is consistent with bare trustees not having any such obligations themselves but does not in any way indicate that the proprietary interests could be extinguished depending on how those obligations were met as between the beneficiary and the partner. The background in paras A through to E refer to the factual position at the time the Deed was entered into, that the beneficiary and the partner were in a relationship and both at that time resided in the Property and were meeting all obligations and outgoings. As would normally be the case with background

clauses, these describe the factual matrix in existence at the time the Deed was entered into and no more.

[79]             As referred to above, the law is perfectly able to deal with a situation where such circumstances change, the relationship comes to an end, and disputes arise as between the beneficiary and the partner (as beneficial co-owners) about how to meet and account for outgoings paid in respect of the Property. Such matters have no necessary relationship with whether the trustee obligations themselves should continue.

Implied time limit

[80]             Similarly, there is no factual basis for implying a time limit attached to the Bare Trustee’s obligations. This would contradict the express terms of the Deed of Bare Trust, which have no such time limits. It seems that the parties may have hoped they would be able to restructure the arrangements at some point, which was accommodated by the usual terms that the beneficiary could call upon the trustee to transfer the Property from the trustee to the beneficiary as and when the beneficiary required. The Trusts Act also provides for the ability of the Court to make an order removing a trustee whenever it is necessary or desirable and it is difficult or impractical to do so without the assistance of the Court.45 These protections mean that there is no necessary or implied time limit on how long a bare trustee may hold legal title to real property.

[81]             Meanwhile, there is nothing unreasonable in Ms Halliday’s expectations that her interests would continue to be held on trust unless and until any changes were expressly discussed and agreed with her. Even if some type of time limit could reasonably be implied, a reasonable expectation would be that the legal interest would then be transferred to the beneficiary (consistent with cl 1.2). The Bare Trustee’s hope that this might happen over a period of two or three years does not amount to any implied commitment or term of the Trust Deed.

45     Trusts Act, s 112.

Implied crystallisation

[82]             The third  alleged  implied  term  is  that  any  beneficial  interest  held  by  Ms Halliday would crystallise upon separation if she did not remain living in the Property herself contributing to outgoings. The defendants further allege an implied term that, if the net equity in the Property at the time of crystallisation was zero, then this would have an implied result of extinguishing Ms Halliday’s beneficial interest so that the legal title could be transferred in full to Mr Hannah. Again, this does not satisfy the requirement of being consistent with the express terms, nor is it reasonable or equitable from Ms Halliday’s perspective, given her legal entitlements.

[83]             Ms Halliday had no reason to compromise her entitlements under the PRA. She would reasonably expect that an express bare trustee relationship properly protects her proprietary interest, rather than sets up a framework for automatic extinguishment. To the extent that it might make commercial sense to find some resolution in those circumstances, that is something  that  can  be  addressed  expressly  at  the  time.  Mr Hannah was in a position to seek agreement to contract out of the PRA under s 21, or to seek orders to that effect before the Family Court. He chose not to do so, knowing that no concluded settlement had been reached.

[84]             This alleged implied term would be  arbitrary,  unfair,  and  unreasonable.  For example, would the extinguishment happen if Ms Halliday moved out for one month, but then moved back in and took over the outgoings to the Property? If there was such an implied  term,  why  did  Mr  Hannah’s  lawyer  not  simply  rely  on  Ms Halliday’s interests already having been extinguished when they sought to negotiate relationship property matters in August 2012? What happens when there is a dispute as to the proper valuation of the Property? These uncertainties illustrate that none of the five traditional conditions of BP Refinery are met on these facts. Accordingly, no such term can be implied.

Discretionary power

[85]             Shane Hannah also relies on cl 2.1 of the Deed of Bare Trust as conferring a power to transfer the legal and equitable interest in his discretion, so long as there is no overriding instruction from the beneficiary. Clause 2.1 simply cannot be read in

that way. It conflicts with the clauses G to K as set out in the background of the Deed of Bare Trust. Clause 2.1 expressly required that any act by the Trustee must not conflict with those provisions. It would also be entirely inconsistent with the fundamental obligations of a bare trustee. A bare trustee could not take a step as fundamental as disestablishing the trust relationship without expressly seeking instructions from the beneficiary, and Shane Hannah made no attempt to do so.

Settlement, estoppel or abandonment

[86]             I next turn to consider whether the plaintiff extinguished her own beneficial interest, namely by statements made to Mr Hannah from January to June 2012 that she would not be contributing to the mortgage and other outgoings while he lived there, or by silence or inaction after August 2012.

[87]             As a general principle, silence does not amount to acceptance of an offer.46   In some circumstances, the maintaining of silence or the failure to raise a matter may amount to a misrepresentation if it makes other statements misleading or incorrect in all the circumstances.47 However, silence or reticence in itself does not constitute a misrepresentation unless there are circumstances creating a duty to speak.48

[88]             The correspondence does not substantiate that any such exceptional circumstances applied. Both parties took different positions on the potential resolution of their relationship property issues. On 20 June 2012, Kathy Jackson, on behalf of Ms Halliday, had proposed a figure of $12,200 to achieve settlement of relationship property issues, but noted that this was expressly subject to full disclosure of the value of the family home and outstanding mortgage. Accordingly, this was an attempt to commence settlement discussions, but did not constitute an offer capable of acceptance.

46  Stephen  Todd  and  Matthew  Barber  Burrows,  Finn  and  Todd   on  the  Law  of  Contract  in New Zealand (7th ed, LexisNexis, Wellington, 2022) at [3.5.1].

47 Francis Cooke Laws of New Zealand Misrepresentation and Fraud (online ed) at [15].

48   At [15], referencing Ware v Johnson [1984] 2 NZLR 518 (HC); Sturley v Manning HC Auckland, A 611/82, 19 December 1984; King v Wilkinson (1994) 2 NZ ConvC 191,828; and March Construction Ltd v Christchurch City Council (1995) 6 TCLR 394.

[89]             In reply, John Hughes on behalf of Mr Hannah, set out an analysis that alleged a net deficit, rather than any equity that could be split between the parties. Rather than making an offer or seeking to achieve a final settlement on proposed terms, the letter from Mr Hughes on 8 August 2012 concluded with the following:

Perhaps you would like to take further instructions and come back to us with your client’s further suggestion as to settlement of property issues.

[90]             By 20  November  2012,  no  response  had  been  received  to  that  letter.  Mr Hughes wrote to Mr Hannah saying that “you might be entitled to claim half of the debts from her”. Mr Hughes also observed that nothing further was required from him at this point. In addition, he recorded  that  he  had  received  the  old file  from  Davis Burton relating to the purchase of the Property, which presumably would have recorded the Deed of Bare Trust obligations in respect of Ms Halliday’s beneficial interest in the Property.

[91]             There is no basis for construing any concluded settlement or misrepresentation from these exchanges, or from the decision taken by each of them not to continue those discussions to bring them to a settled conclusion.

[92]             Ms Halliday was entitled to assume that her beneficial interest would continue to be protected by the terms of the Deed of Bare Trust, unless and until agreement was reached on terms bringing those trust obligations to an end. There is no express or implied representation on behalf of Ms Halliday that she was voluntarily abandoning or extinguishing her beneficial interests in the Property.

[93]             For the same reasons, any estoppel arguments also fail. There is no evidence of any representation or mutual assumption that Ms Halliday was abandoning her rights, let alone any intention on Ms Halliday’s part that this be relied on to impact on legal relations, or that it would be unconscionable to allow a departure from such an assumption.49

49     See National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 (CA) at 550, referenced in Ryan v Lobb [2023] NZHC 689 at [138].

Outgoings and expenditure on the Property

[94]             There had been terse exchanges between the parties during the period of January to June 2012 about who was responsible for the mortgage and other outgoings on the Property after they had split up and were living separately. However, those exchanges pre-dated attempts in June and August 2012 to achieve settlement of the outstanding issues (including express reference to the value the Property as “relationship property” in which they both had a continuing interest).

[95]             Having heard the witness evidence, I find that the alleged exchanges from January to June 2012 about Mr Hannah being responsible for the mortgage and other outgoings reflected Ms Halliday’s position that this was a fair allocation of such responsibilities while Mr Hannah alone was continuing to live in their co-owned house. This is what she meant by “Your house, your problem” (if those words were used). That is an understandable position for her to take in the circumstances, because Ms Halliday faced her own outgoings and expenses of relocating to another home. Whether or not there was any net equity in the Property, Mr Hannah was receiving the benefit of continued occupation. In terms of the PRA, this is typically taken into account under s 18B, with an adjustment reflecting the differential impact in terms of market rent or interest on the non-occupying party’s capital, often with an offset for outgoings paid. A similar occupation rent adjustment is available at common law as between co-owners, and under s 343(f) of the Property Law Act.

[96]             In this case, Mr Hannah asserts that no value could be ascribed to the non-occupying party’s capital because of a negative equity situation at the time of their separation. Even if that is the case, there was a value in terms of him not having to pay market rent elsewhere. This also maintained the potential upside of property values later increasing. Regardless, Mr Hannah could have pursued resolution or determination of these issues but did not do so. Rather than constituting a binding abandonment or implied settlement, both parties simply allowed all existing entitlements and obligations to continue, including the commitments under  the  Deed of Bare Trust.

[97]             The fact that Mr Hannah met mortgage expenses, paid insurance, maintained the Property and incurred expenditure to improve it from the date of separation until the 2021 transfer does not operate as a defence or found a counterclaim for an implied trust, institutional constructive trust, or remedial constructive trust. These were simply decisions by him as a co-owner about how to discharge those responsibilities and invest in the Property, with any disputes with another beneficial co-owner to be determined by applicable legal principles.50 Constructive trust entitlements do not supersede those principles, because that would not be a reasonable expectation.51

[98]             Mr Hannah may have hoped that Ms Halliday had abandoned, or would abandon, the Property. This might have increased his motivation not to re-engage on settlement discussions after August 2012, and to be optimistic that he would ultimately enjoy the full benefit of market rises and any further capital investments. Regardless, Ms Halliday has now asserted her entitlements, and both the common law and ss 339 and 343 provide a proper legal framework for determining the issues in a fair and reasonable way.

[99]             This  includes  the  equitable  concept,  discussed  by  the  Supreme  Court   in Burgess v Beaven, that both parties should usually share increases in values associated with inflation (as opposed to personal effort).52 The Supreme Court recognised that property price inflation was necessarily a function of the retention of the property, which in turn was a consequence in the case of the efforts of Mr Burgess, who took on financial and physical responsibility for the property.53 Even so, the Supreme Court was not disposed to differ from the specific post-separation allowances given by the Judge for mortgage, rates and insurance payments, an actual maintenance payment, and an allowance of $5,000 for sales.54 I return to these quantum issues below, on questions of relief.

50 See [64]–[67] above.

51 See [49] above.

52 See [54](c) above.

53     Burgess v Beaven, above n 21, at [36].

54     At [35] and [37].

Family Court exclusive jurisdiction

[100]         The decision not to settle, and instead allow existing entitlements and obligations to continue during the ensuing years, also explains why this Court has jurisdiction to determine these disputes, despite the correspondence in 2012 exploring whether the issues could be settled under the PRA regime.

[101]         In Dyas v Elliot, the parties living in a de facto relationship bought a property together as tenants in common in the names of their respective family trusts. When the relationship came to an end, Ms Dyas left the property and lived elsewhere. The property was eventually sold, and all the money used to repay the bank mortgage. Ms Dyas sought and obtained orders for occupation rent.  Asher J held that the   High Court had jurisdiction:55

If the Property (Relationships) Act had been specifically invoked by the parties in relation to trust property the position would have been different. However, it has not been. It would be unjust to refuse to exercise a discretion under s 343 simply because the plaintiff has an option, which he has not exercised, to seek compensation or other orders under the Property (Relationships) Act.

[102]In doing so, the Court referred with approval to the following statement in

Fisher on Relationship Property:56

The result is that the law as to relationship property in New Zealand may be regarded as consisting of two largely autonomous systems. One is that body of substantive law which might be conveniently referred to as “conventional property” (para 1.28) from which the parties’ existing and perfected rights may at any time be ascertained. The other is the statutory property regime instituted by the 1976 Act, which comes into operation only if positively invoked by court order or agreement. It follows that unperfected rights under the Property (Relationships) Act while valuable rights, do not constitute existing equitable estates or interests in property.

[103]         The time limit under s 24(1)(c) of the PRA is three years after the date the   de facto relationship ended. In this case, it is now more than 12 years since the separation of Ms Halliday and Mr Hannah. While there is a power under s 24(2) of the PRA for the Family Court to extend the time limit for making an application, on

55     Dyas v Elliott, above n 33, at [26].

56     At [27], referencing (now) Fisher on Relationship Property, above n 19, at [1.26] (emphasis added and footnotes omitted).

the facts I consider it extremely unlikely that such an extension would be entertained. This is because the rights between the parties are already governed by “conventional property” law. Indeed, this may have been the more logical choice for the parties to make, given the trust arrangements put in place with Shane Hannah.

Breach of trust

[104]         I have already explained my finding that, by the time of the 2021 transfer,  Ms Halliday was still entitled to a beneficial undivided half-share of the Property under the terms of the Deed of Bare Trust. I have also held that cl 2.1 did not permit the Bare Trustee to transfer the equitable interest in his sole discretion without discussing this with Ms Halliday. It follows that there was a breach of trust when Shane Hannah transferred title to his brother on 3 June 2021.

[105]         The Declaration of Bare Trust and Distribution was in clear breach of, and entirely inconsistent with, the terms of the Deed of Bare Trust. I consider these issues further below, in the context of assessing whether Shane Hannah acted in good faith and reasonably in the circumstances that would entitle him to relief under s 131 of the Trusts Act.

Causation of loss

[106]         Counsel for Shane Hannah raised the issue of whether any loss has been caused by a breach of trust, in circumstances where there was no equity at the date of separation, and the Property is still held by Mr Hannah.

[107]         I find that damage has been sustained as a result of the breach of trust, because since the 2021 transfer Mr Hannah has held sole legal title to the Property enabling him to draw down further funds, some of which he has expended (post-separation) for his own purposes. As I have already addressed, it is no defence to say that the Property had negative equity upon separation, because the beneficial owners are nevertheless entitled to share the benefits of inflation.

[108]         On the facts as they stood at the hearing, the losses caused by the breach of trust can be remedied by orders for sale of the Property and division of the proceeds.

Counsel for each defendant told me at the hearing that I am not required to determine any issues allocating liability between them. It is only for that reason that I focus on orders for relief against the Property, but I consider both defendants liable for the breaches and any loss thereby caused.

Good faith and trustee relief

[109]         Relief under s 131 of the Trusts Act enables the Court to absolve “morally innocent” trustees from liability, while upholding the strict standards of trustee duties.57 Determining what satisfies the threshold in s 131 is highly fact specific. The courts have consistently avoided laying down any hard and fast rules in this jurisdiction, and in overseas jurisdictions with similar discretions.

[110]         In Halsbury’s Law of Australia, the authors suggest that unreasonable conduct by a trustee would include the following:58

(a)conduct that is negligent or careless;

(b)acting in an unauthorised manner without having taken steps to ascertain whether the conduct was or was not authorised;

(c)doing nothing and simply accepting without enquiry what his or her co-trustees have done; and

(d)placing a co-trustee in a position to handle the trust funds where he or she suspects that the co-trustee may misappropriate trust funds.

[111]         In Re Mulligan (dec’d),59 Panckhurst J awarded judgment against trustees for failing to act even-handedly in respect of income and capital beneficiaries. In particular, the corporate trustee allowed the widow trustee/beneficiary to insist on investment of the trust assets in fixed interest securities, instead of other investments (such as shares) that would have better managed inflation. Over a 40-year period, this

57     James Anson-Holland and others Law of Trusts (online ed, LexisNexis) at [TRU131.01].

58     Halsbury’s Law of Australia – Trusts (online ed, LexisNexis) at [430–5530].

59     Re Mulligan (dec’d) [1998] 1 NZLR 481 (HC).

substantially eroded the value of the trust assets in real terms. The Court considered there were three general principles of special relevance:

(a)the first was the duty of trustees to act with due diligence and prudence in the discharge of their duties;60

(b)the second was the duty of impartiality;61 and

(c)the third concerned the separate responsibility of each trustee, including that a trustee must not delegate his or her duties or powers even when there are co-trustees.62

[112]         Despite Shane Hannah’s duties being owed to Ms Halliday as sole beneficiary, he was happy to abdicate all decision-making and scrutiny to his brother, who had a clear conflict of interest with the beneficiary. It was entirely unreasonable in those circumstances for Shane Hannah simply to do whatever his brother asked of him, without exercising independent scrutiny and without consulting with the beneficiary to whom his duties were owed.

[113]         I accept that Shane Hannah agreed to become a trustee out of kindness. He did not receive any financial or other reward for undertaking those obligations, and his role had a personal detrimental effect on his own ability to borrow (thereby impacting his family). These factors, however, cannot excuse his conduct and the transfer of title that occurred on 3 June 2021.

[114]         Even though Shane Hannah was not legally qualified, I simply cannot accept that a reasonable person would sign the Declaration of Bare Trust and Distribution without appreciating that it directly conflicted with what he knew to be the true position, in terms of the trust obligations put in place during June 2010.

60     At 500.

61     At 501.

62     At 502.

[115]         The Declaration of Bare Trust and Distribution begins by stating that, on or about “10 June 2020 [sic], Shane Christopher Hannah (‘SCH’) was registered as proprietor of a one half-share in the property at 58 Morey Street, Ōwhata.” It next states “SCH was registered in his capacity of Bare Trustee for Jason Hannah (‘JH’) and to hold the interest in the property at the absolute disposal of JH.”

[116]         Shane Hannah knew those statements to be totally untrue. Even without checking the original Deed of Bare Trust (which had been emailed to him) to refresh his memory, he knew that he took registration of the interest in his capacity as bare trustee for Ms Halliday, not for Mr Hannah. There is no ambiguity that this refers to the original position when the trust obligations were first established, because of the words “was registered”. Shane Hannah was registered only once. The actual date that Shane Hannah was registered on the title was 10 June 2010. He would have known that the reference of 10 June 2020 was intended to be to this original registration as trustee on 10 June 2010. Otherwise, he should have questioned why there was reference to a different transaction some 10 years later that did not exist. In either case, it was obvious that the basis for the operative parts of the Declaration was wrong.

[117]         I find it impossible to believe that Shane Hannah would have executed a formal declaration transferring an interest in land without reading it. If he did so, this is entirely unreasonable and fails to meet the minimum standards expected of trustees, even on a voluntary basis. I find it more likely that he did read the document and realised that it was untrue and contrary to the interests of the beneficiary, but he preferred to ignore those matters. Otherwise, he chose to sign a document at the request of his brother because it would serve the interests of himself and his brother, even if this was contrary to the interests of the beneficiary to whom he owed his duties. In either case, I cannot accept that Shane Hannah acted in good faith, or honestly and reasonably in the sense required under s 131 of the Trusts Act. I do not consider it appropriate to excuse the breach of trust under that section, because this would be patently unfair to Ms Halliday.

Trustee indemnity

[118]         For the same reasons, the Bare Trustee is not entitled to any indemnity from Ms Halliday for liability, whether under cl 5.1 of the Deed of Bare Trust or otherwise.

[119]         Section 41 of the Trusts Act provides that the terms of a trust must not give a trustee any indemnity against the trust property for liability for any breach of trust arising from the trustee’s dishonesty, wilful conduct, or gross negligence. I consider that this precludes the Bare Trustee from relying on cl 5.1 of the Deed of Bare Trust to obtain an indemnity from the plaintiff for breaches of the obligations he owed to her.

[120]         At the very least, Shane Hannah was grossly negligent and wilfully decided not to read an important deed having the effect of transferring away her beneficial property, or otherwise he willingly signed the document knowing that it was untrue and breached the obligations he owed to her.

Appropriate relief

[121]         The amended statement of claim dated 5 April 2023 seeks two alternative remedies against the defendants.

(a)The primary relief sought is an order vesting to the plaintiff a one half- share of the Property to be held as tenants-in-common, subject to the mortgage to the Bank of New Zealand (M12139291.3) and for that the Property be sold.

(b)The alternative prayer for relief seeks judgment against both defendants in such sum as is equivalent to the market value of a one half-share held in common as at the date of the hearing (less a half-share of the principle owing under the mortgage as at 3 June 2021) or such other sum as the Court deems just.

[122]         If the Court finds that the plaintiff has a beneficial interest in the Property, the second defendant submitted that an accounting exercise is required to ensure a just outcome:

(a)The accounting exercise involves assessing whether the plaintiff is entitled to a notional occupation rent and, if so, over what period.

(b)The second defendant seeks adjustments in his favour, for expenses and outgoings on the Property during the period from February 2022 to the date of the hearing, as well as capital improvements.

(c)The second defendant attached a schedule to the closing submission setting out the nature of the calculations required.

[123]         Counsel for the second defendant questions whether there is any power to order a sale of the Property, given that there is no express provision in the Deed of Bare Trust that confers such a power,  and no application has formally been made under    s 339 of the Property Law Act. If the Court considers that it has the power to order a sale of the Property, then Mr Hannah wants a period of three months to canvass the option of purchasing the plaintiff’s beneficial interest before any forced sale occurs.

[124]         As set out above, I have found that Ms Halliday is entitled to her beneficial interest in the Property, and that the transfer to Mr Hannah on 3 June 2021 was in breach of trust.

[125]         A beneficiary can pursue two different kinds of remedies against a recipient of trust property acquired in breach of trust:63

(a)Tracing is a process that may lead to a proprietary remedy. It involves following the beneficiary’s existing equitable interest into the hands of the recipient.64 When an express trustee wrongfully transfers the original trust property to a recipient who is not entitled to it, the

63     Mau Whenua Inc v Shelly Bay Investments Ltd [2019] NZHC 3222, (2019) 20 NZCPR 923 at [52].

64     Enright v Newton [2020] NZCA 529, [2021] 2 NZLR 412 at [120]–[124].

property continues to be owned by the beneficiaries in equity, whether or not the recipient knows of the breach of trust, unless he is a bona fide purchaser for value without notice of their equitable interest.65 However, where the trust property is land, the transfer of which has been registered under the Land Transfer Act, any unregistered proprietary interest will be extinguished upon registration unless an exception applies, the most common being Land Transfer Act fraud.66

(b)Knowing receipt is a personal remedy against the recipient,67 based on a test of unconscionability.68 The very fact that the obligation is personal (rather than proprietary) means the interest is not extinguished by the act of registration, but a mere personal obligation is insufficient to sustain a caveat.69

[126]         One of the indefeasibility exceptions is where the title of the estate or interest of the registered owner is acquired through fraud on the part of the registered owner.70 Fraud is defined in s 6 of the Land Transfer Act:

6     Meaning of fraud

(1)For the purpose of this Act, other than subpart 3 of Part 2, fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land.

65 Mau Whenua Inc v Shelly Bay Investments Ltd, above n 63, at [51], referencing Charles Mitchell and Stephen Watterson “Remedies for Knowing Receipt” in Charles Mitchell (ed) Constructive and Resulting Trusts (Hart Publishing, Oxford, 2010) at 115–116.

66 At [53]; and Land Transfer Act 2017, ss 51–56.

67 Mau Whenua Inc v Shelly Bay Investments Ltd, above n 63, at [50] and [52]; and Wei v Chin Yun Holdings Ltd [2024] NZHC 1602 at [84]–[87].

68 Garrow and Kelly Law of Trusts and Trustees, above n 7, at [15.118], referencing McLenan v  Livaja [2017] NZCA 446 at [40]; and at [15.127] referencing Westpac Banking Corporation v Savin [1985] 2 NZLR 41 (CA) at 53 as authority that any of the five categories of knowledge in Baden Delvaux and Lecuit v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1983] BCLC 325, [1992] 4 All ER 161 may suffice to establish unconscionability.

69 Mau Whenua Inc v Shelly Bay Investments Ltd, above n 63, at [53].

70 Land Transfer Act, ss 51(3) and 52(1)(a); and Wei v Chin Yun Holdings Ltd, above n 67, at [88]−[95].

(2)For the purposes of subsection (1), the fraud must be against—

(a)    the registered owner of an estate or interest in land; or

(b)    the owner of an unregistered interest, if the registered owner or registered owner’s agent,—

(i)in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and

(ii)intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.

(3)For the purpose of subpart 3 of Part 2, fraud means forgery or other dishonest conduct by any person.

(4)The equitable doctrine of constructive notice does not apply for the purposes of deciding whether conduct is fraudulent.

[127]         On the facts as I have found them,71 s 6(2)(b) applies to Mr Hannah acquiring Ms Halliday’s beneficial interest, in circumstances where he had actual knowledge of her entitlements under the Deed of Bare Trust, he was at least wilfully blind as to whether those entitlements were still continuing, and he intended to defeat those interests by registering the transfer from his brother. For the same reasons, the unconscionability requirement for knowing receipt is also satisfied.

[128]         Accordingly, I declare that Mr Hannah holds that half-share of the Property on constructive trust for the plaintiff (as a tenant in common), both as a proprietary tracing remedy and as a personal obligation arising from knowing receipt.

[129]         Given that above position, I also accept that it is appropriate, whether as a matter of common law for dealings between beneficial co-owners or in the context of a prospective sale and partition under ss 339 and 343 of the Property Law Act, to make an accounting adjustment for occupation and use of the land and to apportion outgoings and expenses on the Property.

[130]         The following calculations for that adjustment are based on the schedule to the second defendant’s closing submissions.

71     See in particular [37]–[38] above.

[131]         Mr Hannah argued that no occupation rent should be payable because he says the Property had unresolved weathertightness issues and there was a real question whether it was rentable in that condition. Also, Ms Halliday did not seek payment of any occupation rent so it is unfair to impose this without fair warning.

[132]         I am not persuaded that either of these reasons justify deferring or excluding an adjustment for notional occupation rent from the time of separation until the date of hearing. We know from their occupation of the Property that it was considered liveable, including for their children, before and after separation. Furthermore, the characteristics of the Property are accounted for in assessing a suitable rental value. As referred to above, the alleged exchanges between January to June 2012 amount to fair warning that Ms Halliday regarded Mr Hannah as liable to meet outgoings on the Property while he was the only one living there. As shown in the calculations below, this is roughly equivalent to the appropriate level of occupation rent. I do not consider it reasonable to delay the commencement of a notional occupation rent, given that Ms Halliday faced immediate outgoings to stay elsewhere, and it was clearly unreasonable to expect them to occupy the Property together once they had separated acrimoniously.

[133]         The rental valuation for the Property accounts for its condition. Mr Hayes gave evidence as the plaintiff’s expert valuer about the rental value of the Property from 2012 onwards. He set out a table of the median weekly residential rental amounts for three bedroom homes in Ōwhata East. His assessment was that a 10 per cent adjustment below the median should be applied for this particular Property, recognising its location and characteristics. In cross-examination, Mr Hayes accepted that another five per cent reduction could be applied for issues such as leaking windows (before they were replaced in 2021) and for there being no rangehood in the Property and no extractor fan. However, he did not agree that any greater discount would apply, because that reaches the bottom of the rental range for three bedroom homes.

[134]Those calculations produce the following notional occupation rent:

Year ending	Median Weekly Rental	Downward adjustment for size, location and weathertightness	Adjusted weekly rent for 58 Morey Street	Number of weeks	Annual rental total
2012	$340	15%	$289.00	52	$15,028.00
2013	$350	15%	$297.50	52	$15,470.00
2014	$360	15%	$306.00	52	$15,912.00
2015	$385	15%	$327.25	52	$17,017.00
2016	$400	15%	$340.00	52	$17,680.00
2017	$430	15%	$365.50	52	$19,006.00
2018	$450	15%	$382.50	52	$19,890.00
2019	$480	15%	$408.00	52	$21,216.00
2020	$500	15%	$425.00	52	$22,100.00
2021	$550	15%	$467.50	52	$24,310.00
2022	$590	10%	$531.00	52	$26,078.00
2023	$620	10%	$558.00	52	$27,404.00
2024	$620	10%	$558.00	19	$10,013.00
Total	$251,124.00

[135]         Given that the windows were repaired in 2021, it is not appropriate to apply the full 15 per cent discount for the subsequent years. Therefore, this has reverted to 10 per cent.

[136]         As an offset against that notional occupation rent, I apply the following adjustments for the capital investment expenditure and other outgoings on the Property by Mr Hannah during the same period.

[137]         Mr Hannah paid all of the loan/mortgage payments on the Property, the rates, the building insurance and also life insurance (a condition of the loan/mortgage) in the following amounts:

Mortgage to February 2022	$127,228.86
Mortgage post-February 2022 to 17 May 2024	$27,114.44
Home insurance to February 2022	$14,836.00
Home insurance post-February 2022 to 17 May 2024	$6,061.25
Life insurance to February 2022	$8,514.24
Life insurance post-February 2022 to 17 May 2024	$3,402.81
Rates to February 2022	$26,032.00
Rates post-February 2022 to 17 May 2024	$7,399.26
Total	$220,588.86

[138]Since the 2012 separation date, Mr Hannah estimates that he has spent

$43,445.32 in repair and maintenance works on the Property, calculated as follows:

2015: new fence and gates  $4,979.60

2015: concrete driveway materials (estimate)                  $5,000.00

2019: new heat pump  $3,299.35

2020: leak repair (estimate)  $700.00

2021: replacement roof  $9,143.94

2021: replacement windows  $18,763.40

2021: cladding materials  $1,559.03

Total (excluding value of second defendant’s work)     $43,445.32

[139]         However, a sum of $29,856.86 from the 2021 refinancing was already used towards the above expenses, leaving a  balance  of  $13,588.46  that  was  met  by Mr Hannah.

[140]         Since the separation date, Mr Hannah also paid the following relationship debts:

Monies owed to Credit Union Central	$25,266.86
Monies owed to GE Creditline as at 17 July 2012	$3,588.61
Total	$28,855.47

[141]         I understand that $30,000 from the 2021 refinancing was used by Mr Hannah to buy a second-hand vehicle, but that sum was drawn down under a separate facility and has been fully repaid by Mr Hannah, so no adjustment is necessary for that.

[142]         However, a sum of $2,135 was drawn down under the main facility in the 2021 refinancing to pay Mr Hannah’s legal fees owed to Rodgers and Co, and this should not be paid for by Ms Halliday.

[143]         The net effect, as at 17 May 2024, is an adjustment sum in favour of Mr Hannah of $9,744:

Notional occupation rent	-$251,124.00
Reimbursement for Rodgers & Co legal fees	-$2,135.00
Property outgoings	$220,558.86
Balance for capital expenditures	$13,588.46
Relationship debts	$28,855.47
Total (net)	$9,743.79

[144]         In the second defendant’s schedule calculations, there was a credit of $30,000 claimed for “value added by improvements” as at a retrospective date of 1 February 2022.72 I am not satisfied that any such adjustment is appropriate. Mr Hannah is already being reimbursed for expenditures to make improvements, and the value of those will be reflected (and shared) in the existing market value of the Property. Adding another credit would involve double-counting, and I do not accept I have any reliable basis for allocating non-achieved historic value assessments to only one co-owner (the assessed value has since decreased).

[145]Based on current estimates, the net equity in the Property is approximately

$250,000.73

[146]         I do not consider it appropriate to award a mere judgment debt (in terms of [121](b) above) if this will leave Ms Halliday unsecured, as this will not restore her to the position she was in prior to the breach of trust, protected by a proprietary interest in the Property.

[147]         If necessary, I consider there is scope to make orders in this proceeding for sale and partition under s 339 of the Property Law Act. Although that statutory provision was not pleaded, orders for sale of the property were sought in the prayer for relief, and s 339 was addressed in closing submissions at the hearing. Furthermore, the defendants were on notice from the summary judgment hearing that ss 339 to 343 of

72     Based on the difference in a retrospective valuation under two different scenarios as at 1 February 2022, as explained in a letter from Mr James dated 10 May 2022.

73     Valuation by CBRE as at 8 May 2024 of $385,000, and loan secured by mortgage as at 16 May 2024 of $135,823.67.

the Property Law Act would apply in the event the Court concludes the plaintiff has a beneficial interest in the Property.74

[148]         However, I accept that it is appropriate to give the parties time to seek to reach agreement about how the Property should be dealt with in order to achieve the division contemplated in this judgment. The second defendant wants a period of three months to canvass the option of purchasing the plaintiff’s beneficial interest before any forced sale occurs. It is in the interests of all parties to take reasonable steps to maximise the proceeds of sale, and the parties should have the opportunity to propose orders equivalent to those made in Jacobson v Guo.75

[149]         Meanwhile, the plaintiff is the successful party. Under r 14.2(1)(a) of the High Court Rules, the starting point is that the plaintiff is entitled to costs. I reserve costs and will hear from both parties. Any costs awarded will become an adjustment that should also be deducted before distribution of any proceeds of sale from the Property.

Result

[150]         Subject to BNZ’s registered mortgage (which retains priority), I declare that Jason Hannah holds an undivided half-share of the Property on constructive trust for the plaintiff (as a tenant in common), both as a proprietary interest in land and as a personal obligation.

[151]         I order that Jason Hannah is entitled to an accounting adjustment in his favour of $9,744 for the period from 1 January 2012 up to 17 May 2024, for outgoings and expenses paid by him on the Property, offset by an amount for his occupation and use of the land. However, I direct that this adjustment is not payable until the Property is sold, or the parties otherwise settle a final division of their rights in the Property.

[152]         I declare that the same accounting adjustment principles should apply from 18 May 2024 until the Property is sold, or the parties otherwise settle a final division of their rights in the Property:

74     Halliday v Hannah, above n 1, at [61].

75 See [68] above.

(a)The current notional occupation rent payable by Jason Hannah is $558 per week.

(b)This should be offset by any  disbursement  payments  made  by  Jason Hannah for the loan/mortgage payments on the Property, the rates, the building insurance, life insurance payments (to the extent they are a condition of the loan/mortgage), and necessary maintenance and repairs.

(c)Any  personal  post-separation  borrowing   or   expenditure   by  Jason Hannah is payable entirely by him and not to be secured by the Property or deducted from any joint proceeds of sale of the Property. If necessary, reimbursement for such expenditure would need to be deducted solely from Jason Hannah’s share of the net proceeds and added to the payment for Ms Halliday; and

(d)Any costs awarded in this proceeding will also need to be deducted from the paying party’s share of the net proceeds and added to the recipient’s share.

[153]         Subject to the parties agreeing otherwise by 30 September 2024, I intend to make an order under s 339 of the Property Law Act for the Property to be sold and the proceeds divided, with the above adjustments applied. I adjourn this aspect of relief, and meanwhile direct the parties to seek to reach agreement on suitable terms, in accordance with the timetable below.

[154]I make the following timetable directions:

(a)If costs cannot be agreed, then the plaintiff is to file a memorandum addressing costs within 15 working days.

(b)The first and second respondents then have a further 15 working days to file their memoranda on costs.

(c)I will determine costs on the papers.

(d)Any joint memorandum proposing suitable sale and division orders under s 339 of the Property Law Act is to be filed by 30 September 2024.

(e)Otherwise the plaintiff is to file her memorandum on those issues by 30 September 2024, and the second respondent is to file any memorandum in reply by 14 October 2024.

(f)A 9 am telephone conference is to be allocated before me for the first available date after 18 October 2024, to hear from the parties on any disputed issues about sale and division s 339 of the Property Law Act, and to make appropriate orders.

O’Gorman J