Hansard v Hansard

[2012] NZHC 1159

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-6078 [2012] NZHC 1159

BETWEEN  GERALD GUY HANSARD AND DIANA HANSARD AS TRUSTEES OF THE G HANSARD FAMILY TRUST NO. 2

Plaintiffs

ANDDAVID GUY HANSARD AND SHARON GRACE HANSARD AS TRUSTEES OF THE D&S HANSARD FAMILY TRUST Defendants

Hearing:         1 March 2012

Counsel:         D Chisholm for Plaintiffs

P Kennelly for Defendants

Judgment:      28 May 2012

RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Summary Judgment)

This judgment was delivered by me on 28 May 2012 at 4 pm pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Lee Salmon Long, PO Box 2026, Shortland Street, Auckland

Kennelly Law, PO Box 607, Orewa

HANSARD AND HANSARD AS TRUSTEES OF THE G HANSARD FAMILY TRUST NO. 2 V HANSARD AND HANSARD AS TRUSTEES OF THE D&S HANSARD FAMILY TRUST HC AK CIV-2011-404-6078 [28

May 2012]

[1]      The plaintiffs, Gerald and Diana Hansard, are the trustees of the GG Hansard Family Trust  No 2  which  was  settled on  4  March  1966.   They seek  summary judgement for the recovery of a debt of $1,222,658 that they say the trustees of the D&S Family Trust owe to their trust.  The defendants, David Hansard and Sharon Hansard, are the son and daughter in law of the plaintiffs.  They are the trustees of the D&S Family Trust which was settled on 19 September 2003.  For convenience I refer to the two trusts as the GG Trust and the D&S Trust.

[2]      Effectively, on one side of the dispute that underlies this proceeding are Gerald, Diana and David.   David has issued a notice of admission of claim and supports his parents’ claim for summary judgment.  On the other side is Sharon, who is now separated from David. She opposes the application for summary judgement.

[3]      The argument between  the two sides is about the liability of David and

Sharon (as trustees of the D&S Trust) in respect of: (a)          A alleged loan of $509,863; and

(b)      Their alleged assumption of liability for a debt of $712,795.

[4]      Both liabilities are said to have come about when the D&S Trust was settled and David and Sharon re-arranged their financial affairs and those of their printing company, MH Publications Limited. Gerald and Diana say that the company’s liabilities owed to their trust were “converted” to liabilities of the D&S Trust.  They say that such re-arrangement was effected by the repayment and re-advance of the

$509,863 loan and the D&S Trust’s assumption of liability for the debt of $712,795. Sharon disputes this.

[5]      Sharon says the correct position is not as her parents in law would have it. She says the suggestion that the D&S Trust is liable has only been made since her separation from David.   She submits that there are real questions to be tried as to whether monies that the GG Trust originally advanced to her and David and MH Publications:

(a)     Could have been “converted” to liabilities of the D&S Trust as she was

not consulted about and did not consent to that course; and

(b)That even if she is somehow fixed with giving approval to a re- arrangement, the common understanding was always that the monies were provided as gifts as part of David’s inheritance.  As such, she and David would never be called upon to make repayment.

[6]      Sharon claims in reliance on r 12.9 of the High Court Rules that summary judgement is not appropriate because she has a tenable defence to the claim her parents in law have made.  The plaintiffs on the other hand claim in reliance on r

12.2, that such defences as Sharon has raised do not bear scrutiny and do not give rise to any real question to be tried.

[7]      There is no dispute that the GG Trust did advance monies, in the amounts that the plaintiffs claim, for the use of David and Sharon and the company.   The dispute concerns whether the trustees of the  D&S Trust are obliged  to pay the monies back.

Background

[8]      Gerald and Diana are the settlers of the D&S Trust.  Prior to the creation of the D&S Trust, Gerald  and Diana’s GG Trust  had provided financial  assistance amounting to $712,795 to MH Publications. At all relevant times, David and Sharon were the directors and shareholders of that company. Subsequently, GG Trust provided  $509,863  to  the  D&S  Trust  when  it  was  settled.  David  and  Sharon separated in 2010.

[9]      Gerald and Diana’s case is that they wish to be repaid for the monies they have advanced from their trust. They candidly acknowledge that the separation of their son and daughter in law is the reason why they want the monies repaid but they say the various advances making up the $1,222,658 were made from the outset as “on demand” loans.  They also say that following the settlement of the D&S Trust, it was agreed that the GG Trust would fund the D&S Trust instead of MH Publications

and that the parties agreed on a re-arrangement for that purpose.  The rearrangement placed the D&S Trust in the role of debtor for all advances as:

Loan of $509,863

(a)      David and Sharon purchased the assets on behalf of the D&S Trust.

The D&S Trust took ownership of the business assets utilised by MH Publications so as to lease back the assets to the company and derive an income from them. The purchase was financed by the GG Trust which advanced sums totalling $509,863.  At the same time, the existing debt of the same amount that MH Publications owed to the GG Trust was discharged.

Assumption of debt of $712,795

(b)The  D&S  Trust  assumed  direct  liability  for  previous  advances totalling $712,795 made by the GG Trust to MH Publications, and the debts the company owed to the GG Trust in that amount were treated as discharged.

[10]     On 11 October 2010, Gerald and Diana gave notice to the David and Sharon (as trustees of the D&S Trust) that they required repayment of the sums owing to the GG Trust.  David and Sharon have failed to repay any part of the total sum claimed.

Summary Judgment Principles

[11]     High Court rule 12.2 provides:

12.2 Judgement where there is no defence or when no cause of action can succeed

(1) The court may give judgement against a defendant if the plaintiff satisfies the court that the defendant has no defence to  a cause of action in the statement of claim or to a particular part of any such cause of action.

...

[12]     The  principles  are  well  settled.  The  question  on  a  summary  judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.1  The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.2  The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is  inherently  lacking  in  credibility,  as,  for  example,  where  the  evidence  is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.3 In the end the court's assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.4   But it should only do with considerable care. As Somers J stated in Pemberton v Chappell:5

Where the defence raises questions of fact upon which the outcome of the case may turn it will not often be right to enter summary judgement.

[13]     In  Jones  v  Attorney-General  the  Privy  Council  cautioned  that  the  court should not discount even a "theoretical possibility" which would provide support for the plaintiff's claim and which might be open to the tribunal of fact on the evidence.6

The Board went on to emphasise:

... summary judgment should not be given for the defendant unless he shows on the balance of probabilities that none of the plaintiff's claims can succeed. That is an exacting test, and rightly so since it is a serious thing to stop a plaintiff bringing his claim to trial unless is it quite clearly hopeless.

[14]     Though  the  Privy Council  was  concerned  with  summary judgment  on  a defendant’s application the need for caution is equally apposite when dealing with a plaintiffs’  application.  It  follows  that  if  the  evidence  raises  even  a  theoretical

possibility of a defence that may be enough to prevent a summary judgement.

1 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

2 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
3 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
4 Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 (CA).
5 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 4.

6 Jones v Attorney-General [2004] 1 NZLR 433 at [10].

Conflicting evidence

The formal statements of the Trusts

[15]     The transactions that Gerald and Diana rely on in their statement of claim, and the related financial re-arrangements, are supported by the affidavit evidence of Gerald and David Hansard.  Both have produced copies of some relevant financial statements for the respective trusts.  On their face, the statements treat the relevant advances as loans.   An inference is that all parties, in their capacities as trustees, agreed to the re-structuring and the transactions.

[16]     Gerald deposes that the loans resulting from the transactions were never intended to be gifts and says this is corroborated by the financial statements that have been produced.  He contends they were intended to be loans and are repayable on demand.

[17]     Sharon challenges the financial statements on the basis that she was not consulted about the setting up of the D&S Trust or any re-arrangement of the way the GG Trust’s advances were treated.  She contends (and is not contradicted) that David and Gerald assumed control of these matters and deliberately cut her out of their decision making.  She says she did not know of or consent to the D&S Trust’s taking on the purported liabilities. Counsel for Sharon submits that in these circumstances the relevant decisions could not have been made with her authority. He points out that under clause 19 of the D&S Trust Deed the Trustees must be unanimous in any decision made (emphasis added):

The Trustees shall have full power and authority to buy, sell, lease, invest, mortgage, deal and carry on business and generally manage and order the Trust Fund in all respects as if the Trustees were the absolute beneficial owners of it and the powers set forth in clause 20 of this deed shall be deemed to be in aid of this present power but shall not derogate from its generality. The Trustees must be unanimous in any decisions they make.

[18]     Counsel also submits if there had been unanimity about the D&S Trust’s liability for the alleged loan and assumption of responsibility for other debts, then relevant minutes and resolutions would have been produced.

[19]     Materially, there is no documentary evidence that records the terms of any agreement to lend or that indicates terms of repayment.

No obligation to repay

[20]     There is also a conflict as to whether it was agreed that the advances would have to be repaid.   Sharon insists that if there had been an obligation to  make repayment, Gerald, who arranged for his solicitors to set up the D&S Trust, would have ensured that a deed of acknowledgment of debt was signed.  Such a deed would have recorded the terms of repayment. She argues that it is telling that there is no such deed.

[21]     Sharon’s evidence is that she and David were never in the position to repay the monies that were advanced to help their family and their printing business. She says that despite the way monies might be referred to in the books of the D&S Trust, it was understood that the advances of the monies were in the nature of gifts or seen as David’s inheritance.

[22]     Gerald and David’s evidence contradicts that of Sharon. David deposes that it is not entirely correct that the loans could never be paid back.  He points out that MH Publications has reduced its liability to the D&S Trust.  Gerald says there was never a common intention that the loans would not be paid back.

Credibility

[23]     Counsel for the David and Sharon accepts the conflict of evidence is material and one that the Court would not normally attempt to resolve on an application for summary judgment, as it involves an assessment of the credibility of deponents. But he argues this is a case where the Court would be justified in adopting a robust approach  and  need  not  accept  Sharon’s  evidence  uncritically.  He  submits  her evidence is inherently lacking in credibility.

[24]     The principal reasons counsel relies on are these:

(a)      Sharon’s evidence is wholly inconsistent with the copies of the annual financial statements for the GG Trust and the D&S Trust that have been put in evidence.  The 2005 financial statements for both trusts are consistent with the plaintiffs’ account of events.  Particulars of the assets that the D&S Trust purchased are set out in a list attached to its financial statements dated 31 March 2005.   The same picture is conveyed by the D&S Trust’s financial statements for later years.

(b)Though  not  all  copies  of  the  D&S Trust’s  financial  statements  are signed, the 2009 financial statements (unlike the copies of other years’ statements) bear Sharon’s signature.

(c)      Sharon appears to accept the financial statements are a proper record for tax purposes.  By disavowing the loans set out in the statements, she seeks “to have her cake and eat it”.

(d)In  her  capacities  as  a  company director  and  trustee,  Sharon  had  a responsibility to be satisfied that the contents of the financial statements were correct and cannot disavow their contents.

(e)      As a trustee and company director, Sharon must be treated as being a party to all decisions concerning the loans.  Even if she was not a party to the decisions, her subsequent actions unequivocally confirm that she sanctioned  and  approved  of the decisions.    Sharon is  in  any event estopped from denying her involvement when she has acquiesced in and taken the benefit of the arrangements put in place for over 6 years.

(f)      As the loans were essentially made between related parties, there was some informality.  However, the advances were always treated as loans. The absence of a deed of acknowledgement is beside the point as the loans have in fact been made.

(g)      There is no sufficient evidence that the loans were gifts.

(h)If the terms of a loan do not specify a term and time for repayment, the loan must be on demand.   The monetary advances to the D&S Trust were loans and were silent as to a chronological term.  In the absence of such  a  term,  the  loans  would  become  repayable  after  demand  was made.

[25]     Counsel for Sharon argues that the conflicts in the evidence indicate the considerable need for care before opting for a robust approach.

Discussion

[26]     The  main  focus  of  the  submissions  for  both  sides  was  directed  at  the following issues:

(a)      Whether there was unanimity among the four family members in the decisions to advance the sum of $509,863 to  the D&S Trust  and rearrange the liability for the sum of $712,795 that was originally advanced to the company.

(b)Whether the monetary advances  were from  the outset  on  demand loans or whether they were gifts or advances in which David has a beneficial or equitable interest or that give rise to such an interest.

(c)      Whether  a  robust  approach  is  warranted  in  dealing  with  these questions.

[27]     However, another issue emerges from the evidence and submissions which indicates that a key question to be determined is whether there is an arguable defence that Gerald and Diana are estopped from recalling the purported loans.

[28]     I  have  decided  that  there  are  real  questions  to  be  tried. The  conflicting evidence is material and a robust approach is not appropriate.  After considering the evidence critically, I cannot dismiss the possibility that Sharon may have a defence to the plaintiffs’ claims.  She is entitled to the benefits of discovery and a trial. My

reasons follow.   I begin with the question whether Gerald and Diana are arguably estopped from recalling the purported loans.

[29]     Equitable estoppel is used to address unconscionable behaviour.  The authors of Equity and Trusts in New Zealand summarise the requisite elements of equitable

estoppel:7

Although the modern approach is “to depart from strict criteria and to direct attention to overall unconscionable behaviour” it is nevertheless clear that the party alleging an estoppel must show that:

a)   A belief or expectation has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;

b)   The belief or expectation has been reasonably relied on by the party alleging the estoppel;

c)   Detriment will be suffered if the belief or expectation is departed from; and

d)   It  would  be  unconscionable  for  the  party  against  whom  the estoppel is alleged to depart from the belief or expectation.

[30]     In the Court of Appeal decision Krukziener v Hanover Finance Ltd, Miller J

summarised promissory estoppel in the following way:8

[38] ... promissory estoppel is no longer confined to promises affecting pre- existing rights... equity responds to the defendant creating or encouraging an assumption in the plaintiff, and its knowledge that the plaintiff will rely on the assumption to its detriment. The plaintiff must have been led to believe that the promise would affect or result in legal relations... Lastly, equity does not intervene to satisfy the promise, but to avoid the detriment.

[31]     In Hickman v Turn and Wave Ltd the Court of Appeal explained that to establish promissory estoppel on the basis of a pre-contractual provision or representation requires strong evidence:9

[213] In a contractual setting, a promissory estoppel argument more commonly arises post-contract when one party promises the other that an existing contractual provision will not be enforced. It is well established that a pre-existing contractual relationship is not necessary before promissory estoppel may operate. But it is less common and more difficult to establish promissory estoppel on the basis of a pre-contractual promise or representation. This is because the party seeking to establish the representation faces obvious evidential difficulties in proving a promise not

7 Andrew Butler Equity and Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) at 613-614.

8 Krukziener v Hanover Finance Ltd [2008] NZCA 187.

9 Hickman v Turn and Wave Ltd [2011] NZCA 100 [2011] 3 NZLR 318 at [213].

to  enforce  a  contractual provision  when  that  party subsequently signs  a contract in which he or she agrees to perform the relevant obligation notwithstanding the claimed promise that he or she would not have to do so. In such circumstances, statements made in pre-contractual negotiations may be overtaken and contradicted by the written contract.

[32]     Two cases concerning equitable estoppels in the context of close personal or family relationships are helpful.   They demonstrate, in my mind, the potential importance of having all of the evidence, including all relevant documentary evidence, fully tested at trial except in the most clear cut of cases.

[33]     In Welch v Fraser10, an employer, Fraser, told an employee, Welch, that she would  buy  him  a  house.  The  house  was  purchased  with  Fraser’s  money.  The purchase  was  structured  through  a  loan  to Welch’s  family trust,  to  be  forgiven annually to avoid gift duty.  Welch signed a Deed of Acknowledgment of Debt.  He knew that there was no guarantee that the debt would be forgiven and knew that Fraser was prone to changing her mind.   Welch knowingly accepted the risk that Fraser would not continue to forgive the debt.

[34]     Shortly   after   the   first   year's   “gift”   (or   forgiveness)   was   made,   the employment relationship ended.  No further gifts were made and Fraser ultimately advised Welch to refinance. Welch argued promissory estoppel.

[35]     On appeal in the High Court, Ronald Young J proceeded on the basis that a careful examination of the facts of the case was required.11   He affirmed the District Court Judge’s trial finding that Fraser had encouraged Welch to believe that the debt would be forgiven.  However, in the circumstances it was not reasonable for Welch to rely on that encouragement. The circumstances included Welch signing an acknowledgement  of  debt  and  accepting  the  associated  risks.    The  rights  and

responsibilities of the parties were governed and defined by written documents. Fraser did no more than exercise the rights she was entitled to within those documents.

[36]     Ronald Young J held that there was no obligation on Fraser to continue to forgive the debt and it would not be unconscionable for her to cease doing so.  The argument of promissory estoppel failed.

[37]     The outcome of Welch v Fraser can be contrasted with that of Harris v Harris12.  In that case, parents sold a two thirds interest in a farm to their son and his wife. The parents and son had previously been in a partnership which they all sought to alter and expand by entering into a new legal arrangement.  The son signed an acknowledgement of debt, which included interest, on the condition that his parents would write off the debt under their wills.  Wills to that effect were written up before the son signed the agreement, and there was an understanding between the parties that the debt would not be recalled.

[38]     Years later, after a relationship breakdown between the parties, the parents changed their wills by revoking the writing-off of the debt.  They claimed that the debt could be called up at any time and that they were free to change their wills. They proceeded to demand interest on the debt.   The son and his wife claimed equitable estoppel, preventing the parents from recalling the principal amount and the interest.

[39]     Fraser J found that the parents were estopped from demanding payment of the principal amount:13

I  consider,  however,  that  an  equitable  estoppel  arises  in  respect  of  the demand for payment of the debt of $214,367... There was a clear and unequivocal assurance that the indebtedness would be written off by Mr and Mrs Harris under their wills. I have already held that in the particular circumstances and context of this case that carried with it the understanding that the debt would not be called up in their lifetime and they would not change their wills in this respect. This was the underlying assumption on which the other aspects of the transaction were entered into. Stephen and Kylie  acted  upon  it,  first  in  entering  into  the  transaction  and  assuming liability for a proportionate part of the existing mortgage indebtedness and secondly in more general terms remaining on the property and committing themselves and their future to it.

[40]     Drawing from these cases, I am satisfied that I cannot safely dismiss the possibility that the plaintiffs encouraged Sharon to believe that the monies their trust advanced would not be recalled. Nor can I conclude safely that there is no substance to her evidence that there was never an expectation that the purported loans would be paid back but rather that they were intended to be in the nature of gifts or as David’s inheritance.

[41]     Sharon does not point to an isolated action or representation by David’s parents that created her assumption. She does not, for example, mention a specific conversation where they unequivocally and expressly promised to gift the monies or that they would not require repayment.  Materially, however, it seems clear that the arrangements were made in order to benefit David, Sharon and their children and there is some evidential foundation for the possibility that Gerald and Diana Hansard engaged in a pattern of conduct that created or encouraged their daughter in law to hold the belief that the money would never be recalled in the following ways:

a)        They advanced an amount of money that, as Sharon claims, she and

David were never capable of paying back.

b)In spite of his business acumen, Gerald did not document a repayment scheme and there is no suggestion that he ever made mention of a requirement to make repayment.

c)       David   and   Sharon   were   never   required   to   sign   a   deed   of acknowledgement of debt.

d)For  six  years  Gerald  and  Diana  made  no  attempt  to  recover  any money.   The fact that they demanded recovery because of the separation suggests a change of heart and mind and that their prior intention was as Sharon contends.

e)        They  led  her  and  David  to  believe  that  the  monies  were  part  of

David’s inheritance.

[42]     If proved, these facts and particularly the lack of a deed of acknowledgement of debt, suggest that Sharon’s belief that the debt would not be recalled was reasonable, or arguably so.

[43]     As  noted  above,  the  Welch  v  Fraser  decision  turned  on  this  issue  of reasonable   belief.      In   that   case   however,   Welch   had   signed   a   deed   of acknowledgment of debt.  He knew there was no guarantee that the debt would be forgiven and knew Fraser was prone to changing her mind.  In those circumstances, Welch knowingly accepted a risk that Fraser would not continue to forgive the debt.

[44]     Though Sharon signed the D&S Trust financial statements of 2009, she and David were never required to sign a deed of acknowledgement of debt.  She believed that Gerald and Diana had given her and David a sum of money to assist their family and business.   She believed the transfers were recorded as loans merely for tax purposes.   In those circumstances, Sharon’s contention that she did not knowingly accept the risk that the loans would be recalled cannot be robustly discounted as counsel for the plaintiffs suggests.   The same applies to Sharon’s claim that she understood the money was to be part of David’s inheritance.

[45]     There may also be particular value in discovery.  In the Harris v Harris case, the will provided valuable assistance on the issue of an inheritance. In the Court of Appeal decision Nation v Nation,14 the court observed that a trust deed can assist in determining whether a discretionary beneficiary has a legally enforceable interest in the assets of a trust. Had the Court found evidence of such an interest in that case, it may have led to an estoppel or constructive trust.15   However, the Court did not have access to the trust deed and was unable to assess the arrangements between the discretionary beneficiaries and the trustees.  The court left open the possibility that the deed, or the arrangements between the parties involved in the trust, could give a discretionary beneficiary a legally enforceable interest in the assets of a trust:16

[76] There is not a sufficient evidential basis in this case for a finding that the husband had any such interest ... The only evidence before the Court is that the H A Nation Children’s Trust was a discretionary trust, but without

14 Nation v Nation [2005] 3 NZLR 46 (CA).

15 At [75].

16 At [76].

seeing the trust deed itself and knowing the arrangements between the husband,  the  other  discretionary  beneficiaries  and  the  trustees,  it  is impossible to determine whether the husband had any property rights.

[46]     Regrettably, the GG Trust deed has not been put in evidence.  Likewise, the wills of Gerald and Diana.  Such documents may be helpful in deciding whether or not it was reasonable for Sharon to rely on the belief that the debt would not be recalled. They may corroborate Gerald and Diana’s intent and lend credibility to Sharon’s claim.

[47]     I recognise that there is some force in counsel for the plaintiffs’ submission that the transactions were recorded as loans in the financial statements and therefore that the plaintiffs did not realise that Sharon would rely on her “ill-founded” assumption that the monies would not be recalled. This may well be the case, but the submission is conclusory and looked at objectively I cannot discount the possibility that Gerald and Diana would have known that Sharon would rely on the assumption. Sharon and David never paid back any money.  Arguably, this may have indicated to Gerald and Diana that Sharon and David were relying on the assumption that the monies would not be recalled.  The point is arguable, but based on the conflicting evidence provided I believe that this is an issue that should be determined at trial.

[48]     Further, Sharon’s evidence that she believed the money was recorded as a loan for tax purposes but that in reality it was a gift and part of David’s inheritance, suggests the possibility that there was a common understanding that was not overtaken by the terms of the advances.  Rather, that if the advances were taken up as loans, ultimately the liability for the debt would not be enforced. It would be dealt with by gift or inheritance.

[49]     Sharon does not indicate whether she developed the belief that the monies would not be recalled prior to the transactions or following them.  Nonetheless, even if she did develop the belief prior to the transactions, Hickman v Turn and Wave Ltd confirms that it is possible to establish promissory estoppel on the basis of a pre-

contractual representation, although strong evidence will be required.17 I see this is a

further reason why a trial is appropriate.

[50]     I turn finally to the question of detriment.  As noted above, in Jackson v Bell the estoppel assessment turned on whether or not the plaintiff had suffered a net overall detriment.18    In this case the question is properly left for trial.  It is likely that the purported loans have been both a source of benefit and potential detriment for Sharon, but whether or not Sharon would suffer a net overall detriment if the D&S Trust were required to repay the monies must be assessed at trial in the light of all of the factual findings.

[51]     Based on the above analysis, I am satisfied that Sharon may have at least an arguable defence of equitable estoppel and therefore that it would not be right to enter summary judgement on the plaintiffs’ application.  I am reinforced in this view by the need for particular care when dealing with disputes of fact that so often arise in the context of a marriage breakdown where commitments and expectations can change markedly.

Further issues

[52]     Given the findings I have made it is unnecessary to consider in detail whether the decisions  to  advance the sum  of $509,863  and  the liability for the sum  of

$712,795 to the D&S Trust were made unanimously or consider whether the monetary advances were on demand loans or gifts.   It is sufficient to make some brief observations.  Without providing judgement on these issues, it seems unlikely that Sharon could rely on the defence that the decisions were not made unanimously. Even if she was not aware of the decisions at the time they were made, she appears to have sanctioned or approved of them.   At the same time, however,  I cannot dismiss the possibility that the advances were gifts.   The GG Trust deed may be helpful in determining whether or not the monies were gifted to David and Sharon. For  example,  as  an  estate  planning  exercise,  David  may  be  a  discretionary beneficiary of the GG Trust.   The deed may forgive the debt in David’s favour. Because the GG Trust deed has not been provided as evidence, I think it is inappropriate to rule out that possibility.

[53]     The absence of the GG Trust deed presents a similar obstacle to that was faced in Nation v Nation.19   It is possible that the arrangements between David, other discretionary beneficiaries and the trustees could give David a legal or equitable interest in the purported loans and thereby forgive the debt.  In substance, that would help to demonstrate that the monies were intended to be gifts and not on demand loans. If that were the case, it may lead to an estoppel or constructive trust. I think

that the determination of this issue would also benefit from the context of a trial.

Result

[54]     For the reasons I have discussed I am satisfied that the plaintiffs have not discharged the onus of demonstrating that there is no tenable defence to summary judgment.  There are real questions to be tried and both parties are entitled to the benefits of discovery and a trial.

[55]     The application for summary judgment is declined.  Costs on the application

are reserved in accordance with the Court of Appeal’s decision in NZI v Philpott.20

[56]     The Registrar is to allocate an initial case management conference.

Associate Judge Sargisson

19 Nation vNation [2005[ 3NZLR 46 (CA).

20 NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).