Heeg v Heeg HC Nelson CIV-2011-442-000129
[2011] NZHC 1605
•19 August 2011
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
CIV-2011-442-000129
UNDER the Land Transfer Act 1952 section 145A
IN THE MATTER OF an Originating Application to Sustain a
Caveat
BETWEEN ULRIKE GABRIELLE HEEG Plaintiff/Applicant
ANDCHRISTIAN OTTO ALFRED HEEG Defendant/Respondent
Hearing: 25 July 2011
Counsel: P C Maciaszek for Plaintiff
D J Ballantyne for Defendant
Judgment: 19 August 2011
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] On 7 February 2011 the applicant, Ulrike Gabrielle Heeg, registered a caveat against dealings with land against a property owned by the above-named respondent, Christian Otto Alfred Heeg at 9 Mead Road, Brightwater. The caveat number is
8692027.1. On 4 March Christian Heeg, to whom I will refer in this judgment as Christian, applied to Land Information New Zealand under s 145A of the Land Transfer Act 1952 to lapse the caveat. Notice of that was given to Ulrike Gabrielle Heeg, to whom I will refer in this judgment as Ulrike, to the effect that unless an order was made to the contrary by the High Court, the caveat would lapse. On
29 March 2011 an interim order was made that the caveat not lapse until further
order of the Court.
ULRIKE GABRIELLE HEEG V CHRISTIAN OTTO ALFRED HEEG HC NEL CIV-2011-442-000129 19
August 2011
[2] Christian Heeg then applied to the Court for orders that the caveat be removed from his title, and discharging the interim order made on 29 March. It is this application which is the subject of this judgment. Christian Heeg is in fact the applicant, therefore, and Ulrike Heeg.
[3] The issue in this case is whether the respondent has made out grounds for the caveat to remain on the title, or whether it should be discharged. It was accepted by both parties that the onus lies on Ulrike Heeg.
Terms of the caveat
[4] By Caveat 8692027.1 Ulrike Heeg claims:
an estate by way of constructive trust whereby the registered proprietor, Christian Otto Alfred Heeg, holds the property on trust for the caveator pursuant to certain payments made by the caveator in 2001 by way of loan advances for the benefit of the registered proprietor which funds have in whole or in part been applied by the registered proprietor in 2005 for the purchase of the above property following the sale of two earlier properties at Princes Drive, Nelson.
[5] It follows that unless Ulrike Heeg can demonstrate to the requisite standard that Christian Heeg holds the property over which the caveat is registered under a constructive trust for her, the caveat must be discharged.
Brief factual summary
[6] Christian Heeg is Ulrike Heeg’s son. Ulrike Heeg was the second wife of Christian Heeg’s father, August Theodore Otto Heeg. He died in June 1998. At that time Christian was 17. From a translation of his will it is clear that Ulrike Heeg was his sole heir. However, the evidence showed that under German law that does not mean, as it might be expected to in New Zealand, that she would receive the entire estate. Rather, each of August Heeg’s two daughters by his first marriage was entitled to a benefit known as a statutory entitlement, prior to any legal entitlement either might receive by way of a gift under the will itself. Similarly, Christian Heeg would have been thus entitled. It was common ground that each of the two
daughters received a statutory and legal entitlement of one million deutschmarks each. Translated, the provisions of the will relevant to Christian Heeg are these:
2. Inheritance
I declare as my sole heir:
My wife, Ulrike Heeg, born Macke.
My estate mainly consists of company capital and shares. This estate shall be used to secure the livelihood of my wife and my son Christian Heeg.
4. Statutory portions
I have been advised by the Notary about the legal implications of the statutory demands and appoint:
1. Both my daughters shall be paid their statutory portions,
2.I assume that my son Christian will not demand his statutory portion. Instead, as mentioned before, it is my will that my estate shall be used to secure the livelihood of my son as well. The balance to between statutory and legal portion shall be regulated by the last will of my heir.
My son Christian is entitled to his legal portion in case: (a) that Ulrike Heeg enters another marriage
(b) at latest with the death of Ulrike Heeg.
My heir can at any point decide freely to pay the legal portion as she sees fit.
[7] In fact, Christian Heeg did not demand his statutory portion, and the events which followed form the basis of Ulrike Heeg’s claim, now, to a property owned by Christian Heeg in New Zealand, under an alleged constructive trust.
[8] It is not possible on the evidence to determine the exact value of the estate but plainly it was substantial, much more than the sum of 600,000 deutschemarks recorded in the will. Further, the family home was in the name of Ulrike Heeg, not her late husband, and in addition, she had a substantial fund in a Swiss bank account in her name. The parties disagree on whether these were or were not part of the estate.
[9] Two other properties need to be mentioned as part of the factual matrix. First, Christian Heeg owned a small property adjacent to the family home. As I will relate he agreed some years later to sell this to his mother. Secondly, Christian
Heeg’s grandmother devised to him her property in Germany. Again, Christian Heeg
agreed to sell this property to his mother.
[10] At the time of his late father’s death Christian Heeg lived with Ulrike, and that continued for a number of years. From 1974 onwards he, and she, had travelled to New Zealand for holidays. In 2000 they travelled to New Zealand for a six week holiday and in the course of that trip, as Ulrike put it in her first affidavit, “we both decided to consider applying for permanent residence in New Zealand”. They looked for a residential property and found one which they considered to be suitable in Princes Drive, Nelson. They decided to buy this property and a section immediately adjacent to it, fronting onto Dunair Way. They bought both properties and a Christchurch solicitor, Mr Dean Russ, acted for both of them on the conveyancing aspects of the purchase. Settlement did not take place until later in
2001 after they had returned to Germany. The total price was around $NZ170,000. On 20 April 2001 Ulrike:
authorised a payment from my Swiss bank account to the trust account of our solicitor Dean Russ for the amount of $NZ503,611.35 which comprise the purchase price of both properties and incidental costs and expenses.
[11] Ulrike and Christian became jointly registered as proprietors of both properties. She stated that “we registered the titles in joint names in order to enhance the prospect of both us acquiring permanent residence in New Zealand”. By the time registration of the transfers took place Christian had returned to New Zealand and started to reside in the Princes Drive property. Ulrike remained in Germany.
[12] In or around July 2003 Christian asked Ulrike to transfer to him both Nelson properties, in order to further advance his application for permanent residence. Evidently Christian instructed Dean Russ to undertake the conveyancing aspects of this transaction. According to Christian he and his mother had extensive discussions regarding the properties and agreed that to best support his application for residency, give effect to his father’s wishes and his own wishes to be independent, they would arrange for transfer of the properties to him. He said that his mother understood that he needed to raise capital for his immigration endeavour and for future business plans as a means to secure an income in New Zealand.
[13] Although he deposed in his first affidavit that after this agreement was reached, he and his mother instructed Mr Russ, that is not borne out by a letter from Mr Russ to Ulrike dated 21 July 2003. In that letter the firm advised that they had been contacted by Christian who advised that he was to purchase her interest in the two properties. They sent her a sale agreement for each property and an acknowledgement of debt reflecting a loan back to Christian for half the value of the two properties, according to a registered valuation which Christian had obtained. This acknowledgement of debt contained a figure which Mr Russ described as “... equalling your interest in both properties ...”. Instructions for execution of the documents followed and the letter concluded with the following passage:
In terms of this transaction I note that I am acting on the instructions of Christian as far as this purchase is concerned. I am not therefore advising you in respect of this transaction and if you have any doubts or concerns regarding the nature of the transaction or the documents you are being asked to sign, you should take legal independent advice.
[14] The Deed of Acknowledgement of Debt described the advance as one half of the value of the property, being made “to enable the borrower to complete the purchase of the lender’s share in the two properties”.
[15] Ulrike did not take independent legal advice but did sign the agreements for sale and purchase and the Deed of Acknowledgement of Debt and returned them to Mr Russ. In evidence both sides disavowed any need for this document: Christian because he maintains he was receiving the half share of the property as part of his late father’s estate, Ulrike because she maintains she was retaining the beneficial interest in that half under a constructive trust. It seems neither view was reflected in instructions given to Mr Russ. The properties were transferred to Christian Heeg and shortly thereafter he sold them both, and purchased the property at Brightwater over which the caveat has been lodged. He accepted in his affidavit that he applied the proceeds of sale of the sections to the Brightwater property. Christian Heeg and his wife and children have continued to live at that property, and now wish to sell it. The caveat by which Ulrike Heeg claims that Christian Heeg’s ownership of the property is on a constructive trust for her prevents that occurring.
[16] In May 2004 Christian Heeg sold to Ulrike a property he had inherited from his grandmother. He obtained a valuation of the property at €660,000. He sold it to his mother for €600,000 because this would give him a prompt sale and provide a cash sum which he could place in a bank in New Zealand to support his current application for residency. Ulrike Heeg paid for the property on 3 May 2005 and the funds were placed on deposit at the National Bank in New Zealand. They remained in a term deposit for an extended period.
[17] As noted earlier Christian Heeg also owned a property adjacent to his mother’s house but on a separate title. According to Christian he agreed to sell this property to his mother for €150,000, and received payment for it in two instalments of €98,000 and €52,000. Ulrike Heeg’s position on that is that these sums represented an advance to Christian Heeg. It is not necessary to make a determination of this dispute, for the purposes of deciding this application but it is relevant to record it because it is one of a number of financial transactions between Ulrike and Christian over recent years. I was informed, also, that there were a significant number of other financial transfers between these parties over the years but I was not given details. The relevance of their having occurred is that Ulrike and Christian entered a number of apparently complex and intermingled financial transactions, in the context of his being entitled to funds from his father’s estate at the discretion of Ulrike (or ultimately on her remarriage or death).
[18] Christian deposed that once the 2003 transfers of the Nelson properties had been concluded and the purchase of his property adjacent to his mother’s home had also been concluded, he wrote his mother a letter on 18 February 2005. In this letter, which Ulrike Heeg maintains she has never received, he stated:
I Christian Heeg, born on 25 January 1971 in Hannau as son of Otto Heeg and Ulrike Heeg under the condition of payment of €150,000 resulting out of the purchase of my property of Hochstadter Landstrasse 17, Floor 17, Floorstuck 3-20 have no longer any claim out of the inheritance of my father.
Every obligation to pay any part of the inheritance of my father’s is no longer relevant since the formerly joint owned properties in New Zealand have been transferred into my name and further my mother paid my obligations out of the inheritance from my grandmother. Hence I do not have any more claims against my mother.
The payment for the property Hofstade Landstrasse 17, Floor 17, Floorstuck
3-20 in Hochstadter Landstrasse 17 is lent without interest for an undefined
period of time. The time of repayment is in my mother’s free hands.
Legal principles
[19] In this case the onus falls on Ulrike to establish that she has an arguable case for her claimed cavaeatable interest: Holt v Anchorage Management Ltd.[1]
[1] Holt v Anchorage Management Ltd [1987] 1 NZLR 108
[20] In this proceeding, it is not the task of the Court to determine the rights of the parties.[2] In Macrae v Rapana,[3] Fisher J said:
[2] New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41
[3] Macrae v Rapana HC Auckland M633/94, 17 June 1994
Except where patently lacking in credibility on its face, the evidence advanced by and on behalf of the plaintiff should be accepted as correct for present purposes.
And further, on the approach to evidence in conflict:
Faced with such a conflict, and for present purposes only, the plaintiff’s
evidence must be assumed to be correct.
[21] The imperative of the assumption stated by the learned Judge is not to be read as requiring the assertions of caveators to be accepted over those of registered proprietors without consideration of other principles.
[22] It is established that the Court does not have to accept affidavit evidence uncritically. The Court is entitled to take a robust view of vague contradictory or implausible assertions in evidence given by affidavit.[4]
[4] Bacher v Bacher HC Auckland M187-IM02, 21 May 2002, Master Anne Gambrill Eng Mee Yong v Letchumanan [1980] AC 331 Pemberton v Chappell [1987] 1 NZLR 1
[23] An interest under a constructive trust is an equitable interest. Despite earlier debate on whether an interest under a constructive trust is capable of supporting a caveat, the issue now appears to be resolved. An interest under a trust in a specific
property will support a caveat if the interest claimed is an interest in the land itself,
as distinct from an interest in a trust of which the property is merely an undefined part of the subject-matter. In Holt v Anchorage Management (above), the Court said:
His interest as cestui que trust is clearly an estate or interest in the land by virtue of an unregistered interest or of any trust. It matters not that it is an equitable interest and not a legal estate. Many equitable interests are the subject of caveats. The interest of the purchaser of an estate in fee simple under an agreement for sale and purchase is an interest which commonly supports a caveat even though such a purchaser has only an equitable interest in the land and none in the legal estate. Such a purchaser may caveat his vendor’s title even though he cannot show any actual or threatened breach of contract. A sanction against the improper use of the caveat procedure is provided by s 146.
The appellant’s position would be different if his interest were an interest in a trust of which real property was only an undefined part of the subject matter of the trust. In that case he could not claim to be entitled to a beneficial interest in the land. This was the basis on which Guardian Trust and Executors Co of N.Z. Ltd v Hall [1938] NZLR 1020 was decided. To the same effect is Re Savage’s Cavea t [1956] NZLR 118 where all the caveator could claim was a right to share in any surplus of the intestate estate after liabilities had been discharged. But that is not the measure of the appellant’s interest here. He can point to specific land and fairly claim an interest as cestui que trust in that land.
[24] An interest in land under an alleged constructive trust has been held to be a cavaetable interest in Bannister v Bannister,[5] Kexing Li v Zhiwei Xing,[6] and Walker v Pyne.[7]
[5] Bannister v Bannister [1948] 2 2 All ER 133
[6] Kexing Li v Zhiwei Xing HC Auckland CIV-2010-404-008005, 10 June 2011
[7] Walker v Pyne HC Auckland M1855/90, 25 February 1991, Master Towle.
[25] Ulrike Heeg’s claim to constructive trust is derived partly from the initial purchase of the Nelson properties and partly from Christian’s purchase of her initial half share in 2003. The proceeds of sale of those properties were applied to the purchase of the Brightwater property over which the caveat has been lodged, so if the trust is established the interest can be traced into the latter property. More detailed analysis of these issues follows under Discussion below.
[26] If Ulrike Heeg establishes an arguable claim sufficient to establish the right to maintain a caveat over the property there remains a residual discretion in the Court to nonetheless direct removal of the caveat. However, that discretion should only be
exercised where there are exceptional circumstances, for example where the Court is
completely satisfied that removal of the caveat would not prejudice the caveator’s
interests;[8] Hinde McMorland & Sim Land Law at 10.020.
[8] Pacific Homes Ltd (in receivership) v Consolidated Joineries Ltd [1996] 2 NZLR 652
Summary of the arguments
[27] Ulrike Heeg’s claim is that when the Nelson properties were placed into their joint names in 2001 the share taken by Christian was subject to a constructive trust in favour of Ulrike. It was placed in his name solely to enhance the prospect of their both acquiring permanent residence in New Zealand. The case for Ulrike Heeg is posited on her view that the funds used to purchase the two Nelson properties were drawn from a Swiss bank account in her sole name which was her money.
[28] Christian, on the other hand, maintains that the Nelson properties were bought with monies that were actually his late father’s, and in half shares as part of the intention he and his mother had to both obtain residency in this country; further, that the application of the funds from the account in her name was by way of her partly satisfying his entitlement under his father’s will which required the estate to be used “to secure the livelihood of my wife and my son Christian Heeg”.
[29] He maintains that although the bank account was in Ulrike’s name, it was in fact a fund owned by his father’s estate, which originated as a bank account in Austria. Evidently Mr Heeg senior had an aversion to the payment of taxation and drove across the border to lodge funds derived from his business, into a numbered and therefore untraceable account in that country. Ulrike had signing authority on the account. After the death of Mr Heeg senior, and a change in banking laws in Austria, Ulrike and Christian moved the funds to a Swiss bank account. Christian has unrestricted signing rights on this account, and therefore full access to the funds in it. Ulrike did not bring any assets into the marriage, and did not work at all during it, so in Christian’s opinion the account was not at any time owned by her. Thus Christian’s position in relation to this original source of money for the transactions in question is that he had an entitlement to a share of his father’s estate, and this was one of its assets. It is his argument that his initial half share of the Nelson properties
represented a partial satisfaction of his ultimate interest in the estate.
[30] Ulrike countered that argument by saying that despite the obligation in the will to secure his livelihood, her obligation to pay him the capital was deferred until the point of her remarriage or death.
[31] Ulrike Heeg maintains that when her half of these properties was transferred to Christian in 2003 this too was on trust for her and for that reason no acknowledgement of debt was required as he was merely taking the property in a fiduciary capacity for her. Thus it is her argument that having sold that property and applied the proceeds to purchase his present property, Christian holds that also on constructive trust as monies held on trust for her were utilised for the purchase.
[32] Ulrike says that this transfer took place to advance Christian’s application for permanent residence, which would be greatly improved if he were the sole owner of “such valuable unencumbered properties in New Zealand”. According to her she agreed to the transfer as she wished to assist him as best she could, but she wanted to ensure that as between them it was still clear that the funds to acquire the two properties, and thus the properties themselves, belonged to her.
[33] In accordance with this view she stated that she trusted Christian to do the right thing but always regarded herself as still the owner of both properties as she had initially provided all the purchase price funds for them.
[34] In her first affidavit Ulrike stated the following:
The Deed of Acknowledgement of Debt provides that repayment by the Respondent is upon demand. It was our intention and my expectation that I would continue to have an interest in the properties and that this transaction was purely to place the Respondent in a more favourable position for immigration purposes. I believed that the Respondent was therefore holding the two Nelson properties on trust for me. I had no knowledge of the implications of completing this transaction on the basis of the documentation which I signed and received no advice in that regard. I believed that I was transferring the properties to my son to assist him for other purposes; however I certainly expected to retain an interest in the properties in some way and always expected full repayment of all my funds one day.
[35] Christian’s evidence on this transaction is that he had a deeper insight into the requirements of immigration in this country by 2003 and he and Ulrike had extensive discussions about the properties. According to him they agreed that in order to best
support his application for residency and give effect to his father’s wishes, together with his wishes to be independent, they would arrange for the transfer of the properties to him. This transaction and the purchase by Ulrike of the property he owned next door to her home completed, in his view, his mother’s obligations – hence the letter he wrote (paragraph [18] above).
[36] All the instructions to Mr Russ for the transaction were given by Christian and Mr Russ expressly disavowed acting for Ulrike on the transaction, recommending to her that she took independent advice if she needed clarification of any aspect of the transaction. In the event, she did not do so.
[37] The copy of the Deed of Acknowledgement of Debt which was produced to the Court was signed by Ulrike but not by Christian. He evidently does not recall whether he ever signed it. He regarded it as a mere formality and had he known the implications of it, namely that he acknowledged a debt to his mother, he would not have signed it as he maintained that the properties were agreed to be his.
[38] Ulrike maintained that although she can speak and understand spoken English a little she cannot read or write it very well. In contrast to this, Christian deposed that his mother speaks fluent English and German, understands written English well, and that the person who witnessed her signature on the deed of acknowledgement of debt also speaks fluent English and German; he believes that this witness would have advised her what she was signing.
[39] This sequence of events must be seen in the context that Christian and Ulrike got on with each other extremely well throughout this period and the relationship between them only deteriorated when she arrived in New Zealand late in 2010 with her belongings, intending to stay here.
[40] As I have indicated earlier the parties canvassed a number of other transactions in their affidavits. I have considered all this evidence. None of it directly bears on the principal matters which will need to be determined in this case, whether there was or was not an initial transaction giving rise to a constructive trust of Christian’s one half of the share of the property in favour of Ulrike, and a
subsequent transaction giving rise to a constructive trust in favour of Ulrike for her own half share which she conveyed to him in 2003. Rather, the fact so many transactions took place provides a context for the subsequent assertions of Ulrike; of course it will also be relevant to a final assessment of the respective financial positions of the parties, should that be material in substantive proceedings once filed, and aspects of it will be relevant to assessments of credibility which can be made at trial but not on this application. It is not therefore necessary for me to canvass this evidence in this decision on whether the caveat can be maintained. This depends on my assessment of the evidence surrounding the two principal transactions.
Discussion
[41] As the versions of the parties vary so widely it is, again, impossible to tell who is telling the truth from a mere consideration of their respective assertions. I am mindful that it is necessary only for Ulrike to show that she has an arguable case that her version of events is right. Taking her statements at face value, without more, might be seen as sufficient to establish that position. In my judgment, however, I should not in the circumstances of this case accept her version of events uncritically, and there are in my view three key factors which must also be considered.
[42] The first is that despite these two transactions and a number of other transactions involving significant sums of money, having taken place over a period of a decade, the assertions now made in support of the allegation of a constructive trust were not made until February 2011, almost exactly 10 years after the first of the events said to give rise to the trust. There was an opportunity at the outset for Ulrike to have recorded in some way, whether formally or informally, her position. There was a further opportunity at the time the transfer of her registered half share in the Nelson properties to Christian was effected. There have been numerous opportunities since, for example at the time of the sale of Christian’s adjacent property in Germany and the time of his sale of the property inherited from his grandmother, both to Ulrike, for the position to again have been documented legally, or at the very least referred to in a letter or an email. Instead, there has been complete silence about Ulrike’s present contention.
[43] Secondly, when Ulrike’s claim was raised, by her present solicitors in a letter to Christian, the instruction they recorded from Ulrike was to raise with Christian the repayment of a number of “loan advances” she had made to him in the last decade. The allegation of a trust was made in the letter in relation to the proceeds of sale of the two Nelson properties, applied to purchase the Brightwater property, which was thus also said to be held in trust for Ulrike. Then the letter sought repayment of loans for the Nelson purchase and other stated loans, from the proceeds of sale of Brightwater. There are a number of other references to loans and advances in the letter. Despite this, Ulrike has not commenced proceedings to recover advances. In contrast, too, to this position, at paragraph 20 of her first affidavit Ulrike swore that she believed Christian held the two Nelson properties in trust for her, that she expected to “retain an interest in the properties in some way” and “always expected full repayment of all of my funds one day”.
[44] Then at paragraph 23 of the same affidavit, Ulrike said that Christian retained the proceeds of sale of both the properties “and did not account to me for any of them nor did he make any payment to me whether by way of partial loan repayment or otherwise”.
[45] There is a material inconsistency in Ulrike’s position. Either she advanced funds to Christian to enable him to buy a half share in the Nelson properties, in which case that half share was his absolutely and he owed a debt to Ulrike, or she provided the entire purchase price to buy the entire beneficial interest in both properties and held the legal estate, also, in one half while Christian held the legal estate in the other half in a fiduciary capacity.
[46] Each scenario would result in a different position. After the next stage, the transfer of Ulrike’s half share to Christian in 2003, the position changed again. As to a half, Christian continued either to own it outright or to own it in a fiduciary capacity as before. As to the other half, formerly in Ulrike’s name, he either received it outright or he received it in a fiduciary capacity. The capacity in which the half initially owned by Ulrike was then held by Christian is to be decided by analysis of the events that occurred at that time. If it was an outright sale Christian came to own that half outright. If it was a transfer of the legal estate with the beneficial estate
retained by Ulrike, he held it in a fiduciary capacity. As a result he could have come to own both halves in the same capacity, or in different capacities.
[47] Thus when the Nelson properties were sold the following scenarios presented themselves:
(a) half of the proceeds was held by Christian outright, being an initial absolute half share he had in the properties;
(b)half of the proceeds was held by Christian on trust for Ulrike from the original purchase;
(c) half of the proceeds was held by Christian outright, being the half transferred by Ulrike to him in 2003;
(d)half was held by Christian on trust for Ulrike, being the half transferred to him legally, but not beneficially, in 2003.
The proceeds could be held under: (i) (a) and (c)
(ii) (b) and (c) (iii) (a) and (d) (iv) (b) and (d)
[48] Only scenario (iv) leads to the whole proceeds being held on trust for Ulrike; scenarios (ii), and (iii), lead to half the proceeds being held on trust for Ulrike, and scenarios (i) leads to Christian being entitled to the entire proceeds.
[49] Assuming, as I will present purposes, that the proceeds of sale of the Nelson properties may be traced directly into the Brightwater property, this analysis directs the way the claim to a caveatable interest under a constructive trust could arise.
[50] Ulrike’s case did not present an analysis with this precision, yet it was surely
required. Each of the two principal transactions requires separate analysis to
determine which of the above scenarios applies. The mixed claims to advances and trusts accentuated the difficulties in analysing the correct position.
[51] Thirdly, those documents which have come into existence in fact depict a situation which is inconsistent with the existence of the trust now claimed. The initial transaction resulted in the parties being registered as proprietors of the property as joint tenants, which is entirely inconsistent (because of the presumption of survivorship) with the concept of a half share being held on trust by one party for the other. Had Ulrike died her share would have passed by survivorship in its entirety to Christian. This fact supports the notion that Christian took a half share outright initially.
[52] Documents created and signed for the subsequent transfer of her half share of the property to Christian are also inconsistent with the suggestion now made that this half share is held on constructive trust for her. I accept that there are differences of opinion in the evidence about the purpose or effect of the Deed of Acknowledgement of Debt which Ulrike signed and which Christian cannot recall signing. Even allowing for Ulrike having a less than perfect understanding of written English (which I leave open despite evidence to the contrary), the documents do nonetheless provide that she was divesting herself of her one half share in exchange for a debt without reference in any way to that otherwise apparently absolute transfer being in fact a transfer only of the legal estate in the property, with her retaining an equitable interest. The wording of the Acknowledgement of Debt is completely inconsistent with the concept of Ulrike retaining ownership of a beneficial interest in a half share. The wording is not complex (see [14]), and had Ulrike had any doubt at all about its meaning or effect she could have taken independent advice; indeed Mr Russ specifically pointed this out to her. Even with a less than perfect understanding of written English the wording quoted in paragraph [14] above from the Deed must surely have left Ulrike in no doubt that she was selling her half of the property to Christian. The balance of the document stated he would owe her a debt as a result.
[53] At the time it was signed it was clear recognition by Ulrike that she was not retaining a beneficial interest in the property. Whether Christian is in fact indebted to Ulrike for the value of the half share will depend on findings at trial on whether
Ulrike held her half share as an estate asset, subject to the mandates in the will regarding Christian, or outright, personally. This issue is not relevant to this application. It is relevant only if a claim is made by Ulrike for recovery of alleged debt.
[54] It is not, of course, claimed that an express trust was created. There was, however, an opportunity on this occasion, as at the time of the initial purchase, to do precisely that; that opportunity was not taken, and an assertion years later that notwithstanding that, and the clear express wording of the documents recording the transaction, the transfers were in fact intended to have the effect of the property being held on a constructive trust, must in my opinion be treated with considerable circumspection.
[55] In my opinion these elements of the history of events between the parties materially diminish the extent to which I can accept Ulrike’s assertions as establishing an arguable case in support of her claimed grounds for sustaining the caveat. In so saying I have not overlooked the mandate of Fisher J in Macrae v Rapana: ([21] to [23] above). However, on each transaction the assertions now made by Ulrike are inconsistent with, or directly contrary to, documents created contemporaneously with each transaction, are made between eight and 10 years after the events in question, have not been made earlier, and apart from one fact are not supported by any document or independent evidence. That fact is that the bank account from which the initial purchase monies came was in the sole name of Ulrike. However, there are reasons to doubt her assertion that she was the owner of the monies in the account, and Christian had unrestricted access to these monies, a fact more consistent with the monies belonging to the estate (in which he had an entitlement) than to Ulrike (from whom he had no entitlement). Therefore, even giving this fact due weight in support of Ulrike’s asserted position, I find that Ulrike does not have an arguable case of an interest under a constructive trust stemming from the initial purchase of the property. I also find that she does not have an arguable case of an interest under a constructive trust arising from the transfer of her half share to Christian in 2003.
[56] Counsel for Christian levelled some criticism at the wording of the caveat itself, submitting that it was inadequate to properly notify a claim based on a constructive trust. Given the decision I have made, it is not necessary to deal with this submission. I note, however, the Court of Appeal decision in Zong v Wang,[9] in which the Court stated:
[9] Zong v Wang CA282/05, 5 September 2006
The underlying purpose of the caveat regime could be undermined if too strict an approach were taken to the detail required to describe the interest claimed and its derivation from the registered proprietor.
[57] Having considered the terms of the caveat I think it is sufficiently clear that the interest claimed by Ulrike is based on a constructive trust; I accept that the wording is less than ideal but the basis of the claim and its derivation from the registered proprietor are in my opinion sufficient. Had it not been my decision to direct the removal of the caveat on the grounds stated, I would not have directed it on the basis of an inadequacy in wording.
Outcome
[58] Ulrike Heeg’s case is not made out. Christian Heeg’s application must be granted. I direct that caveat 8692027.1 be removed from Identifier 74123 (Nelson Land Registration District). The interim order sustaining the caveat until further order of the Court is discharged. Christian Heeg is entitled to costs on a 2B basis
with disbursements fixed by the Registrar.
J G Matthews
Associate Judge
Solicitors:
Geddes & Maciaszek, PO Box 13467, Christchurch (Fax: 03 366 6207) C & F Legal, PO Box 1049, Nelson 7040 ([email protected])
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