Hingston v Hingston
[2023] NZHC 649
•28 March 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2012-470-918
[2023] NZHC 649
BETWEEN KEITH HAMILTON HINGSTON
Plaintiff
AND
DAVID LEWIS HINGSTON and
ANTHONY MURRAY RICHARDSON as
trustees of the Hingston House Trust Defendants
On the Papers Appearances:
J W Howell for the Plaintiff in High Court proceeding/ Respondent in Court of Appeal proceeding
D G Dewar and J J Pietras for the Defendants in High Court proceeding
C J Griggs and J J Pietras for the Appellants in Court of Appeal proceeding
Judgment:
28 March 2023
JUDGMENT (No 2) OF GWYN J
Introduction
[1] This proceeding was brought by Keith Hingston (Keith) against his son David Hingston (David) and Anthony Richardson, as trustees of the Hingston House Trust (the defendants).
[2] In the proceeding, Keith pleaded a number of causes of action against the defendants: undue influence, unconscionable bargain, breach of fiduciary duty, unjust enrichment, breach of contract and misrepresentation. I issued a judgment on Keith’s claims on 23 December 2021.1 The Judgment was appealed to the Court of Appeal
1 Hingston v Hingston [2021] NZHC 3621 [Judgment].
HINGSTON v HINGSTON [2023] NZHC 649 [28 March 2023]
which issued its judgment on 22 November 2022.2 The Court of Appeal has remitted the defendants’ counterclaim back to this Court for consideration, based on the evidence and submissions adduced at trial.3
Background
[3] It is necessary to set out the background to the dispute in order to understand the counterclaim.
[4]All of Keith’s claims arose out of the following series of events.
[5] In 2007, when he was in his early 70s, Keith’s second marriage, to Shona, ended. At the time of separation they owned a house together in Welcome Bay, Tauranga (the house). Following relationship property proceedings, a Family Court order made by consent on 8 September 2009 required Keith to pay Shona $295,000 by 23 October 2009, failing which the house was to be marketed for sale and Shona to receive $295,000 of the sale proceeds. By the time the 8 September 2009 consent order was arrived at, approximately $40,000 in legal and accounting fees had been incurred on Keith’s behalf.4
[6] Keith was unable to raise the money to pay Shona her entitlement and he turned to David for assistance. Keith, by then in his mid-70s, and the Hingston House Trust, a trust set up by David for the purpose (the Trust), entered into a series of agreements on 19 October 2009 which provided, among other things, for the sale of the house to the Trust, payment of the monies owing to Shona, and a right for Keith to occupy the house for life, on certain terms.
[7]Some detail of these transactions is necessary to understand the counterclaim.
For ease of reference, I set out the relevant paragraphs of the Judgment as follows:5
[16] On 15 October 2009 David settled the Trust, with himself and Anthony Richardson as trustees. The principal discretionary beneficiaries of the Trust are David, his partner Wendy, and their daughter. The Trust was
2 Hingston v Hingston [2022] NZCA 568 [CA judgment].
3 At [110].
4 Judgment, above n 1, at [14].
5 At [16]–[21] (footnote omitted).
established for the purpose of purchasing the house from Keith and thus enabling him to pay Shona her entitlement under the varied consent order.
[17] On 19 October 2009, when Keith was 75 years old, three documents were executed by the Trust and Keith (collectively, the transaction). Both Keith and the Trust received independent legal advice.
[18] First, an agreement for sale and purchase recording the sale of the house by Keith to the Trust for a purchase price of $375,000. The proceeds of the sale went to meeting the $295,000 owed by Keith to Shona, discharging a mortgage over the house of approximately $35,000, and the legal and accountancy fees associated with the second Family Court proceedings.
[19] Second, an agreement providing a right for Keith to occupy the house for life (agreement to occupy). There was to be no rent payable, and the stated consideration was the transfer of the house, a sum of $115,729, the transfer of Keith’s superannuation entitlement, and transfer (or sale proceeds) of various chattels and vehicles. The salient terms of the agreement to occupy were:
2.Keith is currently living in the Property and it is intended that he will remain in occupation of the Property as his principal place of residence for the remainder of his life or until such time that the Trust deems it appropriate for him to be found alternative accommodation of a suitable standard.
3.Keith will share the Property with his partner, Gwendoline Myra Hingston (“Gwen”), and they shall endeavour to live in a peaceful and harmonious manner. In the event their relationship deteriorates then the Trust will be able to exercise its discretion under the terms of this Agreement to Occupy (“the Agreement”) as to the best manner to resolve alternative living arrangements for Keith.
…
NOW AND THEREFORE THE PARTIES AGREE AS FOLLOWS:
1.The Trust agrees that Keith can continue to occupy the Property as he has previously enjoyed prior to the sale of the Property by him to the Trust.
2.There shall be no rental payable in respect of the Agreement, however, consideration for this Agreement is provided as follows:
2.1The transfer of the Property to the Trust.
2.2A payment of $115,729.00 being made in respect of his right to occupy the Property for life as recorded in the Agreement.
2.3A Deed of Acknowledgement of Debt for
$115,729.00 being entered into by Keith in favour of the Trust.
2.4The transfer (or sale proceeds thereof) of Keith’s Isuzu Journey motor home to the Trust.
2.5The transfer (or sale proceeds thereof) of Keith’s Stabicraft boat, outboard motor and trailer to the Trust.
2.6The transfer of Keith’s current and all future Jacques Martin superannuation entitlement (to a bank account nominated by the Trust) to the Trust.
2.7The transfer of (or sale proceeds thereof) of the following assets (at the agreed value) to the Trust:
(a)Small outboard boat, fishing gear
$500.00
(b)Suzuki Vitara
$10,000.00
(c)Trailer
$400.00
(d)Tools and Workshop items
$1,000.00
(e)Kitchen and household furniture
$5,000.00
(f)Home appliances
$1,000.00
(g)Electronic items and TVs etc
$2,000.00
(h)Garden tools
$500.00
Total
$20,400.00
3.Keith will be jointly responsible with Gwen for all maintenance and upkeep of the Property together with any associated costs.
…
5.Keith together with Gwen will be responsible for the following payments in respect of the Property:
5.1All insurance policies
5.2Rates
5.3Utilities (including power and phone)
The costs incurred in respect of clauses 5.1 and 5.2 are to be paid directly by Keith and Gwen to a Bank account nominated by the Trust who will pay these costs on Keith and Gwen’s behalf.
6.The Agreement will remain in force for 30 years or until such time as this Agreement is dissolved or Keith dies.
7.In respect of the Agreement the Trust has a right to sell at any time at its sole discretion the Property, but the Trust acknowledges that it must provide suitable alternative accommodation in consideration of this Agreement.
…
12. Keith acknowledges that should Gwen’s behaviour impact adversely upon his cohabitation with Gwen that the Trust shall be entitled to review and alter the terms of the Agreement on its own account. Further, Keith agrees that should his behaviour impact adversely upon their cohabitation that the Trust shall be entitled to review and alter the terms of the Agreement on its own account.
…
[20]Third, a deed of acknowledgment of debt in respect of the sum of
$115,729.00 for the right to occupy.
[21] Also on 19 October 2009 the Trust and Gwen signed an agreement providing a right for Gwen to occupy the house. The provisions of that agreement were substantially the same as the agreement entered into with Keith, except for the provision as to consideration, which was in the following terms:
2.There shall be no rental payable in respect of the Agreement, however, consideration for his Agreement is provided as follows:
2.1The transfer of $158,989.50 from Gwen to the Trust.
2.2A payment of $147,195.00 being made in respect of her right to occupy the Property for her life as recorded in the Agreement.
2.3A Deed of Acknowledgement of Debt for $11,787.50 being entered into by Gwen in favour of her.
2.4The transfer of fifty percent of Gwen’s current and all future Jacque Martin superannuation entitlement (to a bank account nominated by the Trust) to the Trust.
[8] The relationship between Keith and Gwen subsequently broke down. In January 2010, Gwen moved out of the house, returning to live in Palmerston North.
Keith then entered into a domestic relationship with Petra, who began living with Keith in the house in April 2010.
[9] David considered that Keith and Gwen’s separation, and Keith’s allowing Petra to live in the house, amounted to a breach of the terms of the agreement to occupy. During July and August 2010 David told Keith and Petra that Petra had no right to live in the house and on 6 September 2010 David wrote to Petra requiring payment from her of what he termed “rental arrears”, together with a bond, totalling $9,735 (calculated based on a weekly rental of $295).
[10] On 19 January 2011, David handed Keith a notice evicting Keith and Petra from the house and stating an intention to alter Keith’s agreement to occupy the house, pursuant to cl 12 of the agreement. After some to-ing and fro-ing between the parties, Keith left the house on 2 February 2011 and has not lived there since. The Trust sold the house in September 2015. David retained most of the chattels, including the Suzuki Vitara motor vehicle, the Stabicraft boat, televisions and Keith’s tools. Keith took the Isuzu motorhome. The parties have been engaged in a bitter dispute since that time. This litigation is the culmination of that dispute.
The Judgment
[11] On 23 December 2021, I found for Keith in respect of two of his claims. I concluded that:
(a)the transaction in 2009 was the result of undue influence by David of Keith; and
(b)the Trust is liable for breach of contract in relation to the agreement to occupy.
Court of Appeal judgment
[12] David and the trustees appealed the Judgment to the Court of Appeal. On 22 November 2022 the Court of Appeal gave judgment allowing the appeal and setting aside the judgment on the undue influence cause of action.6
[13] The Court of Appeal also remitted the defendants’ counterclaim to the High Court for determination.7
Counterclaim
[14] In their Statement of Defence, including Set off and Counterclaim to Plaintiff’s Third Amended Statement of Claim, the defendants pleaded that in their capacity as trustees they were at all relevant material times after 16 October 2009 lawful owners of certain property, which included inter alia:
(a)The Isuzu Journey Motorhome, which had an estimated value of
$70,000.
(b)A small boat and outboard motor, with an estimated value of $2,500.
(c)A bird aviary fixed to the land and part of the property transferred, with an estimated value of $10,000.
(d)All current and future Jacques Martin / National Provident superannuation entitlements (held by Keith).
(e)A debt of $115,729 recorded in a Deed of Acknowledgement of Debt dated 12 September 2009.
(f)A trailer, sundry tools, household items and equipment, with an estimated value of not less than $9,900.
6 CA judgment, above n 2, at [103].
7 At [104].
(g)The legal fees and related amounts referred to in the Acknowledgement of Debt dated 20 July 2008.
(h)The sustained ownership in the property of 21 Aurora Ave as recorded in the Acknowledgement of Obligation.
(i)Gwen’s capital was promised to the first defendant in return for her peaceful occupancy right in 21 Aurora Avenue.
(j)Costs incurred in the unpaid insurance and maintenance with particulars to be provided at trial.
[15]Keith denied the counterclaim.
[16] The defendants say that Keith breached his arrangements and agreements, with the trustees, in various respects, in that he:
(a)instructed Gwen not to return to the house.
(b)allowed Petra to have occupancy of the house for an extended period of time, without leave, licence or any form of permission from the trustees.
(c)appropriated and sold the small boat and outboard motor for a sum not disclosed, without accounting for the proceeds.
(d)wrongfully retained and held for his own use the Isuzu motorhome.
(e)reversed the instruction regarding the Jacques Martin superannuation fund.8
8 David’s evidence was that the contributions which Keith ought to have paid from the date of cessation of payment to September 2015, when the house was sold, totalled approximately
$38,400.
[17] In consequence, the defendants claimed in the High Court that the amounts set out at [14] above should be set off against any sum found to be due to Keith and/or that judgment be given to them in respect of those sums. In addition, they seek an order that Keith pay or account to them amounts representing the value of the motorhome and other items removed or retained by him and sums representing payments due to the defendants in respect of the property, including assigned superannuation payments.
[18] The defendants also sought interest on any such sums, an order that Keith indemnify David for all legal expenses incurred by him on Keith’s behalf, “expectation damages” and “aggravated damages” and indemnity costs in the High Court proceeding.
Breach of contract claim
[19] The second cause of action on which Keith was successful in the High Court was breach of contract. In the Judgment, I concluded:
(a)Keith’s departure from the house was a direct consequence of David’s behaviour.9
(b)The defendants failed to provide Keith with suitable alternative accommodation, as required.10
(c)Keith was not breaching the agreement to occupy by allowing Petra to live in the house.11
(d)The superannuation payments were, apparently, to cover outgoings on the house and it was arguable that once Keith was no longer living in the house his obligation to make the payments fell away.12
9 Judgment, above n 1, at [118].
10 At [119].
11 At [123].
12 At [125].
(e)The Trust was in breach of the agreement to occupy.13
[20] The findings in relation to the breach of contract claim were not appealed.14 That is relevant to a consideration of the defendants’ counterclaim.
[21] The agreement reached between the Trust and Keith in October 2009 comprised the agreement for sale and purchase of the house by Keith to the Trust,15 the agreement to occupy the house16 and Keith’s deed of acknowledgement of debt to the Trust.17 The agreement between Keith and the Trust, read as a whole, had the following elements.
[22] First, the Trust would purchase the property for $375,000. As the Court of Appeal accepted,18 the house was sold to the Trust at an undervalue, being $130,000 less than market value and $55,000 less than the forced sale value. However, the Court of Appeal also noted, other factors, including the distressed state of the market and avoidance of sales costs associated with an arms-length transaction, provided an objective basis for the sale figure set.19
[23]Second, the proceeds of sale would be applied to meet:
(a)the payment due from Keith to Shona of $295,000;
(b)repayment of the Sentinel loan of approximately $35,000; and
(c)reimbursement of legal and other costs paid (or to be paid) by the Trust in respect of Keith’s affairs.
[24] Third, each of Keith and Gwen were to separately enter into Leases for Life/agreements to occupy for rent-free occupation of the property, at a cost to Keith of $115,729.
13 At [126].
14 CA judgment, above n 2, at [100].
15 Judgment, above n 1, at [18].
16 At [19].
17 At [20].
18 At [55].
19 At [56].
[25] The figure of $115,729 represented the cost of Keith’s right to occupy for life.20 That figure was calculated on the basis of Keith’s life expectancy, using the tables in Sch 2 to the Estate and Gift Duties Act 1968.
[26] As set out above, the debt of $115,729 owed by Keith was secured by the chattels listed in the agreement to occupy. While the counterclaim pleaded the debt of
$115,729 cumulatively with the various chattels listed in the agreement to occupy, it was clear at trial, and recorded by the Court of Appeal,21 that the transfer of the various assets, or sale proceeds of the assets, was to be applied in reduction of Keith’s debt, or as security for the remaining balance. It was not in addition to the payment of
$115,729.
Approach to counterclaim
[27] The counterclaim focuses primarily on the chattels and other assets listed in the agreement to occupy. Given the finding in this Court (affirmed by the Court of Appeal) that the assets or their cash value were to be applied in reduction of Keith’s debt (being the assessed value of his right to occupy the house for life), or as security for that debt, the appropriate approach to ascertaining what, if anything, the trustees are entitled to by way of counterclaim, has to be considered in light of the trustees’ breach of the agreement to occupy. That requires an assessment of the basis of the bargain entered into and what the parties have actually received under the Agreement, rather than focusing on the disposition of individual chattels.
[28]A chronology is helpful at this point:
(a)19 October 2009 — Agreement to Occupy signed.
(b)April 2010–September 2010 — David makes continued occupation of the house untenable.22
20 At [63].
21 At [65].
22 At [23], [25], [29] and [118].
(c)September 2010 — Keith cancels transfer of his superannuation payments to the Trust.23
(d)19 January 2011 — Notice of Eviction of Keith from the house.
(e)2 February 2011 — Keith and Petra move out of the house.
[29]As recorded in the Judgment:24
[33]The Trust sold the Stabicraft boat in April 2011 for $24,000.
[34]The Trust sold the Suzuki Vitara motor vehicle in November 2011.
[35]The Trust sold the house in September 2015 for $610,000.
[36]Before he ceased his superannuation payment, the Trust received
$9,986.34 of Keith’s superannuation.
[37]Keith retained the motor home, but has since sold it, for approximately
$40,000.
[30] The Trust received the house and a total of $47,986.34. Keith’s debt to Shona was discharged and payment of legal fees incurred on his behalf were to be paid. Keith received occupancy of the house for 16 months.
[31] The $115,729 occupancy fee payable by Keith was for his right to occupy the house. The chattels and other assets that the defendants seek to recover in the counterclaim were consideration for Keith’s right to occupy the house for life. As I found in the Judgment,25 the very purpose of the right to occupy was to allow Keith to remain in the house for the rest of his life, or for the Trust to find him alternative accommodation of a suitable standard. As I also found,26 and the Court of Appeal accepted,27 once Keith’s right to occupy the house was terminated, his obligation to pay insurance, rates and utilities, together with maintenance and upkeep of the house, fell away. The superannuation payments were also, at least in part, to meet those costs. As I also found, the Trust did not find suitable alternative accommodation for Keith.28
23 At [26].
24 At [33]–[37].
25 At [121].
26 At [125].
27 CA judgment, above n 2, at [99].
28 Judgment, above n 1, at [119].
[32] The cost of the life occupancy was calculated on the basis of the actuarial tables at sch 2 of the Estate and Gift Duties Act 1968, based in part on Keith’s age at the time
(75) and his life expectancy.
[33] There was no actuarial evidence before the Court as to how the total amount payable for the right to occupy might be allocated on an annual basis. Keith had the benefit of just under sixteen months of the agreement to occupy before, as I found, that agreement was breached by the Trust. If it were a simple calculation, dividing the total amount by Keith’s life expectancy, it would equate to approximately $15,287.85 per annum.
[34] There can be no question that Keith owes the trustees any money in respect of the agreement to occupy.
[35] The remaining aspects of the counterclaim were that Keith had some liability (unspecified) for the capital payments David made to Gwen when she moved out of the house; for a sum equivalent to Gwen’s occupancy payment for Petra’s occupation of the house; for legal expenses incurred by David on Keith’s behalf; and for damages.
[36] As to the first, I was not able, on the evidence before me, to reach a conclusion as to why Gwen moved out of the house.29 There was therefore an insufficient evidential basis to support any claim in respect of the capital payments to Gwen.
[37] I concluded that there was no tenable argument that Keith had breached the agreement to occupy by allowing Petra to live in the house.30 The counterclaim for “rent” in respect of Petra therefore also falls away.
[38] David’s claim for Keith to indemnify him for all legal expenses incurred by David on Keith’s behalf was not particularised. Keith signed a separate acknowledgement of debt in respect of legal fees paid by the Trust on his behalf in relation to the costs of resolving the relationship property matters with Shona, for a total of $25,009.69. That was signed on 20 July 2009 — that is, before the sale of the
29 At [22].
30 At [123].
house and the signing of the agreement to occupy on 19 October 2009. The Judgment records that approximately $40,000 in legal and accounting fees had been incurred on Keith’s behalf by the conclusion of the Family Court proceedings.31 Some of the evidence at trial suggested that the legal debt would be met by the Trust from the sale proceeds of the house. It appears that subsequently David became involved in a protracted argument with the firm of solicitors and counsel who had acted for Keith, on David’s instructions. As I recorded in the Judgment,32 David had formed the view that Shona was receiving more under the consent order agreed between Keith and Shona than she was entitled to. He instructed new lawyers — Maude & Miller with Richard Laurenson as counsel, to act for Keith, in place of Holland Beckett. David’s evidence at the trial was the new lawyers had “got them into a mess” and for that reason he had refused to pay their accounts. This resulted in the solicitors issuing legal proceedings for recovery of their fee.
[39] The Trust’s financial statements for each of the years ended 31 March 2017 and 31 March 2018 record:
Legal fees were paid regarding matters relating to the Keith Hingston House disputes through the Trust on the basis of the agreement signed by Keith Hingston, being “2009-07-20 acknowledgement of Debt” and also the “2009- 09-12 Acknowledgment of Obligation”. Funds are advanced by David Hingston in the hope they will be repaid.”
[40]The amount paid is not recorded.
[41] David’s evidence at trial was that he settled the legal bill, but it is not clear on the evidence how much he paid, to whom and how the amount was affected by David’s dispute of the original account(s) rendered. In the absence of an adequate evidential basis I cannot consider this aspect of the counterclaim further.
[42] Finally, in view of my substantive findings on the counterclaim, no question of damages arises.
31 At [14].
32 At [11].
Conclusion
[43]The defendants’ counterclaim is dismissed.
Costs
[44] The question of costs was to be considered after conclusion of the appeal and a determination on the counterclaim. I understand that the question of costs will now be listed in the Judge’s Chambers List.
Gwyn J
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