Hitchcock v Murphy
[2024] NZHC 3607
•29 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-2227
[2024] NZHC 3607
IN THE MATTER OF a claim seeking an order for specific performance BETWEEN
STEPHEN LESTER HITCHCOCK
Plaintiff
AND
SUSAN KERRIE MURPHY
Defendant
Hearing: 6 and 7 May, and 25 July 2024 Appearances:
G J Thwaite for plaintiff
K E Hogan and B J Upton for defendant
Judgment:
29 November 2024
JUDGMENT OF JOHNSTONE J
This judgment was delivered by me on 29 November 2024 at 3pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
G J Thwaite, Auckland Insight Legal, Warkworth
HITCHCOCK v MURPHY [2024] NZHC 3607 [29 November 2024]
[1] In 1971, Susan Murphy and her then husband bought just over four hectares (around 10 acres) on the Coatesville-Riverhead Highway, just north of Auckland (the Property). When the marriage dissolved, she bought out her husband’s share.
[2] The Property was subdivided in September 2021, into two, similarly sized lots. The rear two hectares (or five acres, which I refer to as the Back Half) was sold to third parties in June 2022. Ms Murphy remained living in a house on the front half of the Property, nearest the road.
[3] Ms Murphy’s brother, Stephen Hitchcock, has also lived at the Property, for extended periods commencing in 2003. By 2006, he had installed (amongst other things) a Portacom temporary building on the front portion of the Back Half. At times he resided there.
[4] Mr Hitchcock says that he spent money and did work on the Property, and therefore became entitled to an interest in the Property.
[5] Ms Murphy disagrees. She says that all Mr Hitchcock is entitled to is the money that she admits she owes him. She says the amount she owes Mr Hitchcock is much less than he claims. She says his conduct has been getting in the way of him being paid.
[6] Mr Hitchcock sues in this Court. His statement of claim is notable for the array of alternative claims it presents, set out across 13 causes of action.
Mr Hitchcock’s claims
[7] The key aspects of Mr Hitchcock’s various claims to an interest in the Property can be summarised as follows:
(a)Ms Murphy created an express trust, pursuant to which she held either the two-hectare Back Half,1 or the one-hectare front portion of the
1 Twelfth cause of action.
Back Half on which Mr Hitchcock’s Portacom stood (the Portacom hectare),2 on trust for Mr Hitchcock.
(b)Ms Murphy entered a written, or an oral, contract with Mr Hitchcock, pursuant to which she was obliged to transfer either the Back Half, or the Portacom hectare, to Mr Hitchcock.3
(c)Ms Murphy and Mr Hitchcock became partners in the development of the Property, pursuant to which either the Back Half,4 or the Portacom hectare,5 was to be allocated to Mr Hitchcock.
(d)In the circumstances, Ms Murphy held the Back Half,6 or the Portacom hectare,7 on constructive trust for Mr Hitchcock.
[8] Should his claims to an interest in the Property fail, Mr Hitchcock claims that Ms Murphy owes him various sums of money. These claims can be summarised as follows:
(a)Mr Hitchcock paid monies totalling $628,179 to or on behalf of Ms Murphy, and undertook work to the value of $504,000; amounts which have become due and payable to Mr Hitchcock as a debt;8 or
(b)an affidavit sworn by Ms Murphy amounts to her promissory note to pay him sums totalling $513,441.16;9 and
(c)Mr Hitchcock undertook work to the value of $143,000, which is now due as a debt.10
2 Thirteenth cause of action.
3 The first cause of action alleging a written contract providing for transfer of the Back Half; the second alleging a written contract for transfer of the Portacom hectare; the third alleging an oral contract for transfer of the Back Half; and the fourth alleging an oral contract for transfer of the Portacom hectare.
4 Seventh cause of action.
5 Eighth cause of action.
6 Fifth cause of action.
7 Sixth cause of action.
8 Ninth cause of action.
9 Tenth cause of action.
10 Eleventh cause of action.
Ms Murphy’s responses
[9]Ms Murphy pleads that:
(a)This Court has previously determined there was no contract such as that described at [7](b), and she did not hold the Back Half or the Portacom hectare on constructive trust for Mr Hitchcock. Mr Hitchcock’s claims are defeated by a cause of action estoppel or by an issue estoppel. In any event, no contract or constructive trust such as are claimed by Mr Hitchcock can be made out.
(b)Further, no express trust or partnership as claimed can be made out.
(c)The amount Ms Murphy owes Mr Hitchcock is limited to $411,179.
Issues
[10]I must determine the following questions:
(a)Are Mr Hitchcock’s claims to an express trust made out?
(b)Are Mr Hitchcock’s claims to an interest in the Back Half or the Portacom hectare, arising under contract or by way of constructive trust, defeated by Ms Murphy’s plea of estoppel? If not, are those claims made out?
(c)Are Mr Hitchcock’s claims of a partnership made out?
(d)If the above questions are determined against Mr Hitchcock, what amount does Ms Murphy owe him?
Chronology of events
Mr Hitchcock’s first period of residence
[11] When Mr Hitchcock first came to live at the Property in 2003, Ms Murphy owed money to a trading bank, secured by a mortgage registered against the Property’s
title. Ms Murphy had recently suffered a cancer scare, and Mr Hitchcock was prepared to assist. He assigned a cheque he had received for the net proceeds of the sale of a property he had owned in Glenfield. Ms Murphy accepts that, in that way, in May 2003, Mr Hitchcock paid off all of the amount she then owed the bank; that is, the sum of $147,262.16.
[12] At this time, and during the next two years, Mr Hitchcock also contributed money which was spent on the Property, including for the renovation of Ms Murphy’s home on the Property’s front half. Also, work was commenced in development of the Back Half. The amount and value of the work, and the basis on which Mr Hitchcock contributed, is disputed.
Mr Hitchcock is imprisoned for growing cannabis
[13] In 2006, Mr Hitchcock was arrested and charged with cultivating cannabis, and possessing cannabis plant for sale, at premises elsewhere in Auckland. He was bailed to reside at the Property. In 2007, he was convicted and sentenced to a term of imprisonment.
[14] Ms Murphy sent Mr Hitchcock numerous letters while he was in prison. The letters include one in which Ms Murphy wrote “you’ll have your own title”. I return to this letter below, when addressing Mr Hitchcock’s claim that Ms Murphy created an express trust.
Mr Hitchcock returns
[15] Mr Hitchcock was paroled in 2010, and returned to live in the Portacom. On occasion, there was further correspondence between Ms Murphy and Mr Hitchcock, in particular when from time to time Ms Murphy saw cannabis plants on the Property. She would express her displeasure strongly. Mr Hitchcock would seek to justify his conduct.
[16] In January 2014, Ms Murphy noticed Mr Hitchcock had planted a number of cannabis plants around the Property. She wrote to him of her shock, hurt and anger. Mr Hitchcock wrote back. In doing so, he wrote:
It is of course your entitlement to walk the property at will but I feel you do it a lot looking to catch me out carrying on my passion as you put it.
[17] In January 2015, Ms Murphy was again alerted to Mr Hitchcock growing cannabis, and wrote a similar letter of remonstration. She also advised:
I have rung an agent who will be calling into see me about selling. I can repay you for money you’ve spent here to buy some where you only have yourself to be accountable to. I’ve just had enough of the ongoing havoc in my life and I think the times of struggling for me are over.
Ms Murphy’s decision to subdivide and sell
[18]In April 2016, Ms Murphy wrote again. She commenced her letter by advising:
My intention is to subdivide & sell. I cannot put a time on how long this may take.
You will be given back the money you put in to the property on the sale of the back block.
This decision has not been taken lightly.
[19] The balance of Ms Murphy’s letter provides context. It contains her demand that Mr Hitchcock remove his “crop” of cannabis plants within 24 hours, that is, by 6 pm on 27 April 2016, including from “their underground growing room”. And it refers to Ms Murphy’s loss of trust, and her view that Mr Hitchcock had engaged in “manipulative, controlling, narcissistic, psychopathic behaviour aimed at the ones who [had] stood by [him]”.
[20] In what appears to be a separate letter, written soon after an in-person meeting when the prospect of subdivision was discussed further, Ms Murphy seems to address a question Mr Hitchcock had asked. Mr Hitchcock’s question was “when [was Ms Murphy] going to inform [him]”? Ms Murphy observed “how rich” that question was. She wrote that Mr Hitchcock had had “three days over the weekend to come down when the ‘grow room’ & land ‘selling’ could have been discussed”. As this letter continued, in a similar vein to that described at [19], Ms Murphy wrote:
Would you expect others to allow you to do what you’ve been doing here, on their property??
[21] The overall tenor of these letters indicates that April 2016 was when Ms Murphy first advised of her intention to “subdivide and sell”. When writing that she could not “put a time on how long this may take”, she indicated that she had not taken detailed advice on the project. And when writing that the decision had not been taken lightly, she indicated that she did not consider it required that Mr Hitchcock should have input into the decision.
[22] Further, Ms Murphy admits that in early May 2016, Mr Hitchcock expressed an interest in purchasing the Back Half, on the basis that the amounts she had borrowed from him before he was imprisoned (described at [11]–[12]) would be applied to the purchase price.
[23]I infer that this is the point at which:
(a)Mr Hitchcock became aware of Ms Murphy’s intention to subdivide the Property; and
(b)Ms Murphy first committed herself, in writing, to the return of money Mr Hitchcock had provided in respect of the Property.
Cato Bolam are instructed to subdivide the Property
[24] From this point, Mr Hitchcock was included in communications with third parties assisting Ms Murphy to subdivide the Property, and to sell one or more of the subdivided lots. For example, Mr Hitchcock accompanied Ms Murphy to her initial meeting with Cato Bolam, consultants offering planning, engineering, surveying and environmental services.
[25] Cato Bolam were engaged, initially, to seek council consent to the Property’s subdivision into two two-hectare (five-acre) titles. That much is clear from the 6 May 2016 email sent by Myles Goodwin of Cato Bolam. He advised that, at over four hectares, the Property met the zone rules for subdivision. And he provided an estimate of costs for the subdivision into two two-hectare titles.
[26] However, while this initial subdivision progressed, it is clear that Ms Murphy and Mr Hitchcock contemplated the possibility of further subdividing the rear two-hectare title (the Back Half) into two one-hectare titles. And they discussed this possibility also with third parties.
[27] At first, Ms Murphy saw the possibility of the further subdivision as a matter for the new owner of the subdivided Back Half. On 9 May 2016, when enquiring of Cato Bolam how long the initial subdivision might take, she asked about whether the Back Half might then be subdivided into two one-hectare blocks. And she stated her understanding that that further subdivision would require a sealed driveway, which “wouldn’t be [her] problem” once she had sold the Back Half. Mr Goodwin responded, advising that if two-hectare titles were created via a first subdivision, these titles “should be subdivisible” into one-hectare titles when the newly formed Auckland Council’s unitary plan came into force.
[28] On 17 January 2017, Cato Bolam wrote to the Auckland Council in response to queries raised about the subdivision that had been proposed by Susan Murphy as the applicant. In that letter, Cato Bolam observed that there was a Portacom on the “proposed Lot 1 [the Back Half] that is used for occasional residence”, which could be “either consented or removed” when a new dwelling is built. And they observed that an “accessway” to the building platform for Lot 1, shown on a scheme plan, had already been constructed.
The subdivision is consented to, and survey work is undertaken
[29] The Auckland Council granted Ms Murphy’s application for consent to the subdivision on 20 February 2017, on condition that it would be completed with the eventual issue of titles within five years.
[30] Mr Goodwin wrote to Ms Murphy on 7 March 2017, advising of the consent’s five-year validity, and he offered Cato Bolam’s assistance in completing the subdivision, observing that survey work was required, pegs needed to be placed on the ground, and land transfer plans prepared.
[31] On 16 March 2017, the Accounts Manager at Cato Bolam emailed a Cato Bolam surveyor, Brad Mowat, copying Mr Goodwin. She wrote that “Steve (the client’s brother) [had] called asking [Cato Bolam] to place the boundary pegs”. She asked Mr Mowat to advise her when he could do so, observing that she had not recorded Mr Hitchcock’s phone number. She wrote that she would prepare a draft estimate for the completion phase.
[32] On 28 March 2017, Cato Bolam sent its estimate and instruction confirmation form to Ms Murphy at her email address, noting that work would commence upon receipt of the signed and completed form. Ms Murphy duly signed and returned the form.
[33] On 30 May 2017, Cato Bolam wrote to Ms Murphy attaching copies of a preliminary land transfer plan showing the new two-hectare lots to be created by subdivision of the Property. They asked Ms Murphy to confirm her satisfaction with “the boundary positions as pegged and matters shown on the plan by signing and returning [a] copy”. The email attaching Cato Bolam’s 30 May 2017 letter also attached two invoices: one dated 30 May 2017, in the sum of $396.75 for “pegging as requested”, addressed to Mr Hitchcock at Ms Murphy’s email address.
[34] The documents referred to at [31]–[33] derive from Cato Bolam’s file on the subdivision. Notations appearing on the 30 May 2017 invoice addressed to Mr Hitchcock indicate it was not paid until a further invoice, dated 31 August 2017, addressed to Ms Murphy, and relating to a progress fee for further surveying work in the sum of $3,850.20, was also paid by means of a single cheque.
[35] During the middle to later part of 2017, Ms Murphy’s correspondence with Cato Bolam again contemplated the possibility of the Back Half being further subdivided. Ms Murphy wrote to Mr Goodwin on 4 September 2017, asking him to confirm whether the financial contribution sought by the Council related to the initial subdivision of the Property into two, two-hectare blocks, or to both the initial and the further subdivision. When Mr Goodwin responded, Ms Murphy appears still to have been confused. She wrote on 5 September 2017, seeking to confirm her understanding
that the Back Half was “what the money will be for, being as Steve wants to subdivide
… as per pegs being done … again on that lot?” Ms Murphy continued:
He has access to a title & is looking to go ahead on selling a.s.a.p in order to pay me out, realising of course I have to do signing off with council & getting your input as well.
Its been a bit of a trial for me I must admit.
[36] Clearly, by this time, there had been discussion between Ms Murphy and Mr Hitchcock over the prospect of this further subdivision. As discussed further below, Ms Murphy and Mr Hitchcock were aware that, for the further subdivision of the Back Half to proceed, a “transferrable title” right needed to have been acquired. Transferrable Title Rights (TTRs) are a construct of the Auckland Council’s Unitary Plan. Rural site owners may transfer to other properties their entitlement to subdivide. Those other properties may then be subdivided in a manner that would not otherwise be permitted.
[37]Mr Goodwin wrote on 6 September 2017, advising:
If Steve wants to resubdivide, and he has a suitable transferrable title, then the process should be relatively straightforward. Happy to discuss with him if he wants to.
[38] Ms Murphy responded, confirming her understanding that Mr Hitchcock had “organised a ‘donor’ title” to enable the further subdivision to proceed. And on 12 September 2017, she asked Mr Goodwin to “detail the back costs with a separate cost … to date … for the ‘extra subdivision’ Steve is doing, on the back lot 1 acreage, so it [wasn’t] going to confuse [her]”.
[39] The Cato Bolam Accounts Manager wrote to Ms Murphy on 14 September 2017, attaching an estimate of the cost to complete her subdivision. She added: “[p]lease note there are no costs in here associated with Steve’s work on his property”. And she pointed out that Cato Bolam were waiting on the preliminary land transfer plans for the initial subdivision, sent to Ms Murphy on 30 May 2017, to be signed by her.
Ms Murphy and Mr Hitchcock’s discussions over further subdivision
[40] The evidence of both Ms Murphy and Mr Hitchcock at trial confirmed that they had discussions about the possibility of the Back Half being further subdivided. Ms Murphy asserted that the possibility arose as a proposal by Mr Hitchcock. Mr Hitchcock asserted that the “idea arose somehow that [he] should be satisfied with only [a quarter] of the [P]roperty”.
[41] Regardless of its source, the notion described in the parties’ evidence, was remarkably consistent. Ms Murphy described it as involving Mr Hitchcock buying one of the two blocks formed by further subdivision of the Back Half. The money Mr Hitchcock had earlier provided for her benefit would be recognised as part-payment of the purchase price. The other of the blocks (the rear hectare) would be sold to a third party.
[42] Mr Hitchcock described the notion similarly; except he suggested the set-off, relating to the money he had provided previously, would fully extinguish the purchase price for his half of the Back Half.
[43] Letters handwritten by Ms Murphy confirm that Ms Murphy and Mr Hitchcock reached a common understanding that subdivision of the Back Half might offer the mechanism by which Mr Hitchcock could become the owner of the notional title closest to the Coatesville-Riverhead Highway — land on which his Portacom had been installed (the Portacom hectare). But they also indicate that the further subdivision was a project formulated to suit Mr Hitchcock. And that there was, at least, considerable uncertainty over whether it might be accomplished.
[44] What appears to be a first letter in this series, commences with two sets of cost estimates under the headings “#1 Scenario” and “#2 Scenario”. The first scenario relates to the prospect of the Back Half being subdivided and sold, and sets out various anticipated costs, such as agent, lawyer and council fees, totalling $820,000. One of the costs listed as part of the first scenario reads “pay Steve initial borrowing
$500,000”. The second scenario relates to the prospect of the Back Half being further subdivided, with “Steve to remain as is”. There is no express reference, within the listed costs referable to the second scenario, to Mr Hitchcock being repaid any prior
lending. But the listed costs include substantial figures for developing the driveway to the rear hectare, buying a transferable title, and to “pay Steve as suggested
$100,000”. The balance of this letter is directed to what Ms Murphy draws from her estimates; that is, that the amounts to be derived by her from either scenario were unlikely to be substantial once her investment in the Property over a long period had been taken into account, especially under the second scenario involving further subdivision of the Back Half. She comments that she is unaware of how long either subdivision would take “to come to fruition”. And in the context of that comment, she adds: “[i]f I could afford to borrow $500,000 I would give it to you, but I can’t until something is sold”.
[45] Mr Hitchcock says that he received this letter in October 2016. Ms Murphy accepts she sent it by the end of 2017.
[46] Another of Ms Murphy’s letters to Mr Hitchcock, dated 8 November 2017, features her appearing to relay Mr Goodwin’s advice that the Property required subdivision into two, two-hectare sites, not a one-hectare and a three-hectare site. I infer Mr Hitchcock had suggested amending the initial subdivision so that sale of a rear one-hectare site might fund the cost of that level of development. Confirming Mr Goodwin’s advice that a surer way of obtaining the rear one-hectare title would be to proceed with the initial subdivision, and to subdivide the Back Half, Ms Murphy observed that that would come:
… with extra costs & time, which we have been talking about & trying to do, but time & money is the problem I’m facing with no easy workable outcome.
[47]The letter then returns to what Ms Murphy describes as “Option One”:
Back 2ha will need to be sold as you are unable to purchase.
Resource consent was granted feb 17 & 9 more months have past, creeping quickly to a time that I have to pay borrowings back. I pay you money discussed, plus septic plus plantings out back. plus tree removal, plus Dep.
…
[48] A further letter in this series, dated 9 November 2017, commences with Ms Murphy appearing to take exception to a statement made by Mr Hitchcock in
response to the 8 November 2017 letter; that is, his statement “[i]f it makes you feel better then bulldoze it all down”. Ms Murphy then writes:
I – STILL – HAVE – TO – SELL – IT.
I can’t seem to do right for doing wrong: the situation financially for me is worse than BEFORE I started this process. I gave you the option, unfortunately it didn’t eventuate for you to buy it.
Selling the 5 acres was the choice I took.
….
I’ve always said that I will pay you the money I owed you for what you have done for me & I meant that.
I also need to look at payments for the septic tank system, planting out the back fencing that’s been done & the list is growing on other areas that are required over & above, the driveway will need to be metalled, engineers report, all things that I need to do.
I don’t think you understand quite how I’m feeling, you probably don’t care, which in that case it’s selfish reasoning.
[49] The letter continues in a similar vein, expanding upon the pressure Ms Murphy felt herself under, including as a result of trying to “please everyone”.
Mr Hitchcock’s 2017 lending
[50] By the end of 2017, Mr Hitchcock had that year loaned Ms Murphy sums that were used to repay further trading bank borrowing she had undertaken to meet the cost of the subdivision, and to cover personal expenses. Mr Hitchcock says the total of these sums was $85,000 ($65,000 to repay the loan and $20,000 to meet her personal expenses). Ms Murphy says the total was $75,000.
Ms Murphy instructs Bayleys to sell a one-hectare block, to be formed by further subdivision of Back Half
[51] Despite Ms Murphy’s exasperation of late 2017, further correspondence with Cato Bolam confirms that both projects, for initial subdivision of the Property into two two-hectare titles, and for further subdivision of the Back Half, continued. By letter dated 1 August 2018, Cato Bolam wrote to Ms Murphy advising that the Auckland Council had approved the land transfer plan for the initial subdivision. And by letter dated 20 September 2018, Cato Bolam asked Ms Murphy to confirm her “new
instruction” for “the further subdivision of” the Back Half, providing “a preliminary sketch of the proposed development of [her] property”.
[52] On 17 September 2018, in contemplation of this further subdivision proceeding, Ms Murphy appointed Bayleys Real Estate Ltd to sell a one-hectare block to be subdivided from the Back Half. Bayleys’ fee was estimated by reference to a sale price of $1,400,000.
[53] On 17 October 2018, Ailsa McArthur of Bayleys explained to Ms Murphy’s solicitor, Tony Sweetman, that Ms Murphy had instructed her to sell the block which was to be further subdivided from the Back Half. However, Ms Murphy would not purchase a transferable title so as to start the further subdivision process until she had entered a sale agreement. Ms Murphy needed the latter agreement so that her bank would fund the purchase of the transferable title. Ms McArthur sought Mr Sweetman’s assistance with drafting the sale agreement to provide for this transactional sequence.
Ms Murphy’s instructions to Bayleys change
[54] However, emails sent between Ms Murphy and Ms McArthur in late March 2019 confirm that Ms Murphy’s instructions to Bayleys changed. Ms Murphy instructed that the sale of the one-hectare block to be subdivided from the Back Half should not be pursued. Instead, Ms Murphy went back to her initial plan to sell the entire Back Half, in respect of which formal title was expected shortly.
[55] More letters sent between Ms Murphy and Mr Hitchcock provide context. I start here with a letter written by Mr Hitchcock, to which the date 7 October 2018 has been added. For the reasons identified below, I infer it was not sent in October 2018. Instead, I find it was sent shortly before Ms Murphy responded with her own letter, dated 8 March 2019.
[56] Mr Hitchcock’s letter commenced with him reminding Ms Murphy about discussions which led to Ms McArthur being instructed to sell the one-hectare block in contemplation of the further subdivision of the Back Half. As just stated, Ms McArthur was instructed to that end in September 2018. The letter reads as follows:
To refresh your memory, sitting down with Ailsa last Xmas in your cottage discussing the value of your back 5 acres when prices were at their premium, she valued the property at 1.6 and with improvements already in place possibly 1.8, to come up with a figure that was workable and fair to you we agreed to 1.7 mil
You have said [illegible] recently that Auckland prices have dropped off and Ailsa confirms this
I have not wavered from the 1.7 as agreed because that is what was agreed
Prior to starting my efforts in cutting the 5 acres in half you said you were refunding me 500,000 as repayment for some of the monies given to help your efforts in making your life more comfortable
At no stage did I want, expect or ask for that money to be paid back, however when you offered it to me that was all I had to start again with that in mind I approached my friend for advise and we set out with my vision to secure the land I was on. at that stage you were selling the 5 acres, giving me the money mentioned and probably after expenses coming out with around 1 million dollars
Sue - what have I missed
I have gone about my work continually confiding in you and at no stage up till now have you mentioned a change of plans. I have discussed completing
[page missing]
… and with your help the property behind the barn for an eventual sale when you decide to pack up for good. for you
No money for HG [illegible], for you so no one else gets the benefit
Yes there is some monies expected from you to repay back, but all is at my peril to be paid back by me
I was hoping we could get a good price for the back so I could pay you in full to honour myself and hopefully have a little over to go towards paying back
Unless you have been advised wrong or this lawyer of yours doesn’t know the details how could you do this to me
This is not family and I certainly don’t expect this from family
I’m not asking for charity Sue just what’s right. I’ve never asked for anything that doesn’t sit right. For years I’ve had your back with this property putting in many hours and dollars to make it work.
Come on don’t let greed be the power here, do what’s right
[57] The letter I find to be Ms Murphy’s response, dated 8 March 2019, commenced with her observation that “as discussions have reached a stalemate & become abusive & heated, I need to go back to my original plan of selling the 5 acres”. Later in her letter, Ms Murphy added:
I did say I was giving you $500,000 but it was to come off the price of the land, no cash in hand per se. It was a figure to help you out & actually a lot more than was given for home improvements, wall, & some of the little garden walls.
…
You failed to see 5 acres being cut into 2 x 2.5 acres costs extra. I cannot be expected to pay for those costs out of the sale of one block.
…
It appears that you were expecting to receive money … on top of the $500,000 I was taking off the price of the 2.5 acres & expecting to pay in full for it with “a little to go towards paying back” loan as well???
This is not what I would expect of family either!
…
The “improvements” that have been done out back are illegal, so, it is NOT registered with Auck. Council as they are not permitted. … This was all done by you when I said .. clearly .. that you could go up the back on the conditions that what you might want to do was discussed with me & to be done legally.
I also mentioned there was to be NO marijuana to be grown either.
In both instances you ignored my wishes & have put me in jeopardy in doing so with “crops” & illegal buildings.
…
[58] Explaining my finding that Mr Hitchcock’s letter was sent shortly before Ms Murphy’s letter, I observe that passages in Ms Murphy’s letter dated 8 March 2019 appear expressly to respond to passages in Mr Hitchcock’s letter:
(a)Mr Hitchcock refers to Ms Murphy saying she was refunding him
$500,000. Ms Murphy writes “I did say I was giving you $500,000”.
(b)Mr Hitchcock refers to his efforts in “cutting the 5 acres in half”. Ms Murphy refers to his failure to see “5 acres being cut” in two costs extra.
(c)Mr Hitchcock refers to hoping to get a good price, and hoping to “have a little over to go towards paying back”. Ms Murphy expresses surprise that Mr Hitchcock was expecting, with the sale of the rear, subdivided hectare, to be able to pay the price to purchase his subdivided hectare in full, “with ‘a little to go towards paying back’”.
(d)Mr Hitchcock writes that he does not “expect this from family”. Ms Murphy writes that this “is not what [she] would expect of family either”.
(e)Mr Hitchcock refers to “improvements” already in place on Ms Murphy’s back 5 acres. Ms Murphy asserts that “[t]he ‘improvements’ that have been done out back are illegal”.
[59] Moreover, the general thrust of Mr Hitchcock’s letter appears directed to his unhappiness at Ms Murphy changing the “plan” to subdivide and sell a one-hectare block from the Back Half. Since Ms McArthur was instructed to implement the former approach in September 2018, and was doing so in correspondence with Ms Murphy’s solicitor on 17 October 2018, it is unlikely Ms Murphy had notified Mr Hitchcock of her change of plan in time for him to object in writing on 7 October 2018, without sharing that change of plan with Ms McArthur.
[60] I find it more likely, and indeed that Mr Hitchcock did, write and send his letter shortly before Ms Murphy responded. I further find that Ms Murphy’s letter is at least fairly accurately dated 8 March 2019. This timeframe is only shortly before, as stated at [54], emails confirming that Ms Murphy amended her instructions to Ms McArthur, instructing her to sell the entire Back Half.
[61] Mr Hitchcock wrote back towards the end of March 2019, reiterating his position that Ms Murphy had agreed to the further subdivision proceeding on the basis that the sale proceeds of the rear, one-hectare lot would be applied in his favour, and that together with the sum of $500,000 Ms Murphy had acknowledged, these amounts would combine to meet the price agreed for his purchase of the front, one-hectare lot on which his Portacom sat.
Mr Hitchcock caveats the Property and proceedings are commenced
[62] On 2 May 2019, Mr Hitchcock registered a caveat against the title to the Property. Ms Murphy sought to have the caveat lapse, but Mr Hitchcock filed an application in this Court seeking an order to the contrary.
[63] On 28 August 2020, Associate Judge Gardiner (as she then was) dismissed Mr Hitchcock’s application.11 This is the judgment upon which Ms Murphy’s plea of an estoppel is based. The caveat lapsed on 8 September 2020.
Mr Hitchcock’s cannabis offending at the Property is discovered
[64] In the meantime, on 30 April 2020, the police searched the part of the Back Half occupied by Mr Hitchcock. They found, in a space that had been dug underground, equipment that had been set up for the purpose of commercial cannabis cultivation. And they found 36 mature cannabis plants being dried. Mr Hitchcock was charged with cultivating cannabis, possession of cannabis for the purpose of sale, and theft of electricity.
[65] Mr Hitchcock was granted bail to reside at the Property, despite Ms Murphy having advised the police that she did not wish Mr Hitchcock to reside there while on bail.
Mr Hitchcock leaves the Property
[66] By letter dated 19 October 2020, Ms Murphy’s solicitors purported to cancel what they described as Mr Hitchcock’s “bare licence to occupy” the Property. On 10 December 2020, Mr Hitchcock was sentenced on the charges described at [64] to serve a term of home detention. The sentence was suspended pending an appeal to this Court. On 3 March 2021, Brewer J dismissed Mr Hitchcock’s appeal, directing that he should serve his home detention sentence at an address near Kaitaia.12
11 Hitchcock v Murphy [2020] NZHC 2207, (2020) 21 NZCPR 303 [Caveat Decision].
12 Hitchcock (aka Bateman) v New Zealand Police [2021] NZHC 364.
[67] It therefore appears Mr Hitchcock left the Property by 3 March 2021. On 4 March 2021, Mr Hitchcock issued a “trespass notice”, warning Ms Murphy to leave and stay off “these premises at 445 Coatesville-Riverhead Highway… which are occupied by me”.
[68] By letter dated 26 March 2021, Ms Murphy’s solicitors re-initiated contact with Cato Bolam, indicating Mr Hitchcock had vacated the rear of the Property and that Ms Murphy was in the process of getting it ready for sale.
Ms Murphy completes the subdivision and sells the Back Half
[69] On 6 July 2021, Ms Murphy entered an agreement to sell the Back Half at a price of $2,500,000, conditional on the issue of its separate title. That agreement did not proceed.
[70] On 24 September 2021, the subdivision of the Property into two similarly sized lots was completed, with issue of the title for the 2.1713-hectare Back Half (Lot 1 Deposited Plan 512179, Identifier 788085), and of the title for the half on which Ms Murphy remained living (Lot 2 of that deposited plan, Identifier 788086).
[71] On 19 May 2022, Ms Murphy entered an agreement to sell the Back Half at a price of $2,650,000. The agreement proceeded. The Back Half was registered in the names of the purchasers on 23 June 2022.
Express trust?
[72] An express trust is created when a person (the settlor), clearly and with reasonable certainty (and subject to any formalities prescribed by an enactment), indicates an intention to create a trust, identifies the beneficiaries, and identifies the trust property.13 The Property Law Act 2007 prescribes certain formalities applicable to express trusts relating to land: such trusts must be “created in writing and signed by the settlor”, if they are to take effect in the settlor’s lifetime.14
13 Trusts Act 2019, s 15(1).
14 Section 25(2).
Mr Hitchcock’s position
[73] In his closing submissions, Mr Thwaite confirmed that Mr Hitchcock’s claim of an express trust in respect of the Back Half rests largely on the content of one of the letters Ms Murphy sent to him in prison in 2007. It commences as follows:
This is it Stevie! The moment over 32 of us locals have waited for!! Yee haa
… hopefully?!! You’ll have your own title if it is what I think it is going to entail (enclosed RDC strategy plan – in book).
Something will give as Albany has such a huge shopping mall & us being just 10 mins away will open the way for more land to be available as there is very little for the population. .. But … we don’t want little sections eh! Just ½ &
½ & no more (me & you).
[74] The context is that the Rodney District Council (RDC) appears in around 2007 to have published a strategy plan contemplating the permitted subdivision of local properties. Ms Murphy was clearly excited at the prospect.
[75] The letter concludes, above a postscript addressing a matter of recent media attention, as follows:
C U C U. Lots of [heart emoji] XX
[76] Mr Thwaite submits that, against the background of the contributions Mr Hitchcock had made by 2007 — repaying Ms Murphy’s mortgage when she was ill, and funding and working upon various improvements to Ms Murphy’s home and to the Back Half — Ms Murphy’s 2007 letter created the express trust.
Analysis
[77]I disagree with the submission that the 2007 letter created an express trust.
[78] In that letter, Ms Murphy expressed no more than her prediction that if the RDC plan resulted in circumstances that Ms Murphy thought would come to pass, Mr Hitchcock would have his own subdivided title. There is nothing in her letter to suggest that she was, at the time of writing the letter, declaring her intention from that point to hold half of the Property on trust for Mr Hitchcock. There is no certainty of intention.
[79] Nor could there be certainty of subject matter, without Ms Murphy identifying the half of the Property to which any intention to create a trust might apply. Ms Murphys’s 2016 announcement of her intention to subdivide, and her later efforts to fulfil that intention, cannot be applied for the purpose of implying certainty in this regard. The reasoning would be both retrospective, and contradictory: the intention announced in 2016 was not only to subdivide, but then to sell the “back block”.
[80] In any event, Ms Murphy did not sign her 2007 letter, in the sense of authenticating it by writing her name or applying her mark, instead simply bidding Mr Hitchcock a fond and informal farewell. I interpret the “X”s as kisses, not as Ms Murphy’s mark.
[81] I note that there is nothing elsewhere in the evidence suggesting a declaration, made by Ms Murphy, to the effect that she held the Back Half or the Portacom hectare for Mr Hitchcock.
Result
[82]Mr Hitchcock’s twelfth and thirteenth causes of action are not made out.
Are Mr Hitchcock’s claims by way of contract and constructive trust defeated by estoppel?
[83] The rule of res judicata, as applied by the Court of Appeal in Shiels v Blakeley, is that:15
… where a final judicial decision has been pronounced by a New Zealand judicial tribunal of competent jurisdiction over the parties to, and the subject- matter of, the litigation, any party or privy to such litigation, as against any other party or privy thereto, is estopped in any subsequent litigation from disputing or questioning the decision on the merits.
[84] A party’s plea of “estoppel per rem judicatam”, or in other words, their plea that the same question arising in litigation has already been determined, can be raised either in relation to an entire cause of action, or in relation to some particular point
15 Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 266.
directly in issue. In the former instance, the plea may be referred to as one of cause of action estoppel. And in the latter, as one of issue estoppel.16
Ms Murphy’s position
[85] Ms Murphy relies on the fact that, when determining Mr Hitchcock’s application for an order that his caveat not lapse, Associate Judge Gardiner found Mr Hitchcock not to have a caveatable interest in the Property. In particular, the Judge found:
(a)There was no oral agreement between Mr Hitchcock and Ms Murphy that he would assist her with first subdividing the Property, and then the Back Half, with the rear hectare then being sold and Ms Murphy retaining the net sale proceeds, and Mr Hitchcock acquiring the Portacom hectare by way of off-set.17
(b)Mr Hitchcock’s contributions to the Property, together with Ms Murphy’s representations as to her intentions, did not give rise to a reasonable expectation that Mr Hitchcock held an equitable interest in the Property, to be recognised by way of constructive trust.18 In particular, the bulk of Mr Hitchcock’s contributions were loans (if not gifts) which could not give rise to an interest in the Property. Much of his other work was for the purpose of creating a habitable place for him to live where he did, rent free, for at least 10 years. And the work to further the second subdivision was minor and similarly outweighed by the benefit he received in living at the Property.
Mr Hitchcock’s position
[86] For Mr Hitchcock, Mr Thwaite submits that the res judicata rule should not be applied. He says that the issues before Associate Judge Gardiner and the issues in this proceeding are not the same, that the prior judgment (given in caveat proceedings) was
16 See Hon. Justice C C Fraser Laws of New Zealand Estoppel Per Rem Judicatam: The Same Question Determined at [17].
17 Caveat Decision, above n 11, at [51]–[52].
18 At [58]–[63].
not final, and that the policies behind the rule in favour of finality and the avoidance of vexation through litigation are not therefore engaged. He points out that Associate Judge Gardiner’s judgment came before the Court of Appeal when Mr Hitchcock first appealed, then abandoned his appeal, and then sought leave to withdraw that abandonment.19 And he says that the Court of Appeal observed that the litigation being pursued by way of this proceeding would be the proper way for Mr Hitchcock to advance his case.
Analysis
[87] The Court of Appeal dismissed Mr Hitchcock’s application to withdraw the abandonment of his appeal because there was no power to reinstate a lapsed caveat.20 In doing so, it did not necessarily agree with the submission, made for Ms Murphy, that Mr Hitchcock should focus on the (yet to be filed) High Court proceeding which became this proceeding.21 In any event, the submission for Ms Murphy might have assumed the future High Court proceeding would raise new issues, not issues already decided. Accordingly, I do not accept that the Court of Appeal favoured this proceeding over the advancement of Mr Hitchcock’s appeal.
[88] The question then arises, is Mr Hitchcock seeking to re-litigate issues previously determined?
[89] Dealing first with Mr Hitchcock’s claims to a contract, the alleged oral agreement the subject of Associate Judge Gardiner’s analysis is largely identical to that the subject of Mr Hitchcock’s fourth cause of action in this proceeding, alleging that Mr Hitchcock and Ms Murphy agreed orally to the two subdivisions, with the rear hectare being sold and Mr Hitchcock being transferred the Portacom hectare. In my view, Mr Hitchcock’s fourth cause of action must therefore be dismissed.
[90] Dealing next with Mr Hitchcock’s claims to a constructive trust, I consider there is an important point of distinction between the claims determined by Associate Judge Gardiner and those now made in this proceeding. That is, the caveat
19 Hitchcock v Murphy [2021] NZCA 689.
20 At [21].
21 At [17].
proceeding before the Judge was confined to consideration of any equitable interest in the Property. The Property had not yet been subdivided by the issue of separate titles. And the caveat did not (and could not yet) purport to attach only to the Back Half, or to the proceeds of sale of the Back Half.
[91] The essential question before Associate Judge Gardiner was whether, in the prevailing circumstances, it would have been unconscionable or contrary to fundamental equitable principles for Ms Murphy to hold the Property purely for her own benefit. The Judge recognised that Mr Hitchcock had made a range of contributions for Ms Murphy’s benefit, but found that these were (at least for the time being) adequately addressed by their relationship as creditor and debtor, or were not so substantial that they required recognition of an equitable interest in the Property that might be protected by caveat.
[92] Mr Hitchcock’s claims in this proceeding are to an equitable interest in the Back Half, or failing that, the Portacom hectare. The issue of whether Mr Hitchcock’s contributions might be regarded as more substantial when assessed against that different property was not considered.
[93] In my view, these are different claims, and issues. Accordingly, no estoppel arises in respect of Mr Hitchcock’s claims in this proceeding based on an alleged constructive trust (his fifth and sixth causes of action). Those claims require to be considered in light of the circumstances prior to and at the time of the trial in this proceeding, and the different nature of the property under consideration.
Result
[94] For the above reasons, Mr Hitchcock’s fourth cause of action is the subject of issue estoppel, and cannot be made out. But his fifth and sixth causes of action, based on a constructive trust, require substantive determination.
Other contracts?
[95] Given my view that Mr Hitchcock is estopped from arguing his fourth cause of action, I must determine his first to third causes of action, alleging other forms of contract.
[96] A contract is formed when parties with capacity to contract reach apparent agreement upon a bargain involving mutual consideration, intending when doing so to bind themselves to their bargain.22 As observed in Commercial Law in New Zealand:23
The courts look to see if the dealings between the parties have reached a stage where a reasonable bystander with knowledge of the parties’ actions and the terms of any communications between them would see them as having reached a mutual understanding as to the terms of their agreement and as having shown a willingness to be bound by those terms.
[97] The Courts are entitled to look at the whole context of the parties’ relationship in reaching a view as to whether a bargain was concluded and as to its terms.24 However, s 24(1) of the Property Law Act provides that a contract for the disposition of land is not enforceable by action unless the contract is in writing or its terms are in writing, and the contract or written record is signed by the party against whom the contract is sought to be enforced.
Mr Hitchcock’s position
[98] Mr Hitchcock claims that he entered a written or an oral contract with Ms Murphy providing for the transfer to him of the Back Half,25 or a written contract for the transfer to him of the Portacom hectare.26
Analysis
[99] Before turning to Mr Hitchcock’s claims that he contracted for transfer to him of the Back Half, I note first that his alternative claim, that he contracted with
22 Todd and Barber Commercial Law in New Zealand (online ed, LexisNexis) at [2.1].
23 At [3.1].
24 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [52].
25 His first and third causes of action.
26 His second cause of action (alleging a written, not an oral contract, the latter allegation having been determined by Associate Judge Gardiner).
Ms Murphy for transfer of the Portacom hectare, tends to undermine both propositions. Uncertainty about what it was that he agreed to buy, suggests uncertainty about whether he agreed to buy anything.
[100] Addressing Mr Hitchcock’s claim to a contract for transfer of the Back Half, it rests implicitly on the proposition that Ms Murphy’s 2007 letter is the written embodiment of a bargain reached between the siblings, arising objectively on the basis it would bind them both. But Ms Murphy’s written advice to Mr Hitchcock of April 2016, that she intended to subdivide and sell the Back Half, raised no objection, beyond Mr Hitchcock’s query about the timing of Ms Murphy’s advice. If they had reached a binding bargain, that Mr Hitchcock would have the Back Half, the evidence of the forthright way in which they communicated shows that Mr Hitchcock would have reminded her of their bargain. Nothing in the evidence suggests Mr Hitchcock complained about what he now says would have been its repudiation.
[101] Instead, I infer from the evidence of Mr Hitchcock’s subsequent work and investment at the property, and of his ancillary involvement in attending upon Cato Bolam and Bayleys as an advisor or supporter of Ms Murphy, that Mr Hitchcock commenced from around April 2016 to seek to persuade Ms Murphy that (with his help) she should further subdivide the Back Half, and then sell the rearmost hectare, leaving him an opportunity to become entitled to the Portacom hectare.
[102]Here, I rely on:
(a)The fact Ms Murphy remonstrated with Mr Hitchcock about his cannabis crop and his underground growing room in her letter of April 2016, before asking the rhetorical question: would you expect others to allow you to do what you’ve been doing here, on their property?
If Ms Murphy had agreed to sell Mr Hitchcock the Back Half (or for that matter had decided to hold it on trust for him), the property in
question would not by then have continued in Ms Murphy’s mind to be owned so unequivocally by her.
(b)Mr Hitchcock’s letter, which I have found he wrote to Ms Murphy shortly before her letter of March 2019, when she amended her instructions to Bayleys requiring Ms McArthur to sell the entire Back Half, not the rearmost hectare behind Mr Hitchcock’s Portacom hectare.
In that letter, Mr Hitchcock sought to remind Ms Murphy she had said she was refunding him $500,000, which “at no stage” before that had he expected. This recollection I trace to Ms Murphy’s letter of April 2016, where she wrote “you will be given back the money you put in to the property”. Similarly, Mr Hitchcock wrote of “agree[ing] to” a price of $1,700,000 for the Portacom hectare. Plainly, by writing in March 2019 of his expectation of being able to purchase the Portacom hectare through application of the money Ms Murphy had promised him, Mr Hitchcock cannot simultaneously be regarded as expecting to be able to purchase the entire Back Half.
(c)Similarly, the oral evidence of both Mr Hitchcock and Ms Murphy, describing their discussions about the possibility of the Back Half being further subdivided, with Mr Hitchcock acquiring the Portacom hectare. And Ms Murphy’s letters on the topic, in which she referred to paying Mr Hitchcock “money discussed”.
[103] I note that I do not consider the correspondence with Cato Bolam as indicating anything other than Ms Murphy’s ongoing ownership of the Property, and her ongoing expectation of ownership of the subdivided Back Half. The references to Mr Hitchcock having direct involvement with Cato Bolam in their work to peg the property for subdivision, and to him “want[ing] to resubdivide”, doing an “extra subdivision”, and working “on his property” are, in their context, entirely consistent with the project of the further subdivision of Ms Murphy’s Property, and with referring, naturally, to the place at the back, where Mr Hitchcock was living.
[104] In short, Mr Hitchcock’s efforts to persuade Ms Murphy, with his help, to subdivide the Back Half, prove that Mr Hitchcock had not entered a binding agreement, written or oral, to buy it.
[105] Turning to Mr Hitchcock’s alternative contractual claim, and having identified his efforts to have Ms Murphy subdivide the Back Half, I need also to consider whether their discussions gave rise to a written contract for the sale to him of the Portacom hectare.
[106] Here, I find no written contract to be made out, largely for the same reasons as those given by Associate Judge Gardiner when finding there was no oral contract to the same effect, and also because no writing in this vein exists. I acknowledge the letters passing between Mr Hitchcock and Ms Murphy, but they do not establish any sense of mutual obligation owed as between the siblings. Plainly, at various points they both desired the further subdivision of the Back Half and sale of the rear hectare. But, despite what Mr Hitchcock described in his letter as their “agreement”, they did not bind themselves to pursue the further subdivision and then the Portacom hectare sale to Mr Hitchcock, in a way that an informed, objective observer might have taken them to regard as binding. Instead, these were informal arrangements between siblings, to be adjusted or re-configured, entirely at Ms Murphy’s discretion.
Result
[107] For these reasons, Mr Hitchcock’s first, second and third causes of action cannot be made out.
Constructive trust?
[108] A constructive trust is imposed by the court in circumstances where it is unconscionable or contrary to fundamental equitable principles for the owner of property to hold it purely for their own benefit.27
27 Lindsay Breach Laws of New Zealand Trusts: Resulting and constructive trusts (online ed) at [24], citing Morrin v Kissling (1878) 4 NZ Jur (NS) CA 1; Efstratiou v Glantschnig [1972] NZLR 594 (CA); Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 (SC); Hayward v Giordani [1983] NZLR 140 (CA); Boardman v Phipps [1967] 2 AC 46, [1966] 3 All ER 721 (HL); and Mills v Laboyrie [2021] NZCA 450, [2022] 2 NZLR 258.
Mr Hitchcock’s claims
[109] As stated above, Mr Hitchcock’s claims are of constructive trusts arising, alternatively, in respect of the Back Half, or the Portacom hectare. Mr Hitchcock refers to financial contributions comprised of:
(a)the sum of $147,262.16 that Ms Murphy admits he paid in 2003 to repay her bank loan;
(b)further contributions in the sum of $366,179, made prior to his imprisonment in 2007;
(c)the $85,000 advance he says he made in 2017; and
(d)the further work he performed or had done, to the value of $505,000, installing the Portacom and other structures around it, including septic tanks and drainage, as well as broader development of the Back Half, including extensive planting and the laying of a concrete driveway down the length of the Property, to and beyond the Portacom hectare.
[110] And Mr Hitchcock says that Ms Murphy must be taken reasonably to have expected that he would “share in her assets as a result”. The particular property in which the constructive trust is said to arise is unclear. Mr Hitchcock seeks orders that Ms Murphy take steps to convey the fee simple in the Back Half (or the Portacom hectare) to him, despite the Back Half having been sold to third parties as described above. Alternatively, he seeks the fee simple in the front portion on which Ms Murphy’s residence remains. However, a further alternative is an award of damages for the “value of his interest in the [Property], in an amount to be determined”.
Ms Murphy’s position
[111] For Ms Murphy, Ms Hogan submits that the contemporary documentation corroborates Ms Murphy’s evidence that she had not ceded, nor had any intention to cede, any interest in her land to Mr Hitchcock. She says that Ms Murphy was willing
to investigate Mr Hitchcock’s proposal that the Back Half would be further subdivided, with Mr Hitchcock then purchasing the Portacom hectare. She says Ms Murphy would then have been happy to deduct from the Portacom hectare’s price the “funds [Mr Hitchcock] had advanced to her over the years (which it was always agreed were to be repaid from land sale proceeds)”. But she says that at no point was there any discussion, let alone agreement, that Ms Murphy would gift Mr Hitchcock any part of her land.
Analysis
[112] Many of Mr Hitchcock’s calculations as to the value of his contributions are flawed.
[113]For example, I find his assertion that he made contributions in the sum of
$366,179, prior to his imprisonment in 2007 and in addition to the $147,262.16 bank loan repayment that Ms Murphy admits he paid in 2003, to be incorrect. The figure of $366,179 is sourced, not from business records, but from Ms Murphy’s assertion in her affidavit of 22 July 2020, filed in response to Mr Hitchcock’s caveat proceedings, that: “the total amount that I owe [Mr Hitchcock] is $366,179.00”. Mr Hitchcock simply adopted Ms Murphy’s calculation. Ms Murphy’s calculation was in turn said by her to be supported by receipts she had kept or by her “recollection of the cost”, and by a handwritten list, itemising those amounts. But the list includes the figure of
$147,262.16 paid in repayment of her bank loan. Plainly, Mr Hitchcock overlooked this when adopting Ms Murphy’s calculation. In response to being challenged about this in cross-examination, Mr Hitchcock resorted simply to itemising the value of his various contributions prior to 2007 in a spontaneous, and entirely unconvincing manner.
[114] Further, much of Mr Hitchcock’s work on the Back Half near his Portacom was undertaken for his own benefit: establishing his place of rent-free residence; and installing fixtures which he came to use for the purpose of cannabis cultivation. Indeed, it appears it was Ms Murphy’s unhappiness at Mr Hitchcock’s repeated use of the Back Half for growing cannabis, including his installation of the “grow room”, which drove her eventually to her 2016 decision to subdivide and sell. I do not
consider it appropriate to take particular account of this work when assessing the equity of Ms Murphy’s ultimate refusal to acknowledge any claim by Mr Hitchcock against the Back Half.
[115] Yet Ms Murphy’s own method of calculating the amount Mr Hitchcock spent on the Property before his imprisonment in 2007 is also unsatisfactory. It derived in 2020 largely from her own memory of amounts spent more than twelve years before. Neither party had kept adequate records.
[116] Also, in April 2016, Ms Murphy was writing to Mr Hitchcock to advise of her intention to sell the Back Half, “giv[ing] back the money [he] put in to the property on [its] sale”. Ms Murphy’s letter setting out her two cost-related “scenarios” quantified this sum at $500,000. And further, by March 2019, Mr Hitchcock was complaining to Ms Murphy that $500,000 had been the amount she had committed to “refunding” him, prior to him “starting [his] efforts in cutting the [Back Half] in half”. That month, in her letter in response to Mr Hitchcock, Ms Murphy acknowledged she had promised him that sum of $500,000, “to come off the price of the [Portacom hectare], no cash in hand per se”, albeit she immediately went on to assert that this amount was “actually a lot more than was given”.
[117] The position in which the Court is left is that Ms Murphy’s 2016/2017 correspondence amounts to the most reliable, objective account available, of her view of what fairness required her:
(a)to pay Mr Hitchcock, should the Back Half be sold; or
(b)to deduct from the purchase price of the Portacom hectare, should the further subdivision be achieved and the rear hectare sold.
[118]That is, in either instance, Ms Murphy would pay, or deduct, the sum of
$500,000.
[119] Further, it appears that the latter approach was how both parties expected matters would proceed at the time Ms Murphy put the rear hectare on the market
through Bayleys in September 2018. But by March 2019, in a context where the rear hectare had not been sold and (once again) Mr Hitchcock had continued to grow cannabis on the Property, Ms Murphy simply changed her mind and went back to her strategy of selling the entire Back Half. And more than this, it appears Ms Murphy decided, despite her representations of the prior several years, that Mr Hitchcock would not have the $500,000 she had committed herself to paying from the sale proceeds of the Back Half.
[120] In my view, it indeed became unconscionable and contrary to fundamental equitable principles for her to fail, as from the point at which Ms Murphy retreated to her strategy of full sale, to recognise Mr Hitchcock’s entitlement to be paid the sum of
$500,000 from the proceeds of that sale.
[121] Equitable remedies are not generally granted to those whose misconduct undermines their claim.28 The principle is known as the doctrine of “clean hands”. But Mr Hitchcock’s ongoing drug offending was not directed at Ms Murphy, and in any event, it appears she was aware it continued despite his 2007 prison sentence, periodically from as early as 2014, including involving his underground “grow room”. Ms Murphy’s representations about Mr Hitchcock being paid from sale proceeds commenced in 2016/2017. Mr Hitchcock’s offending does not, therefore, affect my assessment of the equities as between the parties.
[122] Further, recognising an equitable interest in the Back Half’s sale proceeds does not involve recognising (as Ms Hogan suggests) that Ms Murphy agreed to gift Mr Hitchcock any part of her land. Ms Murphy’s correspondence confirms that she regarded the payment as one of money “owed for what [Mr Hitchcock] had done for [her].”
[123] Accordingly, at least by the time (following the caveat proceedings before Associate Judge Gardiner) that the Back Half’s separate title issued and transferred to third parties upon sale, Ms Murphy held $500,000 of the proceeds of that sale on constructive trust for Mr Hitchcock. And, given Mr Hitchcock’s further alternative
28 Detection Services Pty Ltd v Pickering [2019] NZCA 575 at [52], citing Lord Scott in Grobbelaar v News Group Newspapers Ltd [2002] UKHL 40; [2002] 1 WLR 3024.
claim under his fifth cause of action (relating to constructive trust) is an award of damages for the “value of his interest in the [Property], in an amount to be determined”, I consider that aspect of his claim is capable of interpretation as a claim to a constructive trust in the Back Half’s sale proceeds.
Result
[124] For these reasons, I find Mr Hitchcock’s fifth cause of action, his claim to a constructive trust relating to the Back Half, to be made out. In particular, I find that Ms Murphy holds $500,000 of the proceeds of the Back Half’s sale, or such assets into which those proceeds have been co-mingled, on constructive trust for Mr Hitchcock.
[125] Interest requires to run in respect of these funds from 23 June 2022, the apparent date of settlement of the Back Half’s sale.
[126] I note that this finding excludes any amount relating to what Mr Hitchcock loaned Ms Murphy in 2017, or to other expenses Mr Hitchcock incurred on the further subdivision. I address those obligations below.
Partnership?
[127] In light of my findings in favour of a constructive trust, it is not strictly necessary that I address Mr Hitchcock’s alternative claim based on partnership. That said, I would not have found Ms Murphy and Mr Hitchcock to have entered a relationship that featured them carrying on a business in common with a view to profit, in the manner required of a partnership.29
[128] As her letters make plain, the profit Ms Murphy contemplated throughout, such as it was, was not for sharing. She did not consider herself in business with Mr Hitchcock. She was prepared to allow him to assist her to maintain the Property, and to progress the subdivision, and the further subdivision, and she committed
29 This definition, appearing at s 4(1) of the Partnership Act 1908 and therefore applicable to the alleged partnership in the present case, has been replaced in substantially the same terms by s 8 of the Partnership Law Act 2019.
(without intending to bind herself to an agreement) to reimbursing him for his expenditure in doing so. But the profit arising, if any, would be hers.
Debt claims
[129] As my findings in respect of a constructive trust imply, I am not persuaded by the bulk of Mr Hitchcock’s alternative claims that Ms Murphy owes him various debts, in amounts exceeding $500,000, for his 2003 payment of Ms Murphy’s bank loan, for development of the Property prior to his imprisonment in 2007, and for expenditure and work done in support of the initial and further subdivisions.
[130] A feature of Mr Hitchcock’s evidence relating to those amounts is that it changed over time, from his affidavit in support of his caveat proceedings, to his oral evidence in that proceeding, to his brief of evidence and then to his oral evidence in this proceeding. I did not find his evidence of quantum at all persuasive. Instead, the best evidence of what Ms Murphy owed Mr Hitchcock by the time of her 2016/2017 letters is found there.
[131]I note that Mr Hitchcock claims Ms Murphy owes him a further $298,000 —
$58,000 for work he performed in February 2017 to assist with Council requirements, and $240,000 for work he performed from February 2017 ($240,000 by way of improvements to the Property including installing the concrete driveway). I accept that Mr Hitchcock did undertake further, substantial work at the Property following Ms Murphy’s correspondence of 2016/2017 in which she confirmed her intention that he would be paid or credited her $500,000 assessment of his contribution. But, given the general unreliability and variability of Mr Hitchcock’s idiosyncratic assessments of the value of his work, I find its value to be very much less than he claims. And further, I observe that his letter of remonstration at Ms Murphy’s retreat to a strategy of entire Back Half sale (described at [56]) describes her unexpected prior offer of the
$500,000 and his decision to respond by “starting [his] efforts [to cut the Back Half] in half”. I infer that Mr Hitchcock considered a $500,000 payment or credit for the work he chose to perform on the Back Half to be sufficient.
[132] Beyond Ms Murphy’s obligation to pay the $500,000 the subject of a constructive trust, Ms Murphy owes no obligation to pay the amounts described at
[129] above.
[133] However, this leaves the sums loaned by Mr Hitchcock to Ms Murphy in 2017, which she used to repay bank borrowing to fund subdivision costs, and to cover personal expenses. As stated above, Mr Hitchcock says the total of these sums was
$85,000, $65,000 to repay the loan and $20,000 to meet her personal expenses. Ms Murphy says she borrowed only $10,000 for personal expenses.
[134] I have not found the accounts of either party, where they are independent of contemporaneous documentation, to be sufficiently reliable to justify factual findings. For that reason, and given Mr Hitchcock’s burden of proof, I find Ms Murphy owes Mr Hitchcock a total of $75,000 for amounts she borrowed from him in 2017.
[135]The parties’ expectation will have been that Ms Murphy would repay this
$75,000 debt when she could, following the sale of either the rear hectare or the Back Half. Interest requires to run from 23 June 2022, the apparent date of settlement of the Back Half’s sale.
Promissory note
[136] Mr Hitchcock’s claim that Ms Murphy’s 22 July 2020 affidavit, filed in the caveat proceedings, amounts to her promissory note to pay him sums totalling
$513,441.16, cannot be upheld. It derives from his misunderstanding of Ms Murphy’s calculations outlined at [113]. Ms Murphy was not, by her affidavit, acknowledging that she owed Mr Hitchcock $513,441.16, comprised of the $147,262.16 bank loan repayment of 2003 and expenditure prior to 2016 of $366,179. Instead, she was asserting that she owed him a total of $366,179, including the 2003 bank loan repayment. This amount being less than the amount I have found Ms Murphy to owe, Mr Hitchcock’s alternative claim based on promissory note is therefore redundant.
Result
[137] For the above reasons, Mr Hitchcock is entitled to judgment against Ms Murphy.
[138]I make orders:
(a)declaring that Ms Murphy holds $500,000 of the proceeds of the Back Half’s sale, including of such assets into which those proceeds have been co-mingled, on constructive trust for Mr Hitchcock;
(b)declaring that Ms Murphy owes a further sum of $75,000 to Mr Hitchcock by way of debt due; and
(c)requiring Ms Murphy to pay the above amounts, together with interest upon such of those amounts as remains unpaid, from 23 June 2022 until the date of payment, in accordance with the Interest on Money Claims Act 2016.
[139]If costs cannot be agreed:
(a)Mr Hitchcock may file a memorandum no more than five pages long, setting out his claim to costs, within 15 working days; and
(b)Ms Murphy may file a memorandum no more than five pages long, setting out her response, within a further 10 working days.
[140]I would then deal with the issue of costs on the papers.
Johnstone J
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