Hollands v Sorensen

[2021] NZHC 103

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2019-441-025

[2021] NZHC 103

UNDER

Law of Equity and Constructive Trust

IN THE MATTER

of Claim for Beneficial Interest against Trust-owned Property

BETWEEN

PETER KEVIN HOLLANDS

Plaintiff

AND

MICHAEL IAN SORENSEN AND SONYA SORENSEN AS TRUSTEES

First Defendant

TRUDY HOLLANDS

Second Defendant

Hearing:

1-3 and 14 December 2020

Appearances:

P Ross for the Plaintiff

S Robertson QC and A Harris for the First and Second Defendants

Judgment:

5 February 2021

JUDGMENT OF GRICE J

Contents

Introduction[1]

Background[18]

The Sorensen’s Trust Arrangements[36]

Relevant law[40]

Property (Relationships) Act 1976[40]

Constructive Trust[41]

Proprietary Estoppel  [57]

Knowing receipt  [59]
Summary of legal claims[61]

Reformulated claim[70]

Trust arrangements and structures[76]

Issues[86]

HOLLANDS v SORENSEN [2021] NZHC 103 [5 February 2021]

What did Sonya and Michael Sorensen say to Peter and Trudy about providing assistance to them

for housing?[88]

Kereru farm[92]

Gift of $200,000/$230,000[99]

What contributions did Peter and/or Trudy make to the Surrey Street property?[121]

What benefits did Peter and Trudy receive from the trustees in the form of free housing or

otherwise?[131]

Is Peter's expectation of an interest in the property reasonable or alternatively is there any
unconscionability in the trustees retaining ownership of Surrey Street?[150]

Assessment of benefits and contributions[156]

Conclusion[160]

Constructive trust[160]

Proprietary estoppel[162]

Knowing receipt[165]

Acquiescence[167]

Summary of conclusions[168]

Costs[169]

Introduction

[1]                 Peter and Trudy Hollands were in a relationship for nearly 20 years. They met in April 1999 and married in February 2002. They have two children now aged 14 and 12 years.

[2]                 They separated in October 2018. The children remain in the care of their mother, Trudy, in the home the family lived in until separation on Surrey Street, Napier. Peter is seeking a share of that house in these proceedings.

[3]                 That house is owned by the Trudy Hollands Family Trust (the Trust). Neither Trudy nor Peter is a trustee of the Trust, nor did they settle it. The first defendants are Trudy's parents, Michael and Sonya Sorensen, who settled the Trust in June 2007 and are its trustees. They are sued in their capacity as trustees of that Trust. Trudy is the principal beneficiary of the Trust. There are a number of discretionary beneficiaries listed by class in the trust deed, including her children and grandchildren and spouse or partner.

[4]                 When the parties separated  following  an  altercation  to  which  Mr  and  Mrs Sorensen were summoned by Trudy, a trespass notice was issued by the Trust, against Peter, at the suggestion of the police who had been called to the incident. As a result, Peter left the property.

[5]                 Trudy and Peter’s relationship property claims were  resolved  by  the  Family Court.1 Consent orders were made dividing the chattels that they had built up in the course of their marriage, including motor vehicles. At the same time, orders were made by consent about the arrangements for the care of the children.2

[6]                 Peter initially took the view that the Surrey…