Hughes v Johnston - [2021] NZHC 1642

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2021-412-42

[2021] NZHC 1642

UNDER Land Transfer Act 2017

IN THE MATTER

of an application that a caveat lapse

BETWEEN

NIGEL WARREN HUGHES and HAWEA

TRUSTEES LIMITED as trustees of the WHERE A WHA KAWE FAMILY TRUST

Applicants

AND

TOBY GREGG JOHNSTON

Respondent

Hearing: (Determined on the papers)

Counsel:

S Caradus and A V Foote for the Applicants

Judgment:

5 July 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 5 July 2021 at 10.30 am Pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar
…..

HUGHES v JOHNSTON [2021] NZHC 1642

[1] The applicant trustees apply to remove a caveat over a property of which they are the registered proprietors in Wanaka.

[2] The respondent, Mr Johnston, was a former trustee of the Where A Wha Kawe Family Trust (the Trust) and is a beneficiary of the Trust.

Background

[3] The background to the applicants being appointed trustees in place of Mr Johnston and his former partner, Ms Brown, is set out in the judgment Johnston v Brown.1 In that judgment, orders were made for the sale of the Wanaka property by the newly appointed trustees. An order was also made requiring the new trustees to pay to Ms Brown a sum from Mr Johnston’s share of the sale proceeds of the Wanaka property.

[4] Mr Johnston applied to stay the judgment removing him as trustee and the sale. A stay was only granted to the extent that the sale proceeds of the Wanaka property would be held pending determination of Mr Johnston’s appeal against the order granting Ms Brown a share of the sale proceeds which would otherwise have gone to Mr Johnston.2

[5] Mr Johnston lodged a caveat against the Wanaka property in January 2021. The caveatable interest claimed by Mr Johnston in his caveat is: “I am a beneficial owner/interest in the land under an express trust, WWK Family Trust, of which the registered owners are trustees.”

[6] Accordingly, the present application is by court appointed trustees who are giving effect to a court order that the trust property be sold. The application to remove the caveat is made on the basis that Mr Johnston does not have a caveatable interest. He is only a discretionary beneficiary of the trust and as such not a beneficial owner of the property. Mr Johnston has also acknowledged in the course of the proceedings that the property should be sold.

1 Johnston v Brown [2020] NZHC 2298.
2 Johnston v Brown [2021] NZHC 507.

[7] I am satisfied Mr Johnston, as a discretionary beneficiary of the trust, has no caveatable interest in the property.3 No appointment of the land to him has been made and of that fact Mr Johnston was well aware. Subject to the issue of whether the present application has been brought to his attention, I am satisfied that an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Hughes v Johnston

Details

AGLC: Hughes v Johnston [2021] NZHC 1642
Case: [2021] NZHC 1642
Decision Date: 5 July 2021

CaseChat Overview and Summary

The applicants, Havea Trustees Limited, trustees of the Where A Wha Kawe Family Trust, sought to remove a caveat lodged by Toby Gregg Johnston over a property in Wanaka. The property was subject to a court order for sale, with the proceeds to be distributed among the trustees and beneficiaries. Johnston, a former trustee and beneficiary of the trust, had lodged a caveat claiming an interest in the property, which the applicants argued was not caveatable as he was merely a discretionary beneficiary. The applicants also sought an order for substituted service of the application to lapse the caveat, as they had been unable to personally serve Johnston despite reasonable efforts. The court was required to determine whether Johnston had a caveatable interest and whether the application had been brought to his attention, justifying substituted service.

The court found that Johnston, as a discretionary beneficiary, did not have a caveatable interest in the property. The court noted that Johnston had acknowledged the property should be sold and there was an order to that effect. The court also concluded that the application to lapse the caveat had come to Johnston's attention, despite the lack of personal service. The court reasoned that Johnston had confirmed receipt of the email with the application, had the necessary court judgments, and was aware of the sale of the property. The court found it reasonable to dispense with personal service of the affidavit, as Johnston already had the contents of the affidavit and was aware of the application's merits. The court also noted that Johnston had refused to provide information necessary for personal service, despite the applicants' efforts to accommodate his preference for personal service.

The court made an order removing Johnston's caveat, noting that Johnston's actions in evading service did not warrant a finding against the applicants. The court also reserved leave to the applicants to seek an order removing any further caveat Johnston might lodge against the property, with service by email being sufficient. The applicants were granted costs on a 2B basis along with disbursements, to be deducted from any funds due to Johnston from the trust.

Orders