Lendich v Codilla
[2022] NZHC 758
•12 April 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1885
[2022] NZHC 758
UNDER the Land Transfer Act 2017 IN THE MATTER
of an application for an order that a caveat not lapse
BETWEEN
DANILO STANISLAV LENDICH
Applicant
AND
ADRIAN CAMPANA CODILLA
Respondent
Hearing: 11 February 2022 Appearances:
PH Thorp for the Applicant N Tetzlaff for the Respondent
Judgment:
12 April 2022
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 12 April 2022 at 4.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
Davenports West Lawyers Ltd, Henderson, Auckland Gaze Burt, Albany, Auckland
PH Thorp, Auckland
LENDICH v CODILLA [2022] NZHC 758 [12 April 2022]
Introduction
[1] The applicant, Mr Lendich, applies for an order sustaining the caveat he has lodged over a property on Fred Taylor Drive. The property was in the name of Mr Posa, a long-time employee of the applicant.
[2] Mr Posa has died and his executor is the respondent, Mr Codilla. The executor opposes the application by Mr Lendich.
[3] There have already been High Court proceedings between Ms Nelson (allegedly Mr Posa’s de facto partner) and the executor and Mr Posa’s housekeeper, Ms Tenchavez, as to the shares in the estate, the main asset of which is the property.1 Mr Lendich did not participate in those proceedings.
[4] Mr Lendich now claims an interest in the property under a resulting trust. Mr Lendich says that the property was transferred to Mr Posa to allow him to obtain a mortgage in respect of the property but that it was never intended that he would have the right to sell the property.
[5] I discuss the requirements of a resulting trust in more detail below but central to those requirements is the absence of any expression of an intention to transfer the beneficial interest in the property.
[6] The caveat is lodged in Mr Lendich’s name personally. The evidence filed by Mr Lendich shows that the property was transferred to Mr Posa by Lendich Heavy Equipment Ltd, a company that was owned by Mr Lendich and his wife. That company ceased trading in 1988 and was struck off the Companies Register in 1990, assigning all of the assets and liabilities set out in its financial accounts to another company associated with Mr Lendich.
1 Nelson v Codilla [2021] NZHC 1958.
[7] Mr Lendich submits that equity looks to the substance and not the form and that the substance of the arrangement is that the arrangement was personal to the applicant as originally documented before being performed for Mr Lendich by his company.
[8] Counsel for Mr Lendich submits that if that is not accepted then Lendich Construction Ltd, who took an assignment of the assets of Lendich Heavy Equipment Ltd before it was wound up, could lodge a caveat or Lendich Heavy Equipment Ltd could be restored to the Companies Register and then lodge a caveat. The applicant submits however that requiring either of the above would be allowing form to prevail over substance and instead Mr Lendich’s caveat ought to be sustained.
Issues
[9]The issues are:
(a)Is it reasonably arguable that Mr Lendich intended to retain a beneficial interest in the property for himself?
(b)If so, does the fact that the property was transferred to Mr Posa by Lendich Heavy Equipment Ltd rather than by Mr Lendich himself prevent the caveat lodged by Mr Lendich being sustained?
[10] Before setting out the factual background, I set out the legal principles applying to applications to sustain caveats and the requirements for a resulting trust.
Legal principles for sustaining caveats
[11] In applications to remove and sustain caveats under ss 142 and 143 of the Land Transfer Act 2017, the onus is on the caveator to show a reasonably arguable case for the interest claimed.2
2 Sims v Lowe [1988] 1 NZLR 656 (CA) at 660.
[12] The principles governing applications for a caveat not to lapse are settled, with the Court of Appeal providing a helpful summary in Philpott v Noble Investments Ltd:3
[26] The applicable legal principles which governed the application to sustain the caveats, and which now govern this appeal, are as follows:
(a) The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;
(b) It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;
(c) The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and
(d) When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.
[13] Counsel for the respondent referred to Master Gambrill’s decision in Bacher v Bacher where Master Gambrill stated that counsel:4
… acknowledged that while the Court cannot resolve legitimate disputes as to factual matters in affidavit evidence, it is well established that the Court does not have to accept the affidavit evidence submitted by the caveator uncritically. The Court is entitled to take a robust view in view of vague, contradictory and implausible assertions in the affidavit evidence of the caveator. In particular, the Court is entitled to take an adverse view of the credibility of assertions made by the caveator that are clearly contradicted by unequivocal contemporary documentation: See EngMee Yong (supra) and the Court is entitled to take into account the evidence of an independent professional witness. It is accepted that the Court may scrutinise the affidavit evidence to see it passes the threshold of credibility.
Elements of a resulting trust
[14] Both parties referred to the Court of Appeal’s summary of the elements of a resulting trust in Potter v Potter where it was held:5
3 Philpott v Noble Investments Ltd [2015] NZCA 342 (footnotes omitted). Recently confirmed in Melco Property Holdings (NZ) 2012 Ltd v Hall [2021] NZCA 184 at [19] and [36]; and Wallace v Studio New Zealand Ltd [2021] NZCA 392 at [40].
4 Bacher v Bacher HC Auckland M187-1M02, 21 May 2002 at [9].
5 Potter v Potter [2003] 3 NZLR 145 (CA) at [14] and [19].
[14] In the present context the essence of a resulting trust is that a person providing or contributing to the purchase price of property conveyed partly or wholly into the name of another retains a beneficial interest in the property to the extent of his or her contribution if there is nothing to indicate that he or she intended to confer the beneficial interest on the legal transferee: … The settlor must have expressed no intention to dispose of his or her beneficial interest. To fill the vacuum, the law presumes an intention to retain the beneficial interest which the settlor has never effectively alienated. The trust “results” from the lack of effective disposition to another.
…
[19] Central to a resulting trust is the absence of any expression of intention on the part of the settlor that the beneficial interest passed to the legal transferee: Gillies v Keogh [1989] 2 NZLR 327 (CA).
[15] Both parties also referred to the analysis in Westdeutsche Landesbank Girozentrale v Islington London Borough Council where the House of Lords held:6
Under existing law, a resulting trust arises in two sets of circumstances:
1.Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer: ...
2.Where A transfers property to B on express trusts, but the trust declared do not exhaust the whole beneficial interest …
Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention.
[16] In Equity & Trusts in New Zealand, the authors discuss resulting trusts relevantly as follows:7
12.5.2 The presumption of a resulting trust will be rebutted by evidence of an intention to make a gift, loan, or trust, or where consideration has been provided, or where there is any other evidence of any intention inconsistent with the trust.
6 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 2 AC 669, [1996] All ER 961 (HL) at 990.
7 Andrew Butler (ed) Equity & Trusts in New Zealand (2nd ed Thomson Reuters, Wellington, 2009) at 314.
Preliminary Comment
[17] Before setting out the factual background I record that the summary procedure for the removal of a caveat is unsuitable for the determination of disputed questions of fact. I therefore proceed on the basis of the facts as set out by Mr Lendich unless the high standard for rejecting facts in caveat applications is met.
Factual background
[18] Mr Posa was an immigrant to New Zealand who began working for Mr Lendich or one of his companies in the late 1960s. Other than a period when Mr Posa returned to Croatia for approximately six months, Mr Posa worked for Mr Lendich or one of his companies until his retirement in the early 2000s.
Hailes Road arrangements
[19] In 1979 the applicant, Mr Lendich, wished to relocate some of his business activities to a new depot in Hailes Road. The selected site included an existing house. Mr Lendich’s evidence is that he and Mr Posa agreed that he would subdivide 2000m2 from the Hailes Road site, including the house, for Mr Posa.
[20] Mr Lendich said that he wanted Mr Posa to live at the Hailes Road house to act as a caretaker for the depot and that he agreed to transfer the property into the name of Mr Posa to enable him to borrow against the property if he wished.
[21] In order to transfer the property, Mr Lendich and Mr Posa entered into an agreement for sale and purchase. The agreement records:
(a)subdivision of the Hailes Road house from the larger site;
(b)a purchase price of $8,000 (clause 1);
(c)Mr Posa, as the purchaser, was to pay $1.00 to the vendor as a deposit and in part payment of the purchase price (clause 1(a));
(d)that “the vendor hereby confirms that the consideration for this purchase shall be provided by him by way of gift” (clause 19(a));
(e)Mr Posa would be entitled to receive rent from the existing tenancy (schedule of tenancies).
[22] Mr Lendich says that he did not discuss with Mr Posa whether or not Mr Posa would have the right to sell or otherwise dispose of the Hailes Road house following transfer although his intention was that Mr Posa would not have this right, with Mr Lendich deposing:
Although this was never specifically discussed as I recall, it was not intended that Tim be able to sell the intended lot or dispose of it as his own.
Fred Taylor Drive
[23] Mr Lendich’s plans for the Hailes Road site and house did not proceed and that property was sold in July 1981. Instead, Lendich Heavy Equipment Ltd purchased a property at 194 Fred Taylor Drive (then State Highway 16) in November 1981. Mr Lendich says in relation to the Fred Taylor Drive property:
[13] To honour my arrangement with Tim, which I was keen to do as a man of my word loyal to my staff, and because I still wanted a trusted caretaker in a caretaker’s cottage on site to look after my depot, I decided to subdivide a section off for Tim, put it into his name free of charge and build a caretaker’s cottage there for him to live, also free of charge.
[14] As with Hailes Road, Tim could live at the property for as long as he wished and, with the property in his name, he could use the asset to borrow against and improve if he wished. As also with Hailes Road, it was not intended that Tim be able to sell the property or dispose of it as his own.
[15] Again I do not recall specifically discussing that with Tim but I am sure he did not believe he could sell the property or dispose of it as his own because he did not attempt to sell or ask that the property be sold when he decided to return to Croatia to live and took all his tools and belongings with him …
[24] The memorandum of transfer for the Fred Taylor Drive property records that the property was transferred by Lendich Heavy Equipment Ltd to Mr Posa on 20 July 1982 for consideration of $1.00. Lendich Heavy Equipment Ltd was owned by Mr Lendich and his wife, Mrs Diane Lendich. Mr Lendich was the Governing Director and Mr and Mrs Lendich were the sole shareholders.
[25] The memorandum of transfer is subject to a detailed fencing covenant providing Lendich Heavy Equipment Ltd would not be liable or be called upon to erect or repair or contribute towards the cost of any boundary fence between the land transferred and any land adjoining that was owned by Lendich Heavy Equipment Ltd with the proviso not to enure for the benefit of any purchaser or transferee from Lendich Heavy Equipment Ltd of any such adjoining land.
[26] A house was built at the Fred Taylor Drive property, with a letter from Mr Lendich in relation to planning issues for the depot and dated 21 October 1985 recording that “to date, Lendich Heavy Equipment Ltd has spent $35,000 in building the Caretakers cottage. It is expected that our Caretaker Mechanic, who is currently overseas, will take up residence prior to March 1986”. The letter records that the house is three-quarters complete.
[27] Mr Posa returned from Croatia in early 1986 with Mr Lendich deposing that he paid for the cost of his return. Ms Nelson, Mr Posa’s long-term partner, gave evidence that Mr Posa repaid this money to Mr Lendich or his associated companies.
[28] There is some dispute in the evidence as to the state of the house when Mr Posa returned. There is no question however that Mr Posa did significant work on it as Mr Lendich’s own evidence is that:
When [Mr Posa] returned, the cottage on the property was at or close to the stage of being closed in and habitable. [Mr Posa], however, wished to make alterations, principally in order to provide soundproofing. He was a musician and, for example, added extra internal walls and soundproofing to the floor and roof to make the house suitable. He also built a small spray painting and panel beating shed on the property. A mortgage to Westpac was registered against the property in August 1986 to enable him to fund that work.
[29] Lendich Heavy Equipment Ltd was wound up in 1988 with a resolution made to transfer all its assets and liabilities as set out in the company’s financial accounts to Lendich Construction Ltd. The evidence does not show what, if any, other steps were taken to give effect to this resolution, or whether there was a sale or assignment.
[30] In 1996 Mr Lendich acquired another property on the other side of Mr Posa’s property from the original Fred Taylor Drive property. Mr Posa’s property is down a very long driveway which effectively separates the properties owned by Mr Lendich or his related entities into two.
[31] Mr Lendich’s evidence is that Mr Posa abruptly retired in the early 2000s when Mr Posa was in his late 60s or early 70s but continued to reside in the property. Mr Lendich says that he “was happy for him to continue to live his life out there”. Mr Lendich says that he kept in contact with Mr Posa but does not refer to any discussions with Tim about the property.
[32]Mr Posa died in October 2018.
Mr Posa’s will
[33] A lawyer, Mr Anthony Vlatkovich, gives evidence on behalf of the executor that Mr Posa instructed him to prepare a will, which he signed on 30 April 2012. The will bequeathed Mr Posa’s property to Xiao Ling Wang, a woman with whom Mr Posa had a relationship at the time. Mr Vlatkovich does not recall any indication from Mr Posa that the property was anything but Mr Posa’s absolute property. He records in his affidavit that if Mr Posa had mentioned any residual interest of Mr Lendich, he would have discussed it with him and made notes which he did not.
[34] A second lawyer, Mr Luke Kemp, also gives evidence on behalf of the executor. Mr Kemp says that he met with Mr Posa on 10 May and 12 May 2016 to take instructions and execute an updated will. This will bequeathed Mr Posa’s entire estate to his carer at that time, Ms Ortencia Tenchavez. Mr Kemp’s evidence is that he discussed potential claims on Mr Posa’s estate with Mr Posa and Mr Posa confirmed that there were none. Mr Kemp’s letter of 12 May 2016 confirms this. The 2016 will appoints Mr Codilla as the executor.
Correspondence following Mr Posa’s death
[35] Following Mr Posa’s death, Mr Bernie Allan of Davenports West Lawyers sent an email on 11 October 2018 to Mr Kemp saying that they acted for Mr Lendich and
that Mr Lendich had given Mr Posa the land and built a house for him on it in conjunction with bringing him back from Croatia to New Zealand to work for Lendich Construction. The letter goes on to say:
The Lendich family own the adjoining land on title NA119D/240 (attached) and it would be of quite some advantage to them to be able to purchase back the property originally given to Tim at a fair market value (notwithstanding the original beneficence). It seems only right and just that that opportunity be given to them and we place the request on record with you for the executors of [Mr Posa’s] estate.
[36] Mr Kemp’s evidence is that Mr Lendich had called him around this time and advised that he would like first right of refusal over the property. One of the reasons Mr Lendich mentioned was that his access to and from his own property would be facilitated by having the use of Mr Posa’s property. Mr Kemp’s evidence is that Mr Lendich did not say to him that he had any residual rights to the property but only that he wanted to buy it back and would like first right of refusal.
[37]Mr Lendich’s evidence is then that:
Later in October, I reconsidered that buy back suggestion and decided that I should not have to pay to buy back what I had paid for already and that some form of trust must apply.
[38] On 26 February 2019, Mr Lendich says Mr Allen followed up with Kemp solicitors only to be told GoLegal Law were now acting. GoLegal advised that day that Probate had been granted and that it would respond to the purchase suggestion in due course. On 8 March 2019 GoLegal advised that Corban Revell was now acting. Copies of this correspondence are not in evidence.
[39] Mr Lendich’s solicitor, Mr Allen wrote to Corban Revell on 26 March 2019 saying that he would like to discuss Mr Lendich’s position in relation to the property as soon as Corban Revell received the file. Corban Revell advised on the same day that they would be in touch once the file had been received.
[40] Mr Lendich deposes that on 18 April 2019 Corban Revell advised that the executor, Mr Codilla, was overseas and that efforts were being made to have Mr Posa’s long term partner, Ms Nelson, vacate the property.
[41] Mr Allen’s evidence is that he was told by Corban Revell on 18 November 2019 that Mr Codilla was overseas and that they would come back to him when “further action occurred.”
[42] Mr Allen deposes that Corban Revell did not come back to him so he contacted them again on 22 May 2021 and they replied on 25 May 2021 saying that Mr Connell of Connell and Connell was now acting for the estate.
[43] A copy of Mr Allen’s email to Corban Revell on 22 May 2021 is attached to Mr Connell’s affidavit. The email said:
Further to our correspondence in March 2019 we enquire as to the status of the estate administration and litigation we understand has been in process. You will recall that you confirmed that you/the Executor would revert to us when a more settled position had been arrived at – so we could discuss our client’s position as the party originally making the land available to Tim.
I look forward to hearing from you by return.
[44]On 31 May 2021, Mr Allen emailed Mr Connell saying:
I understand that you are now acting on this Estate. We act for Danny Lendich/All Seasons Properties – Danny was Tim’s employer and many decades ago made the land still owned by the Estate available to Tim for his house build.
Look forward to hearing from you.
[45] Mr Allen’s evidence is that he spoke to Mr Connell on 1 June 20218 when “Mr Connell exclaimed that he could not see how [Mr Lendich] could possibly have any claim to the property” and that Mr Allen had “informed him that [Mr Lendich] could claim the property pursuant to a constructive trust or similar because he had given the property to the deceased and also built the house for him on the property”.
[46] Mr Connell explains that at the time he was involved in the relationship property and other litigation between Mr Codilla and Ms Nelson in which Ms Nelson claimed (inter alia) the property at Fred Taylor Drive as her relationship home.
8 Mr Connell’s evidence is that this phone call was in May 2021, just before the letter.
[47] Mr Connell’s evidence is that when Mr Allen phoned him, Mr Allen was aware of that litigation but indicated that he would wait until after the proceedings had been completed before discussing matters further with Mr Connell. Mr Connell’s recollection is that Mr Allen’s call was after the trial but before the judgment was delivered.
[48] During the conversation Mr Connell says Mr Allen said that Mr Lendich had sold the land to Mr Posa and that he still retained land adjoining it and that it would be logical for him to purchase it. Mr Connell’s evidence is that Mr Allen did not say that Mr Lendich or any other person associated with Mr Lendich had retained any form of residual right or interest in the land, but only that Mr Lendich would be interested in being given the first opportunity of purchasing the land. Mr Connell recalls Mr Allen saying that Mr Lendich would be a “logical buyer”.
[49] Mr Allen disputes that he was aware prior to his call to Mr Connell that the litigation was in relation to claims over the property saying that he only knew that there was litigation to remove Ms Nelson from the property.
[50] Ms Nelson was successful in respect of parts of her claim with the decision delivered on 30 July 2021 awarding Ms Nelson 65 per cent of the value of the estate.9 This meant Ms Tenchavez retains a 35 per cent interest.10
[51] Mr Lendich’s evidence is that following the High Court decision, he retained counsel and a caveat was lodged on 27 August 2021. The description of Mr Lendich’s interest on the caveat lodged is as follows:
The abovenamed Caveator claims a beneficial interest in the land contained in the above Record of Title pursuant to a Resulting Trust of which the registered proprietor Adrian Campara Codilla is trustee and the Caveator is a Beneficiary arising out of the transfer of the land to Tihomir Posa by the Caveator free of charge and the building on the land by the Caveator subsequent to that transfer.
9 Nelson v Codilla [2021] NZHC 1958.
10 At [231(f)].
Is it reasonably arguable that Mr Lendich intended to retain a beneficial interest in the property for himself?
[52] As the Court of Appeal held in Potter v Potter, it is central to a resulting trust that there is an absence of any expression of intention that the beneficial interest pass to the legal transferee.11
[53] In my view it is not reasonably arguable that Mr Lendich did intend to retain a beneficial interest in the property for himself. Considering all of the evidence together, it is clear that the presumption of a resulting trust would clearly be rebutted in this case.
[54] Mr Lendich’s evidence is that the transfer of the property to Mr Posa was ‘[t]o honour my arrangement with [Mr Posa] … put it in his name free of charge and build a caretaker’s cottage there for him to live in, also free of charge”. The arrangement that Mr Lendich was honouring was the arrangement in relation to the Hailes Road property for which a written agreement had been drawn up. The agreement for sale and purchase for the Hailes Road property expressly states that the consideration for the purchase was a gift from Mr Lendich. Mr Lendich does not say that part of the Hailes Road arrangement was not being honoured. Instead he says “[a]s also with Hailes Road, it was not intended that Tim be able to sell the property or dispose of it as his own.” But the clear words of the sale and purchase agreement for Hailes Road are that the consideration for the transfer was a gift.
[55] Furthermore, the memorandum of transfer for the Fred Taylor Drive property simply records that the consideration for the transfer was $1.00. It does not record that the beneficial interest was retained by either Lendich Heavy Equipment Ltd or Mr Lendich personally as would be expected if that was the case. The memorandum contained a detailed fencing covenant so it cannot be argued that it was a standard form agreement with no special terms.
11 Potter v Potter, above n 5, at [19].
[56] In addition, Mr Lendich’s evidence is that he agreed to the property being put into Mr Posa’s name so that he was able to borrow against it during this lifetime. This is exactly what Mr Posa did with a mortgage registered over the property by Westpac New Zealand Limited on 18 August 1986.
[57] As counsel for the respondent submits, any default by Mr Posa to meet his obligations to the mortgagee could have resulted in a mortgagee sale of Mr Posa’s property during his lifetime or after his death. In that event, any interest claimed by Mr Lendich would have been secondary to the mortgagee’s secured interest, as there was no notice of Mr Lendich’s claimed interest and Mr Lendich accepts that the property could be used by Mr Posa as security.
[58] Counsel for Mr Lendich responds to this submission by saying that the nature of the relationship between Mr Lendich and Mr Posa meant that if any difficulties arose in relation to the mortgage, Mr Lendich would have helped Mr Posa out. There was therefore never any risk of a mortgagee sale. But Mr Lendich’s clear intention that Mr Posa have an ability to raise a mortgage against the property is not consistent with retention of the beneficial interest by Mr Lendich.
[59] Nor does Mr Lendich or any of the witnesses who filed evidence in support of his application say that Mr Lendich or anyone else ever discussed with Mr Posa or with them that the property was to be returned to Mr Lendich. Nor do any of the affidavits filed in support of the executor’s opposition refer to Mr Posa ever discussing the property as being anything other than his own or treating it otherwise than as his own.
[60] Ms Nelson and Ms Tenchavez, who were held to share in the estate following the High Court proceedings, would clearly have an interest in Mr Posa holding both the beneficial and legal interests. But affidavits have also been filed by Mr Connell, Mr Kemp and Mr Vlatkovich, each solicitors, the latter two of whom prepared wills for Mr Posa, none of whom had an interest in the property. None said that Mr Posa mentioned anything about the property reverting to Mr Lendich or Mr Lendich having any residual interest in the property.
[61] Furthermore, the steps taken by Mr Lendich and his lawyer, Mr Allen, after Mr Posa’s death are not consistent with the beneficial interest having been retained by Mr Lendich. If in fact the property was to revert to Mr Lendich, then he and his lawyer would have told the executor and the executor’s lawyer that following Mr Posa’s death. This is particularly the case when Mr Lendich and Mr Allen accept that the executor’s lawyer advised them that the executor was taking steps to remove Ms Nelson from the property, the same property Mr Lendich says he retained a beneficial interest in.
[62] Mr Lendich and Mr Allen say that they were never aware that proceedings had been brought to challenge Mr Posa’s will. But if Mr Lendich considered that the Fred Taylor Drive property was to revert to Mr Lendich then he and his lawyer would have told the executor that. Instead, Mr Lendich and Mr Allen’s evidence is that they said that Mr Lendich had given Mr Posa the property free of charge and that “it was only right” that Mr Lendich had “the first right to purchase the property back at fair market value”.
[63] The most telling evidence is that after his lawyer contacted the executor’s lawyer in October 2018 and said Mr Lendich ought to have first right of refusal, Mr Lendich says in his affidavit:
Later in October, I reconsidered that buy back suggestion and decided that I should not have to pay to buy back what I had paid for already and that some form of trust must apply.
[64] A resulting trust is all about intention. As Duffy J held in Pounamu Properties Limited v Brons:12
[187] The presumption of resulting trust is only a presumption. If there is clear evidence that contradicts the transferor's intention to have the property held on resulting trust, then a resulting trust does not arise. Normally, such evidence will show that the transfer was intended to be a gift or a loan, or that adequate consideration has been provided, or that the presumption of advancement applies.
12 Pounamu Properties Limited v Brons [2012] NZHC 590 at [187].
[65] Here there is evidence from Mr Lendich himself that at the time of the transfer, the transfer was intended to be an outright gift. The relevant time for ascertaining intention is at the time the transfer was made. It was not until after Mr Posa’s death and after Mr Lendich and his solicitor had already contacted the executor’s solicitors about purchasing the property that Mr Lendich first raised that he had always intended to retain the beneficial interest or that the property was to revert to him on Mr Posa’s death.
[66] In light of that evidence, it is not reasonably arguable that a resulting trust arises. Although the threshold for sustaining a caveat is low, with an order for a caveat to lapse only to be made if it is patently clear that the caveat cannot be maintained, that low threshold has not been reached in this case. It is clear on Mr Lendich’s own evidence and that of his solicitor that the caveat cannot be sustained.
Does the fact that the transfer of the property to Mr Posa was by Lendich Heavy Equipment Ltd rather than Mr Lendich personally prevent the caveat being sustained?
[67] As I have reached the view that it is not reasonably arguable that Mr Lendich intended to retain the beneficial interest in the property it is not necessary to consider whether the fact that the property was transferred by Lendich Heavy Equipment Ltd would prevent the caveat being sustained.
[68] It would, however, create a further hurdle for Mr Lendich in establishing a caveatable interest.
[69] Lendich Heavy Equipment Ltd was removed from the Companies Register in 1990. Lendich Construction Ltd took an assignment of the assets and liabilities of Lendich Heavy Equipment Ltd before it was dissolved but it was only of those assets and liabilities “as per the company financial accounts”. The accounts of Lendich Heavy Equipment Ltd were not provided in evidence and so the applicant has not established a reasonably arguable case that any beneficial interest retained by Lendich Heavy Equipment Ltd was transferred to Lendich Construction Ltd.
[70] Mr Lendich submits that as one of the shareholders of Lendich Heavy Equipment Ltd with his wife, he directed the transfer by Lendich Heavy Equipment Ltd to Mr Posa to honour the arrangement agreed in his personal capacity in respect of the Hailes Road property. The involvement of the company adds complication because it raises questions of whether the company had both the legal and beneficial interest at the time it transferred the property to Mr Posa and whether the company retained the beneficial interest or transferred it simultaneously to Mr Lendich. These are matters which ought to be recorded in the company’s accounts, yet those accounts were not put in evidence.
[71] Even if the presumption of a resulting trust was not rebutted by the evidence, Mr Lendich has not established that it is reasonably arguable that Mr Lendich personally has an interest pursuant to a resulting trust. The caveat would therefore not be able to be sustained on this basis either.
Laches and Limitation
[72] The respondent sought to rely in addition on the doctrine of laches and the Limitation Act 2010.
[73] It is unnecessary to consider these arguments because of the view I have reached that it is not reasonably arguable that there was a resulting trust.
[74] If I have erred in that finding, I do not consider that either argument could be determined sufficiently in the context of this proceeding to lead to a result that the caveat ought to lapse.
Result
[75] Caveat 12225785.1 registered by Mr Lendich against record of title NA52A/443 is to lapse.
Costs
[76] Having succeeded, the respondent is entitled to costs. I expect that the parties ought to be able to agree costs but, if that is not possible, memoranda of no more than five pages may be filed by the respondent within 20 working days of my judgment and by the applicant within 10 working days of service of the respondent’s memorandum.
Associate Judge Sussock
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