MacFarlane v Perpetual Trust Limited - [2018] NZCA 311

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA316/2018
[2018] NZCA 311

BETWEEN	JAMES JOHN DUNCAN MACFARLANE Appellant
AND	PERPETUAL TRUST LIMITED Respondent

Hearing:	1 August 2018
Court:	French, Simon France and Moore JJ
Counsel:	Appellant in person J Edwards and J C Suyker for Respondent
Judgment:	14 August 2018 at 3 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed and the orders made by the High Court are confirmed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis with a 20 per cent uplift and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

Mr Macfarlane appeals a decision of Associate Judge Johnston. In the decision, the Associate Judge made orders removing a caveat Mr Macfarlane had lodged over a homestead property situated in North Canterbury and granted Perpetual Trust Ltd (Perpetual) vacant possession of the property.[1]

Background

[1]Macfarlane v Perpetual Trust Ltd [2018] NZHC 1055 [HC decision].

The property in question formed part of the estate of Mr Macfarlane’s father. The latter had eight children including Mr Macfarlane. Under the father’s will, the bulk of the estate including the homestead property was given to the trustees to hold on trust for Mr Macfarlane’s mother, Mr Macfarlane, and his seven siblings during the mother’s widowhood. In the event of her remarriage or death, the trustees were given an unfettered discretion to wind up the trust and pay the capital to the children in such proportions as the trustees thought fit.
In 1965 the terms of the will regarding capital were varied by Court order.[2] The trustees’ unfettered discretion regarding distribution of capital was removed. Instead the capital was notionally divided into 40 equal shares and apportioned. As the Associate Judge noted, the division of the capital into notional shares did not however confer on any beneficiary a gift of any particular property, but rather a fixed proportionate interest in the residue.[3]
[2]This was the result of a proceeding under the Family Protection Act 1955 brought by Mr Macfarlane’s mother.
[3]At [8].
In 1992, Perpetual was appointed sole trustee of the estate pursuant to the terms of an order made in the High Court by consent.[4] The order provided among other things that the assets of the estate including the homestead property were vested in Perpetual as trustee of the estate.
[4]The appointment was to PGG Trust Ltd which amalgamated in 1998 with Perpetual.
Mr Macfarlane lived with his widowed mother in the homestead property. She never remarried and died in October 2016. Mr Macfarlane has continued living there ever since. He does so, despite the property having sustained significant damage in the Kaikōura earthquake of 14 November 2016.
Perpetual, as the registered owner of the homestead property, lodged an insurance claim for the earthquake damage. The claim was eventually settled for $611,784 in July 2017.
Perpetual then decided to sell the property in its damaged state. It entered into an agreement…

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.

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Details

Case: [2018] NZCA 311
Decision Date: 14 August 2018 at 3 pm

CaseChat Overview and Summary

The appeal before the Court of Appeal of New Zealand involved James John Duncan MacFarlane as the appellant and Perpetual Trust Limited as the respondent. The central dispute was over the homestead property situated in North Canterbury, which formed part of the estate of Mr Macfarlane's father. The core issue was whether Mr Macfarlane had a caveatable interest in the property and, if not, whether he could resist the application for vacant possession.

The legal issues the court needed to decide were whether Mr Macfarlane's interest in the estate was sufficient to support a caveat over the homestead property and if he had a defence to the application for vacant possession. The court considered the nature of Mr Macfarlane's interest in the property and whether it was specific enough to warrant a caveat. Additionally, the court had to determine whether the notice to vacate was issued in bad faith and if so, whether this invalidated the notice.

The Court of Appeal found that Mr Macfarlane did not have a caveatable interest in the homestead property. The court held that although the administration of the estate was completed, Mr Macfarlane's interest was limited to a share of the proceeds from the sale of the property, which was insufficient to support a caveat. The court also dismissed Mr Macfarlane's argument that the alleged impropriety on the part of the trustee could confer a caveatable interest. The court concluded that the interest must be more than a general interest in the proceeds from the sale of the property.

Regarding the application for vacant possession, the court found that Mr Macfarlane did not have a defence to the notice to vacate. The court held that Mr Macfarlane had no legal entitlement to occupy the property and that the notice was not issued in bad faith. The court further noted that the allegations of bad faith were unsubstantiated, and there was no evidence to support Mr Macfarlane's claims.

In conclusion, the appeal was dismissed, and the orders of the High Court were confirmed. The appellant was ordered to pay the respondent costs for a standard appeal on a band A basis with a 20 per cent uplift and usual disbursements.

Orders