Legal Research
Cases
McLennan v Livaja

McLennan v Livaja

Link copied

Case Copied 11 October 2017 32 min read

Contents

On this page

IN THE COURT OF APPEAL OF NEW ZEALAND

CA246/2016
[2017] NZCA 446

BETWEEN	IAIN MCLENNAN AND BORIS VAN DELDEN AS LIQUIDATORS OF NEIL TIMBER LIMITED (IN LIQUIDATION) Appellants
AND	BORIS LIVAJA First Respondent
AND	IWONA GRAZYNA KOTOWSKA-LIVAJA Second Respondent
AND	ORION TRUSTEE 1 LIMITED Third Respondent

Hearing:	26 June 2017
Court:	Brown, Dobson and Brewer JJ
Counsel:	P J Dale for Appellant S R G Judd for Respondents
Judgment:	11 October 2017 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Dobson J)

This is an appeal from a decision of Associate Judge Doogue dismissing an application by the appellants, the liquidators of Neil Timber Ltd (NTL), that a caveat lodged against a residential property located at 113G Sturges Road, Henderson, Auckland (the Sturges Road property), should not lapse.[1] The three respondents are the registered proprietors of the caveated property in their capacity as the trustees of the Orion Trust.[2] In essence, the appellants claim an equitable interest in the Sturges Road property on the basis that it was purchased using funds arising from the sale of a property that had been acquired in circumstances amounting to knowing receipt. The issue raised by the appeal is whether a party other than a party to whom relevant obligations were owed in the course of a particular transaction can bring equitable claims for relief relying on the breach of such obligations.
[1]McLennan v Livaja [2016] NZHC 889.
[2]The origins of the Orion Trust are explained at [16]–[18] below.
The background to the application for the caveat is protracted and somewhat complicated. An understanding of that background is necessary, however, to analyse the legal basis advanced for the appellants’ claim to a caveatable interest.

Factual background

The relationship between Mr Ede and Ms Kotowska-Livaja

The second respondent, Ms Kotowska-Livaja, was married to Mr John Ede in January 2004. She met him previously whilst visiting New Zealand and maintained a long distance relationship with him from Poland where she lived. After the couple married, Ms Kotowska‑Livaja returned to Poland until September 2004 when she moved to New Zealand with her mother and her son, who was then seven years old. Difficulties soon arose in the marriage. Mr Ede and Ms Kotowska-Livaja separated in March 2005, in which month she lodged a notice of claim against a residential property at 131 Edmonton Road, Te Atatu, Auckland.
Mr Ede had been bankrupted in June 2004. Before and after his bankruptcy he worked with NTL in a role treated as that of a shadow or quasi director. Throughout the relevant period NTL’s sole director was Mr Stuart Boaden. Mr Boaden explained that Mr Ede was working with NTL with a view to purchasing it.
Mr Ede was also responsible for the formation of a company called Neil Timber Trustee Company Ltd (NTTCL). The sole…

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.

Keep reading for free

Create a free CaseChat account to read McLennan v Livaja and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2017] NZCA 446
Decision Date: 11 October 2017 at 2.30 pm

CaseChat Overview and Summary

The Court of Appeal dismissed an appeal brought by the liquidators of Neil Timber Ltd (NTL) against the decision of an Associate Judge of the High Court to dismiss their application that a caveat lodged against a residential property located at 113G Sturges Road, Henderson, Auckland, should not lapse. The liquidators sought to establish a caveatable interest in the property on the basis that it was purchased using funds arising from the sale of a property that had been acquired in circumstances amounting to knowing receipt. The appeal raised the issue of whether a party other than a party to whom relevant obligations were owed in the course of a particular transaction could bring equitable claims for relief relying on the breach of such obligations. The Court found that the appellants could not establish a reasonably arguable case for maintaining the caveat and that they must pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements. The Court held that the equitable rationale for a claim of knowing receipt did not extend to a claimant invoking a breach of obligations owed to a third party for the purposes of characterising retention of the property as unconscionable. The Court concluded that the appellant liquidators of NTL could not rely on a form of wilful blindness to advance a claim against the property acquired by the original trustees. Instead the appellants needed to make out wilful blindness on the trustees’ part in electing not to inquire as to Mr Ede’s entitlement to apply NTL’s assets as he did.

Orders