McLennan v Livaja - [2016] NZHC 889

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-216 [2016] NZHC 889

UNDER The Land Transfer Act 1952

IN THE MATTER

of an application under section 145A for an order that a caveat not lapse

BETWEEN

IAIN MCLENNAN and BORIS VAN DELDEN as liquidators of Neil Timber Limited (in Liquidation)

Applicants

AND

BORIS LIVAJA First Respondent

IWONA GRAZYNA KOTOWSKA- LIVAJA

Second Respondent

ORION TRUSTEE NO. 1 LIMITED Third Respondent

Hearing: 12 April 2016

Appearances:

Mr Dale for Applicants
Mr Judd for Repondents

Judgment:

5 May 2016

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on
05.05.16 at 1 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

MCLENNAN & ANOR as liquidators of Neil Timber Limited (in Liquidation) v LIVAJA & ORS [2016] NZHC
889 [5 May 2016]

[1] The applicants are the liquidators of a company called Neil Timber Limited (NTL). They have lodged a caveat against property belonging to the respondents and have filed an originating application for an order that that caveat not lapse. The caveat is expressed in the following terms:

Ian McLennan and Boris Van Delden as liquidators of Neil Timber Ltd (in liquidation) claim that the property is owned by the registered proprietors as constructive trustees in respect of which the liquidators are beneficiaries on behalf of the creditors.

[2] NTL seeks an order pursuant to s 145A of the Land Transfer Act 1952. The applicants allege that NTL has an equitable interest in certain funds that were used to purchase a previous property for the benefit of the second respondent and that they are entitled to trace those funds into the property which is the subject of the caveat.

Background

[3] The second respondent is implicated in the present proceedings due to her previous relationship with Mr John Ede. She and Mr Ede began a relationship in
2000 and were subsequently married in 2004. Mr Ede was adjudicated bankrupt on

24 June 2004. During the period of their relationship, and for some time thereafter, Mr Ede was associated with NTL. It appears that Mr Ede was interested in purchasing the company and was working within the business in order to prepare the way for the sale to proceed. He established a second company, Neil Timber Trustees Company Limited, to be the purchaser of NTL. However, the purchase never eventuated.

[4] By late 2004, the second respondent’s marriage to Mr Ede had broken down. On 14 January 2005, the second respondent settled the D’Angellis Trust. The trustees were listed as the second respondent and FM Trustees 325 Ltd. The couple officially separated on 14 March 2005 and negotiated a relationship property agreement. The terms of the agreement required Mr Ede to transfer ownership of a property at 1/1 Ambrico Place to the second respondent. For one reason or another, this did not eventuate. Instead, Mr Ede arranged for $330,000 to be paid towards the purchase of a property at 30/1 Ambrico Place. The…

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: [2016] NZHC 889
Decision Date: 5 May 2016

CaseChat Overview and Summary

The applicants, as liquidators of Neil Timber Limited, sought to maintain a caveat over a property in Sturges Road, Henderson, which they claimed was held by the respondents as constructive trustees for the benefit of the company’s creditors. The applicants alleged that the funds used to purchase a previous property had been misappropriated by Mr John Ede, who had been adjudicated bankrupt. The applicants sought to trace those funds into the property in Sturges Road. The court was required to determine whether the applicants had an equitable interest in the funds, and if so, whether those funds could be traced into the property in Sturges Road. The court concluded that the applicants had established an arguable case that they had an equitable interest in the funds, as Mr Ede had either breached his fiduciary obligations or misappropriated the funds. However, the court found that the second respondent, who had received the property, did not have a subjective belief that there was probably something suspicious about the transaction. Therefore, the applicants had not demonstrated a reasonably arguable case that they had an equitable interest in the Sturges Road property, sufficient to support a caveat. The originating application was dismissed, and costs were awarded to the respondents.

Orders