Mo v Yang
[2022] NZCA 573
•23 November 2022 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA497/2021 [2022] NZCA 573 |
| BETWEEN | QINGHUA MO |
| AND | ZHE YANG |
| TAMAKI HOMES LIMITED YAN YANG |
| Hearing: | 10 May 2022 |
Court: | Miller, Duffy and Ellis JJ |
Counsel: | J D McBride, R P Kaur and S Hou for Appellants |
Judgment: | 23 November 2022 at 2.30 pm |
JUDGMENT OF THE COURT
AThe appeal is allowed in part as specified at [101].
BThe respondents must pay the appellants costs on a standard appeal on a band A basis with usual disbursements. We certify for second counsel.
____________________________________________________________________
REASONS OF THE COURT
(Given by Ellis J)
The first and second appellants, Ms Qinghua Mo and Mr Yu Huang, are married. They were born in China but moved to New Zealand about 20 years ago. The third appellant, DH & PM Ltd (DH & PM), is owned and directed by Ms Mo and Mr Huang, and is their property holding company.
Between 2015 and 2018, Ms Mo and Mr Huang provided funding for a number of property development ventures undertaken by Mr Zhe Yang and Mr Jackson Law, the first and second respondents.
There were family connections between Mr Huang, Ms Mo, and Mr Yang. Mr Huang’s mother and Mr Yang’s father had been school friends in China. Mr Huang and Ms Mo travelled to Taiwan for Mr Law’s wedding in 2016. Mr Huang and Ms Mo were godparents to Mr Yang’s son in New Zealand. In the course of the dealings between them Ms Mo and Mr Huang were also introduced to Mr Yang’s younger sister, the fourth respondent Yan Yang.[1]
[1]The third respondent Tamaki Homes Ltd (THL) is owned and directed by Mr Law.
The developments did not proceed as planned; relationships between the parties soured.
None of the relevant dealings in relation to any of the properties were documented in writing. The principal question in the High Court, and now before us on appeal, is the legal or equitable basis on which Ms Mo and Mr Huang are entitled to now recover their “investments” and how those investments should be quantified.
The properties and the original proceedings
The developments at issue involved five different properties:
(a)3 Huxley Place, Glen Innes (Huxley Place);
(b)12 Ropata Avenue, Point England (Ropata Avenue);
(c)47 Union Road, Howick (Union Road);
(d)8 Taurima Avenue, Point England (Taurima Avenue); and
(e)Lot 4, 342 Bawden Road, Dairy Flat (Bawden Road).
Originally four separate proceedings were filed:
(a)CIV-2018-404-001927 relating to Huxley Place. Ms Mo and Mr Huang were the plaintiffs. The defendants were Mr Yang and Mr Law.
(b)CIV-2018-404-002619 relating to Ropata Avenue. Ms Mo and Mr Huang were the plaintiffs. The defendants were Mr Yang, Mr Law and Tamaki Homes Ltd, the third respondent (THL).
(c)CIV-2019-404-000506 relating to Union Road and Taurima Avenue. Mr Yang and Mr Law were the plaintiffs. Ms Mo, Mr Huang and DH & PM were the defendants.
(d)CIV-2019-404-000997 relating to Bawden Road. Ms Mo and Mr Huang were the plaintiffs and Mr Yang and Ms Yang were the defendants.
Prior to trial, Associate Judge Bell ordered the four proceedings be heard together and directed that the evidence at the hearing would be used for all proceedings.[2] The combined proceedings were heard by Woolford J over three weeks in May 2021. He delivered his judgment on 15 July 2021.[3]
[2]Mo v Yang [2019] NZHC 3032 at [50].
[3]Mo v Yang [2021] NZHC 1792 [Judgment under appeal].
The High Court Judge’s factual findings are not challenged on appeal and so we will not need to refer to the evidence at trial in any detail. The legal issues have also helpfully been narrowed since the hearing in the High Court. For these reasons, it is unnecessary to do much more, in terms of setting out the platform for our decision, than briefly refer to some background matters, the claims made and the Judge’s key factual and legal findings in relation to each development.
We address the claims in the order in which they were addressed in the High Court judgment. That order reflects the order in which the four original claims were filed. It does not correspond to the dates on which the appellants were introduced to each property, but because several were under negotiation at any one time it is not especially useful to examine the transactions in that order.
Huxley Place
The now undisputed facts
In November 2015, Mr Yang entered into an agreement to purchase Huxley Place for $860,000, with settlement on 19 February 2016. He and Mr Law planned to subdivide the property and build four units on it. In order to assist with funding for the project Ms Mo and Mr Huang transferred $350,000 (40.7 per cent of the purchase price) to Mr Yang and Mr Law. $90,000 of this amount was not transferred until after settlement.
Mr Yang and Mr Law had arranged for another investor, Ms Yong, to take title to the Huxley Place property. Ms Mo and Mr Huang said they did not know about this until after settlement; they had believed that Ms Yong’s only role was also to assist in raising finance for the purchase.
Huxley Place was never developed. Rather, it was sold in an undeveloped state on 25 August 2017.[4] The net proceeds of the sale were split between Mr Law, Mr Yang and Ms Yong.[5] Mr Yang and Mr Law refused to repay Ms Mo and Mr Huang, arguing that there was a subsequent agreement with them for the transfer of their Huxley Place contributions to the Taurima Place development.
The claim as relevantly pleaded
[4]The August 2017 sale price is not referred to in the High Court judgment and is not known to us.
[5]Ms Mo and Mr Huang say they only became aware of this following discovery in these proceedings.
Ms Mo and Mr Huang pleaded three alternative causes of action in their Huxley Place claim:
(a)breach of what was referred to in the pleading as an “investment agreement” whereby Ms Mo and Mr Huang would see a return from their original investment proportionate to their 40.7 per cent contribution to it;
(b)resulting trust, with the effect that Mr Yang and Mr Law held a share of the property on trust for Ms Mo and Mr Huang proportionate to their original 40.7 per cent contribution to the purchase price; and
(c)breach of the Fair Trading Act 1986 as a consequence of which Ms Mo and Mr Huang had suffered loss in an amount equating to a share of the proceeds on sale.
The Judge’s conclusions
The Judge found there was no concluded agreement or contract governing the transfer of funds or its terms.[6] He rejected the assertion by Mr Yang and Mr Law that there had been a subsequent agreement that the funds contributed would be used for Taurima Place and he dismissed the claim under the Fair Trading Act.[7] None of these findings are challenged on appeal.
[6]Judgment under appeal, above n 3, at [25].
[7]At [31] and [36].
The Judge also declined to accept that the $350,000 contribution made by Ms Mo and Mr Huang was held on a purchase price resulting trust for Ms Mo and Mr Huang because some of these funds had not been transferred until after settlement.[8] After citing passages from leading textbooks on equity and trusts,[9] he said:[10]
[40] The difficulty with this approach is that a substantial portion of the contributions by Ms Mo and Mr Huang were made after settlement of the purchase of the property. Furthermore, the pleadings do not allege that the contributions made prior to settlement were to be exclusively applied to the purchase of the property. The statement of claim alleges that the oral investment agreement included a term that:
The Defendants would use the Plaintiffs’ contributions as part‑payment of the purchase price of the property and/or to cover the proposed building development on the property, as they saw fit.
…
The Plaintiffs’ contribution would remain unsecured against the title(s) to the property.
Ms Mo, in her brief of evidence, confirms this agreement and acknowledges that their contributions remained unsecured against the title to the property.
[41] In those circumstances, a presumption of a resulting trust cannot arise. There has been no tracing of where the contributions made by Ms Mo and Mr Huang were applied. There is no certainty that any of the contributions were in fact applied to the purchase of the property, although it appears likely that the sum of $160,000 transferred into the account of another investor in the project, Ms Yong (who became the registered proprietor of the property on settlement as nominee for Mr Yang), the day before settlement, was utilised in settlement of the purchase price.
[8]At [40]–[41].
[9]Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [12.3.1(1)]; and Alistair Hudson Equity and Trusts (9th ed, Routledge, London, 2016) at 448.
[10]Judgment under appeal, above n 3.
Instead, the Judge found the restitutionary remedy of money had and received was available to Ms Mo and Mr Huang.[11] He said:[12]
[49] In Napier v Torbay Holdings Ltd, the Court of Appeal confirmed that the remedy of money had and received is available in circumstances where there has been a payment of money which would not have been paid but for a mistake of fact made. The crediting of a sum from one account to another account is the equivalent of payment. A claim for money had and received is a personal claim rather than a proprietary claim over the thing itself. It does not turn on an ability to trace funds. Whether the funds went directly into an account that was in overdraft or not is irrelevant. It also does not depend on proof of any wrongdoing or impropriety on the part of the recipient. It does not turn on the continued existence or retention of the money received. Although unjust enrichment may be seen as underpinning a claim for money had and received, there is no actual requirement of unjust enrichment.
[11]At [48].
[12]Footnote omitted.
The Judge rejected the argument that the remedy of money had and received could include profits on the money advanced by Ms Mo and Mr Huang because such a claim involves:[13]
… purely a restitutionary remedy. If a payer is entitled to any profit on the funds advanced, then logically he or she is also responsible for any losses. That cannot be the case.
[13]At [52].
So Ms Mo and Mr Huang were entitled to receive back only the $350,000 they had contributed, rather than a 40.7 per cent share of the sale proceeds claimed to be held on resulting trust for them.[14]
[14]At [53].
In terms of interest on the judgment sum the Judge held that a calculation under the Interest on Money Claims Act 2016 (the IMCA) was more appropriate than interest calculated on the (slightly more favourable) basis of the Reserve Bank SME lending rates. Interest was to run on the $350,000 from the date of sale (25 August 2017) to the date of trial (10 May 2021).[15] The Court rejected a claim for an award of compounding interest under the Reserve Bank’s SME business lending rates as equitable damages.[16]
Ropata Avenue
The now undisputed facts
[15]At [53].
[16]At [52].
The Ropata Avenue property was purchased by Mr Yang and Mr Law in May 2015 for $1.15 million. Settlement occurred on 31 July 2015. Some of these funds were contributed by Ms Mo and Mr Huang.
The Ropata Avenue development was eventually completed, and three of the five units were sold to members of the public. One unit was sold at cost (approximately $800,000) to Ms Yong. Ms Mo and Mr Huang lodged a caveat over the fifth unit (then valued at $1.1 million) because they said it had been a term of their agreement with Mr Yang and Mr Law that it would be transferred to them on completion.
The claim as relevantly pleaded
Ms Mo and Mr Huang pleaded three alternative causes of action in their Ropata Avenue claim:
(a)various breaches of an “investment agreement”, including breach of a term said to oblige Mr Yang and Mr Law to transfer the fifth unit to them;
(b)a resulting trust, with the effect that Mr Yang and Mr Law held the property on trust for Ms Mo and Mr Huang to the extent of the their full contribution to the project, which was pleaded to total $1,677,019.00; and
(c)breach of the Fair Trading Act 1986.[17]
The Judge’s conclusions
[17]This claim was only faintly pursued in the High Court and it is unnecessary to address it further on appeal.
The Judge again found there was no concluded agreement or contract governing the transfer of funds or its terms. In terms of the contributions made by Ms Mo and Mr Huang to the Ropata Avenue project, he found:
(a)Ms Mo and Mr Huang made “initial” (but post-settlement) contributions of $330,000;[18]
(b)a further $460,000 was contributed by Ms Mo and Mr Huang, but this was later transferred for use in the Taurima Avenue project (addressed below).[19]
[18]Judgment under appeal, above n 3, at [85].
[19]At [97]–[98].
The Judge declined to find a purchase price resulting trust (for the same reasons as before)[20] and again employed the restitutionary remedy of money had and received to return to Ms Mo and Mr Huang their $330,000 contribution.[21] He awarded interest on that sum under the IMCA running from the date the development was substantially completed (31 December 2017) to the date of trial.[22]
[20]At [102].
[21]At [105].
[22]At [105].
In light of his finding that there was no concluded investment agreement, the Judge observed that there was no basis upon which Ms Mo and Mr Huang’s caveat over the fifth unit could be maintained.[23]
Union Road
The now undisputed facts
[23]At [106].
On 14 March 2015, Mr Law entered into an agreement to purchase Union Road for $1.24 million with settlement due on 25 September 2015. $850,000 (68.55 per cent) of the purchase price was contributed by Ms Mo and Mr Huang, who obtained those funds from ASB in return for a mortgage over the property. Upon settlement, title was transferred to DH & PM. Ms Mo and Mr Huang paid outgoings on the property (including interest on the mortgage) and were reimbursed for these by Mr Yang and Mr Law, but with a shortfall of $1,804.99.
The development was never completed and DH & PM remained on the title to the Union Road property.
The claim and counterclaim as relevantly pleaded
Mr Yang and Mr Law pleaded that there was an oral agreement entered into with DH and PM (by its officers, Ms Mo and Mr Huang) that DH & PM would be nominated as the purchaser of the property and would arrange a loan from ASB of $850,000 to be applied towards the purchase price with Mr Yang and Mr Law paying the outgoings. Upon refinancing of the original loan by Mr Yang and Mr Law, DH & PM would transfer the property to them. Messrs Yang and Law said despite agreeing to execute a Deed of trust acknowledging that their company held the property on their behalf, Ms Mo and Mr Huang had then refused to do so. And despite Mr Yang and Mr Law arranging the finance to repay the outstanding debt owed by Ms Mo and Mr Huang, they had refused to transfer the property, causing the project to stall and Mr Yang and Mr Law to suffer a variety of losses.
The three causes of action pleaded were: breach of contract, breach of an “express/implied/resulting trust” and breach of fiduciary duty.
Ms Mo and Mr Huang filed a counterclaim in which they alleged various breaches by Messrs Yang and Law of an alleged short term property financing agreement between them which entitled them to retain title to the property to the extent proportionate to their 68.55 per cent contribution to the purchase price and to an equitable lien over the property to the extent of that contribution.
The Judge’s conclusions
The Judge rejected Ms Mo and Mr Huang’s defence that the contribution by them of borrowed funds to the project could be regarded as an equity investment capable of giving rise to a proportionate ownership interest in the property. He said:
[120] It should be noted at the outset that apart from arranging the mortgage advance, Ms Mo and Mr Huang did not contribute any funds towards either settlement of the purchase of the Union Road property or towards the subdivision and building development. They have paid outgoings, including interest on the mortgage, for which they have been and continue to be reimbursed. I agree with Mr Sheppard, the accountant who gave evidence on behalf of Mr Yang and Mr Law, that the mortgage advance arranged by Ms Mo and Mr Huang cannot be regarded as an equity investment or contribution by them, which would give them a proportionate ownership interest in the property (68.55 per cent) based on a claimed contribution to the purchase price. If the mortgage advance had been an equity investment by Ms Mo and Mr Huang, there is simply no basis upon which Mr Yang and Mr Law would have been called upon to pay the interest on it.
…
[123] Again, in the absence of any contemporaneous documentation or relevant practice from which inferences can be drawn, it is not possible to establish the exact nature of the commercial arrangement. The only arrangements the parties agree upon are that Mr Law would nominate DH and PM Limited as purchaser of the property; Ms Mo and Mr Huang would obtain a loan of $850,000 to be secured against the property; Mr Yang and Mr Law would pay all outgoings on the property including interest on the mortgage advance; Mr Yang and Mr Law would proceed to subdivide the property and build two units on the subdivided property; and the title would be transferred back to Mr Yang and Mr Law at some stage during the development process.
Instead, the Judge went on to find that while the terms of the wider arrangement between the parties were unclear, the Union Road property was held by DH & PM on bare trust for Mr Yang and Mr Law, on the following terms:[24]
(a)At the request and cost of Mr Yang and Mr Law, DH & PM Limited will transfer the property to Mr Yang and Mr Law as and when they require.
(b)Until the property is transferred to Mr Yang and Mr Law, DH & PM Limited will deal with the property as Mr Yang and Mr Law require.
(c)The mortgage repayment amount shall be repaid to DH & PM Limited upon the transfer.
(d)In the meantime, Mr Yang and Mr Law are to provide sufficient funds to DH & PM Limited to meet all outgoings in respect of the property as and when necessary.
(e)Mr Yang and Mr Law will keep DH & PM Limited indemnified at all times against all loss and liability of any kind arising out of DH & PM Limited acting as trustee in respect of the property.
(f)Finally, if the property or any part of it is sold, DH & PM Limited will receive the proceeds of sale and, after payment of the mortgage repayment amount together with all outgoings and expenses in respect of the disposal, will hold the net proceeds of sale in trust for Mr Yang and Mr Law.
[24]At [135].
The Court ordered that, on condition that the ASB mortgage advance was first repaid in full and discharged on transfer and provided Ms Mo and Mr Huang were first reimbursed for all outstanding outgoings, DH & PM was required to transfer the property to Mr Yang and Mr Law or their nominee.[25]
Taurima Avenue
The now undisputed facts
[25]At [136]–[137].
On 9 September 2015, Mr Yang and Mr Law entered into a sale and purchase agreement for Taurima Avenue. The purchase price was $1.19 million and a deposit of $119,000 was paid. The plan was to demolish the existing house, subdivide the property and build five townhouses on it. Settlement was due on 18 December 2015.
Ms Mo and Mr Huang agreed to provide funding of $715,000, which they borrowed from ASB, again secured against the property which, on settlement was registered in their names and in the name of Mr Yang’s sister Ms Yang (as nominee for Mr Yang and Mr Law).[26] Ms Mo and Mr Huang later contributed a further $517,096.70 to the development.
[26]Ms Yang herself had contributed $300,000 to the purchase price.
Resource consent was applied for shortly after settlement. Subdivision and other construction work began around mid-2017, and work progressed until around July 2018, when Mr Yang and Mr Law ran out of funds.
The claim and counterclaim as relevantly pleaded
Mr Yang and Mr Law pleaded that there was an oral agreement entered into with Ms Mo and Mr Huang that they would arrange finance to enable purchase of the property and that Ms Mo, Mr Huang and Ms Yang would be nominated as the purchasers and hold the property on trust for them. Mr Yang and Mr Law would begin developing the property, which would be transferred to them “in the middle stages of the development” so they could obtain further funding to allow them to complete it. Despite agreeing to execute a Deed of trust acknowledging that they held the property on behalf of Mr Yang and Mr Law, Ms Mo and Mr Huang had then refused to do so. And despite Mr Yang and Mr Law arranging the finance to repay the outstanding debt owed by Ms Mo and Mr Huang, they had refused to transfer the property, causing the project to stall and Mr Yang and Mr Law to suffer a variety of losses.
The three causes of action pleaded were (again): breach of contract, breach of an “express/implied/resulting” trust and breach of fiduciary duty.
Again, Ms Mo and Mr Huang counterclaimed. They alleged various breaches by Mr Yang and Mr Law of an investment agreement under which Ms Mo and Mr Huang had contributed $772,096 to the purchase price ($715,000 of which was by way of mortgage funding) and pursuant to which they were to receive an equal share of the net profits upon sale of the five completed townhouse units. They sought a taking of accounts under Part 16 of the High Court Rules 2016 to determine (amongst other things) the value of the return of equity to which they were entitled under the investment agreement. They also sought an order for sale and division of the proceeds in accordance with the outcome of the Part 16 inquiry.
The Judge’s conclusions
The High Court again found that the precise terms of the arrangement between the parties were unclear but that Ms Mo, Mr Huang and Ms Yang held the Taurima Avenue property on trust for Mr Yang and Mr Law.[27] The terms of the trust were the same as those of the trust over the Union Road property.[28] The Judge said he was unable to find any concluded contract governing the basis on which the further $517,096.70 had been advanced or the basis on which it would be repaid.[29] Instead, he found that Ms Mo and Mr Huang were entitled to a remedy in the form of money had and received in relation to that contribution, plus interest of $41,389.11 under the IMCA running from the cessation of construction work (30 June 2018) and the commencement of trial (10 May 2021).[30]
[27]Judgment under appeal, above n 3, at [162] and [177].
[28]At [162].
[29]At [171] and [175].
[30]At [176]. The further contributions of $517,096.70 comprised $57,096 contributed by Ms Mo and Mr Huang to Ropata Avenue project and transferred, together with a further $460,000 contributed to the Ropata Avenue project between 10 October 2016 and February 2017 but transferred for use on Taurima Road.
The court made an order for the transfer of the property to Mr Yang and Mr Law on the same terms as the order made in relation to Union Road.[31]
Bawden Road
The now undisputed facts
[31]At [177].
On 2 December 2014 (some time before the transactions discussed above), Mr Yang had entered into an agreement to purchase Bawden Road for $750,000. Settlement was due 10 working days after issue of a new Certificate of Title. He paid a deposit of $105,000.
The Certificate of Title was issued in early May 2017 and settlement became due on 22 May 2017. On 20 May 2017, Ms Mo and Mr Huang provided a bank cheque for $656,334.08 (87.3 per cent of the purchase price) to enable that settlement to occur. Although Ms Mo and Mr Huang said they had understood that the property would be transferred into their company’s name on settlement, it was instead transferred into the name of Mr Yang’s sister on that day.
Bawden Road was never developed. Rather, it was sold on 26 March 2021 for $1.015 million. From the proceeds Ms Mo and Mr Huang were repaid $654,906.58 and Mr Yang was repaid his deposit. The remaining $223,239.94 is held in a solicitor’s trust account pending the outcome of the proceedings.
The claim as relevantly pleaded
Ms Mo and Mr Huang pleaded that Ms Yang held the property either as a bare trustee or on a resulting trust for the benefit of themselves and Mr Yang and that the three of them were joint owners in equity to the extent of their respective shares (namely for Mr Yang as to 12.3 per cent, and for themselves as to 87.3 per cent).
The Judge’s conclusions
The High Court rejected the claim by Ms Mo and Mr Huang for a resulting trust over the property, finding that there had been an agreement whereby Ms Mo and Mr Huang would contribute a third of the purchase price ($250,000) with $395,000 advanced by them as an unsecured and apparently interest free[32] loan to Mr Law and Mr Yang, to be repaid on completion of the development.[33] Accordingly, the Judge held the remainder of the proceeds of sale was held on resulting trust by Ms Yang for Mr Yang, Mr Law, and Ms Mo and Mr Huang in one third shares, subject to certain specified reimbursements.[34]
[32]We say this because there is no indication that interest on the loan was ever paid and the Judge did not order that it should be.
[33]Judgment under appeal, above n 3, at [198].
[34]At [198].
His primary reasons for this conclusion was that Ms Mo and Mr Huang receiving the claimed 87.3 per cent share would permit them to enjoy a “huge windfall” (due to the considerable increase in value in the two and a half years between the agreement to purchase and settlement) and that a few weeks after settlement, Ms Mo had sent an email to Messrs Yang and Law outlining what had been agreed. This was supported by Ms Yang’s evidence.[35]
The appeal and our approach to it
[35]At [189]–[197].
Although the original notice of appeal contained over 20 separate grounds of appeal, in the appellants’ written submissions they had been distilled down to the following four:
(a)Is the restitutionary remedy of “money had and received” apposite?
(b)If not, were some or all of the properties subject to resulting or constructive trusts?
(c)What principal sums are owing to the appellants?
(d)Should interest be payable on those principal sums, and if so at what rate, from when, and on a simple or compounding basis?
We propose to approach the issues in a slightly different way. In our view it is useful to recognise that the Huxley Place, Ropata Avenue and Bawden Road appeals raise similar issues, which are different to the issues raised by Union Road and Taurima Avenue.[36]
[36]Although there was also some suggestion by the appellants that we could deal with the appeal “globally”—by simply awarding compound monthly interest on all funds advanced by them—we consider that the different arrangements in relation to the different properties, and the Judge’s different findings in relation to some of them, militate against this approach.
As regards the former, the key question is whether the Judge was wrong to reject the appellants’ claims for a resulting (or constructive) trust in relation to each of those developments. If he was, it follows that the remedy of money had and received was neither necessary nor appropriate.
As regards the latter, the key question is whether the Judge was wrong to find an agreement on the terms he did and (so) to ascribe no value to the appellants’ provision of mortgage funding for the Union Road and Taurima Avenue projects and to award them no interest on the further advances they made to Messrs Yang and Law in relation to Taurima Avenue.
We will then consider the issues of interest on any judgment sums, both in terms of how it is to be calculated and the period for which it should run.
Preliminary issue: cultural considerations?
Before turning to consider those issues it is necessary to address one matter initially raised on appeal with which we do not need to deal. In their written submissions the appellants were critical of the Judge’s conclusion that the parties’ dealings were not informed by any “relevant business practice”.[37] There was at least an implicit criticism of the High Court for failing to acknowledge the informal and undocumented arrangements between the parties were a product of their family connections in mainland China and the guanxi cultural practice, the significance of which has recently been the subject of comment in the appellate courts.[38]
[37]Judgment under appeal, above n 3, at [25].
[38]Zheng v Deng [2020] NZCA 614 and Deng v Zheng [2022] NZSC 76.
Before us, however, counsel accepted the cultural context makes no difference to the issues that are now for determination. For example, Mr McBride, who raised the issue, accepted that resulting trust principles accommodate the cultural context. And while we accept that cultural matters go some way to explain the lack of documentation and also arguably (and indirectly) assist in displacing any presumption of advancement, it is common ground that this was an arms-length commercial relationship. These were risk investments on which the appellants say they expected a commensurate return. Aside from absence of documentation, the difficulty the appellants faced in proving exactly what those returns were intended to be is not a cultural matter.
Was Huxley Place subject to a trust in favour of the appellants?
As noted earlier, the relevant claims in relation to Huxley Place (and in relation to Ropata Avenue and Bawden Road) was that, by dint of the appellants’ financial contributions to it, the property was held by the respondents subject to a resulting trust in their favour, to the extent of those contributions.
The seminal statement of principle in this area continues to be that of Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council.[39] Thus a resulting trust can arise in two sets of circumstances, the relevant one of which is where:[40]
… A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested in either 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 contribution. 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 …
[39]Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL).
[40]At 708.
Lord Browne-Wilkinson went on to say:[41]
… resulting trust[s] 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. … If the settlor has expressly, or by necessary implication, abandoned any beneficial interest in the trust property, there is … no resulting trust …
[41]At 708.
So the rationale for a resulting trust is that, absent evidence to the contrary, the law presumes a person intends to retain the beneficial ownership of funds which they advance towards the purchase price of a property. The legal owner holds title to the property subject to the payer’s equitable interest. In this way a trust results to the payer to the extent of his or her contribution. Evidence which might contradict or rebut the presumption is traditionally of an intention to gift. The countervailing presumption of advancement may also be in play, particularly in family cases.
Importantly, however, a party’s financial contributions to the purchase price (including any incidental costs of acquisition) are the sole determinant of the size of the parties’ proportionate shares in equity under a resulting trust. Any subsequent contributions cannot affect the respective beneficial interests because otherwise, the principle that the allocation of beneficial interest under a resulting trust (as with any non-discretionary trust) must be ascertainable at the time of the trust’s creation would be undermined.[42]
[42]G E Dal Pont Equity and Trusts in Australia (7th ed, Thomson Reuters, Sydney, 2019) at [26.75].
The starting point in terms of the present case is that the Judge effectively found the appellants had contributed 30 per cent of the purchase price of Huxley Place.[43] On our reading of the judgment the Judge did not consider Ms Mo and Mr Huang intended this contribution to be a gift and so the presumption of a resulting trust was well and truly engaged. On our assessment that is plainly right. There is nothing in the evidence to suggest that the advance was a gift, or that the presumption of advancement might apply.[44]
[43]$90,000 of the $350,000 provided by Ms Mo and Mr Huang was transferred after settlement. The remaining quantum ($260,000) is 30.2 per cent of the $860,000 purchase price.
[44]Any suggestion that the advance was a loan was, of course, be at odds with the finding that there was no concluded contract.
On the contrary, the evidence overall suggests that the parties were engaged together in an ongoing commercial enterprise whereby Ms Mo and Mr Huang would (largely) provide the funding for and Mr Law and Mr Yang would then undertake the development of certain properties, with the aim of mutual profit. There is, it might be said, something of a sense of a joint venture about the wider undertaking.[45]
[45]The proposition that there was some form of fiduciary relationship between the parties was recognised by the respondents themselves, in their own claims in relation to Union Road and Taurima Avenue. And as the pleading of those claims also makes clear, that relationship exists whatever kind of trust ultimately is either found to exist or created by the Court; the respondents undifferentiated pleading of the existence of an “express/implied/resulting trust” arguably speaks volumes.
The point of concern to the Judge was that the appellants did not just contribute to the purchase price.[46] For the reasons set out above at [60], those further (post‑settlement) contributions cannot be taken into account when determining the appellants’ beneficial under any resulting trust established at some earlier point in time. But, contrary to the view taken by the Judge, their existence cannot be a reason to negate the purchase price resulting trust. The existence or not of a resulting trust is not a matter of judicial discretion. Rather, the question then becomes how, in light of a purchase price resulting trust, are the appellants’ subsequent contributions to be recognised?
[46]Judgment under appeal, above n 3, at [40]–[41].
In our view, in circumstances where the presumption of a resulting trust would lead to the partial and unconscionable denial of a greater beneficial interest, there is nothing to prevent a court imposing a constructive trust that displaces the allocation of equitable interests under the presumed resulting trust. This approach has been specifically endorsed in Anson v Anson, where the New South Wales Supreme Court said:[47]
[37] Thus, there are different times as at which the Court decides whether these two types of trusts exist (time of acquisition of the property, and time when the joint endeavour has concluded), and different purposes sought to be achieved by recognition of the two different types of trust (giving effect to a presumed intention concerning beneficial ownership, and prevention of unconscientious holding of legal rights). These differences lead to a conclusion that, if the factual circumstances are such as to give rise to both a presumption of a resulting trust, and the imposition of a constructive trust on Baumgartner principles, and the application of these two different sets of principles leads to different results, then it is the result arising from the Baumgartner principles which prevails. In Baumgartner the majority approved a statement of Deane J in Muschinski v Dodds, to the effect that:
“the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention “to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.”
That statement has implicit in it a recognition that even a beneficial ownership of property (such as can be derived from application of a presumption of resulting trust) can be altered by the imposition of a constructive trust.
[38] As the passage quoted from Baumgartner above shows, a constructive trust will not be imposed to alter legal property rights which were specifically intended, or specially provided to apply at the end of the joint relationship or endeavour. That is because if the parties have specifically considered how the ownership of the property should lie at the end of their relationship, and intend that the ownership should be in accord with the legal interests in that property, there would be nothing unconscionable about the ownership being as they had intended, regardless of what contributions each of them had made to the property. However, a merely presumed intention concerning the proportionate beneficial ownership, of the type which can give rise to a resulting trust, is not enough to show that there is nothing unconscientious in one party seeking to keep a legal proportionate interest which is greater than the total proportionate contribution which that party made to the acquisition of the property.
(citations omitted)
[47]Anson v Anson [2004] NSWSC 766. To similar (but briefer) effect is Sivritas v Sivritas [2008] VSC 374, (2008) 23 VR 349 at [127].
While we accept that there was no express pleading of constructive trust by the appellants in any of their three proceedings, that does not persuade us that a similar approach is not available here. Resulting trust was pleaded and, in our view, made out. Moreover, and as noted already, when the claims are considered overall, both the appellants and the respondents’ pleadings had a plain (if not exclusive) “trusts” focus. The respondents’ own specific trust claim (in relation to Union Road and Taurima Avenue) was itself undifferentiated, in that the pleading was simply of an “express/implied/resulting trust” and breach of fiduciary duty.
Lastly, although Mr Hutcheson said that he might have advanced different defences had he known that the imposition of a constructive trust was an available option, it remains unclear to us what those defences would have been or how the respondents’ case would have been other than what it was. The circumstances are therefore effectively the same as those in Li v 110 Formosa (NZ) Ltd where this Court said:[48]
[138] We accept that the pleading does not specifically allege that Mr Wang became a trustee of the shares under an institutional constructive trust, but the facts on which the constructive trust must be recognised are the same as those on which the Judge relied for her conclusion that there was a resulting trust. We do not think there is any prejudice arising to Mr Wang as a result of this Court reaching a different conclusion as to the categorisation of the trust involved. In the circumstances of this case it does not result in any material difference to the nature of the appropriate remedy.
[48]Li v 110 Formosa (NZ) Ltd [2020] NZCA 492.
For these reasons we consider the appropriate remedy in relation to the Huxley Place development is the imposition of a (reasonable expectations) constructive trust that would see the appellants have a beneficial interest in the property in proportion to their overall (40 per cent) contribution prior to its resale in an undeveloped state. It follows that they are entitled to a 40 per cent share of the sale proceeds and there is no need for resort to money had and received.
Was Ropata Avenue subject to a trust in favour of the appellants?
As far as the Ropata Avenue development is concerned, the Judge’s finding that there was no contribution by the appellants to the purchase price was not challenged on appeal. But for the same reasons just articulated we consider the appellants’ contribution to that development should be recognised by the imposition of a constructive trust that confers on them a beneficial interest in proportion to their $330,000 contribution. Again, it is unnecessary and undesirable to resort to money had and received.
The difficulty this presents, however, is that Ropata Avenue was developed by the respondents prior to its (partial) sale. It seems the respondents may have funded much of that development themselves. Although there was evidence in the High Court about the respondents’ financial contributions, no findings were made in that regard and we received no submissions on the point. It is not therefore possible to make the necessary findings on appeal. The upshot is that we would allow the appellants’ appeal in relation to Ropata Avenue, but must remit the matter back so the necessary assessment of the respondents’ contributions can occur.
Was Bawden Road subject to a trust in favour of the appellants?
There is no dispute that the appellants contributed a little over 87 per cent of the purchase price of Bawden Road. The property was later sold in an undeveloped state, so the complicating factors at play in relation to Ropata Avenue are not in play here.
We are not especially persuaded by the reasoning that finding a resulting trust in relation to Bawden Road would constitute an unjustified “windfall” for the appellants. While we accept that—had a resulting trust been found—Ms Mo and Mr Huang would have received the lion’s share of the property’s increase in value in the two and half years between Mr Yang agreeing to buy it and settlement, the reality seems to have been that, without their contribution, Mr Yang would not have been able to settle at all.
The real difficulty for the appellants here is that the Judge found there was a concluded agreement between the parties whereby Ms Mo and Mr Huang would contribute a third of the purchase price ($250,000) with the remaining $395,000 constituting an unsecured loan. This agreement was expressly referred to by Ms Mo in her email of 14 June 2017, just three weeks after settlement (and the advance of funds by her and Mr Huang). In that email (which was addressed to Mr Yang) she said:
3. You said the other lot [Lot 4] was sold to me at cost price. I’m grateful for that. But I settled that lot with $650,000 in cash. Deducting the $250,000 I should pay [one-third of purchase price of $750,000]. I lent you $400,000 of which $200,000 you said you will pay me interest and the other $200,000, I didn’t ask anything for that. But I paid an interest rate of 5.6% to the bank myself.
Early the following year (after relations had broken down) Ms Mo sent a further message in similar terms to Ms Yang stating:
… regarding the land on DF Lot 4 which is held by you on behalf of us, we need to prepare a Deed of Trust that proves your elder brother owns one third, I own one third and Jackson owns one third, and I lent two third of the money to them. We need to specify the date of repayment and the agreed interests. [We] also need to add a clause in the title that the [property] can only be sold when all three parties reach an agreement. In this case you will not be a developer. Your elder brother agreed to buy my third at market value in the future. After he completes the purchase, [we can] simply withdraw this Deed of Trust.
And in an email two days later again, addressed to Mr Yang and Mr Law, Ms Mo said:
2. Regarding the investment project of Lot 4, 342 Bawden Road, Dairy Flat, Auckland.
We settled the land by paying cash on 20 May 2017. It is in Calvin [Mr Yang] and sister Emily’s [Ms Yang’s] name. Calvin [Mr Yang] owns 1/3 of the property; Jackson [Mr Law] owns 1/3 of the property; and Pat’s [Ms Mo’s] Mother Mrs Huang owns 1/3 of the property. When the land was purchased, the three parties agreed that Calvin and Jackson borrow money from Mrs Huang to pay their 1/3 share of the property. Calvin and Jackson will repay the principal (the money for buying their 1/3 shares of the property) and the interest to Mrs Huang, when the 5 newly built houses of the first construction investment projects at 12 Ropata Ave, Point England, Auckland are sold. The estimated repayment date is around May 2018. If the repayment is delayed, both sides will negotiate a new date.
By the end of 2018, around October, Calvin and Jackson will purchase Mrs Huang’s 1/3 share of the land at the market value.
In terms of ownership of property on this land and other relevant investment matters, we will find a lawyer to draw up a Deed of Declaration of Trust. Calvin, Jackson, Emily and Mrs. Huang will then sign it (the reason why we will ask Emily to sign the document is the land is in Emily’s name).
In our view these messages suffice to justify the Judge’s conclusion that Ms Mo was, in these messages, recording and admitting the essential terms of an agreement.
The only point on which we differ from the Judge is that, in our view, the agreement summarised by Ms Mo did contain a further term that interest would be paid on at least some of the loan. An agreement to pay interest is mentioned in two of the messages and the first message in time refers more specifically to interest being payable at 5.6 per cent per annum on roughly half the loan amount ($200,000). That same interest would be payable also accords with commercial common sense.
Given that we agree with the Judge about the existence of an agreement, there is no room for a resulting trust. We vary the Judge’s finding only to the extent that we hold that the agreement included a term that interest on $200,000 of the loan advance would be payable at 5.6 per cent per annum from the date of the advance (20 May 2017) until the date of repayment. As well, and in accordance with the High Court judgment, Ms Mo and Mr Huang are entitled to one third of the net proceeds of sale held in the solicitors’ trust account, plus that interest amount.[49]
Union Road and Taurima Avenue
[49]The question of further interest on the judgment sum is discussed later below.
The High Court Judge also found concluded agreements in relation to the Union Road and Taurima Avenue properties and despite their retaining legal title to them, that Ms Mo and Mr Huang were bare trustees. Again, his principal conclusion (as to the trusts) was based on Ms Mo’s own written statements.
As regards Union Road, on 13 February 2018 Ms Mo sent an email to Messrs Yang and Law in which she recorded:
1. Regarding 40 Union Road
This house is in my name. The company owns the house on behalf of the two of you. In terms of the property right, three of us will sign the Deed of Trust prepared by you.
Because this land includes a house on the front section and two divided sections on the back section, I understand that you plan to sell the house on the front section first. I will coordinate the sale of the house. After you determine the buyer, I will transfer the ownership of the property to the buyer through a Sale & Purchase Agreement. After it is sold off, the money will be used to square up the 850,000-dollar ASB loan. We will also transfer the ownership right of the two divided lands on the back section to your appointed entity through normal legal approaches.
In an affidavit sworn later that same year she deposed:
David and I have no interest in this property [47 Union Road] except through our company DH & PM Limited, which retains title of the property as trustee.
Not only are the similarities between that Taurima Avenue transaction and Union Road clear but, as the Judge recorded, Ms Mo also sent a message to Mr Law on 14 June 2017 about that property, in which she said:
1. for Trauma [Taurima], I am just doing you a favour for the loan; I do not own the house.
And as the Judge also noted:[50]
(a)In an email to Mr Yang and Mr Law on 13 February 2018, Ms Mo stated:
4. Regarding the construction investment project at 8 Taurima Ave, Point England, Auckland.
The house is now in my company and Emily’s name. It is being held on behalf of both of you. In terms of the ownership, we, three parties, will sign the Deed of Trust that is prepared by you.
Because you will build 5 new houses at 8 Taurima Ave, Point England, Auckland, we will cooperate with you on the sale of the houses and other matters concerning the transfer of the ownership. After you confirm a buyer of a new entity, we will transfer the property through a Sale & Purchase agreement or other legal ways in accordance with the result of our negotiation. The money which is obtained from selling the property will be used to settle the 715,000 dollars ASB loan.
(b)In her later affidavit, she stated that the arrangement was that as security for the contribution to pay part of the settlement monies she and Mr Huang would retain title to the property together with Ms Yang, who did not contribute, but was included as Mr Law’s nominee. She went on:
After 6 months (ie by June 2016) the Defendants would arrange alternative finance and construction funding and take title to the property
[50]Judgment under appeal, above n 3, at [159]–[161].
We accept that, in some circumstances it may be possible and appropriate to ascribe some value to the assumption of a mortgage liability.[51] But the reality here is that the mortgage was secured against the two properties and the arrangement—as found by the Judge and as largely played out in reality—was that Messrs Yang and Law would meet all the outgoings. Even putting to one side that Ms Mo’s communications set out above support the Judge’s conclusions, we do not accept that the liability involved such risk to Ms Mo and Mr Huang that it could properly be viewed as a contribution capable of valuation or giving rise to an equitable interest in the properties themselves. We can discern no error in the Judge’s findings in each case as to the existence of a trust in favour of the respondents or as to its terms.
[51]See Calverley v Green (1984) 155 CLR 242 at 252 per Gibbs CJ and at 257–258, 262 per Mason and Brennan JJ and 267–268 per Deane J.
As far as the further $517,096 is concerned, the only issue raised on appeal was that interest on that amount should be payable at the relevant “SME new overdraft rate” as published by the Reserve Bank from time to time from the date of each advance as described in the High Court judgment, until payment. It is therefore appropriate that we address those issues in the next part of this judgment.
Interest
The interest awards made in the High Court
The interest on the judgment sums awarded in the High Court were as follows:
(a)Huxley Place: interest (on the $350,000) calculated under the IMCA running from the date of sale (25 August 2017) to the date of trial;
(b)Ropata Avenue: interest (on the $330,000) calculated under the IMCA running form the date the development was substantially completed (31 December 2017) until the date of trial;
(c)Bawden Road: no specific interest awarded (net proceeds of sale held in trust account);
(d)Union Road: no interest awarded because no judgment debt in favour of appellants;
(e)Taurima Avenue: interest on $517,096 loan contribution running from the date construction work ceased (30 June 2018) to the date of trial.
In general terms, two issues are raised by the appellants on appeal:
(a)whether interest should have been awarded under the Reserve Bank SME lending rates rather than under the IMCA, in accordance with the appellants’ primary pleading;[52] and
(b)the dates between which interest should run, in each case.
[52]By “primary pleading” we mean the pleadings made it clear that the SME rate was the appellants’ preferred outcome. The IMCA rate was pleaded in the alternative.
The appellants also sought to advance a further argument that they are entitled to an award of equitable interest, compounding monthly.
The IMCA
The primary purpose of the IMCA is set out in s 3, which provides:
(1)The primary purpose of this Act is to provide for the award of interest as compensation for a delay in the payment of debts, damages, and other money claims in respect of which civil proceedings are commenced.
(2)That purpose is to be achieved by the award of interest in accordance with the following principles:
(a) interest is to be awarded on all money claims except those expressly excluded by this Act:
(b) interest is to be paid from the day on which the money claim is quantified until the day of payment:
(c) the interest rate to be used for the purposes of this Act is to reflect fairly and realistically the cost to a creditor of the delay in payment of a money claim by a debtor and, in particular,—
(i) the rate is to be capable of fluctuating in accordance with changes in the retail 6-month term deposit rate published by the Reserve Bank of New Zealand; and
(ii) interest is to be compounded so that it yields the per annum simple interest rate over the period of a year; and
(iii) interest is to be calculated using a calculator that is publicly available on an Internet site maintained by or on behalf of the Ministry:
(d) in special circumstances, a court is to have power to award any interest or compensatory lump sum it may direct, or make no award.
Section 10(1) of the IMCA stipulates that in every “money judgment” a court “must award interest under this section as compensation for a delay in the payment of money”.[53] Section 9(1) provides:
[53]A “money judgment” is relevantly defined as “a judgment … given … by a court in a civil proceeding that requires the payment of money”: s 6 definition of “money judgment”
(1) When giving a money judgment, a court must award interest under this Act for the period that—
(a) begins either—
(i) on the day on which the cause of action arose; or
(ii) if the amount on which interest is to be awarded was not quantified at the day on which the cause of action arose, on a later day that the court specifies in the judgment as the day at which that amount was quantified; and
(b) ends on the day on which the judgment debt (including all interest payable under this Act) is paid in full.
(2) Subsection (1) applies unless—
(a) this Act expressly provides that interest cannot be awarded under this Act; or
(b) the court, in accordance with this Act, specifies in the judgment any 1 or more shorter periods as the period or periods for which interest is to be awarded under this Act.
Section 13 requires an internet calculator to be established and maintained for the purposes of quantifying such awards. The rates used in the calculator are based on the Reserve Bank’s retail six-month term deposit rate, which is published online, plus a margin of 0.15 per cent.
But s 18 permits exceptions to awards under the IMCA. The appellants invoke them here to seek a higher rate of interest. Section 18 provides:
18 Discretion in special circumstances
(1) If, in the opinion of the court, special circumstances make it inequitable to award interest in a money judgment under sections 10 to 16, or section 17, for a period, the court may, for all or part of that period,—
(a) award interest on all or part of the amount of the money judgment at the rate and calculated in the manner (with or without compounding) that the court directs; or
(b) award a lump sum as compensation for a delay in the payment of all or part of that amount; or
(c) determine not to award interest or a lump sum.
(2) The court may not award interest under this section on an initial amount for any period unless interest could have been, but was not, awarded as provided in sections 10 to 16 on that amount for that period.
Section 25 relevantly provides:
25 Court may not award interest unless procedural requirements complied with
(1) A court may not award interest under a section of this Act for a period unless the party who claims interest under the section for that period specifies the section and, as far as possible, the period in that party’s statement or notice of claim or counterclaim. …
(2) If a party claims interest under section 17, 18, 22, or 24,—
(a) the party must specify in that party’s statement or notice of claim or counterclaim the amount or rate of interest claimed; and
(b) the court may not award interest—
(i) exceeding the amount claimed under paragraph (a); or
(ii) at a rate exceeding the rate claimed under paragraph (a).
…
Common law and equitable rights to interest are preserved by s 26.
Is this a case for a s 18 exception?
The appellants’ pleadings in relation to Huxley Place, Ropata Avenue and Bawden Road comply with s 25 in that they specify the relevant section, the period for which the interest is claimed, and amount of interest claimed under s 18 pursuant to the SME rates. Adoption of the SME rates would result in awards considerably higher than an award under the IMCA.
In our view, however, this is not an appropriate s 18 case. There appear to have been very few decided cases to have touched on s 18, and in none we have seen was an exception made out.[54] The commentary to s 18 notes:[55]
… the reference to “inequitable” suggests that there will be something in the conduct of the parties that makes the ordinary rules unfair in the particular circumstances.
The Ministry’s departmental report identifies situations such as those where the plaintiff has slept on its rights, and where the defendant had deliberately appropriate funds so as to make increased gains. … Because the calculator is intended to be the standard method of calculation, it can be expected that there will be a relatively high threshold for departing from the ordinary regime.
[54]See Siddiqui v Siddiqui [2022] NZCA 324 and Ellis Family Trustee Ltd v Clegg [2021] NZHC 3201.
[55]Robert Osborne (ed) McGechan on Procedure (looseleaf ed, Thomson Reuters) at [IM18.01].
Similarly, the commentary to s 26 suggests that despite the jurisdiction in equity to make an interest award, “[t]he situations where this jurisdiction has to be relied on are likely to be few and far between given the Act’s aim of providing a comprehensive regime”.[56]
[56]At [IM26.02], citing Rama v Millar [1996] 1 NZLR 257 (PC).
In the present case we are unpersuaded that there are any “special circumstances” that might activate s 18 or justify a departure from the IMCA. It seems to us the appellants are really seeking to obtain, by another route, a share of the increase in value of the three properties in issue. We agree with the Judge that they are not entitled to recover on that basis.
Relevant periods
Given we have differed from the High Court Judge as to the relevant basis for the appellants’ claims in relation to Huxley Place and Ropata Avenue it is necessary to specify the relevant interest period afresh. As explained earlier, it is also necessary to consider the relevant interest period for the $517,096 found to be money had and received in relation to Taurima Avenue.
In our view the appropriate dates for the purposes of s 9(1) in all instances (whether constructive trust or money had and received) are the dates on which the relevant funds were received by the respondents. It is not clear to us why the High Court Judge chose different dates. As the IMCA makes clear, the period continues until the date of payment.
This aspect of the appeal is therefore allowed.
Result
For the reasons we have given, the appeal is allowed to the following extent:
(a)The finding that the appellants were entitled to recover their $350,000 contribution to the Huxley Place development by way of money had and received is quashed and instead we make a declaration that the appellants have a beneficial interest in the proceeds of the sale of Huxley Place in proportion to their contribution to it, namely 40 per cent.
(b)The finding that the appellants were entitled to recover their $330,000 contribution to the Ropata Avenue development by way of money had and received is quashed and instead we make a declaration that the appellants have a beneficial interest in the proceeds of the sale of Ropata Avenue development in proportion to their $330,000 contribution to it. The question of what that proportion is—after taking into account the respondents’ own contributions—is referred back to the High Court for determination.
(c)The High Court’s finding in relation to Bawden Road is confirmed but supplemented by a declaration that the appellants are entitled to interest at a rate of 5.6 per cent per annum on $200,000 of their contribution to the development running from the date those funds were paid.
(d)The High Court’s findings as to the periods for which interest under the IMCA is payable are quashed and replaced by orders that interest is payable under that Act from the date of receipt of the relevant funds by the respondents until the date of payment.
All other findings in the High Court are confirmed.
Costs
The respondents must pay the appellants costs for a standard appeal on a band A basis with usual disbursements. We certify for second counsel.
Costs in the High Court are now to be determined by that Court.
Solicitors:
DX Law Ltd, Auckland for Appellants
Croftfield Law, Auckland for Respondents
5
10
0