Narain v Chinappa

[2021] NZHC 1886

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000578

[2021] NZHC 1886

BETWEEN

ANGELINE DEEP NARAIN

First Plaintiff

KANIAMMA WINTER
Second Plaintiff

AND

AJNESH NARAIN CHINAPPA and VILASHNI VANDANA CHINAPPA

Defendants

Hearing:	12 to 14 April 2021 and 3 June 2021
Appearances:	ASR Kashyap and SYY Yong for the Plaintiff O Rose and NTC Batts for the Defendants
Judgment:	26 July 2021

JUDGMENT OF HINTON J

This judgment was delivered by me on Monday, 26 July 2021 at 10 am pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

Aaron Kashyap, Barrister & Solicitor, Auckland Haigh Lyon, Lawyers, Auckland

NARAIN v CHINAPPA [2021] NZHC 1886 [26 July 2021]

[1]    This  is  a  family   dispute  over  ownership  of  a  residential   property   at   7 Ferndown Avenue, Papatoetoe. The answer turns largely on who won a lotto prize of $250,000 in January 2009.

[2]    The parties are all related. The second plaintiff, Kaniamma Winter, is the mother of the first-named plaintiff and the first-named defendant, Angeline and Ajnesh. Vilashni Chinappa is Ajnesh’s wife.

[3]    Angeline issued the proceeding. She says she won a lotto prize of $250,000 in January 2009 and applied $72,046.70 towards the purchase of the Ferndown Avenue property. The property was registered in the names of the defendants. She says it was agreed she would have a half share in the property. In the alternative she says she has a 50 per cent interest in the property by way of constructive or resulting trust.

[4]    The defendants acknowledge that $72,046.70 of the lotto winnings was applied to purchase the property. But they say it was Mrs Winter who owned the lotto ticket, that she gifted the money to them, and at most they have a moral obligation to repay some of it.

[5]    Angeline joined Mrs Winter as a plaintiff during or immediately after the hearing and they filed an amended statement of claim, claiming in the alternative that the ownership interest in the property belonged to Mrs Winter and/or that she had a life interest. This was done at my suggestion because I considered these arguments arose out of the evidence. Mrs Winter had insisted throughout the proceeding that Angeline was the owner of the lotto ticket so the claim to an ownership interest was uncomfortable for her. In any event, as a result of my findings, that claim by Mrs Winter becomes redundant.

[6]    Angeline, Mrs Winter, Ajnesh and Vilashni all filed affidavits and gave evidence. Avinash, the older brother of Angeline and Ajnesh, also gave evidence for Angeline. Mr Singh, who was previously a friend of Mrs Winter but who has lived with the Chinappas for years, gave evidence for the Chinappas.

Background

[7]    As I have said, Angeline, Ajnesh and Avinash  are  the  adult  children  of Mrs Winter. Avinash is the oldest and Ajnesh the youngest.

[8]    The winning lotto ticket was purchased in January 2009 by either Angeline or by Mrs Winter. Angeline said she purchased the lotto ticket while waiting for her mother and grandmother to finish an appointment. She says she put the ticket in her mother’s bag for safekeeping.

[9]    Subsequently, on 24 January 2009, when Mrs Winter and Vilashni went grocery shopping (and Angeline remained at home), Mrs Winter checked the lotto ticket, which was still in her bag, at Panmure Stationery. She found the ticket had won

$250,000. Mrs Winter, with Vilashni’s assistance, completed the lotto prize claim form and signed her name next to the affirmation that she was lawfully entitled to claim the prize money. Mrs Winter says she did this because she was so excited and concerned to complete the claims process there and then. Vilashni recorded her own bank account number on the form. Mrs Winter says this was because Vilashni had a valid ID with her and knew her bank account number. Vilashni agrees that the money was deposited in her account because only she had her bank account details on her.

[10]   Angeline says the lotto winnings were hers. So does her mother, and Avinash says that is what he was told.

[11]   On 27 January 2009 the Lotto Commission paid the sum of $250,000 into Vilashni’s bank account. At the same time there is correspondence between the Lotto Commission and Mrs Winter whereby Mrs Winter provided her “code word” for communications with them.

[12]   Angeline says that they had all been living together in rental accommodation and had “one goal” of buying a house together. With the lotto winnings she says it was agreed that she would pay the deposit, the Chinappas would borrow money as she had a poor credit record, and she and the Chinappas would buy a property as equal owners. They would all live there. Her reason for not being on the title is she just trusted the Chinappas, and concern about her credit rating.

[13]   The Chinappas say, rather, that Mrs Winter said she would gift them the sum of $30,000. They say Vilashni spoke to someone at the National Bank (now ANZ) about buying a house and what would be required to borrow money. She says they told her she would need proof she had enough for a deposit and that there was a

$27,000 limit on gifts so she would need to prepare a gifting document witnessed by someone independent of the family.

[14]   On 9 February 2009, Angeline, Mrs Winter and the Chinappas went to the National Bank in Sylvia Park to transfer the lotto funds from Vilashni’s account into a joint bank account in the names of Angeline (listed first) and Mrs Winter. Vilashni wrote a cheque for $220,060.59 (apparently including $60.59 interest) which was deposited into the joint bank account. She retained the sum of $30,000 from the prize money in her bank account. The Chinappas say this was to be the deposit for a house. It seems no actual property was in the reckoning at that time. Angeline says Vilashni just asked her if she could keep some of the money in the account so that Ajnesh could get a loan.

[15]   The Chinappas claim that on the same day in the evening, Mrs Winter signed a letter recording a gift to them of $30,000. Vilashni says she prepared the letter based on the National Bank’s guidance. Mr Singh gave evidence that Mrs Winter asked him to witness the document and told him she had won lotto. Mrs Winter denies signing any such document, denies making a gift and denies telling Mr Singh she won. Angeline was not present when the document was allegedly signed. She says she did not see this document until lawyers were involved. All relevant material in the brief document that was produced was handwritten.

[16]   All four of the parties went looking for a property and on 21 February 2009 they attended an auction of the Ferndown Avenue property. Mrs Winter did the bidding at the auction and secured the property for the sum of $360,000. The sale and purchase agreement was signed in the names of the Chinappas. The Chinappas say that Mrs Winter bid up above the level they were comfortable with and this was on the basis that she would contribute a further sum to the purchase price. Mrs Winter says she only bid up to the amount the Chinappas told her to bid.

[17]   The deposit under the agreement was $36,000. On or about 21 February 2009 Angeline went to the bank to collect a bank cheque drawn on the joint account, made out to Don Ha Real Estate Ltd in that sum. She delivered it to the real estate agent. Vilashni acknowledges it was Angeline who did this. Angeline says she paid the deposit on the basis of an agreement between herself and the Chinappas that she would be entitled to a 50 per cent interest in the property. The Chinappas contend that the sum of $36,000 simply took the place of the earlier $30,000 gift recognised by the letter. No documentation was signed regarding the $36,000 “gift”.

[18]   On 5 March 2009 the Chinappas entered into a home loan agreement with the National Bank for a loan of $288,000 for the Ferndown Avenue purchase. That left a shortfall and on 6 March 2009 Angeline drew a second bank cheque for the sum of

$37,046.70 on the joint bank account in favour of the solicitor acting on the purchase, in order to complete the settlement. Angeline says she made this payment again on the basis of the agreement between herself and the Chinappas that she would be entitled to a 50 per cent interest in the property. Mrs Winter says she encouraged that agreement. The Chinappas say that it was Mrs Winter who paid the sum of $37,046.70 and she did so as a further gift. However, they acknowledge they did perceive the second amount as different to the earlier gift and acknowledge a sense of obligation (but not legal liability) to repay the amount of $37,046.70. No documentation was signed regarding this alleged gift.

[19]   It seems the $37,046.70 sum included the solicitor’s fees and other costs, as that amount, together with the deposit of $36,000 and the home loan add up to

$361,046.70 which exceeds the purchase price. In her oral evidence Vilashni claimed the Chinappas paid the solicitor’s fees but she offered no proof of this, and I consider it unlikely to be correct.

[20]   On 9 or 10 March 2009 Vilashni paid the sum of $30,000 that had been retained in her account into the plaintiffs’ joint account, this being a few days after the home loan had been confirmed.

[21]   The settlement of the purchase of the Ferndown Avenue property took place on 11 March 2009.

[22]   On 12 March 2009 Angeline signed a National Bank term fund declaration confirming that either she or Mrs Winter could authorise payments severally for their joint account. I note, however, that Mrs Winter does not seem to have ever drawn on the account. The evidence is the account was operated by Angeline. Mrs Winter says she never used any money from it.

[23]   In March 2009 the Chinappas moved into the Ferndown Avenue property. Mrs Winter and Angeline say they moved in at the same time. The Chinappas say Mrs Winter and Angeline did not move in until the Chinappas were on holiday in Fiji about two months later, and infer that was somewhat underhand. Their version of events seems unlikely to be correct given the amount of capital just contributed to the purchase (on whatever basis) and given their evidence that Mrs Winter (at least) always had the right to live with them for life, regardless of the ownership issue. The Chinappas say Mrs Winter’s right to live at Ferndown Avenue for life was cemented by the second payment of $37,046.

[24]   I next mention a separate property at 903 Kotuku Street, Hastings. The defendants place  some  significance  on  transactions  relating  to  this  property.  Mrs Winter was the purchaser of it under a long-term sale and purchase agreement. One early draft document suggests Angeline  and  Ajnesh  should  equally  share  Mrs Winter’s interest, but also suggests they would share one-third/two-thirds. The final agreement was recorded on 3 August 2009 when Mrs Winter and the Chinappas entered into a deed of family arrangement under which the Chinappas took title, Ajnesh raised a loan or similar to pay the $60,000 sum still owing under the agreement and they signed a declaration of bare trust recognising that they held their interest as to 20/166 for Angeline. For purposes of the transaction, the Hastings property was valued at $166,000 which gave Ajnesh an upside of $86,000, allowing for Angeline’s share worth $20,000 and the $60,000 he had to fund.

[25]   Mrs Winter says the 2009 Hastings transaction, which more significantly preferred Ajnesh than previously, took into account the fact that Angeline had in the meantime won lotto. It may also have flowed in part because Ajnesh was Mrs Winter’s favourite child and she tended to prefer him. Mrs Winter said in her oral evidence she did not have favourites but in her earlier affidavit evidence she said he was her

favourite. The Chinappas say the gifting to Ajnesh of the interest in the Hastings property and his status as a favourite is consistent with their argument regarding what they say was the gift or gifts made by Mrs Winter to them for the purchase of Ferndown Avenue. Rather extraordinarily, under cross-examination Ajnesh claimed that it was he who had chosen to gift to Angeline the 20/166 share she ended up with of the Hastings property. This was clearly incorrect and indicative of a sense of entitlement on the part of the Chinappas generally.

[26]   Vilashni also says the Hastings transactions demonstrate that when she and Ajnesh are conducting property dealings it is important to them to record everything in writing. Had there been any agreement as to Angeline having a share of Ferndown Avenue, Vilashni says she would have similarly seen to it that it was recorded.

[27]   On 14 May 2009, Angeline says she gifted $15,000 to her brother Avinash. Avinash confirms it was a gift from Angeline. The Chinappas put it to Avinash that the payment really came from Mrs Winter, but he remained firm on this. He says it was not long before this that he was told Angeline had won lotto.

[28]   Although not mentioned in their affidavit evidence, Vilashni said in cross- examination that sometime between 2009 and  2012,  they  offered  to  return  to  Mrs Winter $42,000 on the basis they recognised a moral, but not legal, obligation to do so.  This is presumably based on the amount by which the payments exceeded

$30,000. She said Mrs Winter declined to accept the money. None of this had been put to Mrs Winter and I do not accept it. Amongst other things, the Chinappas did not have any  ready  cash.   It  seems  unlikely  they would  suddenly  volunteer  to return

$42,000 when they were simultaneously needing to increase the mortgage. I would consider such an action inconsistent with the attitude of the Chinappas generally.

[29]   Up until early 2012, it seems that Angeline, Mrs Winter and the Chinappas co- habited comfortably. Angeline says the arrangement was that the Chinappas would pay the mortgage payments, which at least between March and June 2009 were about

$430 per week (probably including some principal repayment), because she had paid the lump sum. Mrs Winter and Angeline helped considerably with care of the children.

[30]   In her oral evidence, Angeline said she paid for improvements to the Ferndown Avenue property such as adding blinds, upgrading the bathroom and installing an outside kitchen. This was not raised in her written evidence nor in her pleading. In cross-examination it was put to Angeline that Vilashni claimed she paid for these improvements, but Angeline maintained that she would give the Chinappas the money for such improvements. From the bank statements supplied by each party from around February–October 2009, the Chinappas’ main expenses seem to be paying the mortgage and some general items like food, compared to the joint bank account where there are multiple withdrawals, mostly around $1,000. I can only infer from this that during this period the Chinappas did not pay for upgrades and Angeline did. I expect she also paid other money to the Chinappas given my impression that Angeline is very generous with money and the Chinappas not.

[31]   Problems started between Angeline and the Chinappas when Angeline’s partner, Daniel Prasad, moved into the Ferndown Avenue property in early 2012. Matters really deteriorated, and the Chinappas asked Angeline and Daniel to move out. Angeline then arranged for Mr Kashyap to write on 10 April 2012 stating a claim for return of the deposit plus  50 per cent  of the increase in value of the  property.      Mr Kashyap requested that the Chinappas confirm the details of the money that they had received from Angeline. The Chinappas place some significance on that request, saying it demonstrates Angeline’s claim is trumped up. I disagree. It would have been easy for Angeline to obtain the details from Mrs Winter if she had been the payee, rather than get her lawyer to ask. The request simply demonstrates Angeline’s lack of financial acumen.

[32]   Mr Kashyap had already registered a caveat on the title of Ferndown Avenue on 5 April 2012 stating that Angeline claimed a beneficial interest in the property. Ajnesh says Angeline never asserted an interest in the property until they received the letter from her lawyer.

[33]   In June 2012 the Chinappas served trespass notices on Angeline and Daniel. They did not leave. Mrs Winter sided with Angeline. Both Mrs Winter and Angeline say the Chinappas made life impossible for them in the house. The Chinappas deny that, but in my view based on the totality of the evidence around that time, that is very

likely to be correct. On 3 December 2012 the Chinappas issued further trespass notices, this time on Angeline, Daniel and Mrs Winter. The Police were involved by that stage and it seems Angeline, Daniel and Mrs Winter left the house at or shortly after early December.

[34]   As I understand it, Angeline and Mrs Winter have remained close and have been living together in rental accommodation since they were evicted.

[35]   Not long after Angeline, Daniel and Mrs Winter had to leave Ferndown Avenue, the mortgage payments which had been consistently met by the Chinappas, fell into arrears.  More  money  was  borrowed  by  the  Chinappas  against Ferndown Avenue and the Hastings property. While there will be other reasons as well, this also suggests to me that Angeline was assisting with various expenses.

[36]   In about April 2013 the Chinappas applied for Angeline’s caveat to lapse and she applied for an order to sustain. She filed an affidavit in support annexing three bank cheques that she stated were used to pay for the purchase of the property. One of these cheques (for the amount of $15,000) was included in error which Angeline acknowledged in cross-examination. That cheque was in fact the cheque by which Angeline gifted $15,000 to Avinash. The Chinappas say the error shows Angeline had no idea about the payments that were made and that she is fabricating her claim. Again, I disagree, at least as to the latter contention. It shows a lack of financial control.

[37]   Associate Judge Doogue granted Angeline’s application to sustain her caveat until further order of the Court, by judgment dated 4 September 2013.1 In that application, the Judge did not need to determine whether Angeline had an interest in Ferndown Avenue, only whether she had a reasonably arguable case. The Judge determined that she did, and that the disputes of fact that arose during the hearing would need to be properly resolved at trial.2

1      Narain v Chinappa [2013] NZHC 2286.

2 At [42].

[38]   No further steps were taken from then until late 2019 by either party. Angeline, Mrs Winter and Avinash say that there was some form of understanding on the basis that Ajnesh would recognise her interest in the property when he was in a better financial position and she would not claim the costs on the judgment in her favour. The Chinappas say there was no reconciliation and no agreement reached.

[39]   On 29 November 2019 the Chinappas applied again for removal of the caveat and on 15 April 2020 Angeline commenced this proceeding.

[40]   The Chinappas say they have been disadvantaged by the caveat as it affects their ability to borrow more money against the property.

[41]   I do not have evidence of the current value of the Ferndown Avenue property (or of the Hastings property) but understand the former well exceeds $1 million.

Issues

[42]There are six questions to be determined:

(a)Who owned the lotto ticket, and therefore the winnings from that ticket?

(b)Did Mrs Winter gift $30,000 and/or $36,000, and/or $37,046 to the Chinappas?

(c)Was there agreement between Angeline and the Chinappas as to 50/50 ownership?

(d)Does Angeline and/or Mrs Winter have an equitable interest by way of resulting or constructive trust in the property, and if so what?

(e)Does Mrs Winter have a life interest in the property?

(f)Is Angeline stopped from bringing her claim by the affirmative defence of laches?

Who owned the lotto ticket?

[43]   The Chinappas themselves have no direct knowledge as to who was the owner of the lotto ticket as neither of them was there at the time it was purchased. They say that Mrs Winter owned the ticket because:

(a)Vilashni claims she heard Mrs Winter say it was her ticket. Vilashni also says that Mrs Winter was in the habit of buying lotto tickets and Angeline was not and could not afford to;

(b)Mrs Winter filled out the forms with her name as owner and never corrected that with Lotto;

(c)Mrs Winter said that she would gift them money and it was Mrs Winter who signed the gift letter. They ask how would she do that without the lotto winnings being hers? In that regard the Chinappas rely also on the evidence of Mr Singh that he witnessed Mrs Winter sign the gift statement and that she told him she had won lotto.

[44]   For the reasons set out below I have decided that it was Angeline’s lotto ticket and she won the prize.

[45]   Angeline and Mrs Winter were the only people present when the ticket was purchased, and both say it was purchased by Angeline. They say that lotto tickets were regularly purchased by Angeline. Angeline said Mrs Winter seldom purchased them. That was not quite correct as emerged in cross-examination of Mrs Winter, but I accept Angeline did regularly buy tickets and Mrs Winter less so.

[46]   Mrs Winter says she filled the form(s) in her name because she was the one on the spot and she wanted to see to it the claim was made. That seems plausible. She would have wanted to complete the claim form there and then and she would not think to do that in Angeline’s name. Indeed, she probably could not. I note that similarly Mrs Winter recorded Vilashni’s bank account on the forms to receive the payment because Vilashni was the one on the spot. Mrs Winter said she did not know Angeline’s bank account number. None of the details in the claim form were therefore

correct and given that this was a family that lived together, and Mrs Winter behaved like something of a matriarch, I see little significance in this. I also see no significance in Mrs Winter not correcting the true ownership details with Lotto. There would have been no need to do so.

[47]   Both of the plaintiffs say the reason the money went into a joint account in the names of the two of them was because, although it belonged to Angeline, she needed to protect that money from herself. My impression from the evidence overall is that Angeline is hopeless with money, so that proposition rang true. Also, I had the impression that Mrs Winter has a bit of clout with the family, and particularly so with Angeline. It would be consistent with that, that her name would go on the bank account. The Chinappas say the money went into a joint account because Mrs Winter’s WINZ payments may have been cut if the money was in her sole account. However, I consider, as the plaintiffs say, that if Mrs Winter was worried about her WINZ benefit being jeopardised, she would not have had her name on the account at all in the first place. She later removed it after inquiry from WINZ. I note that the Chinappas’ lawyer, in response to Mr Kashyap’s letter, threatened to report Mrs Winter to WINZ.

[48]   Avinash, the older brother, said that he understood the win was his sister’s and it was his sister who gifted him the $15,000. He came across as a straight-forward witness and although it seems he did not have a good relationship with Ajnesh, I believed his evidence. I also note there is no suggestion that Mrs Winter ever gave any money to Avinash, including with regard to the Hastings property, which supports the proposition that Avinash’s gift would have come from Angeline.

[49]   With regard to the gift letter, I accept it is likely the document was signed by Mrs Winter, or at least the piece of paper was signed by her, as although I consider Mr Singh’s evidence was confused and probably wrong in places, I doubt he would have fabricated his evidence of witnessing a document. However, my view of what most likely occurred is that the document was a sham to secure the bank loan. I accept Angeline’s evidence that Vilashni and Ajnesh asked if they could keep $30,000 in Vilashni’s account so they could qualify for a loan. Angeline and Mrs Winter would have wanted that too. I have no doubt the bank would have required proof of funds “belonging” to the Chinappas and it would not have mattered to the parties who signed

that document. Once the loan was approved (on 3 March 2009) Vilashni returned the

$30,000 in full (on 10 March 2009).

[50]   Viewed in the overall context, the document signed by Mrs Winter was of no moment (at least to the parties), which explains why she had no recall of it. This seems to have been a very rushed exercise, both the rush and the document being generated by Vilashni. It is also difficult to know what form the document was even in if and when Mrs Winter signed it, or whether the handwriting on it was added later. There was no truly independent person nor lawyer present.

[51]   There is also the question of Mr Singh saying that Mrs Winter told him that she had won the lottery. Mr Singh may have heard that from someone else or may have become confused, as his evidence did. It is a long time since the document was “signed” and Mr Singh is now in his late 70s. Also, as Mr Singh detailed, he had a falling out with Angeline and Mrs Winter (over an issue to do with payment when he was working at Angeline’s restaurant) and he has lived with the Chinappas for 10 years since then. This may also have blurred matters.

[52]   There is no dispute about it that the two separate payments that were actually applied to the purchase were made separately, neither being the same as the amount recorded in the “gift” letter. Further, I am satisfied that the two bank cheques for

$36,000 and $37,046.70 were drawn down and delivered by Angeline to the Chinappas, not by Mrs Winter. There is no documentary evidence that these amounts were gifted and even the evidence from the Chinappas in respect of these two sums is very slim.

[53]   It seems fairly clear it was Angeline who spent or gifted the $250,000 winnings, not Mrs Winter. It makes no sense at all if this money was in fact Mrs Winter’s that Angeline would apparently be able to disburse it in all directions. In addition to the Ferndown Avenue purchase, payments while living there, and the gift to Avinash, it seems Angeline spent money on the restaurant business she started (VIP Curries), her honeymoon, a car and a tyre machine for Ajnesh.

[54]   Finally, I found the evidence of Angeline in particular more credible than that of the Chinappas. I have already made various findings in favour of Angeline’s version and against the Chinappas. Angeline did not over-state or over-talk and she made concessions where they were due. I was unimpressed with Vilashni’s evidence, particularly her sudden and convenient claim to have offered to repay Mrs Winter the sum of $42,000 and that the offer was declined. The same applied to Ajnesh’s extraordinary evidence regarding the gift he received from his mother of the Hastings property when he claimed to have then gifted the very minor share that Angeline received from her mother. I was also unimpressed with the conduct of the Chinappas in evicting Ajnesh’s mother and sister from a house which, one or other of them had generously enabled to be purchased, coupled with their refusal to recognise any interest on the part of one or other. In my view, their attitude of entitlement drove their evidence which in turn I found lacking in veracity.

[55]   Overall, I find on the balance of probabilities that the lotto ticket and winnings belonged to Angeline and that it was Angeline who provided the finance for the cash contribution to the house purchase and for improvements.

Did Mrs Winter gift $30,000 or the other sums to the Chinappas?

[56]   For the reasons discussed above I am satisfied that the gift letter, if it was signed by Mrs Winter, was a sham. Further the fact the $30,000 was not intended to be a gift is clearly demonstrated by the fact that exact amount was returned to the joint account of Angeline and Mrs Winter not long after it had been retained in Vilashni’s account.

[57]   The Chinappas argued that the only reason they handled the funds the way they did was because it was easier to have one cheque of $36,000 paid for the deposit rather than them paying $30,000 out of the money they already had and the balance having to came out of the joint account. That makes little sense to me. I would have expected them to apply the $30,000 already held and all that was needed was a top-up. I would also have expected them, consistent with Vilashni’s evidence, to have had a gift statement signed for the sum of $36,000.

[58]   I also note that this was not in the first place a situation where either Mrs Winter or Angeline handed over the sum of $30,000 to Vilashni. To the contrary, Vilashni received the lotto winnings as a convenience because hers was the only known bank account number in the flurry at the stationers’ shop. In order to make the house purchase she then simply held some of the money there.

[59]I find that Mrs Winter did not gift $30,000 to the Chinappas.

[60]   The evidence that the two amounts paid towards the house purchase were gifts was very vague and relied heavily on the $30,000 being a gift. The evidence as to both the alleged gift of $36,000 and of $37,046, fell well short of proof, including a complete absence of documentation despite Vilashni’s assertion she was meticulous about such things.

[61]   For all of the reasons referred to, I conclude there was no gift by Mrs Winter to the Chinappas.

Was there agreement as to 50/50 ownership?

[62]   As addressed, Angeline says that at the time of the house purchase she and the Chinappas agreed they would be 50/50 owners. The Chinappas deny any agreement or discussion along these lines.

[63]   I consider there will have been a discussion about 50/50 ownership. As will be apparent, I much preferred Angeline’s evidence over the Chinappas.

[64]   A 50/50 agreement, with Angeline as the only person paying cash, particularly over the first few years of ownership would be clearly beneficial to the Chinappas. Had the property been sold not long after, they would likely have picked up $38,000 approximately, that is 50 per cent of Angeline’s cash contribution.

[65]   I am not influenced in this regard by Vilashni’s claim that she always insisted on documentation regarding property dealings, pointing to the Hastings transaction as an example, and that the absence of documentation here proves there was no agreement. The Hastings transaction was to the Chinappas’ advantage and Angeline’s

disadvantage. In my opinion where they had something to gain, Vilashni might be concerned to document the transaction. I am not at all persuaded that the opposite would apply.

[66]   However, there is insufficient evidence to satisfy me as to such an agreement or for that matter to be sufficiently certain as to its terms.

[67]   Also, although Mrs Winter confirmed that there was a 50/50 ownership agreement, I considered her evidence on the point vague. In her written evidence, Mrs Winter said “I encouraged my children to come to an arrangement, and supported the idea that they would each own half of the property if Angeline would put in some money upfront to purchase a property together with Ajnesh and Vilashni”. But in her oral evidence her recall was not clear.

[68]   I conclude that there would have been a discussion about 50/50 ownership, but there is insufficient evidence to establish a binding agreement was reached.

Does Angeline/Mrs Winter have an equitable interest in the property by way of a constructive trust?

[69]   The plaintiffs seek a declaration that the Chinappas hold the Ferndown Avenue property on a constructive trust  or resulting  trust  for the benefit of Angeline or  Mrs Winter. They also plead in the amended statement of claim that the Chinappas hold the property subject to a life interest for Mrs Winter.

[70]   My view is that this case fits better into the category of a constructive trust and I proceed to consider it under that head.

[71]   A constructive trust arises by operation of law where one person has made contributions to a property but is not registered on the certificate of title. The law holds that it would be inequitable in such circumstances for the registered owners to have full beneficial ownership of the property.3

3      Lankow v Rose [1995] 1 NZLR 277.

[72]   As stated by both parties, to establish a constructive trust the Court of Appeal in Lankow v Rose held that the claimant must show:4

(a)they made a contribution, direct or indirect to the property in question;

(b)they had an expectation of an interest in the property;

(c)their expectation must be a reasonable one in the circumstances; and

(d)that the defendant should reasonably expect to yield the claimant an interest.

[73]   It is not a requirement that the defendant have an actual expectation that the claimant will have an interest in the property.5 However, in this case I consider that the defendants did have such an expectation because I accept there was at least a discussion as to 50/50 ownership, albeit I am not satisfied a binding agreement was reached.

[74]   I consider that Angeline does have a reasonable expectation of an interest in the Ferndown Avenue property. She contributed a large cash sum which likely exceeded any deposit that would have been required by the bank and which represented the entire equity in the property. I find that the Chinappas were probably not in a position to contribute any funds at all. At the very most they could possibly have contributed a few thousand dollars. The fact that they paid nothing speaks for itself.

[75]   I consider that the Chinappas would have had no hope, not only of buying this particular property but of buying even a property of materially lower value without Angeline’s capital contribution.

[76]   On the other hand, it has to be recognised that without the Chinappas, Angeline possibly could not have and probably would not have purchased a property. The

4      At 295.

5      At 295.

Chinappas arranged the mortgage (albeit using Angeline’s money to qualify) and took on liability under it. Angeline said she did not have a good credit record and may have had difficulty raising a mortgage. However, I do not consider the Chinappas’ contribution can be assessed in terms of the amount borrowed, given the inflating Auckland property market and the cushion provided by Angeline’s large equity contribution.

[77]   While in some circumstances the Chinappas would be given credit for payments made under the mortgage, I consider that unnecessary here. Interest on the original debt would likely have been below a fair market rent. The Chinappas have had the benefit of occupation. Angeline and Mrs Winter, quite wrongly, have not. To the extent the mortgage instalments involved any principal repayment, the Chinappas will have the benefit of that, as in calculating Angeline’s entitlement I will deduct the mortgage principal at date of purchase.

[78]   In addition, I accept that while not directly paying the mortgage, Angeline would have paid, as she says was agreed, a reasonable sum on account of expenses, upgrade works and other items while she and Mrs Winter lived in the property. My impression is that Angeline was quite naive with money and also very generous – a fatal combination. I have no doubt that Angeline, especially given that the Chinappas knew she had money, would have been called on to the greatest possible extent.

[79]   I also take into account, but only in terms of offsetting such payments as the Chinappas have made, Angeline and/or Mrs Winter’s care of the Chinappas’ children (which I accept was considerable) and assistance similar to that. I do not consider these matters otherwise particularly relevant to a constructive trust claim in a case like this. To be fair to Angeline I did not take her to advance her case particularly on that footing either, but it was a point that concerned the Chinappas.

[80]   The cash sum Angeline paid of $73,000 was 20 per cent of the gross price of the property. I have decided, weighing up the other factors above, that she had a reasonable expectation of a 50 per cent share in the Ferndown Avenue property. As noted, in calculating Angeline’s share, the mortgage debt is to be taken as the debt at the date of purchase of the property, which was $280,000.00. The Chinappas have

apparently borrowed more since the purchase which should in no way be brought into account, nor should any unpaid mortgage instalment or other charge. To make that clear, if the Ferndown Avenue property is worth $1 million, Angeline would receive

$360,000, being 50 per cent of $1 million less $280,000. The Chinappas would receive the same amount but be liable for any surplus mortgage over $280,000 and any other outstanding charges, out of their share. The figures will obviously change depending on the actual value of the property.

Does Mrs Winter have a life interest?

[81]   Mrs Winter claims a life interest in Ferndown Avenue in the amended statement of claim. Such a right was acknowledged by the Chinappas in their evidence and particularly after payment of the balance  on  settlement  of  the  house  purchase.  Mr Rose, counsel for the Chinappas, retreats somewhat from that position in submissions.

[82]   I consider Mrs Winter may have a claim in this regard and it may be of some value. Whatever its value, and I do not currently have evidence to support that, it would presumably have to be met equally by the Chinappas and Angeline so that the Chinappas would have to pay an even greater sum than the formula payment to Angeline. I have decided since this claim was only formalised in the amended statement of claim, I do not have evidence to fix the value anyway, and it seems that Angeline at least is hopeful of reaching a settlement after my ruling, I will reserve the question of any final determination regarding a life interest and the value of it.

[83]   If the parties are able to finalise matters on the basis of this judgment, then presumably either Mrs Winter will formally abandon her claim to a life interest or she will receive some settlement from her children. If matters are not able to be resolved, then Mrs Winter will be at liberty to seek a ruling in that regard and will need to put forward a suggested timetable for any further briefs of evidence required.

Laches

[84]   Laches is an equitable defence. It applies where a plaintiff makes a claim in equity but due to their inaction or delay in making the claim, it would be unreasonable

or inequitable for the Court to grant relief.6 The Court is reluctant to accept that an equitable interest in land can be lost or destroyed by mere inaction.7 The defence requires an assessment of where the overall balance of justice lies, including factors such as the length of the delay, prejudice to the defendant and the type of property involved.

[85]   Mr Rose submits that the plaintiffs should be precluded from advancing their claim given their unreasonable and unexplained delay in bringing it. He submits that the Chinappas do not need to show prejudice, but that they have suffered prejudice as a result of the delay as due to the caveat they have been unable to obtain additional lending from the bank under the mortgage. Vilashni has produced an email from a banking advisor telling her that requests for further funds are likely to be declined where there is a caveat on the property.

[86]   Mr Kashyap submits the reason for the delay was the temporary reconciliation between the parties after the 2013 proceeding. He submits it would be inequitable to enable the Chinappas to diminish or avoid liability to Angeline in the circumstances. He further submits that the Chinappas have not identified any real or specific prejudice in the context of the delay other than their inability to further top up the mortgage due to the caveat.

[87]   Here the delay was justified. I accept that there was some form of reconciliation between the parties, given that Angeline did not pursue costs against the Chinappas and the social events they attended together, although probably not conversing. I accept Angeline and Avinash’s evidence that Ajnesh said he would settle with Angeline once he was in a better financial position. Furthermore, even if the delay was unreasonable, the Chinappas have been unable to point to any real prejudice beyond the potential difficulty in drawing down on the mortgage and Vilashni herself acknowledges in her affidavit that the bank has no strict rule against increasing the mortgage on a property with a caveat registered on the title.

6      Erlanger v New Sombrero Phosphate Co Ltd (1878) 3 App Cas 1218 (HL), at 1279.

7      Eastern Services Ltd v No 68 Ltd [2006] 3 NZLR 335 (SC), [2006] NZSC 42, at [39].

[88]   I also do not consider it was necessarily more incumbent on Angeline than it was on the Chinappas to bring this matter to a head. Angeline had clearly asserted her claim to an equitable interest in the original proceeding. She left the caveat in place and was not directed by Associate Judge Doogue to take steps within a certain time.

[89]I therefore find against this affirmative defence.

Conclusion

[90]   The defendants hold the Ferndown Avenue property as to a 50 per cent share for the first plaintiff on the basis set out above. I would be strongly inclined to make an order for sale and for any associated directions, but the first plaintiff does not seek such orders at this point, so I reserve leave.

[91]   The question as to whether the second plaintiff has a life interest, its value and any related issues, is reserved.

[92]The defence of laches does not apply.

[93]   The first plaintiff is entitled to costs which I tentatively consider should be on a standard 2B basis. If the parties cannot agree, she is to file submissions within three weeks and the defendants within a further two weeks. Submissions are not to exceed five pages.

Hinton J