Narain v Chinappa

[2013] NZHC 2286

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-2269 [2013] NZHC 2286

UNDER  Section 145A of the Land Transfer Act

1945

BETWEEN  ANGELINE DEEP NARAIN Applicant/Plaintiff

ANDAJNESH NARAIN CHINAPPA and VALASHNI VANDANA CHINAPPA Respondent/Defendant

Hearing:                   28 August 2013

Appearances:           A Kashyap for Applicant

S Sharma for Respondents

Judgment:                4 September 2013

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

04.09.13 at 4.30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

A Kashyap, Barrister & Solicitor

Sanjay Sharma Barrister & Solicitor

NARAIN v CHINAPPA & ANOR [2013] NZHC 2286 [4 September 2013]

Background

[1]      The applicant is the sister of the first named respondent.  The second named respondent, the wife of the first named respondent, is her sister-in-law.   A further person who must be mentioned is Ms Kaniamma Winter (Ms Winter) who is the mother of both the applicant and the first named respondent.  The parties had been living together in rental accommodation up until 2008.  It seems to be the case that there was a common wish that at some point they would be able to purchase a house which would be large enough to accommodate the four of them together with any children that might come along in the case of the respondents.   At the time, the applicant was unmarried and it was expected that she would continue living with the family until she married.

[2]      At  the  time  of  the  events  with  which  this  application  is  concerned  the applicants and the respondents were all in full time work.  Their mother was on a WINZ benefit.

[3]      In January 2009 one of the family purchased a Lotto ticket and won a share of the 1st  division prize in the sum of $250,000.  The applicant says that it was her ticket.  I interpolate that it is her evidence that she applied part of the money to the purchase of property which is the subject of a caveat as I describe later in this judgment.   There is a dispute about whether she won the Lotto or whether her mother did, so that it was the mother who made the contributions to the acquisition of the house-property, and not her.

[4]      Be that as it may, there is no doubt that a payout was received from the Lotteries Commission.  Considerable evidence was given concerning what happened about the money but it is clear that the $250,000 was initially paid by the Lotteries Commission directly into the account of the respondents.  The explanation that the applicant gives concerning this aspect of the matter is, essentially, that it was her mother who took the Lotto ticket in to be checked and she was told that it had won a share of the first division prize of $250,000.   When the mother visited the Lotto outlet she was accompanied by the second named respondent, her daughter-in-law. Further, although the mother had a bank account (either in her own right or jointly

with the daughter, the evidence is not clear) she was unable to remember the account number and accordingly the money was transferred into the respondents’ bank account for convenience.

[5]      A short time later, on 21 February 2009 the respondents brought a property at

Panmure by auction for the sum of $360,000.  The deposit was $36,000.

[6]      The applicant has produced copies of bank cheques which she says were used towards payment of the purchase price of the property.  One of those bank cheques was for $36,000 and it was paid to Don Ha Real Estate Limited on 21 February

2009,  which  was  the  day after the  auction.    The applicant  says  that  additional cheques to an amount of $52,046.70 were paid into the account of the solicitor acting on the transaction, Mr Mohammed, who was also acting as the solicitor for the respondents in the present dispute.

[7]      The applicant says that she initialled the bank cheques and refers to what appears to be her signature on the copies of those documents which have been provided.

[8]      The respondents’ evidence is that the mother was the person who was entitled to  the  money  from  the  Lotto  win  and  that  on  9  February 2009  she  signed  an acknowledgement of gift in the sum of $30,000 to the respondents which was signed by all the relevant parties.  That document was allegedly witnessed by Mr Jee Wan Singh who confirms that he did witness the signing of the gifting document on 9

February 2009 and that at the time the mother told him that she had won Lotto and that she wanted to gift $30,000 to the respondents and asked him to witness the document in question.

[9]      In her affidavit Ms Winter deposes that she did not tell Mr Singh that she had won Lotto or that she wished to gift $30,000 to the respondents, that she produced the gifting statement or that she signed it or asked him to witness it.  She says the signature on that document is not hers.  Her account of matters is that the applicant won the Lotto prize.

[10]     Title to the property was transferred to the respondents on 12 March 2009 and the parties thereafter resumed living together in that house.   Unhappily that arrangement came to an end in 2012 when the respondents served a trespass notices on the applicant and upon her de-facto husband who she had formed a relationship with in the interim and who had been living in the house in addition to the other parties.  While it was disputed initially by the respondents, I also accept that one of the persons named in the trespass notice was the mother.

[11]     On 5 April 2012 the applicant lodged a caveat against the title to the property. The estate or interest claimed to support the caveat was stated in the following terms:

The above named Caveator claims a beneficial interest in the land contained in the above Certificate of Title as Cestui Que Trust of which the registered proprietors [the respondents] are the trustees.

[12]     Steps having been taken to lapse the caveat, the applicant on 3 May 2013 filed an application pursuant to s 145A of the Land Transfer Act 1952 for an order sustaining the caveat on the grounds that the applicant had a legal and equitable interest  in  the  land  pursuant  to  an  oral  agreement  between  the  parties.    The application also said that when the respondents purchased the property, the applicant advanced a substantial amount of money for the purchase.  The application also said that it was for the sake of convenience only that the property was only registered in the names of the respondents.

[13]     The position which the respondents have taken is as follows.  They say that it was the mother who won the Lotto prize and that the money was banked into the account of the respondents on 27 January 2009 because at that time the mother was on a benefit which might have been jeopardised by receipt of the money.   The respondents say that the money, less the amount of gifts that the mother made to them, was later transferred out of their account to the bank account of the mother and the applicant.  They say that the mother gifted $30,000 to them.  They say that they purchased the house property for themselves in February 2009.  Further, they assert, the mother provided a further $42,000 to them on the understanding that she would be able to live with the respondents for life.  In regard to the claim by the applicant that she provided payments by way of cheques towards the purchase of the property the respondents say that she may have:

Written the cheque (sic) because mum’s money was or is in her account or the joint account.  And it was mums decision to give us the money as she was the true owner of it ... mum won $250,000 in lotto and gifted us $30,000 and helped us with some extra money to complete the purchase.”

[14]     In  the  submissions  by  counsel  there  was  reference  to  the  fact  that  the applicant’s bank account was at one point a joint account between herself and her mother but that at some point in time the mother was removed as an owner of the account.

[15]     The  respondents  say  there  was  never  any  agreement  or  discussions  of

“Angeline having a 50% share or any share in the house”.

Principles Relating to Sustaining Caveats And Constructive Trusts

[16]     Section 145A of the LTA provides as follows:

[145A   Early lapse of caveat against dealings

(1) The registered proprietor of any estate or interest in the land protected by a caveat against dealings (other than a caveat lodged by the Registrar) may apply to the Registrar for the caveat to lapse.

(2) The  Registrar  must  give  the  caveator  notice  of  an  application  under subsection (1).

(3) The caveat lapses with the close of the prescribed period after the date on which the notice under subsection (2) is given unless—

(a)  the caveator has earlier given to the Registrar notice that an application for an order to the contrary has been made to the High Court; and

(b) an order to that effect has been made and served on the Registrar within the prescribed period after the date on which the notice under paragraph (a) is given to the registrar.]

[17]     The applicable principles for an application under s 143 of the Land Transfer Act are referred to in Boulton & Mortimer v Senior & Ors.1    These are set out at page 3 of the judgment as follows:

[b]       If it is clear that there was no valid ground for lodging a caveat, or that the interest which in the first place justified the lodging of the caveat no longer exists, such a caveat should be removed. Sims v Lowe [1988] 1 NZLR 656 (CA) at p 659.

[c]       The onus under s 143 of the Land Transfer Act 1952 lies on the caveator to show that he has a reasonably arguable case for the interest he claims. Castle Hill Run Ltd v NZI Finance Ltd [1985] 2

NZLR 104 at pp 104-106

......

[e]       For the purpose of this application, the caveator therefore must show that it is entitled to, or to be beneficially interested in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument  or  transmission  or  of  any trust  expressed  or  implied. Section 137, Land Transfer Act 1952

[f]       What the caveator must establish is an arguable case for claiming an interest of the kind in s 137 of the Land Transfer Act 1952

[g]       Even if the caveator establishes an arguable case for the interest in the land claimed, the Court retains a discretion to make an order removing the caveat although it will be exercised cautiously. Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd (1996) 3 NZ ConvC (digest) 192,459 at p 192,461; [1996] 2 NZLR 652 at p 656;

......

[i]       The summary procedure for removal of a caveat against dealing is wholly unsuitable for the determination of disputed questions of fact. Accordingly it has been said:

... that an order for the removal of such a caveat will not be made under s 143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so. Sims v Lowe [1988] 1 NZLR 656 at pp 659-660..." (See also Glanville v Medial Holdings  Ltd, High  Court  Auckland,  M 46- IM03, 25 February 2003, Heath J; and Pratt v Hodge, High Court Hamilton, M 216/02, 20 May 2003, Master Faire; and Hinde McMorland & Sim "Land Law in New Zealand" 10.020.)”

1  Boulton & Mortimer v Senior HC Blenheim CIV-2004-406-19, 10 February 2004, citing Allen v

Hogan Developments Ltd (2001) 4 NZ ConvC 193,420 (HC).

[18]     While that was a decision under s 143 of the Act, the same principles apply to an application for sustaining a caveat under s 145.

[19]     In the context of this case, the applicant has to show that she has an arguable equitable  interest  in  the  property  which  justifies  the  continued  presence  on  the register of the caveat in order to protect the position of the applicant while she take steps to assert her claim.

[20]   The arguable case must be one which satisfies the requirements for a constructive trust which were discussed in the Court of Appeal in the setting of de facto relationships in the case of Lankow v Rose.2   Both parties accepted that that is the leading case on the subject of constructive trusts.  I propose to refer only to the judgment of Hardie Boys J.

[21]     In his judgment, Hardie-Boys J made reference to:3

what has always been a fundamental principle of equity, that a person will not be permitted to assert strict legal rights in an unconscionable manner: see for example the speech of Lord Diplock in Gissing v Gissing [1971] AC 886 at p 905, the judgment of McMullin J in Pasi v Kamana [1986] 1 NZLR 603 at p 607, and that of Cooke P in Gillies v Keogh [1989] 2 NZLR 327 at p

331.

[22]     Then he said:4

The essential requirements I see to be twofold: that the plaintiff contributed in more than a minor way to the acquisition, preservation or enhancement of the defendant's assets, whether directly or indirectly; and that in all the circumstances the parties must be taken reasonably to have expected that the plaintiff would share in them as a result. Both statements need some amplification. In the first place, by contributions to assets one is not referring to those contributions to a common household that are adequately compensated by the benefits the relationship itself confers. The contribution must  manifestly  exceed  the  benefits.  Putting  it  in  conventional  estoppel terms, the plaintiff's contributions must have been to his or her detriment; or in Canadian terms they must have resulted by the end of the relationship in the enrichment of one to the juristically unjustified deprivation of the other. Further, the contributions need not be in money; they may be in services or

2 Lankow v Rose [1995] 1 NZLR 277 (CA).

3 At 281.

4 At 282.

in any other respect. But there must be a causal relationship between the contributions and the acquisition, preservation or enhancement of the defendant's assets for, as a claim to a constructive trust is a proprietary claim, a claim to an interest in property, the contributions must have been made to assets; not necessarily to particular assets, but certainly to the defendant's assets in general. The contributions may then be recognised by the imposition of a trust over a particular asset or particular assets, which may in turn be quantified or satisfied by a monetary award.

[23]     Applying those principles to the present case, the obligation on the applicant is to show that there is a reasonably arguable case that she made the contributions to the property that she claims she did and that in recognition of those contributions the parties agreed or understood that she would receive an interest in the property.

[24]     In the context of the present case, a decision about whether there has been an unrecognised contribution to the acquisition of the property has to take account of the benefits that the applicant is said to have received from the relationship between herself and the respondents.  These benefits are in the form of being provided with the right to live in the property and the conferment of other support which she received from them, if any.

Assessment of a reasonably arguable case

[25]     There can be little dispute that if the applicant did in fact provide funds which were applied towards the purchase of the property, against a background where it was agreed that she would have an interest in it, the Court would impose a constructive trust to prevent the respondents from defeating her legitimate beneficial interest in the property.  While the respondents did not concede the point, it would seem likely that if the money that was paid towards the acquisition of the house was provided by the applicant, it would be likely that she provided that on the basis of an agreement, understanding or expectation shared by the parties that she would have an interest in the property.   The focus of the enquiry is on the question of who provided the money for the purchase of the house.

[26]     The position that the respondents take is that any assistance that they might have received towards the purchase of the property resulted directly or indirectly from gifts which the mother made to them.

[27]     The  Court  must  therefore  approach  this  matter  on  the  basis  that  it  is incumbent upon the applicant to demonstrate a reasonably arguable case that she was the source of the funds which were applied towards the purchase of the property.

[28]     The respondents claim that the Court can resolve the question of whether the applicant has a reasonably arguable claim in regard to the land in the context of the present application because the evidence which the applicant has provided is unpersuasive and unreliable.

[29]     It is correct that in certain circumstances the Court can make the type of findings that the respondent says that it ought to make in the circumstances of this case.  The case that is habitually referred to which provides direction to the Court  as to the circumstances in which it can legitimately resolve disputed questions of fact is Eng Mee Yong where, in the well-known passage in the speech of Lord Diplock the following statement was made:5

Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be. In making such order on the application as he 'may think just' the judge is vested with a discretion which he must exercise judicially. It is for him to determine in the first instance whether statements contained in affidavits that are relied upon as raising a conflict of evidence upon a relevant fact have sufficient prima facie plausibility to merit further investigation as to their truth.

[30]     It is correct that there are some inconsistencies in the account which the applicant has given of the reasons why the funding of the house purchase took the form that it did.

[31]     The  central  issue  though  is  whether  the  funds  which  were  undoubtedly supplied for the purchase of the house came from the applicant or from her mother

and, if from the mother, on what terms she made the payment.

5 Eng Mee Yong v Letchumanan [1980] AC 331 at 341E.

[32]     One  matter  that  bears  upon  the  probabilities  of  the  case  is  that  the respondents are not left in the position, if they denied the payment was from the applicant, of not being able to identify an alternative scenario.   They can in fact provide a plausible alternative explanation as to why the money came into the hands of the respondents.  It is quite easy to understand that if the money belonged to the mother that she would make an outright gift of it without conditions attached to the respondents.  It was after all payment only of the deposit on the property and was restricted to the equivalent of 10% of the purchase price of the property.  It is easy to imagine a mother making a gift of that kind out of the motivation of wishing to help her child.

[33]     There  are  some  difficulties  with  the  evidence  which  the  applicant  puts forward about the circumstances in which the bank cheques were provided.  The fact is that the bank cheques (all of which were provided by her, the applicant says) in total exceeded the amount of the required deposit, the amount of which is proven by the  solicitor’s  settlement  statement.    No  explanation  is  forthcoming  from  the applicant  about  this  matter.    As  well,  it  is  difficult  to  understand  why,  as  the applicant claims, her signature would appear on bank cheques, given that she is not the drawer of those cheques.

[34]     Then there is the evidence of the witness to the gift statement, Mr Singh.  For some reason he has elected to provide an account of matters which is diametrically opposed to that of the applicant and her mother.

[35]     On the other hand, it may be difficult to understand why, if the Lotto prize had in fact been won by the mother, she would now deny that fact and eschew credit for the payments which were made to the respondents.

[36]     Mr  Sharma  also  questioned  why  the  applicant  was  not  included  as  a registered proprietor of the property when the purchase was settled.  The apparent response from the applicant is that she was not in work at the time.  Mr Sharma said that he understood this evidence to be intended to show that because the applicant did not have a reliable source of income, the lending bank would not view her favourably as a registered proprietor.

[37]     The objection to that line of argument, though, is that the bank would have been no worse off having the applicant added as a transferee of the property even if she did not provide a personal covenant to meet the obligations in the mortgage.  The addition  of  the  applicant  as  a  transferee  would  still  leave  the  bank  with  the governance of the two respondents.  As well, the charge over the property which the bank held in terms of its mortgage would not be in any way adversely affected by the addition of the applicant as a registered proprietor.

[38]     Mr Sharma submitted to me that none of these items on its own decisively undermines the case of the applicant.  But when their cumulative weight is taken into account, the point is reached where the Court cannot conclude that the applicant has advanced sufficient evidence to establish a reasonably arguable case.

[39]     The  respondents  ask  why,  if  the  Lotto  money  in  fact  belonged  to  the applicant rather than the mother, the mother put the money into the account of the respondents who had nothing to do with it rather than into the account that she held in conjunction with the applicant.  The case for the applicant seems to imply that her mother could not remember the bank account number of her account when she was at the Lotto outlet and it was confirmed that she was holding a winning ticket.  But counsel for the applicant agreed with me that there was no suggestion that the prize was going to be paid out then and there rather than a day or two later in which time it would be possible for the mother to recover details of her bank account and provide them to the Lotteries Commission.  Balanced against that evidence, though, is that it was never contended for the respondents that they were entitled to the entire amount of money and they in fact transferred the residue, apparently after deduction of the amount of the deposit on the home, back to the account of either the applicant, the mother or both of them - there being no evidence as to the exact destination to which the respondent sent the money.

[40]     There is also the complicating feature hinted  at in the evidence that the mother had been receiving a benefit from WINZ which might have been jeopardised had she disclosed the Lotto win.   There are also references in the evidence of the applicant to her being unwell at the time when she received the money.   It is not

stated outright that she was receiving a benefit but that possibility might explain why the money was dealt with in the way that it was.

[41]     In  my assessment,  the evidence which  the applicant  has  provided is not straightforward or clear.  It may be that that because of the apparent closeness of the family, boundaries between one party’s property and another’s property were not regarded as as important as they might be in other families in which there might be more emphasis on keeping a family member’s property strictly separated from that of other family members.

[42]     I would not be prepared to resolve the central question that arises on this application, namely whether the money which was used to pay some or all of the purchase price of the house originated from the applicant, in such a way that would potentially defeat her rights to seek orders that would recognise her possible beneficial interest in the property pursuant to a constructive trust.  In other words I am not prepared to conclude that the applicant does not have a reasonably arguable case for sustaining the caveat.  The disputes of fact that arise in this matter are properly to be resolved at trial.

Result

[43]     The result is that the application is granted on the basis that the caveat is sustained until further order of the Court.

Costs

[44]     The parties should confer on the matter of costs and if they are unable to agree they are to file memorandum not exceeding five pages on each side within ten

working days of the date of this judgment.

J.P. Doogue

Associate Judge