Ngaruahine Iwi Authority v Mountain View Developments and Constructions Ltd

[2025] NZHC 2123

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2025-454-18

[2025] NZHC 2123

UNDER

Part 19 of the High Court Rules and s 143 of the Land Transfer Act 2017

BETWEEN

NGARUAHINE IWI AUTHORITY

Applicant

AND

MOUNTAIN VIEW DEVELOPMENTS AND CONSTRUCTIONS LIMITED

Respondent

Hearing (via AVL): Further submissions from respondent: Further submissions from Applicant:

18 July 2025

23 July 2025

25 July 2025

Counsel:

J W A Johnson and A Needham for Applicant R T Wilson for Respondent

Judgment:

31 July 2025

JUDGMENT OF GENDALL J

[1]    On 20 December 2024, the applicant, Ngaruahine Iwi Authority (the Authority) lodged a caveat over the title to the property at 41 County Drive, Hawera, Taranaki (the Property) which they co-own with the respondent Mountain View Developments and Construction Ltd (Mountain View).

[2]    The Authority seeks an order under s 143 of the Land Transfer Act 2017 that the caveat not lapse, on the basis that:

NGARUAHINE IWI AUTHORITY v MOUNTAIN VIEW DEVELOPMENTS AND CONSTRUCTIONS LIMITED [2025] NZHC 2123 [31 July 2025]

(a)it is reasonably arguable that Mountain View holds some or all of its undivided one-half share of the Property on a resulting and/or constructive trust for the Authority; and

(b)the caveat is necessary to protect the Authority’s interest in the Property pending the hearing of its substantive claims against Mountain View.

[3]    Mountain View opposes the application. It says that it is not reasonably arguable that the Authority has any interest in Mountain View’s undivided one-half share of the Property, and therefore the Authority has no caveatable interest.

[4]    I note here that at the hearing, counsel for the applicant made oral submissions regarding the Supreme Court decision of Chirnside v Fay, which had not been mentioned in the applicant’s written submissions.1 Counsel for the respondent sought leave to file a further memorandum on that decision, which I granted, alongside leave for counsel for the applicant to file a memorandum in reply. I confirm that I have received those memoranda, and have considered them in making my decision.

Background

[5]    The Authority is a charitable trust established to support and improve health outcomes for members of the Ngaruahine iwi. In early 2024, the Authority was exploring opportunities to develop and provide social housing solutions within the Taranaki region to meet its health and services objectives.

[6]    Mountain View is a development and construction company. The sole director and shareholder of Mountain View is Ravikumar Gaddam (Mr Gaddam), who through various entities including Mountain View has been in the business of developing properties for social housing since 2012.

[7]    Mr Gaddam contacted the Authority in early 2024, and the parties began discussing potential development opportunities which also included two other properties at 60 Juliet Street and 40 County Drive.

1      Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433.

[8]    On 5 June 2024, Mr Gaddam attended an extraordinary general meeting of the Authority’s Audit and Risk Subcommittee, at which he provided information about his background in property and social housing development, and on potential development sites.

[9]    On 6 June 2024, Mr Gaddam emailed Warren Nicholls, General Manager of the Authority, with a proposal document titled “Development Partnership”. The proposal included the purchase and development of the Property at 41 County Drive and specified: “Sale Price: $2m + GST. Includes house price between $500,000–

$550,000”.

[10]   Another extraordinary general meeting of the Authority was held on 6 June 2024, at which the Authority approved making available $1 million plus GST “for a joint venture with Mr Ravi Gaddam of Land Trading Co on the proposed subdivision” of the Property.

[11]   According to the Authority, at all material times during discussions of the proposal for the Property, the intention was that it would be an ‘equal partnership’ in all respects, and that the parties would contribute equally. Prior to the execution by the parties of a sale and purchase agreement, they entered into negotiations for the general terms of the joint venture for the development of the Property (the joint venture). Pursuant to that joint venture:

(a)the Authority would acquire a half-share of the Property from Mountain View;

(b)the parties, as joint venture partners, would undertake a social housing development on the Property;

(c)the parties would contribute equally to the development costs. The Authority understood this to include its initial investment of $1 million into the Property and that Mountain View would also be investing

$1 million into the joint venture; and

(d)the parties would share equally in the profits of the joint venture.

[12]   While no formal joint venture agreement was executed, the Authority says it was on this basis that it proceeded with its investment into the development, and that this included the purchase of its one-half share in the Property.

[13]   On 16 July 2024, Mr Gaddam sent to the Authority a sale and purchase agreement for the one-half share in the Property which the Authority was going to acquire. The purchase price for that undivided one-half share was stated as $1 million plus GST. A deposit of $500,000 was to be paid as $100,000 on execution of the agreement, and a further $400,000 on 31 July 2024.

[14]   The Authority resolved on 17 July 2024 to enter into the sale and purchase agreement. It signed the agreement on 19 July 2024, with the deposit duly paid to Mountain View. The balance of the purchase price was paid in two instalments occurring by 27 September 2024. The Authority says, in doing so, it relied on the agreed joint venture terms and Mr Gaddam’s representations that the Property was worth $2 million.

[15]   The Authority’s purchase of the one-half share settled on 25 October 2025. Following settlement, the Authority discovered that Mountain View had not already settled its purchase of the Property, as it maintained Mr Gaddam had represented throughout. The record of title records that acquisition by Mountain View of its total ownership interest in the Property also occurred on 25 October 2024, approximately 30 minutes before the transfer to the Authority of its one half-share was registered on the title.

[16]   Subsequently, the Authority learned that Mountain View in fact had entered into an agreement to purchase the Property from a third party in March 2023, but under that agreement, Mountain View was in default and settlement had been delayed and was not able to occur until 25 October 2024. Effectively it seems, this was contemporaneous with settlement under the Authority’s purchase agreement from Mountain View. Mountain View, it appears, has also refused to disclose the initial

price for its purchase from the third party. It did concede however, that it was less than $2 million.

[17]   Then, in December 2024, Mountain View registered a mortgage over its half- share of the Property without the Authority’s knowledge or consent. Later, Mountain View advised that it intended to discharge the existing mortgage and register another mortgage on the title. This new mortgage was to have a priority sum of $750,000. The Authority says this mortgage was collateral for another development being undertaken by Mountain View and it had nothing to do with the 41 County Drive property.

[18]   As noted above, the Authority lodged its caveat on 20 December 2024. An interim order that the caveat not lapse pending the hearing of this application was granted by Associate Judge Skelton on 14 March 2025.

Legal principles

[19]   Section 138(1) of the Land Transfer Act 2017 (the Act) provides that a person may lodge a caveat against dealings with an estate or interest in land on the basis that the person, among other things, claims an estate or interest in the land, or has a beneficial estate or interest in the land under an express, implied, resulting or constructive trust.

[20]   Where an application is made to lapse the caveat, an order that the caveat not lapse can be made under s 143 of the Act.2

[21]   The Court of Appeal has determined the following principles apply to an application to sustain a caveat:3

2      Land Transfer Act 2017, s 143(4).

3      Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218, (2023) 23 NZCPR 259 at [80]–[87]. See also Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813 at [23]–[25]; and Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].

(a)The onus is on the applicant to demonstrate that they hold an interest in land sufficient to support the caveat, but they need not establish that definitively.

(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim.

(c)An order for the removal of a caveat is only available where it is “patently clear” that there is either “no valid ground for lodging it in the first place, or because such a ground no longer exists”.4

(d)Once a reasonably arguable case is established, the Court has a residual discretion to make an order removing the caveat. However, this discretion is to be exercised with caution, and before it orders removal, the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.

[22]   The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact.5 However, where such disputes arise, it is necessary to assess how realistically arguable the asserted case of a proprietary right is. And, where factual disputes arise in an application to sustain a caveat, the Court will generally prefer the evidence of the applicant.6

Submissions

Submissions for the Authority

[23]   Mr Johnson for the Authority submits that it has a strongly arguable claim to an interest in Mountain View’s share of the Property under a resulting and/or constructive trust. He says there is ample evidence that the Authority has demonstrated on the balance of probabilities that it funded the purchase of Mountain View’s share of the Property. He notes the timing of Mountain View entering into the

4      Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 2, at [82].

5      Sims v Lowe [1988] 1 NZLR 656 (CA) at 659 and Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 3, at [83].

6      Bethell v Rickard [2013] NZCA 68 at [22].

sale of the half-share in the Property to the Authority, with it settling that sale at the same time as its much-delayed settlement of the purchase of the Property from the third party. Accordingly, he submits it is reasonably arguable that Mountain View, without any disclosure, has used the Authority’s funds towards the purchase price of the entire Property.

[24]   Mr Johnson maintains the overall effect of the transaction structure was that Mountain View acquired its ultimate share of the Property for nil or limited consideration, with that share effectively being funded fully or largely by the Authority. He notes the exact proportion of Mountain View’s share of the Property held on resulting trust is presently undetermined. But, he does point to the fact Mountain View has conceded the Property was purchased for less than $2 million, and this must mean that at least some of its share was funded by the Authority. Mr Johnson says this raises a rebuttable presumption of Mountain View holding a share of its interest in a resulting trust for the Authority, and he notes too that Mountain View has produced no evidence to rebut this presumption.

[25]   With respect to his claim for a constructive trust, Mr Johnson says this arises both from Mountain View’s breaches of its fiduciary duties arising from the joint venture agreement, and on ordinary constructive trust principles set out in Lankow v Rose.7 (On this aspect, note my comments at [34] and [35] below.)

[26]   As to the claim for breach of fiduciary duties, Mr Johnson says the joint venture was fiduciary in nature, and Mountain View assumed fiduciary responsibilities under the parties’ agreement. He says the Authority placed trust, confidence and dependence in Mountain View and Mr Gaddam to comply with the terms of the joint venture when agreeing to purchase the property, and relied on their representations and reputation. In doing so, the Authority assumed a position of vulnerability in comparison to Mountain View, relying on it to comply with its duties and to protect the Authority’s proprietary interests. Mr Johnson contends that as a joint venture, Mountain View assumed fiduciary obligations to the Authority, including duties of loyalty, to act in good faith and in the Authority’s best interests, and not to prefer its own interests over

7      Lankow v Rose [1995] 1 NZLR 277 (CA) at 294; cited in Almond v Read [2019] NZCA 26, (2019) 5 NZTR 29-036.

those of the Authority. He submits Mountain View breached those duties in a number of ways:

(a)first, in misrepresenting the extent of its financial contribution to the acquisition of the Property;

(b)secondly, without any disclosure on its part, by procuring the Authority to fund some or all of its share of the Property acquisition; and

(c)thirdly, by arranging mortgage lending secured against the Property, all in the context of unequal contributions to the Property.

[27]   In relation to the claim of a Lankow v Rose constructive trust, Mr Johnson maintains the Authority clearly contributed more than 50 per cent to the original acquisition price, when it expected to obtain an interest in the Property equivalent to its contribution (although at the time it believed that contribution was to be, and it was recorded as only 50 per cent). He says the Authority’s expectation was reasonable, and Mountain View cannot expect to retain all of its claimed 50 per cent interest in the property when the Authority has contributed much of the purchase price.

[28]   Mr Johnson does accept however, that the Court in any event retains a residual discretion to remove a caveat for which, like here, there is a reasonably arguable basis. But he maintains this is not a case where such a discretion should be exercised. He says there is a strong likelihood that the Authority will obtain a benefit from continuance of the caveat, and the Court cannot be satisfied that its interests can be protected in any other way. This is the case also, he argues, in a situation where Mountain View has provided no security to protect the Authority’s interests or suggested any means of protection. He highlights that Mountain View has instead denied that the Authority has any interest, it has refused to provide information regarding the extent of the Authority’s contributions to the original purchase price for the Property, and it has twice used its own interest in the Property as collateral security for other unrelated developments. He says the use of Mountain View’s interest as mortgage security itself creates significant potential prejudice for the Authority, with a real risk of suffering loss if Mountain View defaults under its collateral security

agreements. Mr Johnson goes on to argue too that, the fact the Authority has not yet filed its substantive claim, is simply a matter of timing and is not fatal to this application, given the Court only needs to be satisfied there is sufficient evidence of a “reasonably arguable claim”.

Submissions for Mountain View

[29]   Mr Wilson for Mountain View contends that in any event any joint venture has not proceeded. He also submits that there is also a complete answer to the Authority’s claims here. This is simply that the Authority paid $1 million in accordance with the Property purchase agreement it entered into with Mountain View to purchase its undivided one-half share in the land. When Mountain View accepted and transferred the one-half share, the Authority got what it paid for.

[30]   Mr Wilson suggests that on the evidence before the Court, none of the Authority’s property contributed to Mountain View’s half-share in the Property. He maintains that Mountain View had “purchased” the Property in March 2023, and in July 2024 it sold the one-half share to the Authority. He claims that no part of the

$1 million paid by the Authority was a contribution to the one-half share of the Property that Mountain View retained. He says $1 million was the agreed price, and it is neither known nor relevant whether it was a reasonable price. Given the Authority made no contribution to Mountain View’s original purchase of the Property, Mr Wilson contends the Authority has no arguable claim for either a resulting or constructive trust. The application to sustain the caveat, in his view, must therefore fail.

[31]   And, in respect of the Authority’s allegation of a misrepresentation as to the value of the Property, Mr Wilson maintains there was  no  such  representation  by Mr Gaddam. He says Mr Gaddam only stated the price at which Mountain View was willing to sell the land. He observes there is no evidence at all as to the value of the land at the time of the alleged representation. Without such evidence, he says there can be no arguable case anyway that there is a misrepresentation as to value here.

[32]   In terms of fiduciary duties, while he accepts that a joint venture arrangement can sometimes create fiduciary relationships, Mr Wilson says that would depend on the nature of the obligations between parties to and set out in a joint venture agreement.

He submits that there was no joint venture agreement concluded in this case, and although there were joint venture discussions, either party was free to walk away from the arrangements under discussion up to the time there was a concluded joint venture agreement. He says in a situation where the Authority was to provide a draft joint venture agreement for Mountain View to consider, and none was produced, there cannot be any fiduciary duties owed. He further submits that Chirnside is distinguishable from this case, as in that case the joint venture was well advanced when the breach of duty occurred, and the property there was jointly acquired pursuant to the joint venture. In contrast, here Mountain View had already acquired the Property before the parties had met.

[33]   Mr Wilson maintains too that there were no representations made that each party would equally contribute $1 million to the Property. The overall effect of his arguments, as I see it, is that independent business decisions were made on each side and nothing more.

[34]   Lastly, with respect to the mortgage issues, Mr Wilson submits that when no joint venture went ahead, Mountain View with its tenancy in common interest was able to deal with its undivided share of the Property separately, and in doing so was neither affecting nor prejudicing the property of the Authority as its other tenant in common.

Analysis

On what grounds can the applicant Mountain View seek to sustain the caveat?

[35]   Although this was not raised by either party, there is a potential issue here with the claim for a “constructive trust”, given the caveat only specifies the interest claimed by the Authority “as a beneficiary in a resulting trust”. Authorities previously have held that the Court does not have the power to amend a caveat or consider fresh grounds to sustain it, and that instead the interest that must be established is that claimed in the Caveat.8 For completeness, I now set out in full the specific estate or interest claimed under Mountain View’s caveat which reads as follows:

8      Federal Capital Ltd v MTE 31 Ltd [2020] NZHC 811, (2020) 21 NZCPR 29 at [18]; Lee v Oceania P&D Ltd [2022] NZHC 3257 at [51]–[55].

The caveator claims an interest in the share of the property owned by Mountain View Developments and Construction Limited as a beneficiary pursuant to a resulting trust on the grounds that the caveator contributed a share of the purchase price of the property greater than the share in respect of which it is registered as owner of the property.

[36]   Accordingly, a “constructive trust” is not particularised as a claimed interest in Mountain View’s share of the property. While constructive and resulting trusts are both equitable trusts, they are clearly distinct kinds of interests in land. So far as it may be relevant here, I therefore do not consider that the Authority can rely on a constructive trust as a basis to sustain the current caveat.9

Is there a reasonably arguable case for a resulting trust?

[37]   A resulting trust arises where a person providing or contributing to the purchase price of a property conveyed partly or wholly into the name of another retains a beneficial interest in the property to the extent of their contribution, and there is nothing to indicate that they intended to confer the beneficial interest on the legal transferee.10 As noted in Westdeutsche Landesbank Girozentrale v Islington London Borough Council, there are two situations in which a resulting trust arises:11

(a)Where A makes a voluntary payment to B or pays wholly or in part for the purchase of property vested in 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, with the property held on trust for A where they are the sole provider of money, or in the case of a joint purchase by A and B, in shares proportionate to their contributions.

(b)Where A transfers to B on express trust, but the trusts declared do not exhaust the whole beneficial interest.

9      At the hearing before me however, Mr Johnson did suggest that, if necessary, he would seek leave to vary the interest claimed (by registering a replacement caveat) to include a claim here to a constructive trust to remedy the problem. As will appear later, in my view, this is not necessary.

10 Potter v Potter [2003] 3 NZLR 145 (CA) at [14].

11 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL) at 708, adopted and applied in Crampton-Smith v Crampton-Smith [2011] NZCA 308, [2012] 1 NZLR 5 at [35].

[38]   This case, in my view, clearly falls into the first situation. The assertion is made that the Authority paid in large part, if not wholly, for the purchase of the Property then vested in the joint names of the Authority and Mountain View. There is a presumption too that the Authority did not intend to make a gift to Mountain View in paying more than half of what Mountain View paid for the Property in exchange for a half-share.

[39]   The presumption of a resulting trust will be rebutted by evidence of an intention to make a gift, loan, or trust, or where consideration has been provided, or where there is any other evidence of any intention inconsistent with the trust.12 Both the weight to be given to the presumption, and the nature of the evidence required to displace it, will differ according to the circumstances of the case.13 The Court of Appeal noted in Crampton Smith that in most cases the presumption alone will not determine the case, with evidence of intention being highly relevant.14 The evidence of both parties and all the surrounding circumstances are to be considered when determining whether a trust was intended.

[40]   In this case, there is a general lack of documentary evidence of the intentions of the parties. An email dated 10 June 2024 from Maraea Katene-Rawiri, the representative of Ngāti Manuhiakai  hapū  within  Ngaruahine  Iwi  Authority,  to  Mr Gaddam noted that the hapū had a hui in which Ms Katene-Rawiri “took back the patai of our potential partnership”. A meeting minute from the Authority’s Audit & Risk Sub-Committee’s extraordinary meeting dated 5 June 2024 states under “Notes from Mr Gaddam included” that “Sites already purchased in Taranaki are…41 County Drive Hawera [34 lot subdivision]”. The minute for a similar meeting held the following day records, in relation to County Drive, that “[the Authority] are ready to move once we complete our diligence and give the nod”. Mr Gaddam was described as having a “reputable nature” given his history of successes, and an “efficient operator”. The minute records that the Authority, in principle, moved to formally approve $1 million plus GST “to be made available for a joint venture with Mr Ravi

12 Lendich v Codilla [2023] NZCA 222, (2023) 24 NZCPR 374 at [13] citing Jessica Palmer “Resulting Trusts” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [12.5.2].

13 Crampton-Smith v Crampton-Smith, above n 11, at [41].

14 At [43].

Gaddam of Land Trading Co Ltd, on the proposed subdivision of 41 County Drive, Hawera” (emphasis added). The Agreement for Sale and Purchase provides that the Authority purchased an undivided one-half share in the Property for $1 million. A proposal document from Mr Gaddam notes a “development partnership” between the parties. It goes on to describe the “sale price” of 41 County Drive as “$2 M + GST”.

[41]   This evidence seems to suggest that the Authority intended to enter into a partnership/joint venture with Mountain View, that it trusted Mr Gaddam as a reputable person and efficient operator, that it was the Authority’s understanding that Mountain View had already purchased the Property, and that Mr Gaddam had also proposed a “development partnership” and informed the Authority that the “sale price” of the Property was $2 million plus GST.

[42]   In his affidavit evidence, Mr Nicholls, the General Manager of the Authority, deposes that the idea was that Mountain View and the Authority would be equal partners in a project to purchase and develop the land, with both the initial investment and the development expenditure to be shared equally. He describes Mr Gaddam’s indications to the Authority as being that both the Authority and Mountain View would purchase 41 County Drive equally, with Mr Gaddam mentioning a $2 million purchase price. Mr Nicholls says that, at the series of meetings he and Mr Gaddam attended, Mr Gaddam reiterated the $2 million purchase price and their equal investment in the Property.    Mr  Nicholls’ clear  understanding  was  that  the Authority’s  payment of

$1  million for a half-share meant that Mr Gaddam would also be contributing

$1 million to the purchase of the Property.

[43]   Similarly, Mr Hooker—a former trustee and Deputy Chair of the Authority— deposes in his affidavit evidence that, at all times, Mr Gaddam represented that the joint venture would be an equal partnership in all respects. He says it was on the understanding that Mr Gaddam invested $1 million of his own money into the project that the Authority decided to invest $1 million.  He would not have voted to make the

$1 million available to Mr Gaddam had he not thought Mr Gaddam was also contributing to the Project. In terms of the joint venture, he says while this was never formally documented or executed, Mr Gaddam’s proposal to the Authority on 6 June 2024 was reasonably detailed.   He says the  Authority came away feeling they had a

reasonably clear understanding of the proposed project, how it would work, and the expectations for each joint venture partner.

[44]   In contrast, Mr Gaddam deposes in his affidavit that he had specified the property as having a sale price of $2 million plus GST, and that the purchase price of

$1 million plus GST was simply based on the overall sale price for the land. He says the Authority had the full opportunity to make their own assessment of the value of the land. He claims he believed the land was worth $2 million based on its subdivision potential, but says he made no representations as to its value. He deposes that, at the date of the agreement for sale and purchase, the terms of the joint venture agreement had not been discussed in any detail. The understanding was, according to him, that both parties would contribute equally to the costs of the development, and once the sections were subdivided, each party  would  take  an  equal  number  of  sections. Mr Gaddam says he did not state they would purchase the Property equally, but instead said the applicant could purchase the whole property for $2 million or half for

$1 million.

[45]   Mr Wilson, for Mountain View, endeavoured to emphasise that the purchase by the Authority of the one-half share in the Property proceeded entirely as a standalone transaction. Nothing he claimed was linked to the joint venture that, in any event, had only reached a discussion stage and was never written into an agreement or finalised. I do not accept these contentions however, from all the material that has been placed before the Court.

[46]   Mountain View’s relatively recent request that the Authority pay 50 per cent of the invoice for engineering costs related to the resource consent for the subdivision of the Property, in my view, must also support the fact that the parties had entered into the joint venture, and it was proceeding.

[47]   On this joint venture aspect, the Supreme Court decision in Chirnside v Fay is also instructive.15 It held that the absence of a written agreement does not preclude

15     Chirnside v Fay, above n 1.

there being a joint venture in existence.16 And the comments in the Supreme Court decision at [91] of their Honours Tipping and Blanchard JJ are usefully repeated here:

[91]… The essence of a joint venture which is not yet contractual is that it is an arrangement or understanding between two or more parties that they will work together towards achieving a common objective. It is fallacious to think that there can be no joint venture unless and until all the necessary details have been contractually agreed. A joint venture will come into being once the parties have proceeded to the point where, pursuant to their arrangement or understanding, they are depending on each other to make progress towards the common objective. Each party is then proceeding on the basis that he or she is acting in the interests of all or both parties involved in the arrangement or understanding. A relationship of trust and confidence thereby arises; each party is entitled to expect from the others loyalty to the joint cause, loose as the formalities of the joint venture may still be. This in essence is the position  which  was  reached  between  Messrs Chirnside and Fay. Neither of them was thereafter entitled to act solely in his own interests.

[48]   It is my view that, on the available evidence, there is a reasonably arguable case for a resulting trust here. It is generally undisputed that the relationship between the parties arose due to a shared intention to form a partnership or joint venture to undertake a social housing development on the Property. That joint venture arguably proceeded in some form, and this necessarily led to a relationship of trust and confidence arising. While it is true that the general proposal says the “sale price” of the property was $2 million, and that the Property had been “purchased” rather than being in Mountain View’s ownership, it seems clearly arguable that what had been represented to the Authority was that Mountain View had purchased the Property for

$2 million, and so by the Authority purchasing a half-share for $1 million, both parties would be equally contributing to its purchase. I accept that had the Authority been aware that Mountain View had not yet settled its purchase of the Property, and that it was acquiring the Property for less than $2 million, there is evidence that it likely would not have accepted a half-share in the Property for $1 million.

[49]   I consider it reasonably arguable too that, from representations likely made by Mr Gaddam, the Authority intended to, and believed it did, secure a share of the Property proportionate to its contribution relative to Mountain View’s contribution. It appears to be undisputed that this is not what occurred, when the Authority paid more

16 At [70].

than 50 per cent of what Mountain View agreed to pay for the purchase of the Property but received only a half-share. While it is not known whether any of the $1 million paid by the Authority to Mountain View was put towards Mountain View’s purchase of the Property, given the timing involved (in which Mountain View’s purchase was settled mere minutes before it sold a half-share to the Authority), I consider there to be a distinct possibility this occurred. There is accordingly a reasonably arguable case that the Authority paid in part for the purchase of property now vested in Mountain View. There is a presumption too that the Authority did not intend to gift those amounts to Mountain View, with the according share of the property held on trust for the Authority by Mountain View. Mountain View, in my view, has raised no evidence to rebut this presumption sufficient to render this claim by the Authority not reasonably arguable.

[50]   Although there are some disputed facts here (which must be determined at substantive proceedings, I will direct to be undertaken later in this judgment) as I see the position, the Authority has done enough to show that it is reasonably arguable that:

(a)given the existence of the joint venture, Mountain View owed the Authority fiduciary duties of loyalty and to act in good faith and in the best interests of the joint venture at all times including at the time of the acquisition;

(b)Mountain View may have received its share of the Property in breach of the fiduciary duties owed to the Authority, by using the Authority’s funds in part or in whole to acquire its share of the Property; and

(c)the presumption of a resulting trust arises in favour of the Authority over Mountain View’s share of the Property to the extent that the Authority’s funds were used to acquire it.

Should the Court nonetheless exercise its discretion to remove the caveat?

[51]   As noted in Pacific Homes Ltd v Consolidated Joineries Ltd, if the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of recovery of money secured over the land, or specific performance

of an agreement, or if a caveator’s interests can be reasonably accommodated in some other way, then it may be appropriate for the caveat to be removed, despite the claimed interest being established.17 As I note above, however, the Court should be cautious about doing so, and must be satisfied the caveator’s legitimate interest would not be prejudiced by the removal.18

[52]   It seems clear to me that the Authority will benefit from continuance of the caveat. Given its registered land transfer title to a half-share, Mountain View is able to deal with that half-share including an ability to register a mortgage against its share, notwithstanding the current situation where the Authority alleges that part of Mountain View’s one-half share is held on trust for its benefit. Mountain View has already twice registered mortgages against its half-share. I accept Mr Johnson’s submission that this creates real risks for the Authority. If Mountain View defaults under a collateral security agreement, the Authority may lose any interest it has in Mountain View’s half- share. I agree there does not appear to be any viable alternative to sustaining the caveat. This is particularly so when Mountain View here has failed to propose any such alternative, such as an undertaking not to register any further mortgages or increase its existing mortgage over its registered share in the Property. Sustaining the caveat will mean that Mountain View may face some prejudice in not being able immediately to utilise its equity in the Property. However, I do not consider this to be a sufficient basis to exercise the Court’s discretion against sustaining the caveat, given also the conditions I propose to impose on the orders that will follow.

[53]   I accept too that a caveat can be sustained despite the fact that (as here) substantive proceedings have yet to be filed.19 In such cases, the Court generally can grant an order that a caveat not lapse conditional on such proceedings being promptly filed and pursued.20 I consider that to be the appropriate course in this case.

Result

[54]The Authority’s application is granted.

17     Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

18     Philpott v Noble Investments Ltd, above n 3, at [26(d)].

19     Rault-Smith v Clow [2016] NZHC 2152 at [31].

20     Klimenko v Klimenko [2021] NZHC 2592 at [8].

[55]   I order that caveat 13189785.1 registered over the property at 41 County Drive, Hawera (Title 468891 Taranaki Land District), not lapse. This order is conditional upon the Authority filing and serving proceedings for its substantive claim within 20 working days of the date of this judgment and progressing those proceedings diligently and with all reasonable speed.

Costs

[56]   As the successful party, the Authority is entitled to costs. I encourage the parties to confer and try to agree as to costs. If that is not possible, the Authority is to file a memorandum on costs of no more than five pages within 20 working days of the date of this judgment. Any response and reply (also of no more than five pages) is to be filed by Mountain View within 20 working days of it being served the Authority’s memorandum on costs. This is a longer period than usual to allow the parties time to attempt to reach resolution.

Gendall J

Solicitors:

Legal Solutions, New Plymouth for Applicant Thomson O’Neil & Co Stratford for Respondent