Public Trust v Watene

[2025] NZHC 314

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV 2023-470-157

[2025] NZHC 314

IN THE MATTER OF

The Estate of Teiri Poporo Woodhouse

BETWEEN

PUBLIC TRUST

Applicant

AND

MARION ANAMARIA WATENE

Respondent

Hearing:	18 February 2025
Appearances:	M Freeman and G Cairns for the applicant M Sharp for the respondent
Judgment:	26 February 2025

JUDGMENT OF BLANCHARD J

This judgment was delivered by me on 26 February 2025 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt Holland Beckett, Tauranga

PUBLIC TRUST v WATENE [2025] NZHC 314 [26 February 2025]

[1]    Public Trust is the executor of the estate of Teiri Woodhouse.1 The only asset of the estate is a property at 677 Welcome Bay Road, Tauranga. Marion Watene is the administrator of the estate of Te Aohuakirangi (Dolly) Woodhouse, Teiri’s mother. She asserts that Dolly’s estate has a constructive trust claim in relation to the property. She has lodged a caveat on the title to the property. Despite first notifying Public Trust  of the claim around 14 years ago, Mrs Watene  has not  brought  legal  proceedings  to establish it.

[2]    Public Trust has served a notice on  Mrs  Watene  under  s  135  of  the  Trusts Act 2019. Under the section, if proceedings are not commenced within 90 days of the service of a notice, the Court may make an order barring a claim and authorising the trustee to administer the trust property without regard. Mrs Watene did not bring a claim within the 90-day period. Public Trust now seeks an order under s 135.

Transfer of the property by Dolly to Teiri

[3]    Dolly transferred the property to Teiri in 2003. The transfer document states that the consideration for the transaction was $1. I explain more about the transfer when I discuss below the nature of the claim by Dolly’s estate.

Deaths of Teiri and Dolly

[4]    Teiri died in 2007. He made his last will on 30 January 1980. In it he left his residual estate  to  his  wife  Heather Woodhouse,  who  survives  him.  Public Trust is named as executor under the will and was granted probate on 29 March 2010.

[5]    Dolly died intestate in 2009. On 5 October 2016 Mrs Watene was appointed as administrator of her estate. Dolly’s family are the beneficiaries of her estate under the rules of intestacy.

1      Where surnames are common, to avoid confusion and meaning no disrespect, I use first names.

Notice of the claim

[6]    On 2 March 2011 Public Trust received a letter from solicitors notifying them that Dolly’s estate intended to file a claim against Teiri’s estate. The claim was not particularised but was said to be in respect of the property.

Attempts at resolution

[7]    In the period between 2012 and 2016 discussions took place between Public Trust and Dolly and Teiri’s  family to see whether a resolution could be reached.     A deed of family arrangement was prepared. Under this, the property was to be transferred to Dolly’s estate on the basis that the estate would take over the mortgage on the property. However, the deed did not proceed because some family members were not prepared to sign it.

[8]    Later, there was another proposal under which the property was to be transferred to Dolly’s estate subject to the mortgage or with the mortgage being discharged. However, again the proposal did not proceed because not everyone agreed.

Lodgement of the caveat

[9]    On 9 October 2017 Mrs Watene lodged the caveat on the title to the property. It stated that the estate or interest claimed by the caveator was “a beneficial interest in the land … as cestui que trust”.

Fire damage to the property

[10]   In 2020 the house on the property was badly damaged by fire. Initially, Public Trust took the position that it was not obliged to carry out repairs. However, Public Trust later accepted responsibility to repair the property.

Discharge of the mortgage over the property

[11]   The mortgage on the property was in favour of the Pirihima Trust. In 2022 Mrs Watene and other members of Dolly’s family successfully had the balance of the loan written off and the mortgage discharged.

Further attempt at resolution

[12]   Carlene Ririnui is Dolly’s granddaughter. She lived at the property before and after Dolly’s death.

[13]   On 30 May 2022 Heather advised that she agreed to the property being transferred to Carlene, subject to Carlene paying Public Trust’s outstanding costs. Public Trust was agreeable to this proposal,  but  it  could  not  proceed  because,  as a result of Dolly’s estate’s claim, it required Mrs Watene’s approval and that was not forthcoming.

The s 135 notice

[14]   On 19 August 2022 Public Trust served a letter attaching a s 135 notice on Mrs Watene.  The notice called on Mrs Watene  to take legal proceedings, within     a period of 90 days from the date of service of the notice, to enforce her claim and also to prosecute the proceedings with all due diligence. It also advised that, if a legal proceeding was not brought within 90 days, a court may bar the claim or authorise the trustee to administer the trust property without regard to it. The notice also set out Public Trust’s understanding of the nature of the claim.

Further attempt at resolution

[15]   The covering letter attaching the notice recommended that Mrs Watene obtain independent legal  advice.  Public Trust remained willing to try to resolve matters   by agreement. The covering letter therefore went on to say that Public Trust was keen to find an outcome that worked for all the  parties  involved.  It  also  said  that Public Trust would prepare a deed that it believed would allow for this to happen and it would provide Mrs Watene with a copy for her review in due course.

[16]   On 19 October 2022,  Public  Trust  emailed  Mrs  Watene,  other  members of Dolly’s family, and Heather, a deed of family arrangement under which the property was to be transferred to Carlene. However, the deed was rejected.

Expiry of the 90-day period

[17]The 90-day period expired without Mrs Watene filing a claim.

[18]   On 8 February 2023 Public Trust’s solicitors emailed Mrs Watene a letter regarding the claim. The letter noted that the 90 days had expired. It further noted that Mrs Watene had not brought a claim and that Public Trust inferred she did not intend to bring any claim. The letter went on to say that Public Trust required the caveat to be removed so it could administer Teiri’s estate. It said that Public Trust was entitled to apply to bar any claim under s 135 and apply for the caveat to lapse, and there was no basis for Mrs Watene to challenge those steps.

[19]   The letter invited Mrs Watene to agree in writing that the caveat could lapse, and said that, if she did so, Public Trust would then take steps to lapse the caveat (at its cost). However, if Mrs Watene forced Public Trust to apply under s 135 and for the caveat to lapse, it would seek costs from Dolly’s estate and, if the costs could not be met from Dolly’s estate, from Mrs Watene personally.

[20]   The letter encouraged Mrs Watene  to  take legal  advice before responding.  It said that Public Trust needed a response by 23 February 2023 and that, if there was no response by that date or Mrs Watene  responded continuing to assert a claim      or refusing to lapse the caveat, then Public Trust would seek a barring order under    s 135.

Further attempt at resolution

[21]   As I have explained, ultimately Public Trust agreed to repair the fire damage to the house on the property. On 12 April 2023 Public Trust emailed Carlene advising that they had entered into contracts to carry out the repairs to the property. The email went on to say that, once the building work was complete, Public Trust would arrange for the property to be transferred to Carlene. But this was on the understanding that Carlene would arrange for Mrs Watene to remove the caveat on the property. The email noted that Carlene had previously indicated that she would attend to this. As it transpired, however, Carlene was not able to obtain Mrs Watene’s approval to the caveat being removed, so again this attempt at resolution did not succeed.

The nature of the claim by Dolly’s estate

[22]   The exact nature of the claim that Dolly’s estate has in relation to the property is a little unclear.  However, it was  described in the hearing as  a “fraud” claim and  a claim for a constructive trust.

[23]   Mrs Watene says that Dolly did not intend to transfer the property to Teiri. She says Dolly intended to remain the owner of the property and merely allow it to be mortgaged to the Pirihima Trust. Teiri could use the property as security to borrow from the Trust, but the property would remain in Dolly’s ownership. The central allegation is that Teiri fraudulently induced his mother to transfer the property to him, when she only intended it to be mortgaged.

[24]   The  claim  is  contradicted  by  a  letter  that  Teiri  sent  his  solicitor  on   27 March 2003. In the letter he said he helped to pay for the deposit used to purchase the property and, once it had been purchased, he paid rates and insurance on it.      He went on to say that, in 2002 Dolly called a family meeting “to make her wishes felt”. He said that Dolly told the family, “the house was to go to [Teiri] in no uncertain terms, and the reasons were obvious, all through the years my brothers and sisters were aware that this would happen” and “[t]hey have not opposed the decision.”

[25]   The claim is  also  inconsistent  with  a  letter  sent  by  Teiri’s  solicitor  on  23 April 2012. The letter suggests that the property was transferred from Dolly to Teiri on the basis that Teiri would acknowledge he was indebted to Dolly for the capital value of the property at $115,000. The letter suggests that it was intended that the

$115,000 would be reduced by gifts from Dolly of $27,000 per year. The letter goes on to explain that the property was transferred but the deed of acknowledgement of debt and the subsequent gifting never occurred. The letter concludes that, “on the face of it [Teiri’s] estate still owes [Dolly’s estate] the sum of $115,000.”

[26]   A letter of 10 March 2017 sent by Mrs Watene’s counsel, Mr Sharp, to Public Trust summarises what appears on Teiri’s solicitor’s file. The summary in the letter is broadly consistent with the account in the solicitor’s letter.

[27]   Public Trust says that it cannot concede Mrs Watene’s claim when it is refuted by the letters of Teiri and his solicitor. Further, there are potential limitation issues because of the time that has passed since 2003.

Public Trust issues proceedings

[28]   Public Trust commenced these proceedings on 12 October 2023. Public Trust considered that it had tried to resolve matters on multiple occasions. Each effort resulted in the parties failing to reach agreement. Given the previous dealings between the parties, Public Trust had no confidence that the matter could be resolved by agreement. While it once appeared that a resolution may be possible, it had become very clear that it was not practically achievable. Public Trust therefore commenced proceedings to resolve the impasse.

Legal principles

[29]   Section 135 of the Trusts Act 2019 replaced s 75 of the Trustee Act 1956. While there are some differences in drafting between the two provisions, the principles referred to in the cases under s 75 are generally also applicable under s 135.2 The principles are summarised in Graham v Graham,3  drawing on the earlier decision   of New Zealand Guardian Trust Co Ltd v Lipsitt.4 The principles, insofar as they are relevant here, are as follows:

(a)the Court is not required to undertake a substantive assessment of the merits of the claimant’s claim. However, whether the claim has any merit may be taken into account when considering if it should be barred;

(b)a lack of action both before and after the three-month period will count against a claimant;

2      See for example Darlow v Moleta [2024] NZHC 2711.

3      Graham v Graham [2015] NZHC 1571 at [14].

4      New Zealand Guardian Trust Co Ltd v Lipsitt HC Christchurch P386/91, 14 August 1998.

(c)an explanation will be required as to why no steps were taken to initiate proceedings from the time the claimant had knowledge that the trustee was not going to meet their claim; and

(d)evidence that a claim may not be prosecuted with all due diligence will count against a claimant.

Public Trust’s position

[30]   Public Trust says that it does not have sufficient information to assess the merits of Mrs Watene’s claim. Accordingly, it does not seek to argue that the claim should be barred on the basis that it is without merit.

[31]   Instead, Public Trust simply seeks to have the claim barred on the basis that no action has been taken to pursue the claim despite the fact it was first notified      in March 2011. Nearly 14 years have passed since that time without the claim being filed. In the meantime, Public Trust has not been able to finalise Teiri’s estate despite more than 14 years passing since probate was granted in October 2010.

[32]   The s 135 notice was served on Mrs Watene in August 2022. Not only was no claim brought within or following 90 days, no claim has been brought in the roughly two years and six months since the service of the notice. Not even the service of these proceedings on Mrs Watene a year ago in February 2024 has prompted her to file proceedings.

Mrs Watene’s position

[33]   In his written submissions, Mr Sharp, counsel for Mrs Watene, raised three points. The first two points, in which he took issue with the manner in which the s 135 notice was served on Mrs Watene and with the form of the notice, were not pursued in the hearing. I was advised that they are no longer relied on.

[34]   The third point in the written submissions is that Public Trust cannot rely on the s 135 notice because of waiver by estoppel.  The submission is essentially that  Public Trust led Mrs Watene to reasonably believe that the s 135 notice would not be

relied upon to seek orders under the section. Alternatively, it is submitted that the same circumstances provide a reasonable explanation as to why Mrs Watene has not pursued her claim despite the time that has passed.

[35]   It was also submitted that Mrs Watene has now filed her claim. It was contended that she has filed the claim in that she has detailed the nature of the claim in the affidavits that she has filed to oppose Public Trust’s  application under s 135  in these proceedings. In taking this approach, Mr Sharp relies on the following passage in Graham v Graham:5

[18]   While I consider that Lewis was dilatory in his response to the notice of claim, and his failure to file an application prior to 19 December 2013 is unexplained, he has now effectively brought his claim in the context of these proceedings, and has provided full affidavit evidence in support of his claim. That being so, and in light of the fact the claim is, on its face, reasonably arguable, I am satisfied that it is appropriate to extend the time for making the claim, and to go on and consider the substantive merits of that claim.

Decision

[36]   I do not think that Public Trust is barred from relying on s 135 due to waiver by estoppel. Nor do I think that the circumstances provide a reasonable explanation as to why Mrs Watene has not filed her claim.

[37]   To explain why I take this view, I will examine the steps that have occurred since Mrs Watene was served with the s 135 notice in August 2022.

[38]   The argument for Mrs Watene focusses on the fact that, since the s 135 notice was served, Public Trust made further (unsuccessful) attempts at resolution. As I have explained, on 19 October 2022 Public Trust emailed Mrs Watene, other members of Dolly’s family, and Heather, a deed of family arrangement which involved a transfer of the property to Carlene. Further, on 12 April 2023 Public Trust wrote to Carlene advising that once the repairs had been carried out, the property would be transferred to her, provided Mrs Watene removed the caveat.

5      Graham v Graham, above n 3, at [18].

[39]   However, in my view, by making these further attempts at resolution, Public Trust did not represent to Mrs Watene that it would not be relying on the s 135 notice.  Nor was it reasonable for her to interpret Public Trust’s actions in that way.   I say this for the following reasons.

[40]   The mere fact a party seeks to resolve a dispute does not mean that it does not intend to continue to rely on its legal rights if the attempt at resolution fails.

[41] Subsequent to the 19 October 2022 email, Public Trust sent Mrs Watene its 8 February 2023 letter carefully setting out the position that had been reached. The letter, which I described in full at [18]–[20] above, made it absolutely clear that Public Trust was continuing to rely on the s 135 notice.

[42]   The 12 April 2023 email was not sent to Mrs Watene. It was sent to Carlene. Moreover, it was consistent with the position that, as far as Public Trust was concerned, Mrs Watene was no longer pursuing her claim. It envisaged that Carlene would arrange for Mrs Watene to remove that caveat to allow the transfer to Carlene to occur.

[43]   Accordingly, there is nothing that Mrs Watene can reasonably point to as indicating that Public Trust did not intend to continue to rely on the s 135 notice.

[44]   As I have explained, these proceedings were served on Mrs Watene  around   a year ago. This should have completely dispelled any residual doubt that Public Trust was continuing to rely on the s 135 notice. Yet still Mrs Watene did not bring her claim.

[45]   I do not accept the submission that Mrs Watene  has now brought the claim  in the context of these proceedings. Section 135(2)(b) applies “if a legal proceeding is not, within 90 days of the service of the notice, commenced to enforce the claim”. In my view, merely referring to the claim in affidavits filed in these proceedings clearly does not constitute commencing legal proceedings to enforce the claim.

[46]   As I have  explained, Public Trust does not contest the merits of the claim.     I therefore proceed on the assumption that, had it been pursued, the claim would have had some prospect of success. Nevertheless, the conclusion that I have reached is that Public Trust’s application must succeed because the delay by Mrs Watene in bringing her claim has been so extreme. A line must be drawn somewhere, and Dolly’s estate’s claim is clearly on the wrong side of the line.

[47]   For these reasons, my conclusion is that I should make the orders sought     by Public Trust.

Caveat

[48]   Public Trust also seeks the removal of the caveat lodged by Mrs Watene on the property. Mrs Watene accepted in her written submissions that if an order is made against her under s 135 then there is no basis for the caveat to remain on the title and it must be removed. I agree that the caveat must be removed.

Results

[49]I grant Public Trust’s application:

(a)barring Mrs Watene’s claim on behalf of Dolly’s estate; and

(b)authorising Public Trust to administer Teiri’s estate without regard to Mrs Watene’s claim.

[50]I order that the caveat on the property lodged by Mrs Watene is removed.

[51]   Finally, I order Mrs Watene to pay costs to Public Trust. The costs should be for a category 2 proceeding. Time band B should apply in relation to each step in the proceeding. Mrs Watene must also pay reasonable disbursements.

Blanchard J