Rawson v Prescott
[2024] NZHC 1919
•15 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1616
[2024] NZHC 1919
BETWEEN ROY WILLIAM RAWSON
Plaintiff
AND
LUCINDA JANE PRESCOTT
Defendant
Hearing: 26 February 2024
Further submissions received on 14 and 28 March 2024
Appearances:
SJ Irons and SM Bolland for the Plaintiff T Bloy and R Hayes for the Defendant
Judgment:
15 July 2024
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 15 July 2024 at 10 am pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Evolution Lawyers, Auckland Young & Caulfield, Auckland Rubicon Chambers, Wellington
RAWSON v PRESCOTT [2024] NZHC 1919 [15 July 2024]
Introduction
[1] The applicant, Roy Rawson1 seeks summary judgment of his claim for orders granting vacant possession of a property in Browns Bay, Auckland. Roy is the registered proprietor of the property as trustee of a trust set up by his late brother, George Rawson, in 2004. George passed away unexpectedly in July 2022. Roy is also the sole executor of George’s estate.
[2] The defendant, Lucinda Prescott, is George’s widow and resides in the property. Lucinda opposes summary judgment on the basis that Roy is estopped from acting against George’s wishes as expressed in a 2013 memorandum of wishes relating to the trust. The 2013 memorandum says that on George’s death, George’s wish is that Lucinda is to be appointed beneficiary of the trust and will have the right to reside in the property for life or until she enters into a relationship in the nature of marriage. At that point George’s wish is that the property is transferred as to a one-half share for Lucinda’s two daughters, one-quarter share to Jacob Rawson (George’s informally adopted son) and one-quarter to Lucinda or her estate.
[3] Lucinda accepts that ordinarily a memorandum of wishes will not be binding on a trustee. However, she says that she and George entered into an agreement contracting out of the Property (Relationships) Act 1976 and requiring adherence to the 2013 memorandum. The contracting out agreement refers to the 2013 memorandum in a clause headed “Protection of Lucinda”. This clause provides that on his death George’s separate property (which is set out in schedule A to include all of the assets comprising the trust fund and any dwelling house):
shall be applied in such manner as shall benefit and protect Lucinda generally in accordance with the provisions for her protection set out in the attached Will dated 15th March 2013 and the Memorandum of Wishes dated 15th of March 2013.
[4] Lucinda says she has an arguable defence based on this clause that Roy is estopped from seeking that she vacate the Property. In addition, she says there are a
1 I refer to the parties and those involved in this application by their first names to avoid confusion. I intend no disrespect in doing so.
number of factual disputes which render Roy’s claim unsuitable for summary judgment.
[5] Lucinda further submits that she has a licence to be in the Property and that, by virtue of s 206(3) of the Property Law Act 2007 (PLA) and the code in pt 4, she was required to receive notice cancelling her licence to be in the Property. Lucinda says she has received no such notice.
[6] Roy submits the estoppel claim is fundamentally flawed because it ignores the fact that the property was settled in a trust long before George and Lucinda entered into a relationship and because other trustees were possessed of the trust at the time the contracting out agreement was entered into. Roy says only George signed the contracting out agreement so it is not binding on the trust as there were three trustees at the time who were required to act unanimously. Furthermore, Roy says that George had changed his wishes before he died as a result of Lucinda being unfaithful and that George’s wish was for all trust property to be left to Jacob.
[7] In terms of the factual disputes raised, Roy submits these are an attempt to frustrate the summary judgment application. In Roy’s submission, some do not require determination in order to decide this application, others are unable to be challenged and others are legal questions (including the PLA issue) that can be determined on the evidence before the Court.
Issues
[8]The issues for determination are therefore:
(a)Is there a reasonably arguable defence that Roy is estopped from seeking an order for vacant possession of the property?
(b)Are the factual disputes sufficient for summary judgment to be declined?
(c)Does Lucinda have an arguable defence under the PLA?
Background facts
[9] George set up the George Rawson Family Trust (Trust) in March 2004. George was the settlor, and the initial trustees were George, Roy, and KM Trustee Services Limited, an independent trustee company associated with George’s lawyer at the time, Kevin Martin. The Trust Deed records that the final beneficiaries of the Trust are Jacob and any children of George who were born or adopted before the vesting day.2 The discretionary beneficiaries are defined to include George, the final beneficiaries, children or grandchildren of the final beneficiaries and certain trust funds.
[10] The property in Browns Bay (Property) was acquired by the Trust in October 2004.
[11] Lucinda and George began a de facto relationship in October 2010, and were married in November 2013. They lived together at the Property for approximately 12 years and treated it as their family home.
[12] In April 2013, George and Lucinda entered into a contracting out agreement which included the following provisions (Contracting Out Agreement):
George’s Trust’s Residential Property
5Lucinda acknowledges that the residential property at 48 Redwing Street, Browns Bay ("the property") in which Lucinda and George are residing is owned by George's trust. Lucinda agrees that the fact that she and George are residing in the property will not in any circumstance create for her any beneficial interest in the property nor will she be entitled to any form of compensation notwithstanding that she may carry out work on the property and/or pay moneys to George by way of rent or board or mortgage contribution and that any interest George may have in the property shall at all times be George's separate property. Should George's trust at any time sell the property and purchase another ("replacement property"), the covenants given by Lucinda in this agreement shall apply equally to the replacement property.
2 I record that the copy of the Trust Deed in evidence does not appear to be complete as the copy finishes at cl 18.1 and has no execution page. I have not sought a complete copy prior to issuing this judgment as it does not affect the result I have reached.
Income
6All income of any description earned by either George and Lucinda (whether from employment or otherwise) shall be regarded as the sole and separate property of the earner.
Liabilities
7George and Lucinda shall be solely responsible for any liabilities which they incur in their own name. Liabilities incurred jointly shall be the joint and equal responsibility of George and Lucinda, irrespective of the purpose for which such liability may have been incurred. Neither George and Lucinda is authorised to incur liabilities on behalf of the other without the express prior written authority of the other.
Division on Death
8The parties agree that:
(a)In the event of the death of one of them, the survivor will not and will not be entitled to choose Option A under section 61 of the Act; and
(b)The survivor will either choose Option B or will not make any claim in which case, under section 68 of the Act, the survivor will be treated as having chosen Option B.
Independent Legal Advice
9The parties acknowledge that prior to the execution of this agreement they have each obtained independent legal advice regarding the terms, effects and implications of the agreement.
Protection of Lucinda
10In the event that George shall die before Lucinda and at the date of such death George and Lucinda are still living together in a relationship or marriage, George's separate property herein shall be applied in such manner as shall benefit and protect Lucinda generally in accordance with the provisions for her protection set out in the attached Will dated 15th of March 2013 and the Memorandum of Wishes dated 15th of March 2013.
[13] A copy of the 2013 Will is not included in evidence but a copy of the 2013 memorandum of wishes is (2013 Memorandum). The 2013 Memorandum included wishes that after George’s death: the trustees would appoint Lucinda to be a beneficiary of the Trust; Lucinda would have the right to reside in the Property until “a termination event” occurred; and the Property would then be transferred as to a half-share to Lucinda’s two daughters (if still alive and having attained the age of 25),
a quarter-share to Jacob and a quarter‑share to Lucinda or her estate. Clause 3 of the 2013 Memorandum defines a termination event as Lucinda’s death or Lucinda entering a relationship in the nature of marriage.
[14] In 2016, George signed a new will and new memorandum of wishes (the 2016 Will and the 2016 Memorandum respectively). The 2016 Will is George’s last will and appoints Roy as executor and trustee of his will together with George’s solicitor, Kevin Martin. The 2016 Will expressly provides that Roy and Kevin are to have the power of appointment and removal of trustees under the Trust. Under the 2016 Will George leaves 50 per cent of his cash in bank accounts and any proceeds of his life assurance policy to Lucinda and 50 per cent to Jacob. In addition, George leaves Jacob all his shares in his company, Plus 2 WP Ltd, as well as the money in his KiwiSaver account.
[15]George passed away unexpectedly on 10 July 2022.
[16] KM Trustee Services Ltd resigned as trustee on 31 August 2022, approximately a month after George died. Roy is now both the sole remaining executor of George’s estate and the sole remaining trustee of the Trust.3 Roy is bringing these proceedings in his capacity as trustee of the Trust but not as executor.
[17] Roy’s evidence is that shortly before George passed away he communicated to Roy, Jacob and Sharon Swaris (George’s accountant) that Lucinda had been unfaithful to him and as a result George had changed his wishes and wanted everything to go to Jacob.
[18] Lucinda accepts she was unfaithful in October 2021 but says that it was a single incident which she sincerely regrets. Lucinda says that she and George reconciled and that the incident did not cause her and George to separate but that they stayed living together as a married couple. Furthermore, Lucinda says:
I was never informed, given the impression, or suspected that George would remove me and my children from receiving any benefit of his estate or the
3 George’s final will records that Roy and Kevin will be executors. There is no evidence as to why Kevin is no longer an executor.
Trust, let alone be asked to leave our family home. I strongly believe that this was not George’s intentions right up until the time of his tragic passing.
[19]Roy disputes this which I discuss in further detail below.
[20] Roy submits further that the communications between Jacob and Lucinda following George’s death make it clear that Lucinda agreed to vacate the Property, that she took money from Jacob to do so and then refused to leave despite repeated requests which culminated in a trespass notice being served on Lucinda on 20 February 2023.
[21] Lucinda confirms in her affidavit that after George’s death she was initially willing to sell the Property and that she assisted in preparing the Property for sale. Lucinda confirms that she received $5,000 shortly after George’s death and then another $3,450 on 7 December 2022 to pay the bond for another property. Lucinda adds however she also made contributions to Plus 2 WP Ltd before Jacob came back from overseas and took over. Lucinda explains that she was initially willing to cooperate on the basis that her “reasonable needs were going to be met to a standard at least somewhat similar to what was provisioned … in the 2013 Memorandum”. Lucinda says however that it became clear that this was not going to be the case and so she remains in the Property as she says she has a right to do.
Preliminary issue regarding supplementary affidavits
[22] Before setting out the relevant legal principles, I record that two supplementary affidavits were filed following the reply affidavits for which leave is required.
[23] The first was a supplementary affidavit by Roy dated 26 February 2024. This was filed in response to Lucinda’s submissions (filed on 20 February 2024) which referred to the fact that Roy had failed to verify a number of allegations in the statement of claim contrary to the requirements for summary judgment, including as set out in r 12.4(5)(b) of the High Court Rules 2016. A supplementary affidavit was therefore filed by Roy verifying the allegations in the statement of claim with one qualification. This was in relation to the allegation in paragraph 8 of the statement of claim referring to discovery of Lucinda’s infidelity in the marital bed. Roy deposes in his supplementary affidavit that this was how it was conveyed to him but that he
accepts that Lucinda disputes this and that “we cannot prove the specifics of this allegation.” In addition, Roy deposes to his belief that Lucinda does not have a defence to his claim as is required when applying for summary judgment.4
[24] Lucinda’s counsel opposed leave being granted for Roy’s supplementary affidavit because of its late filing. However, Lucinda’s written submissions had invited an affidavit to be filed to correct deficiencies so I consider it is appropriate to grant leave.
[25] In addition, Lucinda filed a short affidavit in reply to Roy’s reply affidavit to “address certain factual inaccuracies”. Roy did not oppose leave and I confirm leave is granted for this affidavit as well.
Summary judgment principles
[26] Roy seeks vacant possession of the Property by way of summary judgment under r 12.2(1) of the High Court Rules. This rule provides that the court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[27] The principles applying to a plaintiff’s application for summary judgment are settled and were set out by the Court of Appeal in Krukziener v Hanover Finance Ltd.5 The ultimate question is whether there is a “real question to be tried” that warrants the time and expense of a trial.6
[28] The plaintiff has the overall onus. Where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.7
[29] The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is
4 High Court Rules, r 12.4(5)(b).
5 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26] to [27].
6 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
7 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or where it is inherently improbable.8
[30] The Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.9
Is there a reasonably arguable defence that Roy is estopped from seeking vacation of the Property?
[31] To establish that an estoppel defence is reasonably arguable, Lucinda must show an arguable case that the settled elements of equitable estoppel can be made out.10 The parties agreed that Lucinda would need to establish that it is arguable that:
(a)a belief or expectation by Lucinda has been created or encouraged by words or conduct by the Trust;
(b)to the extent an express representation is relied upon, it was clearly and unequivocally expressed;
(c)Lucinda reasonably relied to her detriment on the representation; and
(d)it would be unconscionable for the Trust to depart from the belief or expectation.
[32] I consider each of these elements below. I emphasise that as this is a summary judgment application Lucinda only has to establish that the elements are reasonably arguable.
8 Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC).
9 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
10 As confirmed by the Court of Appeal in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd
[2014] NZCA 407, [2014] 3 NZLR 567 at [44].
Is it reasonably arguable Lucinda had a belief or expectation encouraged by words or conduct of the Trust?
[33] Lucinda’s evidence is that she understood that the Contracting Out Agreement and 2013 Memorandum would provide her with the right to occupy the Property if George died and would provide her daughters with an interest in the Property if Lucinda died or remarried. On that basis Lucinda says she was happy to sign the Agreement.
[34] Lucinda submits that the 2013 Memorandum to the extent that it related to her was incorporated into the Contracting Out Agreement, which is in turn a binding agreement under s 21 of the Property (Relationships) Act. Counsel submits that this is a far more compelling statement of intention regarding Lucinda’s interest than the usual non-binding statement of wishes from a settlor of a trust.
[35] Roy submits in response that the Contracting Out Agreement is only between George and Lucinda and so cannot bind the Trust.
[36] However, Lucinda points to the fact that George’s signature on the Contracting Out Agreement was witnessed by Kevin Martin, the sole director and shareholder of one of the trustees, KM Trustee Services Ltd. Kevin was also the Trust’s lawyer at the time and certified on the Contracting Out Agreement that he had given George independent advice.
[37] Lucinda therefore says the contents of the 2013 Memorandum and its incorporation into the Contracting Out Agreement were therefore known and approved by at least two out of three trustees of the Trust, including the Trust’s lawyer.
[38] Roy says in his reply affidavit that all decisions of the trustees were unanimous and that “we listened to George as settlor and appointer and would not simply act as rubber stamps”. Roy continues:
2. … I can categorically state that:
(a)I was never consulted about binding the trust to give Lucinda a contractual right to trust property, and
(b)If I was, I would have disagreed with George on this.
3. Fundamentally, I do not believe George intended this to be binding on the trust. That is clear from the wording of the memorandum itself. If Lucinda wants to take issue with George’s estate she can, but, that should not interfere with trust property.
[39] Counsel for Roy emphasises that the 2013 Memorandum records at cl 8 that “these wishes expressed are not intended to be binding on my trustees” and that therefore there was no requirement on the trustees to act in accordance with those wishes even if they were incorporated into the Contracting Out Agreement.
[40] However, the Contracting Out Agreement is specific in recording an agreement to apply George’s separate property “in such manner as shall benefit and protect Lucinda generally and in accordance with the provisions for her protection set out in the attached Will dated 15 March 2013 and the Memorandum of Wishes dated 15 March 2013.”
[41]As I have said above, the 2013 Will is not in evidence.
[42] The 2013 Memorandum begins by saying that on George’s death Lucinda is to be appointed a beneficiary of the Trust before recording George’s wishes in terms of living in the Property and ownership shares.
[43] The interpretation of the Contracting Out Agreement is not straight forward. The independent trustee of the Trust, KM Trustee Services Ltd, resigned shortly after George passed away and Kevin Martin, KM Trustee Services Ltd’s sole director at the relevant times, has not provided evidence as to the circumstances in which the Contracting Out Agreement was signed. Nor are the Trust’s records in evidence.
[44]As Katz J observed in Ferrer-Aza v Nzone Race Management Ltd:11
… it is well established that factual matrix evidence is relevant (indeed sometimes critically so) to the contractual interpretation exercise. As a result, questions of contractual interpretation may not be able to be adequately addressed in a summary judgment context, particularly where there is either insufficient contextual evidence before the Court, or it is necessary to resolve disputes regarding the matrix of fact.
11 Ferrer-Aza v Nzone Race Management Ltd [2016] NZHC 885 at [44].
[45] In my view, it is not therefore appropriate to attempt to interpret the Contracting Out Agreement in the context of this summary judgment application.
[46] Furthermore, once the Contracting Out Agreement has been interpreted, the context in which the Agreement was entered into will also need to be properly explored to determine whether it amounted to a representation on behalf of the Trust. The question for the Court is not whether it is arguable that the Contracting Out Agreement was effective in binding the Trust but whether it is reasonably arguable the Contracting Out Agreement and the circumstances surrounding it, created a belief or expectation that the Trust would act in accordance with the Contracting Out Agreement.
[47] The belief or expectation can be created or encouraged by action, representation or omission to act so the fact that the Trust was not a party to the Contracting Out Agreement is not determinative.
[48] In these circumstances, I consider that it is reasonably arguable that Lucinda can establish the first element for estoppel.
To the extent an express representation is relied upon, is it reasonably arguable that it was clearly and unequivocally expressed?
[49] This second element is linked to the first element in this case as it depends on the interpretation of the Contracting Out Agreement and particularly the “Protection of Lucinda” clause at cl 10. Clause 10 appears to have been separately negotiated from the rest of the Agreement as it is in different font, on a separate page, and without a page number. The page is initialled by George and Lucinda and their respective lawyers, Kevin Martin for George and Ian Stevenson for Lucinda, so there is no question that it is part of the Contracting Out Agreement.12 Both lawyers certify on the execution page that they have given their respective clients independent advice.
[50] I accept that the Contracting Out Agreement and its incorporation of the 2013 Memorandum is not clearly drafted, but it appears to be arguable that the Contracting Out Agreement and the circumstances in which it was witnessed and certified may
12 This was not suggested by Roy.
have created a belief or expectation by Lucinda that the Trust would allow her to reside in the Property on George’s death and that the Property would be dealt with generally in accordance with the 2013 Memorandum.
[51] This is to be considered from Lucinda’s rather than the Trust’s perspective, as the Trust’s intention is of secondary importance.13
[52] Questions arise as to what “apply George’s separate property” means. Roy submits that the Property could not have been George’s separate property because it was the property of the Trust. “Separate property” is defined in cl 3 of the Contracting Out Agreement as the property of George in schedule A. Schedule A then includes “George’s interest in the [Trust] including all of the assets comprising the trust fund of the [Trust] including but not limited to any dwelling house or real estate investment”.
[53] There are clearly issues as to whether the representation relied on was clearly and unequivocally expressed but, as set out above in Ferrer-Aza, summary judgment is not usually the appropriate forum for interpretation exercises. That is particularly the case here where the 2013 Will is not in evidence yet is referred to in the Contracting Out Agreement, and where all of the parties involved have not given evidence or been cross‑examined.
[54] In these circumstances, I consider that it is reasonably arguable that this second element is satisfied as well.
Is it arguable that Lucinda reasonably relied to her detriment on the representation?
[55] In relation to detriment, Lucinda submits it is obvious that she will suffer detriment as she is being forced to defend a proceeding that seeks to evict her from the only home she has known for more than 12 years and that she also stands to lose an interest that is potentially worth $1,140,000. This figure is based on an actuary’s report annexed to Lucinda’s evidence. This values her interest as owner in 25 per cent of the
13 James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 19.2.4(2).
Property and her life interest in the remaining 75 per cent of the Property as referred to in the 2013 Memorandum.
[56] Roy submits there is a lack of evidence of detriment because, in any event, any interest could only be in terms of George’s estate and not the Trust. In relation to the requirement that Lucinda reasonably relied on the representation, Roy says any reliance would have been unreasonable because the 2013 Memorandum expressly states that it is non-binding and because of the plain reality of trust ownership. Furthermore, Roy says that the 2013 Memorandum includes certain requirements for Lucinda to comply with whilst living in the Property so she could still be evicted in any event — the right to live there is not open-ended.
[57] In my view the question of detriment is a matter that again needs to be considered in the context of a full hearing, not on a summary judgment basis. The Contracting Out Agreement includes an agreement that Lucinda will not be entitled to any form of compensation notwithstanding that she may carry out work on the Property and/or pay moneys to George by way of rent or board or mortgage contribution. Lucinda also agreed not to choose Option A under s 61 of the Property (Relationships) Act on George’s death.
[58] Lucinda’s evidence is that she was happy to sign the Contracting Out Agreement because she understood the Agreement would provide her with the right to occupy the Property if George died and for her daughters to have an interest if Lucinda died or remarried. Lucinda therefore gave away significant rights when entering into the Contracting Out Agreement.
[59] Roy submits that is not the case because any rights would only be against the estate and not the Trust, so there can be no detriment. But if Lucinda’s belief or expectation was that she would be made a beneficiary under the Trust and be treated generally in accordance with the 2013 Memorandum then it is no answer to say there is no detriment because any interest could only be in the estate. Different arrangements may have been made if Lucinda understood that she would not generally be treated in accordance with the 2013 Memorandum as Lucinda submits was agreed.
[60] Furthermore, the fact that there were certain requirements for Lucinda to continue living in the Property does not mean there is no detriment — if Lucinda complied with those requirements she would have the right to continue living there so this argument does not take Roy very far. This submission would only be relevant if Lucinda could not comply with those requirements. The evidence regarding damage to the house by Lucinda’s dog is disputed and is unable to be determined on a summary judgment basis.
[61] In terms of reasonable reliance, two lawyers witnessed the Agreement and certified that they had provided independent advice to George and Lucinda. In these circumstances and where there is no evidence providing a reason why Lucinda should not have relied on any representation, I consider that it is reasonably arguable that Lucinda reasonably relied to her detriment on the representation.
Would it be unconscionable for Roy to depart from that belief or expectation?
[62] Lucinda says it would be unconscionable for Roy to depart from the representation set out in the 2013 Memorandum because:
(a)The Agreement is contractually enforceable against Roy in his capacity as executor of George’s estate and by refusing to perform the 2013 Memorandum as trustee, Roy is in breach of contract as executor.
(b)Roy, as sole trustee of the Trust, has the power to facilitate the performance of the Agreement by George’s estate, including the terms of the 2013 Memorandum, so as to avoid a breach of contract by the estate.
(c)By refusing to perform the 2013 Memorandum, Roy is allowing and taking advantage of a breach of contract caused by himself as executor, which is unconscionable.
(d)Roy’s position ignores George’s intentions as set out in cl 10 of the Agreement (the “Protection of Lucinda” clause).
(e)Lucinda says, further, that the wording of cl 10 in the Agreement gives rise to an arguable inference that George intended and may have believed, that:
(i)cl 10 of the Agreement would bind the trustees if he died while in a relationship with Lucinda; and
(ii)save for the situation in cl 10, the 2013 Memorandum would be otherwise non-binding on the trustees.
(f)Furthermore, Lucinda says Roy’s position ignores the reconciliation between George and Lucinda after the affair and it would be unconscionable for Roy to assert that the act of infidelity, in and of itself, justifies his departure from George’s wishes in the 2013 Memorandum.
[63] Unconscionability is difficult to assess in a summary judgment context especially where all the relevant parties have not given evidence and there are missing documents. The parties also dispute a number of factual issues, some of which are relevant to the question of unconscionability, particularly the dispute in relation to whether George changed his wishes before he died.
[64] On this issue, Roy submits that George told him, Sharon Swaris (George’s accountant) and Jacob that he intended to change his wishes. However consideration of George and Jacob’s evidence and Sharon’s letter reveals that this is less than clear. Roy gives evidence that George conveyed this change in wishes to him but does not provide any details including when that conversation occurred.
[65] Contrary to Roy’s submission, Jacob does not say that George told Jacob that he wanted to change his will. Jacob’s evidence is that Lucinda confided in him rather than George. Jacob does say that George had caught Lucinda cheating on him in their bed, but he does not say how he knew that.
[66] Sharon Swaris records in a letter that George had informed her in June 2022 that he intended to change his will and Trust, including replacing trustees and transferring to new lawyers, and that he had asked Sharon to be a professional trustee on 9 June 2022. Sharon says the reason for the changes was that Lucinda had an affair with someone George knew. Sharon continues that George was extremely upset that this occurred in the family home, explaining that George’s home was his sanctuary. Sharon says George wanted to update his will and Trust to reflect that all of his assets, including the business and family home, would only be passed to Jacob. Again, this statement is not particularly detailed and it is only recorded in a letter annexed to Roy’s affidavit and not in an affidavit sworn by Sharon.
[67] As discussed above, Roy, in his supplementary affidavit (filed to verify the statement of claim), concedes he does not know that the infidelity occurred in the marital bed but says that was how it was conveyed to him. Roy does not say who conveyed it to him in that way or provide any further details.
[68] Lucinda disputes that she was unfaithful in the marital bed or home or with someone George knew. Importantly, Lucinda strongly disputes that George changed his mind about the arrangements on his death. There is no contemporaneous documentary evidence either way.
[69] In terms of unconscionability, Roy justifies his actions in seeking vacant possession of the Property on the basis that George had changed his wishes and wanted Jacob to inherit everything. But whether George changed his wishes is disputed and is a matter that needs to be considered in a full hearing.
[70] I consider therefore that it is reasonably arguable that if a representation by the Trust is found to have arisen on which Lucinda reasonably relied to her detriment, that it would be unconscionable for the Trust to resile from that.
Do factual disputes render the claim unsuitable for summary judgment?
[71] In addition, Lucinda submits that there are clear and material disputes of fact that are not appropriate for summary disposition. These disputes concern:
(a)the nature of Lucinda and George’s relationship;
(b)details concerning Lucinda’s infidelity;
(c)George’s relationship with Lucinda’s children;
(d)George’s change of wishes;
(e)the trustees’ endorsement of the Contracting Out Agreement;
(f)the nature of the occupation right; and
(g)the nature and quantum of loss.
[72] Roy submits that the disputes set out in (a) to (c) relating to the nature of the relationship, infidelity, and George’s relationship with the children do not require determination for summary judgment.
[73] In relation to (d), George’s late change of wishes, Roy says that the evidence given by Roy as to George’s intention to change his wishes and the evidence of Sharon Swaris is unable to be challenged by Lucinda because she was not party to those conversations.
[74] Lucinda accepts that she was not party to those conversations but says that she should certainly have the right to cross-examine Roy and Sharon to test the accuracy of their recollections. This is particularly the case where Sharon has not filed an affidavit but simply provides a letter annexed to Roy’s affidavit.
[75] I agree that just because Lucinda was not a party to those conversations does not mean the evidence cannot be challenged by way of cross-examination. The evidence on this issue is also not sufficiently detailed as discussed above.
[76] Lucinda further raises a concern in her evidence that Roy started telling people that Lucinda had killed George.
[77] In his reply evidence, Roy disputes this but at the same time accepts that he asked questions and spoke to two of George’s close friends in confidence and that he raised his suspicions with the police. Roy says his suspicions arose as George was in the process of changing his will to remove reference to Lucinda and was then found dead 10 days later at the bottom of his stairs. Roy goes on to record that “this suspicion” has no bearing whatsoever on his decision as trustee to favour Jacob and that he is simply doing what George wanted.
[78] It is arguable that Lucinda may be able to seek a review of Roy’s decisions as trustee to defend any application for vacant possession. Although not yet appointed a beneficiary, the 2013 and 2016 Memoranda of Wishes may mean Lucinda is a discretionary beneficiary.14 The Trusts Act 2019 defines beneficiary to include discretionary beneficiaries.15 In that case Lucinda would be able to seek review under ss 126 and 127 of the Trusts Act. Even if not a beneficiary, Lucinda may have a right to seek review of Roy’s decisions as trustee pursuant to the Court’s inherent jurisdiction.16
[79] I have discussed above the evidence in relation to whether George changed his wishes prior to his death. Although a trustee is not bound by a memorandum of wishes, they are relevant considerations for trustees in the exercise of their discretion. As the Court held in Chambers v SR Hamilton Corporate Trustee Ltd & Ors:17
[36] Settlors are entitled to express their wishes for the benefit of trustees, and trustees are entitled to take them into account. They can be important guidance to them in the exercise of discretionary powers. However trustees, whatever a settlor’s wishes, must conscientiously apply their independent discretion in exercising their powers. Wishes can only be taken into account if they are not inconsistent with the purposes of the trust as appear from its written terms. Trustees should not blindly obey all settlor instructions. It is necessary for trustees to read and understand a memorandum of guidance to discern the settlor’s wishes, and then with those wishes in mind make an independent assessment of the appropriate course of action, taking into account not just the memoranda, but all relevant factors.
(footnotes omitted)
14 Trusts Act 2019, s 9.
15 Section 9.
16 Section 126(4).
17 Chambers v SR Hamilton Corporate Trustee Ltd [2017] NZCA 13, [2017] NZAR 882.
[80] Therefore, even if estoppel is not available, I do not consider that summary judgment ought to be granted as a review of Roy’s decisions as trustee may arguably provide a defence to these summary judgment on the basis that Roy, as trustee, failed to take into account relevant consideration (or took into account irrelevant considerations).
[81]In relation to the remaining factual disputes, Roy submits that the disputes at
(e) and (f) above, endorsement of the Contracting Out Agreement by the Trustees and the nature of Lucinda’s occupation right, are matters of law rather than fact and that the Court is in as good a position on summary judgment as it will be after a full trial.
[82] I do not accept this submission because there has been no discovery of trust records or documents and no evidence from Kevin Martin, the Trust’s lawyer, on the context in which the Contracting Out Agreement was entered into or the terms of the licence on which George and Lucinda resided in the Property.
[83] Finally in respect of (g), the nature and quantum of loss, Roy says the Trust is entitled to damages but since the claim for summary judgment is primarily focused on vacant possession the losses arising are a matter for another day (with the hope that quantification will be able to be resolved between the parties).
[84] Lucinda says that she has not received any quantification of loss to date and therefore disputes any quantification claimed. In addition, some of the loss claimed appears to be loss suffered by Jacob yet he is not a party to the proceeding. Lucinda further submits that as a hearing is going to be necessary in any event, the Court ought to exercise its discretion not to grant summary judgment.
[85] In my view it is a relevant factor that granting summary judgment will not wholly determine the dispute. The factual disputes therefore either provide an arguable defence to summary judgment or support it being declined.
Does Lucinda have an arguable defence under the PLA?
[86]Finally, for completeness, I consider Lucinda’s defence based on the PLA.
[87] As set out in the introduction, Lucinda relies on s 206(3) of the PLA to submit that Roy is unable to seek vacant possession by summary judgment because he has not complied with the code for cancelling leases and licences in pt 4 of the PLA.
[88] Roy submits that Lucinda’s licence to reside in the Property is a bare licence and so does not attract the protections of pt 6 of the PLA.
[89] Because of the view I have reached above, I do not need to determine this question but I record that prior to completion of discovery by the Trust (or at least evidence of the Trust’s records) I am not in a position to determine whether it was a bare or contractual licence.
Result
[90]The plaintiff’s application for summary judgment is declined.
Costs
[91]Costs on the summary judgment application are reserved in accordance with
NZI Bank Ltd v Philpott.18
Associate Judge Sussock
18 NZI Bank v Philpott [1990] 2 NZLR 403 (CA) at 407.
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