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Reid v Castleton-Reid

Reid v Castleton-Reid

Case [2019] NZCA 372 20 August 2019

Resulting Trust

Presumption of Advancement

Family Law

Property Law

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA266/2018
[2019] NZCA 372

BETWEEN	ROSS RONAYNE REID Appellant
AND	BARRY ROSS LAURENCE CASTLETON-REID Respondent

Hearing:	2 July 2019
Court:	Courtney, Venning and Dunningham JJ
Counsel:	S L Abdale for Appellant M J Matthew for Respondent
Judgment:	20 August 2019 at 10 am

JUDGMENT OF THE COURT

AThe appeal is allowed and the judgment and costs order in Mr Castleton‑Reid’s favour is set aside.
BThe case is remitted to the High Court for a hearing to determine the parties’ respective interests in the balance of the money from the Trading Account.
CThe respondent is to pay costs for a standard appeal on a Band A basis with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

The appellant, Ross Ronayne Reid, and the respondent, Barry Ross Laurence Castleton-Reid, are father and son.
In 2009 Mr Reid deposited $1,700,000 into a share trading account in Mr Castleton-Reid’s name. Mr Reid then traded the account until May 2010 when Mr Castleton-Reid closed it and terminated his access to it.
Mr Reid brought proceedings in the High Court seeking to recover the money from the share trading account.
In a judgment delivered on 24 April 2018 Gordon J dismissed his claim.[1] The Judge held that Mr Reid had gifted the $1,700,000 to Mr Castleton-Reid.

Background

[1]Reid v Castleton-Reid [2018] NZHC 782.

Mr Reid is now 97 years old. He has had mixed success in his financial endeavours over the course of his life. He and his brother Emslie established a successful building business, Reidbuilt Homes Ltd, which they sold to Fletchers in 1984 for $1 million.
Mr Reid’s business ventures since then have not been as successful. More recently he has been bankrupted twice, in August 1999 and May 2003. He says that he now has no assets. His sole income is his superannuation and he has two substantial debts: the balance of a Customs fine of approximately $25,000 and a credit card debt.
Following the sale of the building business Mr Reid and his brother established a family trust, the Hallmark Trust in 1986. The beneficiaries were the brothers’ wives, children and grandchildren. Mr Reid was neither a trustee nor a beneficiary of the Hallmark Trust.
In June 2007 a capital distribution of $1,806,039 was made to Mr Reid’s wife, Esme, from the Trust.[2] The money ultimately found its way into a succession of joint accounts in Mr and Mrs Reid’s names. Mr and Mrs Reid spent the money jointly and in ways for the benefit of each of them. At the time of Mrs Reid’s death on 22 November 2018, there was $1,750,000 on term deposit with Kiwibank in their joint names. On Mrs Reid’s death, the money in the account became Mr Reid’s by right of survivorship. None of it formed part of Mrs Reid’s estate.[3]
[2]At [59].
[3]At [66].
At the time of Mrs Reid’s death, she and Mr Reid…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Reid v Castleton-Reid

Details

AGLC: Reid v Castleton-Reid [2019] NZCA 372
Case: [2019] NZCA 372
Decision Date: 20 August 2019 at 10 am

CaseChat Overview and Summary

In Reid v Castleton-Reid, the Court of Appeal of New Zealand considered the appeal by Ross Ronayne Reid against the decision of Gordon J in the High Court, which dismissed his claim to recover $1,700,000 deposited in a share trading account in the name of his son, Barry Ross Laurence Castleton-Reid. The primary issue on appeal was whether the High Court judge was wrong in law and fact in determining that Mr Reid had gifted the $1,700,000 to Mr Castleton-Reid. The Court accepted the advantage Gordon J had in seeing and assessing the witnesses and the Judge was entitled to make the adverse credibility findings she made against Mr Reid. The real issue, however, was not whether Mr Reid could establish the parties had made some sort of nominee agreement, but whether Mr Castleton-Reid's evidence, in the context of the surrounding background facts, disclosed a sufficient expression of intention by Mr Reid to gift $1,700,000 of his money to his son at the time he paid the money into the Trading Account in his name. Absent a gift or application of the presumption of advancement Mr Castleton-Reid would have held the money on resulting trust for Mr Reid. While Mr Castleton-Reid’s evidence on its own and putting to one side Mr Reid’s evidence about a nominee agreement, the evidence concerning Mr Reid’s intention to gift the $1,700,000 was, rather than overwhelming as Mr Matthew submitted, ambiguous at best. There is no mention of it being a gift. Mr Castleton-Reid does not suggest his father said he was going to gift the $1,700,000 to him. Rather, at its highest, he refers to an inheritance. An inheritance is something that Mr Castleton-Reid could expect to receive in due course, on Mr Reid’s death. An inheritance is not an inter vivos gift. Mr Castleton-Reid’s evidence of the conversation and the wording he attributes to Mr Reid to establish the gift (“an inheritance”, “my inheritance”) is more consistent with Mr Reid speaking of property (the $1,700,000), beneficially owned by Mr Reid, which ultimately would become Mr Castleton-Reid’s inheritance, that is on the death of Mr Reid, rather than a present intention to gift the money. Another explanation for the reference to inheritance might be that Mr Reid believed at least half (or more) of the funds from the joint account were Mr Castleton-Reid’s inheritance as belonging to Mrs Reid’s estate. It seems that for some time Mr Reid believed the funds in the joint Kiwibank account were at least partly his wife’s and that he held one half for her estate. The fact remains, it was not estate money, it was Mr Reid’s own money. There is a related point. When a donor intends to make a gift, they intend to part with property that he or she believes belongs to them. If Mr Reid believed the money did belong to Mrs Reid’s estate, and not to him, then he could not have intended to gift it to Mr Castleton-Reid. The contemporaneous documentation does not support a finding that the $1,700,000 was a gift. The opening of the Trading Account in Mr Castleton-Reid’s name is not sufficient. It says nothing about the parties’ intention. The unrestricted authority given to Mr Reid to trade shares, to withdraw moneys from the Trading Account and also Mr Lock’s evidence of his dealings with Mr Reid regarding the Trading Account’s establishment are consistent with Mr Reid retaining control of the funds. Mr Reid controlled all the investments through the Trading Account. He instructed Craigs to use the $1,700,000 to purchase Australian Macquarie shares. That was against Mr Lock’s advice. Mr Castleton-Reid permitted his father sole control over the investments and withdrawals from the Trading Account. He never involved himself with decisions regarding the investments. Mr Castleton-Reid’s only actions in relation to the Trading Account were to open it, and then, in May 2010, to close it. Mr Castleton-Reid’s suggestion that he agreed to allow his father to trade through the Trading Account because his father might otherwise be bored is difficult to understand. His acknowledgement he was not relying on Craigs’ advice and was permitting his father to solely control the share trading is also at odds with his own note on the account authorisation form that he was a conservative investor. A conservative investor dealing with his own money would be unlikely to have allowed Mr Reid to trade against the broker’s advice, particularly as Mr Castleton-Reid would have been aware of Mr Reid’s recent bankruptcies. A related point is that Mr Castleton-Reid did not know what the amount of the gift was. Mr Castleton-Reid never asked how much Mr Reid was giving him. The amount was not discussed. Again, surely if Mr Castleton-Reid was receiving a gift as he says, he would have been interested to know the amount. Next, no satisfactory explanation has been advanced why Mr Reid would gift his son all his assets. The $1,700,000 represented the only money available to Mr Reid. He was not a beneficiary under his wife’s will. He had signed an acknowledgement on 1 April 2009 that he would not pursue a claim against her estate. Why would he gift his son $1,700,000 and at the same time ask to borrow money from his son to buy two apartments and, more curiously, to pay his outstanding accounts? It simply does not make any sense. Mr Castleton-Reid’s personal circumstances were such that he did not need the money. The property at 21/55 Verbena Road had a rating valuation of $1,040,000. The Castle had a valuation of $1,775,000. Mr Castleton-Reid also received a classic car under the will and the shares in Air NZ and Auckland Airport valued at over $477,000, quite apart from his own assets. Mr Castleton-Reid also owned had his own home and a rental property his mother had given him before she died. Next, Mr Castleton-Reid received copies of the statements for the Trading Account which disclosed that Mr Reid had withdrawn approximately $578,667 from the account between April 2009 until May 2010. The moneys withdrawn were of various different amounts. Mr Castleton-Reid apparently took no issue with the substantial deductions from the account that Mr Reid had applied to his own purposes. His answer to the Judge’s question about this issue, that he thought the withdrawals were consistent with his father’s proposal he would buy two apartments and pay normal expenses is unconvincing. When challenged during cross-examination why if, as he said the funds were his, he would expect Mr Reid to seek his permission to withdraw large amounts in excess of $10

Orders