Ryan v Lobb

[2023] NZHC 689

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1591

[2023] NZHC 689

BETWEEN

VERENA COLLEEN RYAN

Plaintiff

AND

STUART JAMES LOBB

First Defendant

LOCKHART TRUSTEE SERVICES NO.56 LIMITED

Second Defendant

Hearing:

13 and 14 June, 4 October and 7 November 2022

Counsel:

W M Patterson and L W Dixon for Plaintiff

P A Fuscic and K L Thompson for First Defendant (on 13 and 14 June 2022)

First Defendant in Person on 4 October and 7 November 2022 A Low for Second Defendant (excused bar a brief attendance on 4 October 2022)

Judgment:

6 April 2023

JUDGMENT OF HINTON J

This judgment was delivered by me on 6 April 2023 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:

Patterson Hopkins (Auckland) for Plaintiff

McVeagh Fleming (Auckland) for First Defendant KP Legal (Auckland) for Second Defendant

RYAN v LOBB [2023] NZHC 689 [6 April 2023]

TABLE OF CONTENTS

Factual background  [10]

Changes in trusteeship  [43]
Lothbury Management Limited (LML)  [45]
Post-separation  [49]

Procedural history  [55]

Other proceedings between the parties  [66]

Procedural and other issues raised by Mr Lobb  [70]

Clause 2.5 of the trust deed  [79]

The parties’ positions on clause 2.5(3)  [80]

Extent of jurisdiction

Pleadings  [86]

Ability of Court to exercise the trustees’ powers  [99]

Relevant legal principles on construction of trust deeds  [110]

Interpretation and application of clause 2.5(3)

Contribution of assets/gifting by the settlors  [113]

Renovation work  [140]

Other claimed contributions by Mr Lobb

Mr Lobb’s work on Orakei Road  [145]
Payment of outgoings post-separation  [150]
Contributions by third parties  [152]
Negative contributions  [153]

Claim to resulting trust in favour of Mr Lobb’s father  [154]

Liabilities  [165]

Conclusion  [167]

Orders  [176]

Costs  [181]

APPENDIX A APPENDIX B APPENDIX C

[1]        This case involves interpretation and application of a resettlement clause in a family trust deed.

[2]        The parties were married in January 2000 and separated in October 2016. The bulk of their property had been transferred to a trust settled in 2005 (the Lothbury Trust).

[3]        The trust deed made express provision for the breakdown of their relationship. Clause 2.5(3) provided that:

If the Settlors separate (or their marriage is legally dissolved), either Settlor may give the Trustees written notice requiring them to resettle (on new Trusts acceptable to the Settlor who has given notice) such part of the Trust assets as the Trustees consider fair and equitable having regard to the respective contributions of the Settlors (whether by gifting, inheritance or otherwise) to the total assets of the Trust.

[4]        In September 2017, Ms Ryan gave notice to the trustees under cl 2.5(3) requiring resettlement of half of the trust assets on a new trust she had settled (the Verena Ryan Family Trust). That was strongly opposed by Mr Lobb.

[5]        In October 2017, Ms Ryan requested arbitration in accordance with the terms of the trust deed. Mr Lobb rejected this request, asking instead that the parties attend mediation.

[6]        In June 2019, Ms Ryan again requested that Mr Lobb and the other trustees attend arbitration. That was rejected.

[7]        In August 2019 Ms Ryan filed this proceeding seeking a declaration as to the construction of cl 2.5(3).

[8]        Since then, there have been a number of interlocutory applications beginning with unsuccessful applications to dismiss and for leave to appeal brought by Mr Lobb. The procedural history is detailed later.

[9]        This hearing was set down for two days which proved to be insufficient. Counsel then estimated that a further day was required. That also was insufficient and ultimately the hearing occupied four days.

Factual background

[10]      Ms Ryan and Mr Lobb began a de facto relationship in London in 1997 or 1998. They were engaged in August 1998 and married on 8 January 2000. They have two children, a son born in January 2001 and a daughter born in June 2002. They separated in October 2016 and the marriage was dissolved in August 2019.

[11]      Various properties were purchased in the United Kingdom and in New Zealand during the parties’ relationship, all of which were sold well before separation, bar a property at 23 Orakei Road, Auckland. A number of these properties were jointly owned by the parties, including Orakei Road.

[12]      The Orakei Road property was purchased at auction in May 2003 for $760,000. The purchase price was funded by a Westpac mortgage of $550,000 and cash of

$210,000. As is standard with joint ownership, the parties were jointly and severally liable under the mortgage. It is agreed that the cash component of the purchase price came largely from the sale proceeds of a jointly owned property in Wolseley Avenue in London.

[13]      On 17 June 2005 the Lothbury Trust was settled by the parties and the Orakei Road property was transferred by them to the trust. Mr Lobb, Ms Ryan and the Public Trust were trustees. The discretionary beneficiaries were and remain the parties, their children, remoter issue and any spouse or de facto partner of such persons. The term of the trust is 80 years, though the trustees have power to bring forward the vesting date.

[14]      Prior to establishment of the Lothbury Trust, on 7 March 2005 Public Trust prepared a document entitled “Details for Family Trust Proposal”. It records the customers’ motivations as “asset protection, education purposes and FPA/TPA/estate claims”. The document sets out a summary of the intended trust provisions and at

item  10  records: “Joint property    →   Trust,  no property agreement.    No blended family”.

[15]      Public Trust sent a reporting letter on 7 March 2005 attaching a family trust structure, details of the property to be transferred and a fee estimate.

[16]      The Public Trust proposal was accepted by Mr Lobb and Ms Ryan on 4 May 2005. An estimated market valuation of Orakei Road had been obtained at $1.1m.

[17]      On 6 May 2005 Public Trust prepared a diary note recording that the parties had made the approach in March to discuss family trusts, wills and enduring powers of attorney and that they had decided to go ahead with establishing a family trust. The note records the parties’ assets as being Orakei Road valued at $1.1m, a rental property in Auckland valued at approximately $750,000 and an apartment in London valued at approximately NZ$1m. It further records that the parties are seeking to transfer their family home into a trust but have decided to leave the other properties outside of the trust. They are likely to be selling both in the near future and using the proceeds to purchase additional properties or assets which may be placed into the trust at that stage. The rental property and the apartment were subsequently sold. The only asset of any value still in existence at the time of separation was the Orakei Road property.

[18]The 6 May 2005 Public Trust note also stated:

Mr Lobb is an accountant by trade and the primary reason for the Lobbs placing their home in trust is for asset protection. They also wish to have greater flexibility with the distribution of their assets upon their eventual deaths.

[19]      On 17 June 2005 the parties and Public Trust signed the trust deed. The following documents were also signed on 17 June:

(a)A letter of wishes stating how the parties wished the family trust to be administered, including: “It is our intention that the family home (or substitute dwelling) will be retained to provide a home for us. Any cash in the trust that is available for investment should be invested in

managed funds such as a Public Trust group investment fund or invested in term deposits or similar investments”;

(b)A deed of sale recording the sale of Orakei Road to the trustees for

$1.1m;

(c)Deeds of acknowledgement of debt acknowledging the trustees were indebted to the parties for $550,000 each;

(d)Deeds of forgiveness of debt signed by the parties forgiving $27,000 each;

(e)Gift statements to IRD;

(f)A trustee resolution addressing all of the above. The resolution also records permission to the parties “as Primary Discretionary Beneficiaries with their children to reside at Orakei Road rent free but on the basis they meet all outgoings including mortgage principal and interest payments, rates, insurance and maintenance”; and

(g)Enduring powers of attorney.

[20]      Unusually, the Westpac mortgage was not assumed by the trustees which would have materially reduced the debts owed to the parties. Instead, the parties remained principally liable for the mortgage in their personal capacities and the loan was guaranteed by the trustees and still secured against Orakei Road.

[21]      Renovations were made to Orakei Road in 2005 and 2006 (possibly running into 2007 and early 2008).

[22]      Public Trust sent an email to Mr Lobb on 12 August 2005 recording that at the last trustee meeting there was discussion and a plan produced showing intended alterations to Orakei Road over the next year or two. The Public Trust email recorded these would add to the capital value and affect debt owed to the settlors and consequentially the amount to be gifted. Public Trust also prepared a file note

recording the intended work, that the cost would add value to the home, and it would affect the debt the trust owed to the parties. It noted that a trustee resolution would be required.

[23]      On 1 October 2005 Mr Lobb sent an email to Public Trust advising work had commenced and he was gathering a file of invoices to support the construction costs as requested.

[24]      On 23 December 2005 the parties transferred some antique furniture to the trustees for $55,200. This sale was recorded in a deed of sale and again the consideration took the form of a debt back recorded in amended deeds of acknowledgement of debt acknowledging the trustees were indebted to the parties for

$27,600 each. A trustee resolution was signed at the same time.

[25]      On 14 March 2006 the parties transferred jewellery and watches to the trustees for $33,325, including Ms Ryan’s engagement ring and Mr Lobb’s Rolex watch. These transactions were again recorded in a deed of sale and the consideration again took the form of a debt back recorded in deeds of acknowledgement in favour of the parties as to one half each of the total sale price, namely $16,662.50 each.

[26]      On 19 June 2006 Public Trust sent a reporting letter to the parties and enclosed financial statements as at 16 June 2006. The statements record the above assets and the debts owed to the parties. The reporting letter set out a summary of the duties and responsibilities of trustees.

[27]      On 29 June 2006 Public Trust sent an email to the parties prior to a meeting scheduled for the next day reminding them the alterations needed to be discussed. Public Trust asked that they bring along a breakdown of what had been spent on renovations to date and asked for copies of receipts.

[28]      A schedule dated 30 June 2006 which appears to  have been  prepared  by  Mr Lobb sets out the cost of renovations at $570,000 with a breakdown of the various cost items. $70,000 of the cost was stated to be for repairs and maintenance and not included in the amount to be added to the debts owed to the parties. Exclusion of

maintenance costs flows from the trustee resolution of 17 June 2005 stating that the parties were liable for all outgoings, including maintenance.

[29]      On 30 June 2006 further deeds of forgiveness of debt were signed by the parties.

[30]      On 14 November 2006 the trustees signed a resolution ratifying major renovations to Orakei Road at a cost of $500,000 and resolving to accept further loans of $250,000 each from the parties, to be added to the existing debt. These additional debts were recorded in the trust financial statements for the year ended 16 June 2007 and also recorded in the deeds of partial forgiveness of debt dated 7 August 2007.

[31]      Between 3 November 2005 and 9 November 2006, the joint borrowings of the parties from Westpac  increased by just over $400,000.  As funds were moved by   Mr Lobb through various joint accounts, it is difficult to trace money flows but it can be reasonably assumed there was a significant increase in bank debt to fund renovation work.

[32]      On 22 June 2007 Public Trust sent financial statements for the year ended   16 June 2007 to the parties. The letter referred to the need for an annual meeting and matters that the trustees needed to cover.

[33]      On 7 August 2007 two further deeds of forgiveness of debt were signed by the parties.

[34]      On 8 August 2008 Public Trust executed two further deeds of partial forgiveness of debt on behalf of each party, doing so as their attorney pursuant to the enduring powers of attorney dated 17 June 2005 noted above.

[35]      On 24 November 2009 Public Trust sent the parties financial statements for the year ended 31 March 2009 and revised financial statements for the 2008 year (as a result of moving to a 31 March balance date). These statements show rental income and property costs, including mortgage interest. (It seems Ms Ryan and the children moved back to London in late 2007 and Orakei Road was rented out.)

[36]      On 21 December 2009 the parties signed two further deeds of partial forgiveness of debt.

[37]      On 12 October 2010 Public Trust sent the parties financial statements for the year ended 31 March 2010 and the trust’s tax return for review and signature.

[38]      On 13 July 2011 Public Trust sent the financial statements and tax returns for the year ended 31 March 2011 to the parties for review and signature. Those statements record that the debts had increased to $755,216 each.

[39]      Up until 1 October 2011 gifts of over $27,000 attracted gift duty. On 1 October 2011 gift duty was abolished and on 17 October 2011 the parties’ loans to the trust of

$755,216 each were fully forgiven by them by deeds of forgiveness of debt.

[40]      The last financial statements prepared by Public Trust were for the year ended 31 March 2012. These were not signed until 7 May 2015.

[41]      The Public Trust retired as trustee on 25 February 2015 and Lockhart Trustee Services No. 56 Limited (Lockhart Limited), the second defendant, replaced the Public Trust as trustee.

[42]      The 2012 financial statements record that as at 31 March 2012 the trust assets comprised the family home at Orakei Road, the furniture, jewellery and watches, all recorded at historical cost and the trust had no liabilities. The Westpac debt was not a trust liability being only guaranteed by the trustees and by this time the parties had forgiven the significant debt owed to them by the trustees.

Changes in trusteeship

[43]      As noted, on 25 February 2015 Public Trust retired as trustee and was replaced by Lockhart Limited.

[44]      In separate proceedings1 Lockhart Limited applied to be discharged as trustee. In a judgment dated 27 July 2020, Edwards J removed all three trustees and appointed a receiver, Digby Noyce, to the trust. There remains no trustee in office. In about April 2022 Ms Ryan inquired whether the Perpetual Guardian would be prepared to be appointed sole trustee but they declined.

Lothbury Management Limited (LML)

[45]      Unknown to Ms Ryan and Public Trust, Mr Lobb, through a company owned and controlled by him, called Lothbury Management Limited (LML) was claiming both GST refunds and tax deductions for the renovations on Orakei Road and for work on other properties. In evidence Mr Lobb confirms that LML was his alter ego. When LML’s GST returns were audited by the IRD, Mr Lobb advised IRD that the development of Orakei Road by LML would be completed by September 2006 with a proposed sale value in excess of $1.6m. He forecast a net profit on development of that property at $200,000 and made similar representations about another former jointly owned property.

[46]      On 2 May 2006 IRD wrote to Mr Lobb requesting tax invoices issued in relation to income earned and Mr Lobb sent two invoices for $10,000 each purportedly addressed to the Lothbury Trust for what were described as quarterly retainers for the period 1 October to 31 December 2005 and 1 January to 31 March 2006 for “property development management”. No such expenses are recorded in the Public Trust financial statements or otherwise in Public Trust records and Ms Ryan was unaware of any such invoices.

[47]      There is no suggestion Ms Ryan knew of, or was involved in, LML. Mr Lobb said she had no understanding of financial matters and he would not bother to tell her. It seems the Public Trust  also knew nothing of LML or of any GST registration.   Mr Lobb repeatedly stated in evidence that he was an expert on accounting and trust matters and it was clearly his view that others had a much inferior understanding and, in Ms Ryan’s case, none.

1Lockhart Trustee Services No 56 Ltd v Ryan (as Trustee of Lothbury Trust) [2020] NZHC 1823.

[48]      As noted, LML was claiming GST refunds. Ms Ryan has identified approximately $200,000 of refunds paid by the IRD. It is difficult to identify for which property those refunds were claimed or the ultimate application of those refunds. As the trust is not registered for GST, presumably any GST liability falls on LML. There would also appear to be some risk for LML/Mr Lobb that the IRD might take the view refunds should not have been claimed and that interest and penalties may apply.

Post-separation

[49]      Ms Ryan lived at Orakei Road from October 2016 until September 2018 and Mr Lobb lived with his father. Mr Lobb claims she had a male friend living at the house which Ms Ryan strongly denies.

[50]      As noted at the outset, in September 2017 Ms Ryan gave notice under cl 2.5(3) of the trust deed. She repeated an earlier request that Orakei Road be sold immediately and sought an urgent meeting of trustees at Mr Lockhart’s office. Mr Lobb rejected all requests and said he wanted to buy out Ms Ryan’s interest which, given her limited contributions and their “significant relationship property liabilities to the bank and my parents would not be very much”.

[51]      From September 2018 onwards Mr Lobb and his father lived at Orakei Road. He says the children “use the property and wish to retain the property for the long- term utility, enjoyment and tax-free financial gain”. The children are now aged 22 and nearly 21. Mr Lobb’s evidence is that his daughter has been living at the property with himself and Mr Lobb Senior and still resides there. His son previously lived there but moved out.

[52]      Mr Lobb’s evidence was that for the whole period since separation he and/or his father have paid the mortgage interest and other household outgoings, including rates, insurance and power. He provided a schedule of all payments allegedly made by him or his father while Ms Ryan was in occupation, totalling $263,412. However, I noted during the hearing GST had been added to the actual invoices which Mr Lobb said was because the payments (themselves already GST inclusive) had been made by LML. The fact of the payments having been made by LML and charging of double GST seemed to emerge only on the last day of hearing under questioning from me.

Excluding GST ostensibly charged by LML, the total becomes $208,231. Further, Mr Lobb appears to have also added interest to all payments. The total actual payments made appears to be approximately $150,000 for the 2016-2018 period. It is also a reasonable assumption that LML has claimed a tax deduction which would result in the net total being closer to $100,000.

[53]      A trust settled by Mr Lobb Senior redeemed or refinanced the Westpac debt (by then just under $1.4m) in September 2020. Ms Ryan accepts that a debt of $1.4m (that is a deduction of $700,000) should be taken into account in a resettlement under cl 2.5(3), albeit that the trustees are not principal debtors. Mr Lobb says that the debt now owed to his father’s trust is significantly larger than $1.4m. So far as I am aware no further advances have been approved by the trust/receiver and Mr Lobb has been liable for interest payments.   The mortgage could  therefore only legitimately secure

$1.4m. In any event, only $700,000 is to be deducted for purposes of the resettlement.

[54]      Ms Ryan says whatever outgoings were paid (by LML) and whatever debts have been incurred since separation, they are not her responsibility. She had made it clear she wished the property to be sold not long after the separation, which has throughout been strongly opposed by Mr Lobb.

Procedural history

[55]      The proceeding has had a lengthy history since filing in August 2019. Mr Lobb initially represented himself, later engaged lawyers, including Mr Fuscic, and then represented himself again from around July 2022.

[56]      Mr Lobb applied on 6 December 2019 for an order dismissing the proceeding on the basis inter alia of arbitration clauses in the trust deed (cls 2.5(5) and 3.7). He also applied under the Property (Relationships) Act 1976 (PRA) for an order for return to him of certain documents and records that he said were in Ms Ryan’s control. Those applications were set down for hearing in April 2020 but the hearing was adjourned at Mr Lobb’s request for COVID-related reasons. The applications were then heard by Associate Judge Smith on the papers.

[57]      Before judgment was given on Mr Lobb’s application to dismiss, Lockhart Limited brought separate proceedings seeking an order that it be discharged as a trustee and an interim trustee or receiver be appointed.2 In July 2020 Edwards J discharged not only Lockhart Limited but also Mr Lobb and Ms Ryan, and appointed Mr Digby Noyce as receiver. No order has since been made for the appointment of new trustees.

[58]      On 20 November 2020, Associate Judge Smith gave judgment, finding that the circumstances in which the arbitration provision would apply had been overtaken by appointment of the receiver. 3 He said that as there were no longer any trustees, there was no dispute that could engage cl 2.5(5) or cl 3.7 of the trust deed. Associate Judge Smith acknowledged that Mr Lobb and Ms Ryan retained their status as discretionary beneficiaries who could seek to invoke cl 3.7, but their children were also discretionary beneficiaries and had never agreed to the cl 3.7 procedure. So, to the extent cl 3.7 purported to bind all discretionary beneficiaries other than the settlors, it was invalid.

[59]      Associate Judge Smith stated that the High Court did not have jurisdiction under the PRA and directed that if Mr Lobb sought documents, he should do so by way of a discovery application.

[60]      The Judge also addressed informal requests by Mr Lobb “on several occasions” to join his father, Mr Warwick Lobb, as a party to the proceeding. This was on the basis that Mr Lobb asserted his father was owed a large amount of money. Associate Judge Smith had already directed, at a conference convened on 12 December 2019, that if Mr Lobb wished to have his father joined as a party, he should file a formal joinder application by 31 January 2020. No such application was filed and Mr Lobb’s various informal applications were therefore denied.4 Associate Judge Smith also indicated he could not see any good ground for joinder of a creditor of the trust.

[61]      Mr Lobb sought leave to appeal the decision of Associate Judge Smith. This was declined by the Court of Appeal on 2 June 2021 inter alia on the basis that no

2 See above n 1 at [44].

3      Ryan v Lobb [2020] NZHC 3085.

4      At [75] – [76].

progress had been made towards resolution of issues between the parties during the five years that had by then taken place since separation.5 The major issue was that any further delay was not acceptable. As they noted “[a]fter so long, and given the history of the dispute, the interests of justice make prompt resolution of the substantive proceeding the determinative factor.”6

[62]      Mr Lobb also sought an extension of time to appeal the decision of Edwards J discharging the trustees. However, on 13 May 2021 this was denied by the Court of Appeal, inter alia on the basis that he had delayed too long, despite being aware of the appeal period and being familiar with litigation procedure.7

[63]      Mr Lobb sought orders that Ms Ryan and Lockhart Limited provide tailored discovery and that the Public Trust provide particular non-party discovery. On 27 August 2021, Associate Judge Paulsen declined to make orders for tailored discovery. He ordered the parties to provide standard discovery and Public Trust to provide particular discovery.8 Associate Judge Paulsen gave seven reasons why he should not order tailored discovery which included, as the third reason, that the proceeding concerned one confined issue only. He noted that while the Court is asked to identify relevant contributions for the purposes of cl 2.5(3), it is not required to make any finding as to the amount of each party’s contributions, nor what part of the Trust assets it is fair and equitable to resettle, having regard to the respective contributions.9 He said those issues will have to be determined at a later date and the issue before the Court is a very narrow one.

[64]      On 3 December 2021, Associate Judge Paulsen dismissed Mr Lobb’s application for leave to appeal or vary/rescind the discovery orders. He noted that, in the interim, all parties and Public Trust had filed affidavits of documents in compliance with the discovery orders he had made.

5      Lobb v Ryan [2021] NZCA 224.

6 At [18].

7      Lobb v Lockhart Trustees Services No 56 Ltd [2021] NZCA 180.

8      Ryan v Lobb [2021] NZHC 3294 at [11].

9 At [11].

[65]      In a minute issued 9 May 2022 Toogood J made orders in regard to the hearing of the substantive proceeding directing that the parties file by 30 May 2022 an agreed statement of issues for determination; an agreed statement of the evidence in dispute and separately those not in dispute; and an agreed chronology.

Other proceedings between the parties

[66]      It is relevant to note that this proceeding – with its many hearings – is only one of a number that have been brought before the courts related to Mr Lobb and Ms Ryan.

[67]      None of these proceedings are relevant to my decision, including the 2019 family protection proceeding heard by Judge Pidwell in the Family Court at Auckland, to which Mr Lobb repeatedly refers, as a credibility finding was made against Ms Ryan.

[68]      However, I note with concern that Mr Lobb appears to be adopting a scattergun and vindictive approach to litigation generally. He raised in the course of this hearing proceedings he had just issued against Westpac which I believe was in relation to the parties’ debt. It was clear that Mr Fuscic knew nothing of this. The proceeding had been filed by other lawyers.

[69]      Separately, Mr Lobb lodged a caveat on Ms Ryan’s former partner’s property to protect, in his estimation, Mr Lobb’s relationship property interests in Orakei Road.10 This caveat was found, inter alia, to be an abuse of process and was removed by the Court.

Procedural and other issues raised by Mr Lobb

[70]      In the course of the hearing Mr Lobb made a number of informal applications and raised numerous and repeated objections. I rejected all of these at the time but have endeavoured to list at least some below.

[71]      Mr Lobb submitted on a number of occasions that the proceeding should be struck out. As addressed above, he made a formal application to strike out the

10     MacDonald v Lobb [2020] NZHC 2206.

proceeding which was dismissed by Associate Judge Smith. Leave to appeal to the Court of Appeal was also declined. Nothing further need be said on this score.

[72]      Mr Lobb submitted I should direct the parties to arbitration. He also submitted that they should be directed to mediate. His argument with regard to arbitration has similarly been previously considered by this Court and dismissed. A mediation in the context of this proceeding would be of no purpose. Notably, it was Ms Ryan who initially tried to trigger the arbitration clause, to no avail.

[73]      Following termination of Mr Fuscic’s instructions, Mr Lobb complained of insufficient time. In fact he was given every opportunity to make written and oral submissions and he filed voluminous documents. I was concerned when Mr Patterson provided a restatement of his earlier filed written closing submissions at the October hearing because although the content was very similar to his closing submissions, it could be confusing for Mr Lobb. I therefore allowed more time than otherwise for the further day that was required so there was no possibility of Mr Lobb missing any point that might be new. This meant he could amend his closing submissions with time on his side. Mr Lobb’s closing submissions extended to 610 paragraphs, over 192 pages.

[74]      In any event, Mr Fuscic had filed a very comprehensive written opening which Mr Lobb praised and adopted in entirety. It went well beyond a normal opening and addressed Mr Lobb’s entire case.

[75]      Mr Lobb said he was disadvantaged by not having access to the common bundle for closing submissions, saying it had been retained by Mr Fuscic for non- payment of fees. But he seemed to be able to turn to Mr Patterson’s references readily enough and took me to a number himself. Further, the vast majority of the documents were not relevant, relating as they did to historical transactions.

[76]      Closing submissions are not normally transcribed but at Mr Lobb’s request, I arranged for him to receive a copy of Mr Patterson’s oral closing submissions as delivered in October 2022. This was at a considerable inconvenience to the Court. The Registrar also forwarded a further electronic version of the notes of evidence.

[77]      I allowed Mr Lobb to speak last in closing submissions in case there was anything Mr Patterson had raised in questions from me during his reply submissions which Mr Lobb wished to address.

[78]      Mr Lobb is a qualified accountant and, on his own evidence, a highly intelligent person very well versed in all of the evidence and issues before the Court. I am satisfied Mr Lobb was not disadvantaged by this proceeding. The same could not be said of Ms Ryan and her counsel.

Clause 2.5 of the trust deed

[79]Clause 2.5 of the trust deed provides in full:

(1)During the Trust Period the Trustees may at any time resettle by way of deed the whole or any part of the capital or income of the Trust Fund in any manner and upon any terms and conditions for the advancement or benefit of any of the Discretionary Beneficiaries as the Trustees think fit. This power is restricted to the whole or any part of the income or capital of the Trust Fund that has not then been irrevocably paid or applied under the provisions of this deed to or for any Discretionary Beneficiary.

(2)This power cannot be exercised in any manner which will have the effect of extending the date of distribution of the Trust Fund beyond the Distribution Date in this deed. The perpetuity period in respect of any fresh trust declared under this power must be the same period as the period declared in respect of this deed.

(3)If the Settlors separate (or their marriage is legally dissolved), either Settlor may give the Trustees written notice requiring them to resettle (on new Trusts acceptable to the Settlor who has given notice) such part of the Trust assets as the Trustees consider fair and equitable having regard to the respective contributions of the Settlors (whether by gifting, inheritance or otherwise) to the total assets of the Trust.

(4)Once resettlement is effected under clause 2.5(3), the Settlor who gave notice shall cease for the purposes of the Deed to be a Discretionary Beneficiary and one of those acting as Protector. From that time, the other Settlor alone shall exercise all powers and discretions given to the Settlors by this Deed (including any powers the Settlors may have at the time as Protector).

(5)Any dispute or failure to agree relating to the provisions of this clause

2.5 is to be treated as a dispute to which clause 3.7 applies. (Emphasis added.)

The parties’ positions on clause 2.5(3)

[80]      Mr Patterson, for Ms Ryan, takes the position that the trustees are only required in terms of contributions under cl 2.5(3) to consider the legal ownership of assets when they were contributed to the trust. No other contributions are to be taken into account. He says that the correct final analysis is Orakei Road has to be sold and 50 per cent of the proceeds resettled, relying on the previous joint ownership and the equal transfers to the trust. He submits that the only debt to be taken into account (also on an equal basis) is the debt owed to Westpac at the date of repayment by Mr Lobb Senior’s trust, which it is agreed was approximately $1.4m. He says that is a volunteered position as strictly speaking, the Westpac debt should not be taken into account in the context of cl 2.5(3). It is not a liability of the trustees.

[81]      Mr Lobb takes a very different view. He says cl 2.5(3) requires the Court to assess the contributions of each party to Orakei Road, putting to one side the joint ownership at the time of transfer to the trust. He says the parties were not in fact joint owners, that was a mere convenience for Ms Ryan to be listed on the title. According to Mr Lobb, a complex tracing exercise is required, which he has to a material degree carried out. To the extent that exercise cannot be completed, Mr Lobb says it is due to Ms Ryan, her colleague Ms McQueen, Mr Patterson, Mr Lockhart and others having stolen or mislaid documents regarding dealings with earlier properties.11

[82]      Mr Lobb says that all funds to acquire historical properties and therefore Orakei Road came from either himself or other family members, particularly his father. In his submissions before Associate Judge  Smith  and  in  earlier  correspondence Mr Lobb’s position was that his parents were owed a significant amount of money by the trust. That position had morphed by the time of the hearing before me, to one where Mr Lobb was primarily arguing that Ms Ryan held her share in Orakei Road as trustee for Mr Lobb Senior, who was the true beneficial owner. He said that applied to all properties throughout in which she had a joint interest. He says, consistent with that, sale proceeds were always distributed to himself, or to members of his family, not to Ms Ryan.

11     I cautioned Mr Lobb a number of times about making these sweeping allegations, especially with regard to senior counsel.

[83]      The end result of Mr Lobb’s tracing exercise is, he says, that Ms Ryan made no contribution to the acquisition by the trust of Orakei Road in 2005, nor any contribution over the years to Orakei Road, to the predecessor properties, or otherwise. The same applies to the other assets transferred.

[84]      Mr Fuscic, counsel for Mr Lobb for the first two days of the hearing, summarised what he said must be taken into account in interpreting cl 2.5(3) as follows:

(a)Contributions made to the original acquisition of each asset regardless of the legal ownership of the asset at the time it was contributed to the trust. (This is Mr Lobb’s key point above.)

(b)Contributions post-settlement to the maintenance, development, and improvement of the trust’s assets. (Mr Fuscic referred particularly to time spent by Mr Lobb “project managing” and labouring on Orakei Road; funding of renovations which Mr Lobb says came, with the exception of added Westpac debt, from him and his family; and his or his father’s post-separation contributions in payment of outgoings on Orakei Road.)

(c)Any contributions by any third parties that potentially give rise to claims against the trust assets. (This necessarily crosses over with (a) and (b) above.)

(d)Contributions which may have a negative impact on the trust assets, particularly damage allegedly caused by Ms Ryan to the Orakei Road property.

(e)Pecuniary and non-pecuniary contributions. (Presumably, this covers everything above.)

(f)Assets and liabilities of the trust.

[85]      Mr Lobb says the net effect of his application of cl 2.5(3) is that Ms Ryan is not due any payment from the trust and in fact must pay into the trust a sum of approximately $1.5m.

Extent of jurisdiction

Pleadings

[86]      At the outset of the hearing Mr Patterson sought implementation orders, including directions for resettlement of assets and for the receiver to sell Orakei Road. A slightly modified form of orders was submitted at the resumed hearing on 4 October 2022 and is attached as Appendix A.

[87]      I have to consider whether I can properly make orders by way of implementation or at least partial implementation, or whether my role is limited to pure interpretation of cl 2.5(3).

[88]      The plaintiff did not seek orders by way of implementation in her original pleading, nor even in the amended statement of claim filed on 1 June 2022. Further, one of the seven reasons that Associate Judge Paulsen declined to make orders for tailored discovery was that this proceeding was a limited one.

[89]      However, the agreed statement of issues directed by Toogood J in May 2022 raised as a question whether implementation issues had to be determined at a later date, and both parties’ evidence and submissions go well beyond the narrow question of interpretation.

[90]      The plaintiff’s evidence, submissions and the draft orders filed by Mr Patterson address the cl 2.5(3) issue as fully as is possible for the plaintiff.

[91]      Significantly, Mr Lobb and previously his counsel have comprehensively addressed, both in evidence and submissions, issues not just of interpretation but of the detailed application of cl 2.5(3). In closing submissions dated 7 September 2022, Mr Lobb sets out the orders he seeks. The relevant paragraph is attached as Appendix B.

[92]      I raised with Mr Fuscic in a tele-conference following the first two days of hearing whether he accepted I should be dealing with the whole matter, including implementation under cl 2.5(3). He agreed that made sense but said he should take instructions. Mr Lobb terminated Mr Fuscic’s engagement not long afterwards.

[93]      I consider it inevitable that the parties had to address the issues as comprehensively as they have. There is no realistic delineation between interpretation and application in a case such as this.

[94]      I raised with Mr Patterson and Mr Fuscic the matter of the arbitration clause in the trust deed, not being familiar at that time with the full history of this proceeding. They both pointed out Associate Judge Smith’s judgment in which he held the arbitration clause was not binding and that the Court of Appeal had declined an application for leave to appeal. Mr Fuscic submitted that arbitration had been “frustrated” by the Court order removing the trustees. He noted that under the new Trusts Act 2019, the Court can order ADR but that no one had applied for it. That may not be available either. In any event, it is clear, given the history of this matter, that any form of either arbitration or mediation would be pointless even if it were available. That is well illustrated by Mr Lobb’s email to Ms Ryan dated 15 May 2021 which is annexed as Appendix C.

[95]      It is important to note that a central part of Mr Lobb’s case throughout the proceeding is that he has been denied discovery and worse, all parties, including counsel other than his own, have conspired against him to conceal and destroy documents. However, I am entirely unpersuaded by that claim. There is no evidence, other than Mr Lobb’s assertions, to support his accusations. His claims rise to the point of scandalous when mounted (repeatedly in written and oral submissions) against Mr Patterson, Mr Lockhart and Mr McCoubrey of the Public Trust Office. Ms Ryan and Ms McQueen removed large quantities of documents from the Orakei Road property for copying purposes which may be unfortunate, but I consider it understandable in the context of this case, given the extent of unauthorised or undisclosed activity on Mr Lobb’s part and the stance he has taken throughout.

[96]      I am satisfied in the end that all or very substantially all documents that were in existence at separation have been available to Mr Lobb for a long time, either via his own records and inquiries or via his family, the Public Trust, and others. I reject any argument that Ms Ryan, her counsel or others have concealed or destroyed documents. I am satisfied that all relevant documents for purposes of implementing resettlement under cl 2.5(3) are before the Court, so far as they exist. To the extent they are not, for example, with regard to any potential GST liability, it is Ms Ryan who is disadvantaged. Mr Lobb is in control of LML. As he says, he is the person with the expertise to interpret and construct a case out of the documents.

[97]      In short, I consider both parties have been in as good a position as they can be to address the issue of both interpretation and application of cl 2.5(3) and they have in fact done so in the evidence and in submissions.

[98]      In all of the circumstances, I consider it is appropriate in terms of the case as run before me to address issues of implementation so far as is possible.

Ability of Court to exercise the trustees’ power

[99]      It follows that I also have to consider the extent of this Court’s power to exercise a trust power.

[100]   As Mr Patterson said in opening submissions in June 2022, circumstances have changed since this proceeding was commenced in that for some time there have been no trustees who can give fair and equitable consideration to what part of the trust’s assets should be resettled once the meaning of cl 2.5(3) is determined. Given the time that has passed, the resignation of two independent trustees, and refusal of Perpetual Trustee to accept sole appointment (at the request of Ms Ryan only), it seems clear the trust will remain trusteeless. Mr Patterson says the Court should act in the stead of the trustees.

[101]   Mr Fuscic contended in opening that the Court does not have jurisdiction to make orders for division and that the parties should be reinstated as trustees, being the only people with the relevant knowledge to implement cl 2.5(3). Mr Lobb in closing

said the only people capable of running the trust are himself and his father and they should be appointed as trustees, as is clear from Appendix B.

[102]   While a receiver was appointed by this Court, the receiver can only act in accordance with Court directions and does not stand in the shoes of the trustees.12

[103]   Section 114(1) of the Trusts Act 2019 provides that where it is necessary or desirable to appoint a new trustee, and it is difficult or impracticable to do so without recourse to the courts, the Court may do so. Plainly, the statutory position is that the exercise of administrative powers is ideally carried out by trustees. As I have noted, however, in this case there seem to be no appropriate, willing and independent trustees for the Court to appoint, as would be ideal.13 The proposition put up by Mr Lobb is plainly untenable.

[104]   Referring back to the trust document, the power in cl 2.5(3) is a mandatory one. Once a settlor has given the trustees written notice, the trustees must resettle a portion of the assets onto the new trust. The trustees have no discretion whether to exercise the power of resettlement; their discretion is limited to determining on fair and reasonable grounds what proportion of the assets is to be resettled.

[105]   I agree with Mr Patterson that cl 2.5(3) creates a trust power, meaning that it must be exercised. The only discretion goes to the mode and manner of exercise, as opposed to a power of appointment which is a mere power where there is a discretion as to whether or not to exercise the power.

[106]   Where trustees have a trust power of appointment, and if from any circumstance exercise of the power becomes impossible, the Court will substitute itself and will exercise the power by the most reasonable rule.14

12     Trusts Act 2019, s 138.

13     I note that Public Trust, which ordinarily may be an appropriate appointee, has already been a trustee of and subsequently resigned from the Lothbury Trust.

14     Lynton Tucker and others Lewin on Trusts (20th ed, Sweet & Maxwell, London, 2020) at [33– 034–33–35].

[107]   In Mettoy Pension Trustee Ltd v Evans,15 the Court said that although the authorities do not deal directly with a situation where a fiduciary power is left with no one to exercise it, they point to the conclusion that the Court must step in.16

[108]   While I accept that the Court intervening directly in executing the trust power is an unusual step, this is one of those cases where it is required. The cost and delays to the parties has been vast. There are no trustees currently in office to execute the power. Any trustee would have to be independent and there is no realistic prospect of any suitable trustees accepting office. Without the Court’s assistance, there is no end in sight to the litigation affecting the parties.

[109]   For the above reasons, I am satisfied it is within the Court’s power to step in and implement a resettlement under cl 2.5(3) and that it is clearly appropriate to do so.

Relevant legal principles on construction of trust deeds

[110]   The law on the construction of trust deeds is well settled. It is the same as for the construction of contracts. This approach was outlined in Marley v Rawlings as follows: 17

(a)… the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party's intentions.

[111]   The principles in Marley v Rawlings were adopted by the Court of Appeal in Powell v Powell.18 In Powell the Court held that in ascertaining settlors’ intentions, it is guided by the words of the trust deed and the context in which the trust was created.

[112]   In a case such as this, interpretation and application are closely linked. As I have said, the parties addressed both and I do also.

15     Mettoy Pension Trustee Ltd v Evans [1990] 1 WLR 1587.

16     See also a recent example of the Court executing a trust power (in that case in the place of recalcitrant trustees) in AB v CD [2019] EWHC 2323.

17     Marley v Rawlings [2014] UKSC 2 at [19].

18     Powell v Powell [2015] NZCA 113.

Interpretation and application of clause 2.5(3)

Contribution of assets/gifting by the settlors

[113]   I consider that cl 2.5(3) is directed primarily if not solely at the parties’ contributions as attributed to them in transfers to the trust, which in this case was equal shares of all assets transferred, or forgiveness of the related debts - it makes no difference which, as all debt back was fully and equally gifted by the parties. That is the natural and ordinary meaning and purpose of cl 2.5(3). I agree with Mr Patterson that this is largely an unwind provision but with the added consideration of fairness and equity. Basing contributions on the amounts gifted is expressly provided for in the clause. There are no relevant “inheritances”.

[114]   It must be remembered that resettlement under cl 2.5(3) was not intended to be a complex exercise. It was after all to be carried out by the trustees. The clause should be interpreted in a way that facilitates a robust unwind. It also has to be remembered that the resettlement is not on Ms Ryan but still on a trust. I note that Ms Ryan’s new trust includes the children as discretionary beneficiaries. The assets being resettled are not being alienated. One trust is being carved into two.

[115]   In terms of the Orakei Road property, equal division is consistent with the previous joint ownership and with all of the contemporaneous trust records recited above, including the Public Trust’s minutes, the equal loans made to the trust by the parties, the equal gifting by the parties and the trust accounts recording the above. It is also consistent with the parties retaining equal liability for the substantial debt owed to Westpac.

[116]   The same equal treatment was applied to the sale of the jewellery and furniture to the trust, both in terms of equal attribution of sale prices and equal gifting of debts.

[117]   As to Mr Lobb’s interpretation, it is unclear whether he was ultimately arguing that he made the cash contribution to the Orakei Road purchase, or his father did. But insofar as Mr Lobb argues that the cash sum of $210,000, applied to the purchase of Orakei Road, should be analysed by his tracing back exercise, that argument runs counter to legal title and to all of the trust documents. It is devoid of common sense

and fairness. It also ignores the fact that the bulk of the funding for the parties’ purchase of Orakei Road came by way of the Westpac debt raised jointly by them, for which they were jointly and severally liable.

[118]   I note that the parties agree that the bulk of the $210,000 cash sum came from the sale proceeds of Wolseley Avenue, London. This was also registered in their joint names.

[119]   There was voluminous evidence from Mr Lobb, to which Ms Ryan felt compelled to reply, tracing back through property purchases over the years, including of properties in London. I consider all of that evidence to be irrelevant. None of the contemporaneous documentary evidence is consistent with Mr Lobb’s argument.

[120]   I do not ignore his claim that his own intentions were always as he now argues, but that is entirely subjective. A reasonable person would clearly not read cl 2.5(3) in the way he asserts. In fact, a reasonable person would say that if Mr Lobb took the view he now holds at the time of settlement of the trust, then he was acting deceitfully in the settlement of the trust and related transactions, vis a vis his wife. He should not have held the settlement out as an equal one.

[121]   It would be a ludicrous outcome if, as Mr Lobb argues, on the day Ms Ryan transferred her joint registered interest in Orakei Road to the trust, she conceded ownership and control but retained liability for a joint debt of $750,000. That plainly was not the parties’ intention. It would be even more ludicrous if following separation, Ms Ryan were to receive nothing from the Lothbury Trust and be required to pay

$1.5m to the trust based on Mr Lobb’s arithmetic.

[122]   Quite apart from the ordinary meaning of cl 2.5(3), Mr Lobb’s argument would fly in the face of the principles of the Property Relationships Act 1976 which, while not directly applicable here, would be more than thwarted by his interpretation of the clause. A property purchased by the parties in their joint names (and similarly with

the predecessor properties) would be relationship property under s 8(1)(c) of the Act, subject to presumed equal sharing.19

[123]   Importantly, Mr Lobb’s argument also falls foul of the general principle that a party will not be permitted to adduce evidence that in transferring legal title to another he or she intended to retain the beneficial interest if the effect of the evidence would be to disclose that the transfer had a fraudulent purpose.20 That principle applies even in a case where all funds were in fact provided by one party, which is not the case here. (Ms Ryan and Mr Lobb jointly provided at least $550,000 of the $760,000 purchase price, that being the sum raised from the bank, and the other funds came from a jointly owned property.)

[124]   Mr Lobb’s alleged justification for Orakei Road (or any of the previous properties) being held in joint names when, in his view, Ms Ryan had no interest or entitlement, is that it facilitated “tax-free gifting” by the parties and satisfied various requirements from the bank. 21 Advantage was taken of annual tax-free gifting by both parties and favourable terms negotiated with Westpac because both parties were borrowers. But the case law is clear, including Potter v Potter cited above, that there is no such thing as a transaction or ownership arrangement which is effective against the Inland Revenue, creditors or otherwise but not for other purposes. The same would apply to the banking arrangements.

[125]   In Potter itself, which has the closest facts to the present, the parties purchased a property. It was funded by Mr Potter but the title was registered in their names as tenants in common in equal shares in anticipation of being transferred to a trust to be established shortly thereafter. The purpose of registering the property as tenants in common was to facilitate a gifting programme. The parties separated before the trust

19 There was a brief argument over whether Orakei Road would have been the family home as  defined in the Property (Relationships) Act 1976 at the time of transfer to the trust. I do not consider it necessary to address that. This case does not engage the PRA directly and the property would have been categorised as relationship property in any event.

20 Potter v Potter [2003] 3 NZLR 145 (CA) (affirmed on appeal in Potter v Potter [2004] UKPC 41, [2005] 2 NZLR 1). See also Horsfall v Potter [2017] NZSC 196, [2018] 1 NZLR 638 and Mills v Dowdall [1983] NZLR 145.

21 It seems the Public Trust were in turn advised that the transfer to the trust was primarily for creditor protection.

was established and Mr Potter argued that Ms Potter held her half share on trust for him.

[126]The Court of Appeal held:22

[19]  … It was said that the half interest of the property was conveyed to   Ms Potter solely for revenue purposes without prejudice to Mr Potter’s retention of the entire beneficial interest. The difficulty is that gift duty could have been legitimately reduced only if Ms Potter’s half-interest had been a beneficial one. A bare legal interest as trustee would have provided no basis for personal participation in a gifting programme for the purposes of the Estate and Gift Duties Act 1968.

[127]After reciting the general principle already noted above, the Court said:23

[20] … Accordingly, in cases where the property has been transferred by a husband to a wife to gain revenue advantages, the husband has been precluded from averring in a later proceeding that his real intention was to retain the beneficial interest: see for example Re Emery’s Investment Trust [1959] Ch
510. The same principle applies where a husband has put property into his wife’s name as a protection against creditors … In this situation, the settlor is the unwilling beneficiary of a compliment to his own honesty. It is assumed he would not have intended to defraud others by pretending that his wife had a beneficial interest when in reality he had intended to retain the beneficial interest all along.

[128]   The Court of Appeal’s judgment was upheld by the Privy Council. The Board held:24

It was argued … that the arrangement under which the respondent was to take a half-share in Inlet Road was solely in order to achieve certain fiscal advantages and that it had not been intended that she would hold her half- share beneficially. This argument was an impossible one. The fiscal advantages could only have been achieved if the respondent did hold her half- share beneficially.

[129]   At least by the time of the hearing before me, Mr Lobb claimed his father was in fact the beneficial owner of the half-share vested in Ms Ryan. As discussed subsequently, I do not accept Mr Lobb can advance that claim on behalf of a third person but, in any event, the net effect is the same. Mr Lobb Senior was well aware of all relevant facts and arrangements being made. Both Mr Lobb and Mr Lobb Senior would be precluded from arguing against the title registration.

22 At [19].

23 At [20].

24 Above n 20 at [13].

[130]   I agree with Mr Patterson that the current facts are close enough to being on all fours with Potter v Potter. The gifting programme entered into by the parties could only have been effective against the Inland Revenue if they were the beneficial owners of the assets transferred to the trust and were personally entitled to the debt back.

[131]   In the above circumstances, Mr Lobb cannot deny that Ms Ryan had a beneficial interest in Orakei Road in accordance with the legal title, or in the jewellery or antiques.

[132]   I also consider that Mr Lobb is precluded from denying that Ms Ryan was beneficially interested in the assets transferred on the basis of estoppel principles.

[133]There are two potentially relevant estoppels. The first is estoppel by deed.

This rule goes back as far as Blackstone’s Commentaries:25

[A deed] is the most solemn and authoritative act that a man can possibly perform. … Therefore a man shall always be estopped by his own deed, or not permitted to aver or prove anything in contradiction to what he has once so solemnly and deliberately avowed.

[134]   The above passage is quoted in an article by Professor Burrows, The Law Relating to Deeds in New Zealand.26

[135]   Estoppel by deed arises in relation to both the facts set out in the recitals and the operative provisions of the deed.

[136]   Ms Ryan and Mr Lobb are party to a deed of sale of Orakei Road, which recites that they as vendor own the property which they wish to sell and the trustees to buy. They are party to multiple deeds of acknowledgement of debt and corresponding deeds of forgiveness of debt, all recording that the debts arising belong to them. Mr Lobb is estopped from denying the truth of what is recorded in those deeds.

25     Bl. Comm 1st ed, bk 1ii, 295.

26     J Burrows “The Law Relating to Deeds in New Zealand” (1963) Otago LR 240 at 259.

[137]   Likewise, Mr Lobb is estopped by the deeds he signed from contradicting that he and Ms Ryan each contributed $250,000 to the trust by way of further advances for purposes of the renovation work.

[138]   The second is estoppel by convention or conventional estoppel, which is a relatively new common law estoppel. The elements of the estoppel were authoritatively summarised by Tipping J in the Court of Appeal decision of National Westminster Finance NZ Ltd v National Bank of NZ Ltd:27

The authorities show that for an estoppel by convention to arise the following points must be established by the party claiming the benefit of the estoppel (the proponent):

(1)The parties have proceeded on the basis of an underlying assumption of fact, law or both, of sufficient certainty to be enforceable (the assumption).

(2)Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.

(3)Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the position between them.

(4)the proponent was entitled to act, and has, as the other knew or intended, acted in reliance on the assumption being regarded as true and binding.

(5)the proponent would suffer detriment if the other party were allowed to resile or depart from the assumption.

(6)In all the circumstances, it would be unconscionable to allow the other party to resile or depart from the assumption.

[139]   In Rattrays Wholesale v Meredyth-Young & A’Court Ltd,28 Tipping J noted that the broad rationale underlying this (and indeed all) forms of estoppel is “to prevent a party from going back on his word… when it would be unconscionable to do so.”29 Estoppel by convention looks to the common participation of parties in a state of affairs that gives rise to certain expectations. The evidence in this case satisfies the requirements of estoppel by convention. As discussed above, the conduct of Mr Lobb and Ms Ryan in entering into joint ownership, assuming mortgage debt, forgiving

27     National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 at 550.

28     Rattrays Wholesale v Meredyth-Young & A’Court Ltd [1997] 2 NZLR 363.

29     At 377.

debts and furthering funds for renovations demonstrates a mutuality of understanding as to their joint ownership interests. Ms Ryan would clearly suffer detriment through the loss of her 50 per cent interest. In this context, she would not have transferred the property to the trust (where it ceased to be in joint names and also ceased to be relationship property, subject to equal sharing) had she expected Mr Lobb to deny her interest in it. I consider that for him to do so would be unconscionable.

Renovation work

[140]   As Mr Patterson was forced to acknowledge, the position with the funding of the renovation work carried out on the Orakei Road property is complicated by the unilateral actions of Mr Lobb through LML.

[141]   At the direction of the Public Trust, Mr Lobb provided a schedule of costs and work done, showing a total cost of $500,000. Public Trust used that information to prepare a trustee resolution acknowledging further advances of $250,000 from each of Ms Ryan and Mr Lobb; that resolution was approved by the trustees (including the parties). Financial statements were prepared and approved recording the additional advances. Tax returns were prepared and filed on the basis that work costing $500,000 had been completed, and depreciation was claimed for tax purposes during the period Orakei Road was let out. The tax returns were signed by Mr Lobb. Both parties signed deeds recording that they had made additional advances to the trust of $250,000 each and that those additional advances were forgiven.

[142]   I agree with Mr Patterson, that as with the original asset settlements, the records must be taken as determinative in terms of the parties’ contributions for the purposes of cl 2.5(3). It would be unfair and inequitable for it to be otherwise. The parties debt to Westpac also increased materially over this period.

[143]   As discussed above, Ms Ryan would clearly suffer detriment if Mr Lobb were permitted now to claim that the additional advances of $250,000 each were, for purposes of cl 2.5(3), contributed to the trust by him only.

[144]   Mr Lobb claims that the actual renovation costs were higher than he declared to the Public Trust and that were meticulously recorded in the trust records. That

appears to be so, although the amount and funding is impossible now to unravel and I reject the concept that it should be unravelled for purposes of a cl 2.5(3) resettlement. I cannot rely on the evidence put forward by Mr Lobb in terms of LML documents. I consider his claims, as in general, to be greatly exaggerated. Any GST liability that might subsequently arise to the IRD is not a trust liability and is not to be taken into account for purposes of determining a resettlement on Ms Ryan’s trust under cl 2.5(3).

Other contributions claimed by Mr Lobb

Mr Lobb’s work on Orakei Road

[145]   Mr Lobb says he personally carried out project management and other work on Orakei Road during the relationship which he has self-valued at $100 per hour. He says this should reduce Ms Ryan’s proportional contribution to the trust assets. It is difficult to apportion the amount claimed by Mr Lobb. He says he spent in all

$500,000 worth of time, including on remedying damage allegedly caused by Ms Ryan to the property.

[146]   For purposes of cl 2.5(3) the “contributions of the settlors” should be taken, at least during the relationship, as a reference to financial contributions, not contributions of the parties by way of work or time. That is consistent with an overall reading of cl

2.5 which references capital, income and assets, but also with specific reference to cl 2.5(3) which talks of contributions to the assets (whether by gifting, inheritance or otherwise). Although the word “otherwise” is broad, it is to be read in light of the examples given, both of which involve financial contributions.

[147]   Though again not directly applicable here, it would be contrary to the principles of the PRA if work carried out by one partner during a relationship to an asset of the trust, in this case the family home, resounded in a financial reward, while contemporaneous and presumed matching contributions in other regards by the other partner went entirely unrewarded. Even if there were residual relationship property assets, they would still be presumptively equally shared.

[148]   Purely for the record, I note that Mr Lobb was not asked by the trustees to undertake whatever work he did. These were tasks he chose to undertake while he

was otherwise unemployed. There is no independent evidence as to work carried out or a reasonable hourly charge-out rate for an unqualified worker, which would clearly be well under $100 per hour in 2006. There is also no evidence that the work he did added any value to the asset. It seems that no code of compliance was obtained.

[149]   I reject the argument that Mr Lobb should have any claim in respect of time spent on the Orakei Road property during the relationship. That is not a contribution for purposes of cl 2.5(3), and even if it were, it would not be fair and equitable to make provision for it under cl 2.5(3).

Payment of outgoings post-separation

[150]   Mr Lobb claimed to have paid outgoings on Orakei Road while Ms Ryan (and he says her then partner) were in occupation. However, as noted, it emerged during the hearing he had not paid the outgoings himself. They were paid by LML. I have already found that the true outgoings, including mortgage interest, were materially less than claimed. The amount really at issue is likely in the order of $100,000, not in excess of $260,000. In any event, contributions with regard to the payment of outgoings, including mortgage interest and maintenance of Orakei Road, are not relevant under cl 2.5(3). These are not contributions to the assets. It is clear from the resolution prepared by the Public Trust and signed by the parties in June 2005 that the parties were to have the right to occupy the Orakei Road property in exchange for being liable for all maintenance and outgoings of the property. These matters should therefore not be taken into account on a resettlement of trust property.

[151]   I also consider this conclusion just, given the much longer period over which Mr Lobb has been in occupation and the corresponding length of time Ms Ryan’s trust has been locked out under cl 2.5(3). Even if the matter were being addressed under the PRA, I consider it very unlikely that there would be an adjustment made in these circumstances.

Contributions by third parties

[152]   Clause 2.5(3) talks of contributions of the settlors. In some circumstances a contribution by a third party to the trust assets at the request of the settlors might

arguably be treated as in effect a contribution of one of the settlors. The evidence would need to be clear and asserted by the third party. In this case, there is no claim by a third party, nor on the facts do I detect any viable claim. The assertion by Mr Lobb of a resulting trust in favour of Mr Lobb Senior is addressed subsequently.

Negative contributions

[153]   I agree with Mr Lobb that in an appropriate case negative contributions by the parties might be taken into account, but in that unusual circumstance careful proof would be required. Mr Lobb asserts that Ms Ryan caused damage to the Orakei Road property during her post-separation occupation of it and he quantifies the cost of repairs at approximately $200,000. That is denied by Ms Ryan but in any event the evidence advanced by Mr Lobb is entirely inadequate. No invoices or corroborating documents have been provided. I am not persuaded that any material damage or loss was suffered to the property beyond fair wear and tear such that it would be fair or equitable to take it into account. No adjustment is required in this regard.

Claim to resulting trust in favour of Mr Lobb’s father

[154]   Mr Lobb claims that Ms Ryan held her half-share of Orakei Road for the benefit of his father.

[155]   There is no need to address that argument as such a claim would need to be made by Mr Lobb Senior to have any prospect of upsetting Ms Ryan’s ownership status. He has not done so, nor even filed affidavit evidence in this proceeding. This despite the fact that Mr Lobb Senior has obviously lived and worked closely with his son for many years and was present throughout this hearing. Mr Lobb was even advised by Associate Judge Smith in December 2019 that any application to join his father must be filed by January 2020. He did not do so.

[156]   Any such claim would be extremely fraught in my view. Mr Lobb Senior would presumably have to assert a resulting trust in his favour arising at the latest in 2003 when the parties acquired Orakei Road. Such claim would face significant limitation, let alone credibility issues. A resulting trust may arise in a situation where

one party provides the purchase money for property, but the transfer of legal title is taken by another, such that the legal owner is presumed to hold the property in trust.30

[157]   Mr Lobb relies on the aforementioned tracing exercise to say that some or all of the cash contribution to the purchase of Orakei Road in 2003 came from Mr Lobb Senior. But even if that were true, Ms Ryan jointly contributed a much greater sum by way of the funds borrowed from Westpac and applied to the purchase of Orakei Road. Further, Ms Ryan’s liability for that debt flies in the face of Mr Lobb’s claim that his father has a 50 per cent beneficial interest. Mr Lobb also relies on the fact that Mr Lobb Senior was the parties’ property manager and held enduring powers of attorney from himself and Ms Ryan. Such roles patently do not indicate an ownership interest.

[158]   Also, it is crystal clear from the historical emails referred to by Mr Patterson that Mr Lobb Senior himself was not asserting any claim in respect of Orakei Road. He emailed the parties when they were in London on 17 February 2009 asking them to confirm that he could sign the banking mandate and said: “No transaction will take place without your approval”. On 19 March 2012 Mr Lobb Senior emailed Mr Ryan saying:

As I am acting for the key trustees of the Lothbury Trust, I would like to receive a separate independent email from Verena, that she is in agreement with the proposals, as you have sent them to me, for my own personal comfort, even though I do not hold somewhere powers of attorney from you both which I will never use without your specific instructions. These powers of attorney will not be required here, however, just your separate consents that you are happy / accepting the proposals.

[159]   As discussed, the fraud on the revenue and estoppel principles discussed earlier would also equally apply to a claim by Mr Lobb Senior, were one to be advanced. He was well aware Ms Ryan was a registered joint owner of Orakei Road and a settlor of the trust.

[160]   The presumption of a resulting trust is, understandably, subject to strict limitation. The person providing the purchase money must show no indication that they intended to pass beneficial ownership. In this case, there is ample evidence

30     Dyer v Dyer (1788) 30 ER 42 (Ch) at 43.

showing that Mr Lobb Senior considered Mr Lobb and Ms Ryan the legal owners of Orakei Road, and as mentioned above, sought instructions from both parties before exercising his powers of attorney or rental management. This does not align with Mr Lobb’s assertions that Ms Ryan was granted title to allow his father to act as a “silent partner”.

[161]   A loan arrangement will also not give rise to a resulting trust. Loans function as personal obligations (to pay back a sum of money), whereas resulting trusts operate to protect proprietary interests.31 Mr Lobb makes the claim that Ms Ryan is indebted to Mr Lobb Senior (and himself) at several points in this proceeding; this goes against his claim that her title is held in trust.

[162]   A further issue arises with the transfer of ownership from Ms Ryan and Mr Lobb to the Lothbury Trust occurring some years after the purchase of Orakei Road (when Mr Lobb Senior’s interest would have arisen). In a case where the property is held in trust, it is doubtful that the trust would survive a further transfer; moreover, it is unclear why Mr Lobb Senior would not have asserted his alleged interest at that point, or before.

[163]   In short, it is not at all surprising that Mr Lobb Senior has not advanced the claim asserted by his son.

[164]   No claim has been made by Mr Lobb Senior as to a resulting trust, nor does such a claim appear tenable on the material before me. It is therefore not a matter to be taken into account under cl 2.5(3).

Liabilities

[165]   The last accounts of the trust record no liabilities, as noted earlier. The Public Trust records must be taken as determinative in this regard for purposes of cl 2.5(3) with the exception of the $1.4m former Westpac debt as recorded above.

31 Above n 20 at [13].

[166]   No deduction is to be made from the Verena Ryan Family Trust’s share of the net assets in respect of any debt claimed by LML or by Mr Lobb, including as to GST or other “invoices” rendered by Mr Lobb/LML. These were not authorised by the trustees or the receiver and are not trust liabilities.

Conclusion

[167]   The relevant contributions of  the  parties  to  be  taken  into  account  under cl 2.5(3) are their financial contributions to the assets during the relationship being the sums gifted as shown in the trust records. Those contributions are equal. There are no other relevant contributions of the parties to be taken into account.

[168]   There are also no third party contributions or claims to be taken into account. The claim by Mr Lobb that his father was always the beneficial owner of Ms Ryan’s share in Orakei Road cannot be advanced by Mr Lobb and is seriously flawed in any event.

[169]   The relevant assets are as shown in the last trust accounts prepared by the Public Trustee.

[170]   In assessing fairness and equity, I take into account the full factual background detailed in this judgment and have given particular consideration to the position of the children on the assumption that Mr Lobb is correct: the parties’ daughter lives at Orakei Road and both children wish it to be retained. I consider cl 2.5(3) was clearly intended to prevail over the children’s views particularly at their age and with the length of time that has passed since the separation. Both trusts will continue to make provision for them as beneficiaries. Orakei Road was intended to primarily benefit the parties for their lifetime and for some years it has been of no benefit to Ms Ryan.

[171]   The terms of the Verena Ryan Family Trust are a matter for Ms Ryan under cl 2.5(3). I have noted that the children are included as discretionary beneficiaries and I would have been concerned as to fairness and equity were they not.

[172]   Mr Lobb Senior’s position falls outside the considerations under cl 2.5(3). He volunteered repayment of the Westpac mortgage and it was imposed on Ms Ryan who

wished the property sold, even if it were a mortgagee sale. That was a reasonable position for her to take in all of the circumstances.

[173]   Taking all matters into account, I consider the jewellery should be vested according to use. All other assets are to be divided equally.32 The only “liability” (to be deducted from the trust assets) for purposes of a resettlement on the Verena Ryan Family Trust is the sum of $1.4m (the former Westpac debt referred to above).

[174]   Overall, I consider the general tenor of the orders set out in Appendix A to be fair and appropriate but amendments are required to achieve the result reflected above.

[175]   The orders sought by Mr Lobb in Appendix B are plainly insupportable for the reasons already discussed.

Orders

[176]I make orders as follows:

1.Vesting Mr Lobb’s Rolex watch in him and Ms Ryan’s Rolex watch and her jewellery in her.

2.Directing that an amount equal to one-half of the value of the antique furniture be transferred from the assets of the Lothbury Trust to the Verena Ryan Family Trust and the value be set at

$55,200 (the original sale price) or, if Mr Lobb elects (by written notice to the receiver), the value established in a revised valuation by Webbs, the original valuers.

3.Mr Lobb and others occupying 23 Orakei Road, Remuera are

to provide vacant possession to the receiver within two months of the date of this judgment.

32     I put pressure on Ms Ryan to offer 100% of the furniture to Mr Lobb without adjustment but in retrospect do not consider that fair.

4.The receiver is directed to sell 23 Orakei Road at such a price and upon such terms as he thinks fit.

5.50 per cent of the sum reached by deducting from the gross sale price only the costs of sale, the receiver’s costs and the sum of $1.4m, is to be paid to the Verena Ryan Family Trust.

[177]   The receiver may seek further directions or orders of the Court, including but not limited to:

(a)Obtaining vacant possession of the property;

(b)Obtaining the discharge of the mortgage over the property now vested in WAG Trustees (2020) Limited;

(c)Directions as to issues that might arise regarding GST claims by the IRD, if any;

(d)Making interim distributions, if sought by either Ms Ryan or Mr Lobb.

[178]   Upon completion by the receiver of his duties, including any necessary reports to the Court:

(a)To vary the terms of the deed constituting the Lothbury Trust so that Ms Ryan ceases to have any beneficial interest in the trust fund or any powers or other interests in respect of the Trust;

(b)Appointing as trustees of the Lothbury Trust such person or persons as Mr Lobb may nominate;

(c)Discharging the receiver.

[179]   Leave is also reserved to Ms Ryan and/or Mr Lobb to seek further orders or directions if necessary to give effect to the above.

[180]All orders are to be implemented without delay.

Costs

[181]   Ms Ryan is entitled to costs. Mr Patterson is to file submissions within 14 days, limited to five pages, with schedules. He should address increased and/or indemnity costs. Mr Lobb is to reply within two weeks, subject to the same conditions.

Hinton J

APPENDIX A

Ryan v Lobb

Proposed Orders

1Direct that one-half of the net assets of the Lothbury Trust (excluding jewellery and watches and the antique furniture) be resettled on the terms of the Verena Ryan Family Trust.

2Vest Mr Lobb’s Rolex watch in him and Ms Ryan’s Rolex watch and her jewellery in her.

3Direct that an amount equal to one-half of the value of the antique furniture be transferred from the assets of the Lothbury Trust to the Verena Ryan Family Trust and the value be set at $55,200 (the original sale price) or, if Mr Lobb elects (by written notice to the receiver), the value established in a revised valuation by Webbs, the original valuers.

4To give effect to Order 1 above, the receiver be directed to obtain vacant possession of 23 Orakei Road, Remuera and to sell it at such a price and upon such terms as he thinks fit.

5The net proceeds of sale (after payment of the receiver’s fees and disbursements and any other payments directed by the Court to be made from the proceeds of sale) be held by the receiver in an interest-bearing account pending further order of the Court.

6The receiver, before or after acting under Order 4 above, to have power to seek further directions or orders of the Court including but not limited to:

(a)Obtaining vacant possession of the property

(b)Obtaining the discharge of the mortgage over the property now vested in WAG Trustees (2020) Limited;

(c)Directions as to how any monies claimed against the Trust assets by IRD as a consequence of any investigation made into the GST refunds obtained by Lothbury Management Limited are to be satisfied;

(d)Making interim distributions, if sought by either Ms Ryan or Mr Lobb.

7Upon completion by the receiver of his duties including any necessary reports to the Court:

(a)To vary the terms of the deed constituting the Lothbury Trust so that Ms Ryan ceases to have any beneficial interest in the trust fund or any powers or other interests in respect of the Trust:

(b)Appointing as trustees of the Lothbury Trust such person or persons as Mr Lobb may nominate;

(c)Discharging the receiver.

8Leave also reserved to Ms Ryan and/or Mr Lobb to seek further orders or directions if necessary to give effect to the above orders.

APPENDIX B

Extract tal‹en fi om closiilg SilbtniSSionS OU’the fiist defendant, datcd 7 Septembei’ 2022, p 190.

Proposed Next Steps

60s. I submit, what should ñappen next in summary is,

{a) Acoutorde fo the‹etunafa)mystoiendocuments

{b) AuditaDle Financial âCCOUflts for 31 March 2023/22 are prepared by

(c)    AU jewellery (trust and relationship) is returned to Lothbury for evaluation and matching to the records

(d)   Immediate removal of the receiver

(e)    Reappoint my father and myself as court supervised trustees

(f)     Remove Ms Ryan and Mr Lockhart from the legal title

(g)   A two week court ordered mediation is the next logical legal stem for these wide ranging issues attended by only three people, the mediator, and the settlors.

(h)    This matter is brought to an end and costs awarded in my favour (because it is not a proper use of the law, is founded in deception and unDroven false allegations and is simply designed to inflict delay, costs, and debt avoidance favouring only Ms Ryan, and this proceeding is too narrow in focus to result in a complete and just final resolution.

(i)     And/or the outcome of the two joint debt cases must be known before any more proceedings can be brought by Ms Ryan or there is any further time and money wasted on this proceeding.

APPENDIX C