Schmidt v Ebada Property Investments Ltd - [2025] NZSC 131

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI O AOTEAROA

SC 42/2025
SC 49/2025
[2025] NZSC 131

BETWEEN	ANTHONY MIKHAL SCHMIDT First Applicant in SC 42/2025 and Second Applicant in SC 49/2025 TAYLOR JADE SCHMIDT Second Applicant in SC 42/2025 and First Applicant in SC 49/2025
AND	EBADA PROPERTY INVESTMENTS LIMITED First Respondent BRIAN PATRICK GARRITY Second Respondent

Court:	Glazebrook, Williams and Kós JJ
Counsel:	First Applicant in SC 42/2025 in person A J Woodhouse for First Applicant in SC 49/2025 N J Scampion and S O H Coad for Respondents
Judgment:	3 October 2025

JUDGMENT OF THE COURT

A The applications for leave to appeal are dismissed.
BCosts are reserved.

____________________________________________________________________

REASONS

In late 2005, the applicants, Mr and Ms Schmidt, were in default under mortgages over their two properties at Kaiaua Rd and Bell Rd, near Mangatāwhiri. In November 2005, they were both found guilty of failing to provide the necessities of life in connection to the death of their two-year-old daughter. They were each sentenced to two and a half years’ imprisonment. This added to their immediate economic woes.
Mr Schmidt had rekindled a friendship with the second respondent, Mr Garrity, a solicitor. Mr Schmidt raised the possibility of Mr Garrity purchasing Kaiaua Rd as a means of resolving their difficulties, on the basis that Mr Garrity would discharge the mortgage and allow Mr Schmidt’s father to remain there paying rent.[1] In November 2005, shortly before their criminal trial concluded, the Schmidts signed powers of attorney appointing Mr Garrity as their attorney. At some point Mr Garrity was also given access to the bank account of the Schmidts’ family trust, the Excel Estate Trust (Excel).
[1]Schmidt v Ebada Property Investments Ltd [2019] NZHC 3548 (Venning J) [HC judgment] at [40]. The Schmidts claimed they had instead discussed the possibility of Mr Garrity setting up a corporate trustee to hold the properties on trust for them, but this version of events was not accepted by the Judge. See also Schmidt v Ebada Property Investments Ltd [2025] NZCA 125 (Goddard, Brewer and Osborne JJ) [CA judgment] at [192].
In December 2005, Mr Garrity signed an agreement on behalf of the first respondent, eBada Property Investments Ltd, a new company controlled by him, to purchase Kaiaua Rd from Schmidt Trustee Ltd (STL), the corporate trustee of Excel. The price was $290,000, close to market value. On settlement eBada paid STL $160,000 and the remainder of the consideration was “paid” by way of a deed of forgiveness of debt in the amount of $130,000 (which all parties now acknowledge was a fiction).
In November 2006, Bell Rd was sold by STL to eBada under a similar arrangement. The sale price was $495,000—substantially lower than the market value of $665,000—with $200,000 paid to STL (though some of this was ultimately paid to Mr Garrity) and the remaining $295,000 “paid” by way of another fictional forgiveness of debt.
Between December 2005 and February 2008, Mr Garrity also acted…

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.

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Details

Case: [2025] NZSC 131
Decision Date: 3 October 2025

CaseChat Overview and Summary

The applicants, Mr and Ms Schmidt, sought leave to appeal the decision of the Court of Appeal, which had dismissed their claims against eBada Property Investments Ltd and Mr Garrity. The applicants argued that the Court of Appeal had erred in finding that there was no constructive trust or fiduciary relationship between them and Mr Garrity regarding the sale of their properties. They contended that the Court of Appeal had overlooked certain evidence and had failed to properly consider their arguments on undue influence and breach of fiduciary duty. The respondents opposed the applications, arguing that the findings of the Court of Appeal were well-reasoned and based on the evidence presented. They contended that the applicants' claims were without merit and that the Court of Appeal had correctly dismissed them.

The Court considered the applications and found that the proposed appeals did not raise any matters of general or public importance, nor did they have general commercial significance. The Court noted that the applicants' arguments largely challenged the findings of fact made by the Court of Appeal, which were based on the particular circumstances of the case. The Court held that disturbing those findings would require it to make new findings of fact, which it was not prepared to do. The Court also found that the proposed appeals did not disclose any risk of a substantial miscarriage of justice. The Court emphasised that the applicants' fabrication of the unsigned trust deed, which was intended to improve their litigation prospects, disentitled them to equitable relief. Therefore, the Court concluded that it was not necessary in the interests of justice to hear and determine the proposed appeals.

The applications for leave to appeal were dismissed. Costs were reserved.

Orders