Smith v Smith - [2020] NZHC 2288

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-000155

[2020] NZHC 2288

UNDER The Land Transfer Act 2017, s 143

BETWEEN

SHARON JEAN SMITH

Applicant

AND

ALLAN RAYMOND SMITH and NEIL

WILLIAM WELCH, as trustees of the SMITH FAMILY TRUST

Respondents

Hearing: 25 August 2020

Appearances:

M Brady for Applicant

P J Morgan QC for Respondents

Judgment:

3 September 2020

REASONS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 3 September 2020 at 4.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date ……………………….

SMITH v SMITH [2020] NZHC 2288 [3 September 2020]

[1] In my minute of 27 August 2020, I recorded the result of my decision to order that the caveat lapse but on condition that the proceeds of sale be held in the respondents’ solicitor’s trust account pending determination of Sharon Smith’s substantive claim.

[2]This judgment contains the reasons for my findings and orders.

Introduction

[3] Sharon Smith and Allan Smith were married in 2012 and separated in early 2019. For the last year of their relationship they lived in the property at 2 Durham Heights, Flagstaff, Hamilton (the Property).

[4] The registered proprietors of the Property are the respondent trustees, Allan Smith and Neil Welch as trustees of the Smith Family Trust.

[5] The applicant, Sharon Smith, is a discretionary beneficiary of the Trust in her capacity as wife of the settlor, Allan Smith.

[6] Sharon Smith lodged a caveat against the Property on 12 March 2020. The Property is the subject of a sale and purchase agreement which is due to settle on 2 September 2020.

[7] In these proceedings, under s 143 of the Land Transfer Act 2017, Sharon Smith seeks an order that the caveat not lapse. The critical issues I must determine are:

(a)Whether there is an arguable case that Sharon Smith has an institutional constructive trust claim against the Property based on contributions she is said to have made; and

(b)If so, whether I should, as a matter of discretion, order that the caveat lapse on condition that a portion of the proceeds of the sale be held in a solicitor’s trust account pending determination of Sharon Smith’s substantive claims.

Factual background

[8]In 1996, Allan Smith settled a family trust, the Smith Family Trust.

[9] In 2006, Allan Smith settled a trust called the Allan Smith Smart Trade Trust, which owns the shares in a business he had developed called Smart Loyalty NZ Ltd.

[10] The Smith Family Trust and the Allan Smith Smart Trade Trust have the same trustees, namely Allan Smith and Neil Welch.

[11] In 2008, the Smith Family Trust purchased a beach property at Whangamata. The Smith Family Trust also owns a residential property at 88 Braid Road, Hamilton, where Allan Smith lived.

[12] Following their marriage in 2012, Allan Smith and Sharon Smith lived in the Braid Road property. They continued living there…

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 Smith v Smith

Details

AGLC: Smith v Smith [2020] NZHC 2288
Case: [2020] NZHC 2288
Decision Date: 3 September 2020

CaseChat Overview and Summary

Sharon Smith sought an order under section 143 of the Land Transfer Act 2017 that her caveat against the sale of the property at 2 Durham Heights, Flagstaff, Hamilton, not lapse. The property is owned by the Smith Family Trust, of which Allan Smith and Neil Welch are the trustees. Sharon Smith claims to have an interest in the property by way of an institutional constructive trust based on her contributions to the acquisition, preservation and enhancement of the property. Allan Smith and the trustees contend that Sharon Smith’s contributions were minor and that the caveat should lapse. The court found that Sharon Smith had established an arguable case for an institutional constructive trust in the property. The court also found that, in the exercise of its discretion, the caveat should lapse but on condition that the proceeds of sale be held in the respondents’ solicitor’s trust account pending determination of Sharon Smith’s substantive claims. Sharon Smith was ordered to file and serve proceedings claiming a constructive trust by 2 October 2020 and to take all reasonable steps diligently to prosecute those proceedings. The court reserved leave to the parties to apply for further directions. The court also made an order as to costs.

Orders