Spence v Lynch

[2013] NZHC 1478

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7681 [2013] NZHC 1478

BETWEEN  STUART GORDON SPENCE Plaintiff

ANDCHRISTOPHER MAURICE LYNCH Defendant

AMANDA ADELE WHITE First Third Party

ANNE LEOLINE EMILY FREEMAN Second Third Party

Hearing:                   20 - 24 May, 4, 5 and 7 June 2013

Appearances:           P J Wright and G D Stringer for the Plaintiff and the Defendant

A D White, First Third Party in person
A L E Freeman, Second Third Party in person

Judgment:                19 June 2013

JUDGMENT OF PRIESTLEY J

This judgment was delivered by me on Wednesday 19 June 2013 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Counsel/Solicitors:
P J Wright, Barrister, Auckland
G D Stringer, Inder Lynch, Papakura

Copy to:
First Third Party

Second Third Party

SPENCE v LYNCH [2013] NZHC 1478 [19 June 2013]

CONTENTS

PARAGRAPH

Introduction  1

Procedural background  7

The evidence  14

Relevant narrative

Section 21 agreement  15

The DCT Trust property trail  21

Mr Lynch’s resignation as trustee  29

Mr Spence’s advances to the trust  31

Property Sharing/Profit Sharing Agreement  46

Mr Spence’s Trust  64

Ms Freeman’s debt  68

Ford Territory  76

Taxation debt  80

Use of trust funds  81

Other evidence  85

Analysis  86

Result  136

Costs  140

Introduction

[1]      A man and a woman start a de facto relationship.  They had both emerged from  previous  failed  relationships  and  want  a  degree  of  certainty  over  their respective assets.  Sensibly they enter into an agreement under s 21 of the Property (Relationships) Act 1976 (the Act).  So far so good.

[2]      The woman, who has talents as a property developer and speculator, sees merit in establishing a family trust.  She does so.  She is the settlor.  There are three trustees: herself, her mother, and a solicitor. Appropriately the man has no interest in the family trust.   The beneficiaries are the woman herself, her children, and her siblings or their issue.

[3]      The relationship of the man and woman lasts for six years and five months. Despite the initial orthodox and sensible arrangements evinced by the trust and s 21 agreement, carelessness, confusion, and chaos rode in behind the couple.   Their family lived in properties owned by the trust.  Both the man and the woman’s mother advanced substantial sums to the trust.  Startlingly no one took any steps to prepare annual accounts and balance sheets for the trust.   The s 21 agreement was never reconsidered or updated.   The trust’s bank accounts were used constantly and extensively by the woman to pay domestic accounts.  The man, because he respected the woman’s financial acumen, gave her internet banking authority for his bank accounts.   The solicitor, advised the man and woman about a possible property sharing agreement, but one was never concluded.   When the couple separated the man lodged a notice of claim pursuant to s 42 of the Act.  The woman, despite the domestic loss of the man’s income, continued to use the trust as a vehicle to acquire further realty.

[4]      Four and…