Tiller v Ministry of Business, Innovation and Employment the Official Assignee
[2021] NZHC 2584
•22 July 2021
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA
AHURIRI ROHE
CIV-2021-441-000011
[2021] NZHC 2584
UNDER section 226 of the Insolvency Act 2006 IN THE MATTER OF
an appeal against a decision of the Official Assignee
BETWEEN
ROBYN ELIZABETH TILLER
Appellant
AND
MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT – the OFFICIAL ASSIGNEE
Respondent
Hearing: 22 July 2021 Appearances:
P Ross for the Appellant
D Dingwall for the Respondent
Judgment:
22 July 2021
JUDGMENT OF GRICE J
(appeal against determination of Official Assignee as to property ownership)
Contents
Introduction[1]
The Official Assignee’s decision[12]
Grounds of appeal[14]
Standard on appeal[18]
Relevant provisions under the Insolvency Act 2006[23]
Onus of proof[27]
Issues[30]
Legal principles in relation to trusts[35]
Mrs Tiller’s position[38]
Certainty of words[38]
Certainty of subject[43]
Certainty of objects[44]
Certainty of intention[45]
The Official Assignee’s position[50]
Analysis[58]
Estoppel[85]
Conclusion[90]
Costs[93]
TILLER v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT – the OFFICIAL ASSIGNEE [2021] NZHC 2584 [22 July 2021]
Introduction
[1] Mrs Tiller and her husband, Mr Michael Robert Tiller, were adjudicated bankrupt on 29 November 2016 on the application of the Bank of New Zealand. The bank was owed $6,841,065.10. They were discharged from bankruptcy in the usual course following the expiration of three years.
[2] The Tillers say they have nothing of value left, except the house that they have recently built in Waipawa. The Official Assignee had decided that the house was part of the assets in Mrs Tiller’s bankruptcy and is now seeking to sell it. Mrs Tiller appeals that decision.1
[3] Mrs Tiller says the adjudication and bankruptcy had occurred when she and her husband were overseas. Her children were looking after their business, which was a vineyard in Marlborough, known as the Isabel Estate Vineyard Ltd. Mrs Tiller says she and her husband had gone overseas intending to pursue the “marketing” side of the business. It appears clear the vineyard was in financial difficulties at the time they left New Zealand. They lived, for a time at least, on a houseboat in France that they had bought.
[4] In the meantime, while they were away, the company was put into receivership by the Bank of New Zealand and subsequently into liquidation. The Tiller’s home and business assets were taken by the bank and sold. Mrs Tiller said they had not been advised of the dire state of affairs by their children, although she admits that they knew that the vineyard was in some difficulty before they left New Zealand. Mrs Tiller says however, the bankruptcy was a surprise to them, and they only found out about it when they returned to New Zealand in late 2016.
[5] On 8 December 2016 the Tillers completed and signed a Statement of Affairs for the Official Assignee. This comprised a comprehensive form backed by a declaration. Mr and Mrs Tiller indicated in that they had little in the way of assets. They listed their occupation as “retired”. Their only income, at that stage, was
1 This decision was delivered orally, and the written version has been edited for grammar and flow with the addition of footnotes.
superannuation and a benefit. Mr and Mrs Tiller said on the declaration that they had no secured or unsecured debts. In addition, they declared that they had been involved as beneficiaries with a trust, the “Hawkesbury Trust (defunct)”.
[6] Unbeknownst to the Official Assignee, in 2017, while still an undischarged bankrupt, Mrs Tiller bought a section in Church Street, Waipawa and has since built a house on the property. The house has not yet obtained a council completion certificate.
[7] Mrs Tiller settled the purchase of the Waipawa section on 15 September 2017. It is common ground that the sum of $33,500 was paid for the section pursuant to an Agreement for Sale and Purchase dated 25 August 2017. The money came from a bank account at the Co-operative Bank, which contained funds that had been remitted from Australia on 7 September 2017 and further funds were received on 20 November 2017. The payments for materials and labour for the building of the house also came from that account.
[8] In November 2018 the Official Assignee, based on information he had received from an anonymous source, commenced investigating the circumstances surrounding the acquisition of the property. Mrs Tiller responded to the enquiry by stating the property and materials for the building had been purchased using a loan from her father, Mr Steeles. Mr Steeles is now elderly and lives in Australia.
[9] In December 2019 the house and section had a valuation in excess of $215,000. The discharge from bankruptcy does not affect the fact that property acquired by an undischarged bankrupt vests in the assignee and any rights of the bankrupt in the property are extinguished.2
[10] The Official Assignee is presently poised to take steps to sell the house. He had offered to sell it to the Tillers at a discounted figure. That offer was not taken up.
2 Insolvency Act 2006, s 122(1)(b).
[11] If the property is held on trust by Mrs Tiller it does not vest in the Official Assignee.3 Mrs Tiller may deal with it according to the terms of any trust applying to it.
The Official Assignee’s decision
[12] Mr and Mrs Tiller were discharged from bankruptcy on 14 December 2019. That was a year after the enquiry into the property acquisition had been commenced by the Official Assignee.
[13] The Official Assignee determined on 10 December 2020, a year after the bankruptcy was discharged, that the property was beneficially held by Mrs Tiller and had therefore passed to the Official Assignee. A transmission has now been registered in favour of the Official Assignee against the title.
Grounds of appeal
[14] The grounds for the appeal against that decision of the Official Assignee are set out in the Notice of Appeal and were further developed in the submissions.
[15] The primary ground is that the trust funds had been advanced by Mrs Tiller’s father, to her, as trustee. It is now common ground those funds were used to purchase a houseboat that had been registered in the names of Mr and Mrs Tiller and used by them and their family. The funds from the sale of that boat went via an Australian bank account into Mrs Tiller’s New Zealand bank account and were used to purchase the Waipawa section and build the house. The submission is that the property is held on trust by Mrs Tiller for the benefit of her and her children.
[16] An additional ground of appeal was raised this morning in oral argument. It had been a matter earlier raised with the Official Assignee in correspondence but was not referred to in the notice of appeal nor in the written submissions. That is a ground based on estoppel, which I will deal with later in this decision.
[17]I turn now to the standard on appeal.
3 Insolvency Act 2006, s 104.
Standard on appeal
[18]Section 226 of the Insolvency Act 2006 (Act) relevantly provides:4
(1)A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the court to reverse or modify the act or decision.
(2)This section applies to –
(a) an act or decision of the Assignee; or
…
(4) The court may confirm, reverse or modify the act or decision.
…
[19] The Official Assignee submits that the correct approach is by way of general appeal following the process outlined by Duffy J in Haines House Removals Ltd v Jamieson.5 The Official Assignee’s decision was not an exercise of a discretionary statutory power, but rather was a decision that is subject to a general right of appeal. Mr Dingwall, for the Official Assignee, noted that this approach had been applied in a number of cases over the years.6 The approach taken in the earlier decision of Glynbrook 2001 Ltd v Official Assignee was narrower.7 That is explained by the rationale that the approach there was limited to the exercise of a discretionary power and so is not relevant to this case.8
[20] Clifford J, in Rao v Official Assignee, summarised the approach to an appeal, such as is before me, as follows:9
[24] My view, having reviewed the authorities, is that I am required to consider the merits of the application on a de novo basis and determine, in my own assessment, what decision is reasonable under the circumstances, based on the material presented to me at the hearing. In doing so, however, I must pay due regard to the decision of the Assignee and take into account the Assignee’s functions in administering the estate and giving effect to the policy
4 Insolvency Act 2006, s 226.
5 Haines House Removals Ltd v Jamieson [2013] NZHC 653 at [12] and [39].
6 For example: Murray v Official Assignee HC Hamilton B318/92, 9 September 1992 at 18; Edmonds Judd v Hobbs [2000] 2 NZLR 135 (CA) at [29]–[33]; and Knight v Official Assignee [2009] NZAR 235 (HC) at [9].
7 Glynbrook 2001 Ltd v Official Assignee [2012] NZCA 289.
8 At [87].
9 Rao v Official Assignee HC Wellington, CIV-2006-485-4, 17 October 2007 at [24]–[25].
of the Act. The Act provides for the Assignee to exercise his or her discretion in administering the bankrupt’s estate and if the Court interferes too readily that statutory policy will be frustrated.
[25] In assessing the merits of the application I am guided by the standard of reasonableness.
[21]Mr Ross, for Mrs Tiller, took no issue with that approach.
[22] I adopt that approach. The Court should consider the matter de novo and make its own assessment based on the material presented at the hearing. In assessing the merits of the application, the Court would be guided by the standard of reasonableness. Nevertheless, the Court must pay due regard to the decision of the Official Assignee in the circumstances. That decision should not be interfered with “too readily”.
Relevant provisions under the Insolvency Act 2006
[23]Section 101 of the Act provides that:
(1)On adjudication,–
(a)all property (whether in or outside New Zealand) belonging to the bankrupt or vested in the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and
(b)the powers that the bankrupt could have exercised in, over, or in respect of any property (whether in or outside New Zealand) for the bankrupt’s own benefit vest in the Assignee.
(2)This section is subject to section 104.
[24] Section 102 mirrors s 101 in relation to property acquired by bankrupts during their bankruptcy:
(1)Between the commencement of bankruptcy and discharge of the bankrupt,–
(a)all property (whether in or outside New Zealand) that the bankrupt acquires or that passes to the bankrupt vested in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and
(b)the powers that the bankrupt could have exercised in, over, or in respect of that property for the bankrupt’s own benefit vest in the Assignee.
(2)This section is subject to section 104 and section 123.
…
[25]Mrs Tiller relies on s 104 of the Act, which provides that:10
Property held by the bankrupt in trust for another person does not vest in the Assignee.
[26]I now turn to the onus of proof.
Onus of proof
[27] The parties agree that the Assignee bears the onus of proving, on the balance of probabilities, that relevant property is that of the bankrupt and therefore falls within the estate by virtue of the Act.11 Bearing that in mind a party who wishes to assert that property held by the bankrupt is held by them on trust bears the onus of proving it.12
[28] Mrs Tiller says that her father settled the money on her, acting out of concern for the plight of her and her family, given their financial troubles. The funds were for the purpose of providing for them. The trust alleged to have been settled is said to be an express discretionary trust, not a fixed trust. A fixed trust would allow the Official Assignee to claim any fixed equitable interest that may have been held by Mrs Tiller. The trust funds were initially used by the Tillers to purchase the houseboat in the South of France. Following the sale of the houseboat, a sum in excess of $74,000 ($74,538.81) was transferred on 11 August 2017 to Mrs Tiller’s Australian bank account.
[29] Mr Ross submits that he can only say it was an “exceedingly poorly documented” transaction. Nevertheless, he notes, it is not necessary for trust arrangements to be in writing. He says evidence supports the establishment of a trust in this case. The terms of the trust, including who was the trustee, the corpus, the
10 Insolvency Act 2006, s 104.
11 Re Monk HC Wellington B107/91, 14 May 1992 at 14.
12 Official Assignee of McWilliam v McWilliams [1923] NZLR 561 (SC) at 562.
beneficiaries and any specific purposes for the use of the trust funds, fall to be determined by the evidence now before the Court.
Issues
[30] The sole issue for determination is: does the appellant hold the property at [redacted], Waipawa,13 on trust for another person?
[31] Earlier, during the Official Assignee’s enquiries, the Tillers had maintained that the funds had been advanced by Mr Steeles as a loan and therefore were owing to him. Mr Ross does not advance the loan argument today. He says Mrs Tiller may not have known that the funds were the subject of a trust and a trust can be established without the parties knowing. A loan argument would be inconsistent with that position.
[32] In correspondence Mr Ross had suggested that the Official Assignee was estopped from taking the property. This was due to representations alleged to have been made by a staff member of the Official Assignee to Mrs Tiller. One particular representation was to the effect that if they could prove the advances were by way of a loan then Mrs Tiller would be entitled to the property and the Official Assignee would remove its caveat and would not take the property. It is that argument that Mr Ross seeks now to advance on appeal. He sought leave to amend his notice of appeal and has made oral submissions as well as also handing up some emails in support of that argument. Mr Dingwall does not oppose the leave to appeal. I deal with that application later in the judgment.
[33] If this Court finds that the property is held on trust, then it does not vest in the Official Assignee and the Court would reverse the Assignee’s decision. If, on the other hand, I find that Mrs Tiller owns the property and it is not held on trust, she is the beneficial owner and the decision of the Official Assignee would be confirmed.
[34]I now turn to the legal principles in relation to express trusts.
13 Address redacted for confidentiality.
Legal principles in relation to trusts
[35] As Mr Ross submitted, it is not a requirement for an express trust to be created in writing. In that case the available evidence must satisfy the Court that an express trust was established.
[36] That evidence must be directed to establishing the three certainties required to recognise a trust.14 The first, being the certainty of words, requires that it is clear that a legally binding obligation is imposed on the alleged trustee. The second is certainty of subject. This requires that there is no ambiguity about either the property subject of the trust or the exact interest to be taken by the beneficiaries. The third is the certainty of objects which requires that the beneficiaries are ascertainable.
[37]I now turn to deal with Mrs Tiller’s position in light of those certainties.
Mrs Tiller’s position
Certainty of words
[38] In relation to certainty of words equity looks to the intent of the words rather than the form.15 There is no need for any technical expression to be used in order to constitute a trust. In every case it is the construction of the words used to create the trust that the Court looks at as well as any admissible extrinsic evidence,16 and the surrounding circumstances, which may assist in finding the expression of the intention to set up a trust.
[39] Precatory or recommendatory words or just expressing a belief when the trustee meant to declare a trust have been found not to evidence the settling of a trust.
14 Trusts Act 2019, s 15; and Knight v Knight (1840) 49 ER 58 (Ch).
15 Philip Pettit Equity and the Law of Trusts (12th ed, Oxford University Press, Oxford, 2012) at 48; and Lynton Tucker, Nicholas Le Poidevin, James Brightwell Lewin on Trusts (20th ed, Sweet & Maxwell, London, 2020) vol 1 at [5–001].
16 The interpretation of trusts requires a similar approach to the interpretation of contracts. In Bathurst Resources Ltd v L & M Coal Holdings Limited [2021] NZSC 85 at [55] the Court agreed that the interpretation of written contracts is governed by the law of contract and is an object of task. The admissibility or otherwise of extrinsic evidence is an evidential issue, to be determined in accordance with the law of evidence in light of the substantive law of New Zealand. In the case of contracts, “it is the law governing the interpretation of contracts which fundamentally shapes what is relevant, and what is therefore admissible, extrinsic evidence”.
Both counsel referred to the example of Re Adams and the Kensington Vestry.17 In that case Cotton LJ held that the words “in full confidence that she would do what was right as to the disposal thereof between his children, either in her lifetime or by will after her decease” imposed only a moral obligation on a testator’s wife to deal with the property given to her as an absolute gift.18 In Comiskey v Bowring-Hanbury,19 similar words were used, but there the House of Lords held by the majority that in the circumstances a document in its entirety did convey the requisite intention to create a trust.
[40] Mr Ross also pointed to the case of Paul v Constance.20 In that case Mr Constance, who was living with Mrs Paul, received a compensation payment and put it into a separate bank account, as advised by his bank manager. Subsequently, other money was deposited into the account, and sums withdrawn for joint purposes. Mr Constance died intestate, and his wife was appointed as administrator. Mrs Paul argued that the money in the account was held on trust for her in addition to Mr Constance. The word “trust” had never been uttered, but on occasions, Mr Constance had said, “the money is as much yours as mine”. In the circumstances of the case the Court held that a trust existed.
[41] The words used may not be decisive, but they are considered in view of the surrounding circumstances.
[42] The outward indication of an intention to settle a trust in this case is presumably from Mr Steeles, who was the apparent settlor. Mrs Tiller has also provided an affidavit attesting to the establishment of a trust.
Certainty of subject
[43] In order to establish a trust, there must be identifiable trust property. In this case Mrs Tiller points to the funds advanced by her father which were first used in the
17 Re Adams and the Kensington Vestry (1884) 27 Ch D 394 (CA).
18 At 395.
19 Comiskey v Bowring-Hanbury [1905] AC 84 (HL).
20 Paul v Constance (1977) 1 All ER 195 (CA).
purchase of the houseboat in the names of Mr and Mrs Tiller and subsequently used in the purchase and construction of the Waipawa house.
Certainty of objects
[44] In relation to certainty of objects, where a class is named as beneficiaries a trust is not valid unless those entitled to enforce it can be identified. In this case Mr Ross points to Mr Steeles’ declaration of trust as identifying Mrs Tiller and her children as the beneficiaries.
Certainty of intention
[45] The evidence of Mrs Tiller and her father is proffered to establish the certainty of words. Mrs Tiller, in an affidavit dated 2 October 2020, provided for the purposes of establishing that there was a trust to satisfy the Official Assignee, said, insofar as the terms of the trust were concerned that:
(a)Initially her father advanced the funds to her. She said, “[w]e purchased a houseboat in France. The object of this was actually to combine business with a lifestyle option and to provide something tangible for the family. Because the bulk of our customers were in the United Kingdom we based ourselves in Europe and marketed the products”.
(b)The Tillers had stopped receiving funds from the companies after the appointment of the receiver and survived for a while on distributions from trust monies but realised they could not do that indefinitely.
(c)“We decided that the purposes of the trust could not be achieved so we sold the canal boat and the funds were remitted to Australia. After a time these were advanced once more for the purpose of purchasing the small block of land we now occupy in Waipawa”.
[46] As well as the purchase of the section, further funds were used by Mrs Tiller from her bank account to pay for the building materials for the construction of the
dwelling on the Waipawa property. These funds had also come from the Australian bank account.
[47] Mrs Tiller’s father, Mr Philip John Steeles, swore an affidavit dated 15 October 2020. Insofar as is relevant to the trust submission he said that:
(a)He lent Mrs Tiller $65,268 which was reflected in a deed of loan dated 17 September 2011. The deed provided that the loan “repayable upon the earlier of death of the survivor of myself and Patricia, upon giving of 60 days[’] notice or notice for immediate repayment upon appointment of a trustee in bankruptcy to Robyn’s affairs”.
(b)He later entered a Deed of Acknowledgement of Debt on 17 January 2013 with his son recording a debt owed by the son to Mr Steeles and his wife of $281,500. He directed his son to pay a part of that money to each of his siblings as “an early inheritance from both myself and Patricia”.
(c)He directed his son to pay $55,000 to Robyn by 30 June 2014.
(d)He “deliberately sent the loan funds and early inheritance to Robyn but intended they be applied to the benefit of her as well as her children in a manner that was for my daughter to determine”.
[48] Mr Ross says those last words that “he intended they be applied to the benefit of her as well as her children in a manner that was for [his] daughter to determine”, were the words showing the intention to establish the trust.
[49] Mr Ross said that Mr Steeles was apparently aware of the risk of bankruptcy and having that in mind advanced the monies by way of trust.
The Official Assignee’s position
[50] The Official Assignee noted that in his affidavit Mr Steeles speaks of providing an “early inheritance” for each of his children, one of whom is Mrs Tiller.
The Assignee says there is nothing to suggest the payment to the appellant was to be any different from the payments to the other children. There is no evidence that payments on trust were made to the other children. The Official Assignee says Mr Steeles was obviously aware of the difference between a loan and a gift, as he had earlier advanced monies to Mrs Tiller as loans and had them properly documented by Deed, which had specifically provided for the advent of bankruptcy.
[51] In contrast to that formal deed of loan, the Official Assignee points out there is no proper documentation as to the settlement of the apparent, or purported, “trust”. The Official Assignee also points out that Mr Steeles said of the funds advanced that he “intended that they be applied to the benefit of her [Mrs Tiller] as well as her children in a manner that was for my daughter to determine”. The Official Assignee says Mrs Tiller’s assertion as to the intended beneficiaries is inconsistent with her father’s statement. She says her father “advanced funds to me on trust for the benefit of our children as well as ourselves”.
[52] Mrs Tiller said, “the intention was to provide something for us …” and “… we decided that the purposes of the trust could not be achieved so we sold the canal boat and the funds were remitted to Australia”.
[53] Earlier in her affidavit Mrs Tiller had spoken of her father and other members of the family who “wanted to assist and advanced funds to me on trust for the benefit of our children as well as ourselves. The intention was to provide something for us”. She made that statement in the context of discussing what she and her husband had done and the difficulties they were facing in terms of the debt they owed.
[54] Mrs Tiller also refers to taking distributions from trust monies “but realised we could not do that indefinitely”.
[55] The Official Assignee says the inconsistency between Mr Steeles’ evidence and that of Mrs Tiller is that Mr Steeles says he intended to advance monies for the benefit of his daughter and grandchildren, whereas Mrs Tiller speaks of it benefitting her husband, as well as herself and their children as beneficiaries.
[56] The Official Assignee also points to other evidence which supports his decision that the property belonged to Mrs Tiller personally. That includes statements made by the Tillers to the Official Assignee concerning the funds in question in the course of the investigation, misleading information provided by the Tillers concerning their financial position, and other documentation obtained by the Official Assignee, which does not support the existence of the trust.
[57]Now I turn to consider the issues and the arguments.
Analysis
[58] Mrs Tiller only advised the Official Assignee that she had a loan from her father when he had commenced his investigation into the funding of the house, following the anonymous tip in 2018. Until Mrs Tiller obtained legal advice she had maintained to the Official Assignee that the funds had been advanced to her by way of loan in order to purchase the Waipawa section and build their house.
[59] The Australian bank accounts were obtained directly by the Official Assignee due to the failure by Mrs Tiller to provide them. The statements did not support the fact that the loan had been advanced for the purchase of the Waipawa section and house. Mrs Tiller then explained to the Official Assignee that the funds had initially been used to buy a canal boat on which the Tillers had lived in the South of France until returning to Australia. She said they sold the canal boat at a profit and put that money into a bank account in Australia. The Tillers then decided they should return because of grandchildren in New Zealand. The Official Assignee also noted he had been told by the Tillers that they needed to be resident in New Zealand to get the New Zealand Superannuation payments. Mrs Tiller then purchased the Waipawa property in her name and had the funds remitted from Australia. The funds and/or boat were under their control at the time they completed the Statement of Affairs for the Official Assignee,21 however there was no reference to the boat, or those funds, in the Statement of Affairs.
21 The joint Statement of Affairs was filed on 8 December 2016. The canal boat appears to have been sold in August 2017 when the funds were remitted to Australia.
[60] In the Statement of Affairs which was signed and declared by each Mr and Mrs Tiller on 8 December 2016, they did not disclose any of the following: that they had a loan from Mr Steeles; that they had bought and sold a canal boat in the South of France; nor that they had remitted the proceeds from the sale of the boat back to Australia.
[61] Less than a year later they remitted the funds from the sale of the boat to buy the section and fund the building of the house at Waipawa. No mention was made then, to the Official Assignee, of the existence of the funds, or of the fact the house was to be built.
[62] None of the information concerning the trust or the loan was disclosed to the Official Assignee until the Assignee made enquiries following the anonymous tip.
[63] When the Official Assignee’s officer contacted Mrs Tiller on 26 November 2018 following the tipoff which led to the investigation, they were told the money to purchase the land had been borrowed from family. At a meeting on 27 November 2018 with Mr and Mrs Tiller and the investigating officer the Tillers said they were building a “cabin from materials they purchased from savings”. The officer was told that Mrs Tiller’s family had purchased the property and the funds were a loan. The Official Assignee then asked for some evidence to support that and suggested it would be appropriate to get a letter from the person who lent the funds, and included the reason for the loan, and whether they required repayment of the loan. Nothing was forthcoming from Mrs Tiller. Following that the Official Assignee obtained the relevant file from the firm of lawyers who acted for Mrs Tiller on the purchase of the property.
[64] The legal file included a completed Authority and Instruction form, commonly known as an “A and I” form, to enable the settlement of the purchase of the Waipawa property by way of electronic transaction under the Land Transfer Act 1952 and regulations. This was signed by Mrs Tiller in front of a Justice of the Peace. It contained a statement that Mrs Tiller was not an undischarged bankrupt. The
document, which amounts to a certificate, is intended to be relied upon by the lawyers acting on the conveyancing transaction as well as the Registrar-General of Land.22
[65] Mr Ross handed up two pages of the completed A and I form in the course of oral argument. The pages produced had been signed by Mrs Tiller and witnessed by the Justice of the Peace but did not include the page that referred to her not being an undischarged bankrupt. Mr Ross said that Mrs Tiller had only received the two pages to sign and not the page with the certificate as to bankruptcy on it. There was no evidence from the Justice of the Peace who witnessed and certified Mrs Tiller’ identity for the purposes of the form, nor was there any affidavit or information from the lawyer who is said to have sent the document and given the instructions for signing. The handed-up material is of little evidential weight in the circumstances.
[66]The requested information regarding the loan was not received.
[67] On 22 January 2019 the Official Assignee lodged a caveat over the property to protect his interest in the after-acquired property under s 102 of the Insolvency Act.
[68] A further meeting was held on 25 January 2019. Mr Tiller attended but Mrs Tiller did not, despite the meeting having been arranged with her. Matters discussed included the Australian bank account in the appellant’s name that had not been disclosed in the Statement of Affairs and the subsequent opening of the Co-operative Bank account in New Zealand which had not been disclosed either. The Official Assignee’s officer had found both of those accounts as a result of investigations.
[69] On 31 January 2019 Mrs Tiller emailed the Official Assignee saying she was unable to obtain the Australian bank records but said that the properties had been funded “primarily by the loan from her father and their own hard work.” Mrs Tiller forwarded a copy of an email from Yvonne Farquharson, who stated she used to look after Mr Steeles’ affairs. The email suggests that Mr Steeles did lend some monies to Mrs Tiller, but the email was unclear as to how much. It suggested if evidence of the
22 A false or negligent certification as to the correctness of an A & I form is an offence under s 164 of the Land Transfer Act 1952, which has been replaced by the Land Transfer Act 2017.
payments was required it would need to be created, meaning the information would need to come from Mr Steeles.
[70] At the next meeting on 19 March 2019 between Mr and Mrs Tiller and the officer, the need for evidence regarding the original source of the loans was emphasised. The officer then indicated that they would request the bank statements directly. Mr Tiller then advised that they had left New Zealand for France in 2014 and had returned only upon learning he was ineligible for the pension while living outside New Zealand. He said the canal boat on which they had lived was sold and the proceeds transferred to the appellant’s bank account in Australia.
[71] The officer obtained some statements relating to the Australian bank accounts and was awaiting others when they received an email from Mr Tiller on 2 May 2019, sent by Mrs Tiller. The email said that Mrs Tiller was still awaiting receipt of the evidence to substantiate their claim that the purchase monies for the property had been borrowed. There followed an exchange of emails concerning the sale and purchase of the canal boat and confirmation that the sale proceeds had been remitted first to Australia and then to New Zealand and used to purchase the property in Waipawa.
[72] The Official Assignee says that by November 2019, a year after the initial complaint, no further evidence as to the origin of the funds had been provided by Mrs Tiller. The following information was then put before the Official Assignee:
(a)Having been adjudicated bankrupt on 29 November 2016, the bankrupt filed a joint Statement of Affairs on 8 December 2016.
(b)In the Statement of Affairs, the bankrupt listed only three main assets: a joint bank account with Kiwibank of $552.94; a KiwiSaver account of $2,000; and a 1990 Land Rover Discovery, estimated at $3,000 resale value.
(c)The bankrupt did not disclose the ownership of the boat in France, an asset of significant value, despite owning the boat at the time the Tillers
filed their Statement of Affairs. That asset vested in the Official Assignee under s 101 of the Insolvency Act 2006.
(d)Without the Official Assignee’s knowledge or consent the bankrupt sold the boat and in 2017 transferred the proceeds to the appellant’s Australian bank account.
(e)The bankrupt did not disclose the existence of her Australian bank account which was used by her to receive the proceeds of sale from the boat. She subsequently transferred the proceeds to a bank account in New Zealand with the Co-operative Bank. The Australian account had been opened prior to the appellant’s bankruptcy.
(f)Mrs Tiller did not disclose to the Official Assignee the existence of her bank account with the Co-operative Bank.
(g)Mrs Tiller had made a false certification on 13 September 2017 in an A and I form that she was not an undischarged bankrupt, for the purposes of the purchase of the property at Waipawa.
(h)The Official Assignee would not have found out about Mrs Tiller’s ownership of the property but for the anonymous complaint which was received more than a year after the purchase was settled.
(i)When questioned about the property purchase Mrs Tiller maintained the funds were loaned to her by the family but had been unable to provide evidence of that. All that had been provided were emails alluding to a loan or loans which had been made some years prior to the bankruptcy as well as details of the sale of the boat in France followed by transfers of funds.
(j)The bank statements from 2014 would have been readily available. That led the Official Assignee to the view that there may be at least one other bank account that was not made known to him.
(k)There was no mortgage, charging order, or any other instrument registered against the property to suggest that any party other than Mrs Tiller had an interest in it.
(l)The response of the Tillers when asked about the property was that it had been a loan from her father to purchase the property but did not mention that the funds had come from the sale of the riverboat.
(m)If the funds from Mr Steeles had been advanced by way of a loan, then Mr Steeles would have been an unsecured creditor in the bankrupt estate. It would not have meant that the property was not Mrs Tiller’s property.
[73] Once Mrs Tiller had obtained legal advice, the claim arose that the funds were held on trust and they were not a loan.
[74] The affidavits of both Mr Steeles and Mrs Tiller were then produced, facilitated by Mrs Tiller’s legal advisor. Both affidavits indicated that the deponents considered a trust had been established, despite the earlier contention by Mrs Tiller that the monies were a loan.
[75] It is noteworthy that the trust argument was developed following the Official Assignee’s advice that a valuation on the property had been obtained putting the value at $215,000. The Official Assignee had indicated then that if Mrs Tiller could raise the funds, she could purchase the property at an amount of approximately
$205,000, adjustments having been made by way of deduction for estimated legal fees, disbursements and Real Estate Agents’ commission.
[76] I conclude that Mrs Tiller was prepared to mislead the Official Assignee if explaining the true position would not support her cause. For instance, I refer to the Statement of Affairs declared on 6 December 2016, she did not:
(a)refer to the alleged trust despite the reference to the Tillers Hawkesbury Trust which was referred to as “now-defunct”;
(b)refer to any loan from Mr Steeles; or
(c)refer to monies held in the Australian bank account, nor to her New Zealand bank account, if it then existed.
[77] This is despite specific questions in the Statement of Affairs in relation to trusts, debts and bank accounts.
[78] The Tillers’ signatures each appear in the Statement of Affairs under the declaration: “I declare that the information I have provided in the statement of affairs, including any supporting documents, provides a true and full representation of my financial affairs”.
[79] It is apparent from a review of the documents, including the meeting notes and email correspondence with the Tillers that they were less than candid in their disclosures to the Official Assignee. In fact, they actively misled the Official Assignee at every turn.
[80] I now turn to the direct evidence concerning the trust. I am of the view that the affidavit evidence of the purported settlor (Mr Steeles) and the trustee (Mrs Tiller) does not support the establishment of the trust. A trust is not valid unless those entitled to enforce it and the beneficiaries can be identified. Mr Steeles was apparently the settlor and Mrs Tiller was apparently the trustee and they give inconsistent evidence as to who the beneficiaries of the trust were. Mr Steeles says it was to be for the benefit of his daughter and her children “in a manner that was for my daughter to determine”. However, Mrs Tiller’s evidence is that Mr Steeles advanced the funds to her on trust for the benefit of “our children as well as ourselves”, meaning she and her husband.
[81] In addition, Mrs Tiller’s conduct has been consistent with Mr Tiller being a beneficiary and even, at times, a co-trustee. For example, Mr Tiller was the registered owner and lived on the houseboat in France. Mr Ross argued that Mr Tiller could have been acting as an agent of the trust and in any event the remedy would be for breach of trust, if in fact that was inconsistent with the provisions of the trust. However, there
is no evidence supporting Mr Ross’ submissions and, in view of the argument that Mrs Tiller did not even know there was a trust established, I consider that submission lacks merit.
[82] In the circumstances, as I have noted, I put little weight on Mrs Tiller’s assertions in her affidavit concerning the establishment of the trust. They are contrary to her earlier and persistent assertion that the funds that went into the purchase were from a loan from her father. In view of her lack of forthrightness in relation to direct questions and her misleading answers in the Statement of Affairs, even putting to one side the failure to disclose the true situation as to her bankruptcy in the A & I form, I consider that little weight can be put on her evidence. I bear in mind that she has not been subject to cross-examination but nevertheless I am entitled to reach that conclusion in view of the evidence as a whole.
[83] I do not consider Mr Steeles’ evidence establishes an intention to create a trust, in the circumstances of this case. I consider he was providing the money to Mrs Tiller as an “early inheritance” and he “hoped” that it would be applied for her benefit and that of the children but that was for Mrs Tiller to determine. Mr Steeles’ affidavit evidence was also provided many years after the trust was apparently settled but, even if taken on face value, it does not establish a case in the circumstances of this case. Mr Steeles’ expressed intention does not to establish a trust for the same reasons that the Court in Re Adams held that the applicant was the outright owner. As Mr Dingwall pointed out Mr Steeles’ expression, could be the 21st century equivalent of the intention expressed in Re Adams.
[84] I am satisfied that the money advanced to Mrs Tiller by her father was an absolute gift in legal terms.
Estoppel
[85] I now turn to the application for leave to amend the grounds of appeal to include an argument on estoppel. To pursue that argument Mr Ross referred to, in particular, two pieces of email correspondence. The first was from Ms Gardner, of the Official Assignee’s office to Mrs Tiller, saying, among other things, “I also explained that when you prove the funds used to purchase the property and assist with the
building were paid for by a third party then I would remove it”. The next email that Mr Ross points to is another email from Ms Gardner to Mrs Tiller dated 2 May saying that Ms Gardner had received the bank statements from Australia and found that Mrs Tiller had two bank accounts. She said she had asked for copies of the second account, but the Australian bank had yet to respond. She said she did not believe there was any point in another meeting with Mrs Tiller until she received the bank statements. Ms Gardner went on to say, “I cannot remove the caveat over the property you purchased until I have the relevant information to confirm the original funds came from your family”.
[86] While Mr Dingwall does not oppose the application for leave to amend the notice of appeal, he points out that the emails taken alone are misleading. The emails occurred in the course of the investigation and before Ms Gardner had all the information. She was obviously acting under the impression that the funds had been provided to Mrs Tiller by a third party, after she had been adjudicated bankrupt, for the purpose of building the house and buying the section.
[87] In those circumstances the ownership of the property may have remained with the bankrupt. However, the situation in fact was entirely different. The evidence established that the monies in fact had been advanced, or as I have found, gifted, many years earlier, used to buy a boat that was sold and the proceeds were remitted from Australia to a New Zealand bank account in the name of Mrs Tiller to be used for the purchase of the property. The advances were therefore monies in existence before the bankruptcy.
[88] There is no evidential basis for an argument of estoppel. However, Mr Ross made it clear that his primary argument was the trust argument. He did not explore in any detail the claim of estoppel.
[89] In those circumstances I consider it is inappropriate to grant leave to amend the appeal. Accordingly, leave to appeal on that point is declined. In any event, it would have failed on its merits on the information before me and an appeal on that point would have been dismissed.
Conclusion
[90] In summary I conclude that the evidence does not support the establishment of a trust in relation to the funds received by Mrs Tiller from her father. Therefore, I find the Waipawa property is owned personally by Mrs Tiller. She purchased the property and built the house on it from personal funds.
[91] The Official Assignee was correct in his decision that the Waipawa property, including the house, belonged to Mrs Tiller personally.
[92]Accordingly, the appeal is dismissed.
Costs
[93] Both counsel indicate that the appeal justified a 2B award in terms of the High Court Rules 2016 costs schedules. Mr Ross advised me that Mrs Tiller is in receipt of a grant of legal aid, although that grant was only made recently.
[94] In terms of s 45 of the Legal Services Act 2011, I am not aware of any exceptional circumstances that would justify an order for costs being made against the legally aided person. Therefore, as is the usual position, costs are not awarded.
[95] In the event of costs being awarded, for the purposes of s 45(2) I would have awarded costs against the appellant on a 2B basis, together with reasonable costs and disbursements, together with travel costs, to appear in Wellington for the hearing today.
[96] Having indicated that is my position, if counsel wish to make further submissions on costs, I allow leave to make such submissions within three days of the date of this judgment.
Grice J
Solicitors:
Cathedral Lane Law, Napier | Ahuriri for the appellant.
Solicitor for the Official Assignee, Christchurch | Ōtautahi for the respondent.
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