Wakenshaw v Wakenshaw
[2016] NZHC 773
•22 April 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-2785 [2016] NZHC 773
UNDER THE LAND TRANSFER ACT 1952 IN THE MATTER OF
an application that caveat number
BETWEEN
JANTHINA WAKENSHAW Applicant
AND
DONALD FYFE WAKENSHAW Respondent
Hearing: 22 March 2016 Appearances:
Mr Chambers for Applicant
Mr Dench for RespondentJudgment:
22 April 2016
JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE
This judgment was delivered by me on
22.04.16 at 4.00 pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
WAKENSHAW v WAKENSHAW [2016] NZHC 773 [22 April 2016]
Introduction
[1] The applicant is the daughter-in-law of Mary Wakenshaw (“Mary”). The respondent is one of Mary’s sons and is the applicant’s brother-in-law. The applicant has lodged a caveat against a property in Bethell’s Beach, claiming an interest:1
As beneficiary under an implied or constructive trust and [the respondent], the registered proprietor, is the trustee.
[2] The property in question was previously owned by Mary but was gifted to the respondent in August 2014, shortly before Mary passed away. The applicant has subsequently filed an originating application for an order that the caveat not lapse.
Background
[3] The applicant was married to the late Norman Millar Wakenshaw (“Norman”), who was Mary’s son. Norman died on 11 May 2014. He and the applicant had been married for 28 years and had two daughters, now aged 14 and 16 years respectively. Mary died approximately a year after Norman, on 21 May 2015.
[4] During her lifetime Mary and her husband (the father of Norman and the respondent) went their separate ways. As part of settling their joint property, Mary acquired the interest of her former husband in a section of vacant land at Long Road, Bethells Beach in 1990 (“the property”). However, there is some dispute about the events around and after that time.
[5] The applicant alleges that Norman and the respondent assisted Mary by providing finance to her to use for the purchase of her former husband’s interest in the property. She alleges that the purchase was made on the basis of an agreed understanding that Mary was to be the legal proprietor of the property “but the
beneficial owners of the property were Donald and Norman”.2 The applicant says
that she and Norman began constructing a home on the property around 1987, where they lived with their two daughters. She says that she and Norman paid all outgoings on the property “including rates”. The respondent used to occasionally
come and stay but he would be lodged in a converted garage when he did so rather
1 Caveat against dealings with land dated 5 November 2015.
2 Affidavit of Janthina Wakenshaw dated 25 November 2015 at [11].
than staying with Norman and the applicant. Before Norman died, the applicant says, he told her that the respondent had assured him that he would transfer Norman’s one half share in the property to her and that the respondent had:3
Assured [him] that he would look after the interests of [the applicant] and
my daughters upon Norman’s death.
[6] Similarly, the applicant claims that before her death, Mary told the applicant that Donald would look after her interests and those of her daughters. The applicant claims that Mary repeatedly stated that on her passing, the applicant and her daughters would never have to move from their home and that Donald:4
Would transfer our share to us if we wanted.
[7] The respondent’s narrative of events is somewhat different. He states that his parents owned three houses at the time of their separation in Whangamata, Glendene and Bethells Beach. When they separated, his father took the Whangamata house and Mary took the Bethells Beach property. The respondent states that no money changed hands in respect of those transactions. The respondent states that Mary did purchase her ex-husband’s interest in the Glendene property but that she obtained a
mortgage for that purpose from the Auckland Savings Bank.5 The respondent further
states that he and Norman had jointly developed the property at Bethells Beach prior to Norman’s marriage and that he (the respondent) was largely responsible for the construction of the house which the applicant and her daughters now reside in. The respondent denies that he ever made a statement to Norman that he would transfer a share of the Bethells Beach property to the applicant and her daughters.
[8] Mary subsequently made a will on 28 August 2014, a few months after Norman’s death. Norman, who had been named as a beneficiary under a previous will, was removed as such from the latest will. The applicant says that the earlier will had been executed in 1985 and had provided for substitutionary gifts to the applicant and her daughters if Norman pre-deceased Mary. The applicant has spoken
very critically in her affidavit of what she said was the respondent’s part in the
3 Affidavit of Janthina Wakenshaw dated 25 November 2015 at [14].
4 Affidavit of Janthina Wakenshaw dated 25 November 2015 at [16].
5 The title to the Glendene property, which is attached to the affidavit of Janthina Wakenshaw dated 25 November 2015, is subject to a mortgage in favour of Auckland Savings Bank, registered on 5 October 1982.
creation of the new will. Essentially she claims that the respondent manipulated his mother while she was sick and dying.
[9] Not only did Mary change her will, but on 20 September 2014 she also gifted the Bethells Beach property to the respondent. It is to be noted that that date was quite close to the date when Mary made her further will. Assuming that Mary was in a state of intellectual lucidity at the time, she would have appreciated that whatever provision she made for the daughters of Norman and the applicant in the later will, it would not include the property which she had given to the respondent.
The basis for the alleged interest in the land
[10] The first point that Mr Dench, counsel for the respondent, raised was the basis for the applicant’s alleged interest in the land. I agree that this is a central point because before any person can obtain an order sustaining a caveat, they must show the basis upon which they are:6
… entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust express or implied or otherwise[.]
[11] The terms of the caveat which the applicant lodged in this case stated that the estate or interest which the applicant claims arose because the applicant was:7
… [a] beneficiary under an implied or constructive trust and [the
respondent], the registered proprietor is the trustee.
[12] The terms of that alleged trust appear in the notice of application:8
That, in consideration for the assistance given to the mother, Mary Miller Wakenshaw… the mother and extended family had acknowledged and agreed that, while the mother held title to the Property in her name, the beneficial owners of the Property would be the applicant’s late husband, Norman Miller Wakenshaw … and his brother, the named respondent, in equal shares.
[13] Initially, the basis upon which the interest in land was said to rest was that
Norman had made contributions to the acquisition of the land together with the
6 Land Transfer Act 1952, s 137(1).
7 Caveat against dealings with land under s 137 of the Land Transfer Act 1952.
8 Notice of originating application that caveat not lapse and/or be sustained dated 25 November
2015 at [2.2.2].
respondent, and that those contributions had been made on the basis that they would receive a one half share of the beneficial interest in the property.
[14] However, at the hearing counsel for the applicant, Mr Chambers, told me that the basis for the alleged trust was that a number of promises had been made to the applicant in acknowledgement of the fact that she and Norman had contributed to the maintenance and development of the property. He said that they had paid all the outgoings on the property. It was promised that they would beneficially receive Mary’s half share in the property.
[15] Before proceeding further, I will address two other matters that have arisen in the course of proceedings.
[16] Prior to the hearing, Mr Dench attempted to obtain clarification of the nature of the trust and he wrote to Mr Chambers for that purpose. It is not disputed that the following is an accurate summary of the exchange between the two counsel.9
10.The applicant needs to establish a proprietary interest in the property that is capable of supporting her own caveat. By letter dated 18
December 2015, the respondent (through counsel) asked the
applicant (through counsel) to identify her cause of action/caveatable interest with specific regard to the problem that she was not the beneficiary of the trust. The response by letter dated 5 February
2016 was:
1Based upon the promises made the by [sic] deceased and [the respondent], [the applicant] would pursue a claim for a half share of the Bethels [sic] Beach property, on behalf of her daughters under section 3(1)(c) and 3(2) of the Family Protection Act 1965 (sic).
2Based upon the promises made the by [sic] deceased and [the respondent], [the applicant] would pursue a claim for a half share of the Bethels [sic] Beach property for the duration/remainder of her life, or a portional interest in the Bethels [sic] Beach property, or a claim for remuneration from the estate for the rendering of services and the performance of work for the deceased in her life time, under sections 3 and 4 of the Law Reform (Testamentary Promises) Act 1949.
[17] Unfortunately neither of the two bases set out in the preceding paragraph provide standing for the applicant to proceed with a caveat over the property.
[18] The second point was raised by Mr Dench in his synopsis. He noted that the terms of the trust alleged by the applicant (as set out at [12] above) appeared to describe an express trust rather than an implied one. As Mr Dench rightly noted, an express trust in relation to land would need to be created in writing and signed by the settler.10 Clearly, there is no express trust in relation to the land at Bethells Beach. However, the terms of the alleged interest, as described in the caveat, refer to an “implied or constructive trust”. I therefore set the matter of express trusts to one side.
What entitlement does the applicant have?
[19] In order to sustain the caveat, the applicant must show that there is an arguable case that an implied trust exists on one of the bases identified by the applicant, namely, that an equitable interest arose in the property from the fact that Norman provided funds for the acquisition of the property and for its upkeep or maintenance.
Implied trust arising from contributions to purchase price
[20] A first point to note in respect of this issue is the significant factual dispute regarding whether such contributions were in fact made. At this stage of proceedings, the applicant needs only to show that she has a reasonably arguable case. However, it is necessary for her to explain to the court the basis of the claim that she intends to make at trial. That explanation should be accompanied by at least an outline of the evidence which the applicant intends to put forward in support of the claim. If the applicant were to present her case at trial on the basis of unsupported and furthermore, disputed, assertions about the payment of significant sums of money, without putting forward any corroborating material, then there is a high likelihood that she would fail.
[21] There is little detail about the alleged arrangement. The amount of money that was involved is not stated. The date when the arrangement was entered into is not even approximately stated. The source of the money which Norman allegedly provided is not stated. Did the arrangement that the applicant alleges contemplate that Norman and his family would apparently have the right to rent free occupation of the property or was that arrangement reached later?
[22] The absence of any evidence seems particularly unusual in this context given that, if the applicant’s account of events is correct, a significant sum of money must have changed hands. It seems very unusual that there should be absolutely no record of such a transaction.
[23] However, that is not the only problem that the applicant faces in respect of this issue. The applicant did not support her case on the basis that she provided the funds for the acquisition of the property, her evidence being that it was her late husband, Norman, who did. Thus she herself is not a beneficiary of any implied trust that might have come into existence.
[24] I understand that Norman died intestate. In that case, there is a possibility
that the applicant would be entitled to letters of administration as Norman’s widow.11
However, there does not appear to have been a grant of administration made at any stage up until the present time. That being so, the legal result is as stated in Laws of New Zealand in the following passage:12
10. Interim vesting in Crown. Where a person dies without leaving a will that effectively appoints an executor, the estate vests in the Crown until administration is granted, in the same manner as formerly in England in the case of personal property it vested in the ordinary. Notices that need to be given or documents that need to be served on the Crown may be given or served in accordance with the Crown Proceedings Act 1950.
[25] Even though I was not requested to do so, I gave consideration to adjourning this matter so that any necessary application for the grant of letters of administration could be made, thus supplying the deficiency identified above. However, given that these proceedings concern a caveat which is providing a block on the title of the land
owned by the respondent, I do not consider, taking a balanced view of matters, that it is reasonable to further delay consideration of the matter in order to give time for such an application to be made. There is also concern that the applicant may not have a proper appreciation of the grounds that she would need to make out in order to justify the continuation of a caveat. The references noted above to claims under the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act
1949 do not engender confidence in this area.
Implied trust arising from contributions to property
[26] The applicant claimed that she and her husband made a number of contributions to the Bethells Beach property over the years. In particular, the applicant says that she and Norman paid all outgoings relating to the property, including rates and various improvements to the property.
[27] I understand that the applicant invokes the principles which have been established in cases such as Lankow v Rose.13 Those cases have established that it is necessary for a person who makes such a claim to establish that more than a minor contribution was made to the acquisition, preservation or enhancement of the defendant’s assets, whether directly or indirectly; and that in all the circumstances both parties must be taken reasonably to have expected that the claimant would share in the assets as a result. While the contributions do not need to be monetary in nature, there must be a causal relationship between the contributions and the acquisition, preservation or enhancement of the defendant’s assets and the
contributions that are made must manifestly exceed any benefits that the claimant derives from the arrangement.14
[28] If the applicant’s account of events is correct, there is at least a reasonably arguable case that she and Norman made contributions to maintaining the property, in that they paid the rates. However, as above, the respondent’s evidence on this point directly contradicts that given by the applicant.
[29] The respondent says that his mother paid the rates in respect of the property until 1996 and that he has been responsible for the payments since that time. Neither party has produced documentary evidence on this point. As noted above, the respondent also denies that the applicant and her husband built the house which is now located on the property. He says that he was heavily involved in the construction and that his mother paid for major improvements to the property including a transformer, an underground electrical connection, a septic tank and a new toilet system. He acknowledges that an extra bedroom was added to the property in 2013 but says again that he paid approximately 25% of the cost and carried out most of the labour. He further acknowledges that the applicant recently painted the inside and outside of the house, but claims that this was maintenance and repair work rather than an improvement.
[30] Given this factual dispute it would normally be expected that the applicant would provide at least documentation to support her claim. The only evidence which has been produced in support of the applicant’s claim is a number of invoices which clearly relate to daily expenses or repairs and maintenance work. If the matter is litigated through to trial, the applicant may obtain relevant materials through discovery. However in the absence of any further documentation on this point, it would seem that the applicant’s claims in this respect suffer from the same evidential defects identified above in relation to the claimed contributions to the purchase price.
[31] There is little doubt that the applicant and her late husband did actually make some payments in regard to the property. However, some of these would have been running costs that any person occupying the property might be reasonably expected to make and therefore could not be regarded as giving rise to a reasonable expectation that the payments would be recognised in due course by a proprietary interest in the property. This point is especially relevant in light of the fact, as accepted by all parties, that for 20 years the applicant and her husband lived in the property rent free. On that basis, it could not be said that the contributions made by the applicant and Norman manifestly exceeded the benefit that they derived from the arrangement.
The effect of the contributions on the respondent’s beneficial ownership of the house
[32] Even if I am wrong in my conclusions regarding the implied trusts set out above, it is far from clear that the existence of those trusts could now bind the respondent. This is a complex area of law incorporating concepts of fraud, equity and indefeasibility. However in light of my conclusions above, it is not necessary for me to say anything further on this point.
The discussion that the respondent might establish a trust for the girls
[33] It was claimed for the applicant that about the time that Mary executed her will in August 2014, a discussion took place about the possibility of the respondent setting up a trust to which he would transfer one half of the Bethell’s Beach property for the benefit of the two daughters.
[34] As it turned out, the respondent did consider taking such a step but in the end concluded that it was not necessary for him to do so. He does not dispute that he agreed to the applicant and the girls continuing to live in the property and for the girls to ultimately acquire the property. His evidence was that:15
I have done what I said I would do. I have continued to allow Jan and the girls to live at the property (rent free) from September 2014 when I acquired it. I have also chosen to gift the property to the two girls in my will. I have always been close to my family and it is my wish to look after them. (I am gay and have no children or immediate family of my own[.])
[35] The fact was that the proposal to transfer the property to a trust could at its highest have been nothing more than an incomplete gift, as Mr Dench submitted.16
As such it would not be open to the applicant to enforce it.
[36] My conclusions are that on the evidence even if the respondent did promise to set up a trust, it is a bare promise that could not have given rise to any equitable
interest in the property.
15 Affidavit of Donald Wakenshaw dated 12 February 2016 at [12].
16 Harvey v Beveridge [2014] NZCA 72, (2014) 29 FRNZ 539, at [31]–[33]; Roger Fenton & James Garrow Garrow & Fenton’s Law of Personal Property in New Zealand (LexisNexis, Wellington, 2010) at [4.3]–[4.7].
The point about the execution of the will and the deed of gift
[37] The lack of clarity about this case was not helped by the applicant’s allegations that the respondent took advantage of his position in regard to Mary to persuade her at a stage of her life when she was old and ill to transfer the property to him. I should note that the respondent rejects that any such thing occurred. His position is that he occupied a special place in Mary’s estimation and affections and that he had been the one who had been most involved in looking after her in her closing years.
[38] The assertion that the respondent somehow contrived to have Mary change the disposition of her property by a gift to the respondent and to change her will in his favour is completely unparticularised. Such allegations also seem to be legally irrelevant to the case which the applicant brings against the respondent. These allegations could only be relevant to a cause of action brought against Mary’s estate, alleging that she changed her will and made the gift when she was subject to undue influence on the part of the respondent. There is no suggestion in the applicant’s submissions that the applicant intends to make out any such case. Even if there were a plausible cause of action along those lines available to the applicant, it would not be procedurally fair to the respondent to provide relief on the caveat application based upon the possibility that the applicant might plead a case which has not been put forward so far.
[39] Considerable evidence has been put forward about the circumstances in which Mary executed her will and the deed by which she gifted the property to the respondent. Questions about whether Mary ought to have had independent advice (the solicitor having deposed that Mary waived her right to independent advice) have been raised on behalf of the applicant.
[40] Suggestions have also been made that the respondent, who was living with Mary and drove her to the interviews, might have had an improper influence on the outcome of the legal arrangements which Mary adopted. There is simply no evidence that that is so. In the absence of any such evidence, it was not helpful for that allegation to be made.
[41] I understand that the applicant also questions whether Mary, because of her age, understood what she was giving effect to when she signed the will and signed the deed of trust. Again, that suggestion has no support from the evidence. Ms Hall, the solicitor who took the Will instructions, gave explicit evidence that she had no concerns about Mary’s mental capacity. She saw her on four separate occasions. While Mary was elderly, she was not frail.
[42] In any case, these allegations are not relevant to either of the grounds upon which the applicant claims the existence of a beneficial interest in the property which is binding on the respondent.
Summary
[43] The conclusions reached in this judgment are now summarised.
[44] First, the applicant has not presented any satisfactory evidence to indicate that she or Norman made any contribution to the purchase price, if any, of the Bethells Beach property.
[45] Secondly, to the extent that the various actions of Norman gave rise to rights which he is able to claim against Mary or her estate, these are not actionable on the part of the applicant. She is not the administrator of Norman’s estate.
[46] Thirdly, there must be very real doubts about whether the other contributions allegedly made to the property while Mary was the legal owner of it amounted to anything more than Norman/the applicant meeting the costs of and incidental to their occupation of the property. There is no satisfactory evidence that Norman/the applicant made any contributions to the property during the time that it was owned by the respondent.
[47] Fourthly, if there was any statement of intention on the part of the respondent that he would gift the property to the applicant/the girls, then there has been an incomplete gift which gives rise to no rights upon the intended donees.
[48] The fifth conclusion is that there is no adequate evidence which would establish a reasonably arguable case that the respondent acquired the property from Mary as a result of the application of undue influence on his part which might otherwise result in his holding the property as a trustee for the applicant and her daughters.
Concluding comments
[49] At the hearing, I expressed concern to the parties that they were embarking upon litigation in an attempt to resolve a family dispute. The expense of taking that course, in relation to the amounts that are probably at stake in the proceeding, would not justify continuing litigation.
[50] At the same time, it is of real concern that legitimate rights which the daughters may have against the estate of their late grandmother pursuant to the Family Protection Act do not appear to have been followed up. I specifically note that I am not criticising the legal advisors involved. There may be reasons which explain why steps have not been taken in this direction. Further, while I note the generous attitude that the respondent has taken toward ultimately leaving the property to the two girls by his will, that proposal does not provide a binding protection for them.
[51] A further area of concern is the combative tone of the affidavits that have been filed. Claims that the respondent has somehow behaved improperly in regard to his late mother’s estate appeared to have been made without any apparent foundation. If there is to be a resolution of the dispute between the parties and if there is to be any chance that workable family relationships may be restored, it is very important that the parties refrain from making inflammatory comments, particularly where they do not assist the party putting them forward and where there is no proper basis in the evidence for those comments.
[52] I record that at the hearing there was a discussion about the possibility of a Judicial Settlement Conference taking place. Mr Dench told me that his client is not averse to exploring some type of mediated settlement but that he was insistent that the caveat, which ought never to have been lodged against the title to the property,
must first be removed. On that basis, the respondent opposed my proposal that this proceeding be adjourned while a judicial settlement conference took place. The result is that, as Mr Chambers noted, if and when this proceeding is concluded, there would be no continuing justification for ordering a judicial settlement conference. Notwithstanding that a judicial settlement conference no longer appears to be a practical possibility, it is to be hoped that the parties will take all practical steps that they can to ensure that their dispute is resolved by mediation.
Costs
[53] Because of the nature of this proceeding I do not consider that any costs order ought to be made. This proceeding is reflective of a wider family dispute. It is in the interests of all concerned that that dispute be resolved promptly. Making a costs order would not be conducive to the early consensual settlement of the disputes between the parties.
Orders
[54] I dismiss the applicant’s originating application for an order that the caveat
should not lapse pursuant to s 145A of the Land Transfer Act 1952.
J.P. Doogue
Associate Judge
2