Webb v Teviotdale

[2023] NZHC 2921

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1331

[2023] NZHC 2921

UNDER

the Land Transfer Act 2017

IN THE MATTER

of an application that caveat 812731090.1 not lapse under s 143 of the Land Transfer Act 2017

BETWEEN

AVEAEL JOANN-RACHAEL WEBB

Applicant

AND

BRIAN MEREDITH TEVIOTDALE

First Respondent

ELEANOR ANNE TEVIOTDALE

Second Respondent

Hearing:	12 October 2023
Appearances:	S A McKenna for Applicant J M Skinner for Respondents
Judgment:	19 October 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

(summary judgment)

This judgment was delivered by me on 19 October 2023 at 2.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

WEBB v TEVIOTDALE [2023] NZHC 2921 [19 October 2023]

[1]    When Aveael Webb was about 20 years old, she inherited a half-share in her grandmother’s house in Eastbourne, Wellington. Aveael’s grandmother died in August 1996 and left the other half-share in the property to another of her granddaughters, Ms McGee. At that time, Aveael lived with her parents in Rotorua.

[2]    The respondents  are Aveael’s  parents.  Aveael  says  her father,  Brian,  had  a sentimental attachment to the Eastbourne house and he wanted to buy Aveael’s  and Ms McGee’s half-shares in the property.

[3]    Aveael, while uneasy about selling a bequest, says her parents told her that they would leave the whole house to her in their wills so that it would pass back to her when they had both died, thereby giving effect to her grandmother’s wishes for her to have an interest in the Eastbourne home.

[4]    Aveael’s grandmother’s estate was administered by the Public Trust. In practical terms, Aveael says she left the mechanics of the transaction to her father. Aveael says her parents worked on the basis the property had already been valued, referring to the government valuation which, at the time her grandmother died was

$321,000.00. By the time the final price was struck, a new government valuation had issued on 2 November 1996 at $370,000.00.

[5]    An agreement for sale and purchase is not available. Aveael advises, having made enquiries, that the Public Trust file was destroyed long ago.

[6]Fifty per cent of the government valuation representing Aveael’s half-share was

$185,000.00. Aveael says that to the best of her recollection, she received either

$182,000.00 or $193,000.00, together with a car and a horse float which she said was worth about $5,000.00.

[7]    When Brian and Eleanor came to negotiate the purchase of Ms McGee’s half-share in the Eastbourne property, a registered valuation was obtained. The valuation must have been commissioned by the Public Trust as the valuation dated 11 February 1997 is addressed to the Public Trust, Lower Hutt. The valuation was for

$425,000.00 including $5,000.00 for chattels (which included floor coverings, blinds, drapes and light fittings which would not be reflected in the government valuation).

[8]    The agreement for sale and purchase in relation to Ms McGee’s half-share is dated 11 June 1997, for a purchase price of $225,000.00. The vendor is named as the Public Trust with Brian and Eleanor as purchasers.

[9]    As I  have  said,  at  that  time Aveael  lived  at  home.  By  a  contract  dated 4 February 1997, Aveael signed an agreement to purchase her own property in Rotorua. That contract settled in March 1997.

[10]   Aveael says she did not see the 11 February 1997 valuation sent by the Public Trust to her parents’ P O Box number, albeit for her attention, under cover of a letter dated 17 February 1997. However, it is clear from Aveael’s evidence that in the early part of 1997 she learnt that her parents were going to have to pay Ms McGee more than they had paid Aveael for her half-share.

[11]   Aveael says that on or about 2 February 1997, her parents were ready to go ahead with their purchase of her half-share. She says they showed her the updated government valuation at $370,000.00. Aveael says she asked if Ms McGee had accepted that amount and her parents replied that Ms McGee disputed the property’s value and they were going to have to pay her more.

[12]   Aveael’s claim is summed up in the following passage from her evidence. She says her parents told her:

… it doesn’t matter if [Ms McGee] gets more, she’s not the one getting the property back. They were right, I was content to receive a lower sum than [Ms McGee] because the cash paid was only one aspect of the deal I reached with my parents, I was the one getting the property back in my parent’s wills, which was [far] more important to me than what I was paid.

[13]   Unfortunately Aveael and her parents now disagree over the arrangements concerning the Eastbourne property.

[14]   On 10 May 2023, Aveael lodged a caveat against the Eastbourne property, claiming the following interest:

The Caveator claims a beneficial interest in the land pursuant to a resulting trust created by agreement to Transfer the land from the Caveator as beneficiary to the registered owners, Brian Meredith Teviotdale and Eleanor Anne Teviotdale on 12 May 1997.

[15]   Brian and Eleanor have challenged the caveat and Aveael has applied for an order sustaining the caveat.

Applicable principles

[16]   The Court of Appeal in the recent decision of Lendich v Codilla,1 confirmed that the relevant principles were  those  set  out  by  the  Court  of  Appeal  in Philpott v Noble Investments Ltd. These are as follows:2

[26]      The applicable legal principles which governed the application to sustain the caveats, and which now govern this appeal, are as follows:

(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;

(c)The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained – either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and

(d)When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s interest would not be prejudiced by removal.

1      Lendich v Codilla [2023] NZCA 222.

2      Philpott v Noble Investments Ltd [2015] NZCA 342 (footnotes omitted). Recently confirmed in Melco Property Holdings (NZ) 2012 Ltd v Hall [2021] NZCA 184 at [19] and [36], and upheld on appeal in Melco Property Holdings (NZ) 2012 Ltd v Hall [2022] NZSC 60, [2022] 1 NZLR 59 at [56]; and Wallace v Studio New Zealand Ltd [2021] NZCA 392 at [40].

[17]The Court of Appeal also said:

[10]We  also  note  with  approval,  the  following   observations   of  Master Gambrill in Bacher v Bacher regarding the Court’s approach to the assessment of affidavit evidence filed in support of an application to sustain a caveat:3

[Counsel] acknowledged that while the Court cannot resolve legitimate disputes as to factual matters in affidavit evidence, it is well established that the Court does not have to accept the affidavit evidence submitted by the caveator uncritically. The Court is entitled to take a robust view in view of vague, contradictory and implausible assertions in the affidavit evidence of the caveator. In particular, the Court is entitled to take an adverse view of the credibility of assertions made by the caveator that are clearly contradicted by unequivocal contemporary documentation … and the Court is entitled to take into account the evidence of an independent professional witness. It is accepted that the Court may scrutinise the affidavit evidence to see it passes the threshold of credibility

…

Resulting trusts

[18]   Aveael’s argument that she has an interest in  the  Eastbourne property under a resulting trust is based on the proposition that the consideration to be provided to her by her parents in exchange for her interest in the property would be;

(i)a cash component;

(ii)a motor vehicle and a horse float; and

(iii)a promise that the property would be left by the respondents to Aveael upon their death.

[19]   The arrangement described by Aveael has the flavour of a contractual arrangement. Mr McKenna, counsel for Aveael, in his submissions said that the consideration to be provided to Aveael included the third element described above.

[20]   The interest claimed in the caveat is of “a resulting trust created by agreement to transfer the land from …” Aveael. In other words, the contract under which Aveael

3      Bacher v Bacher (2002) HC Auckland M187-IM02, 21 May 2022 at [9].

sold her share in the Easbourne property to her parents created a resulting trust in her favour – the trust property being the reversion, that is, she retained the right to own the land when her parents died.

[21]   Mr McKenna’s submissions go on to say that the purchase price to be paid to Aveael was not revisited when the registered valuation was obtained by the Public Trust. Brian and Eleanor say they were prepared to revisit the purchase price once the registered valuation became available which would allow them to determine the amount they would pay to Aveael by way of a top-up.

[22]Mr McKenna submitted:

When an interest in property is transferred to a party that has only provided part of the consideration for the interest received, a resulting trust in favour of the transferor will arise.

[23]   Mr McKenna submits that the additional consideration to be provided by Brian and Eleanor under the sale agreement, was  the  reversionary  interest in  the land.  Mr McKenna submitted that once Brian and Eleanor accepted they were going to pay something by way of a top-up, this means Aveael only received part of the consideration agreed and had not parted with her entire interest in the property.     Mr McKenna submits there was a resulting trust “over the portion of her interest in the property that the applicant did not dispose of”, with the interest Aveael did not dispose of being the reversion of the fee simple upon the death of Aveael’s parents. In other words, Mr McKenna submits Aveael  only agreed to grant Brian and Eleanor   a life interest and retain for herself the fee simple subject to that life interest.

[24]   With respect to Mr McKenna, I consider that submission an artificial interpretation of what occurred and as I will discuss below, does not sit with Aveael’s own written description of the arrangement.

[25]   Brian and Eleanor became the registered proprietors of the Eastbourne property. They gained the fee simple interest. Aveael, in her affidavit, talks about her father wanting to “buy [her ]share”. She says that she discussed with her parents what they would “pay for [her] 50 per cent share …”. This is the language of a transfer of the fee simple interest – not of a life interest.

[26]   I am unable to accept that it is reasonably arguable that even on Aveael’s evidence, she only transferred to her parents a life interest. Of course, at the time of Aveael’s sale of the property, she only controlled a half-interest in the property. She could not grant her parents a life interest over Ms McGee’s half-share. Aveael had no interest in Ms McGee’s half-share that she could retain. Aveael’s evidence does not mention the idea of a life interest being discussed. Her evidence is that her parents would leave the whole house to her in their wills so that it would pass back to her when they die, not that the property would revert back to her on their death independently of their wills which would be the case if they only had a life interest. This is, on its face, a testamentary promise.

[27]   While the caveat is not put on the basis of a testamentary promise, a claim to an interest pursuant to the Law Reform (Testamentary Promises) Act 1949 will not support a caveat. Nor is an oral contract to leave land by will enforceable unless the requirements for writing are satisfied, similarly an express trust over the property will also fail for lack of writing.4

[28]   Mr McKenna’s submissions represent an amalgam of ideas. Firstly, there is the idea that the sale of her half-share was at an undervalue, but that the consideration making up that undervalue was the promise that the Eastbourne property would be transferred back to her.  As I have said, that is a contractual  analysis.  The  claim of a resulting trust takes  a  different  line  being,  as  I  have  said,  of Aveael  retaining a reversionary interest in the fee simple because she was not paid the full value of the property. Again, as I will expand on below, Aveael’s own evidence is inconsistent with the last proposition as her evidence is she sold her half-share to her parents but that they promised to leave Eastbourne to her in their wills.

[29]   Mr McKenna’s written submissions under the heading “Conclusion on Resulting Trust” says:

46. In this case the applicant has transferred her entire interest in the property to the respondents in circumstances where the consideration she has only received a portion of the intended consideration. This gives rise to a rebuttable presumption that she did not intend to part with her entire interest in the property. Without even needing to

4      Sutherland v Lane [2020] NZHC 721 at [90].

venture into the factual disputes as to what the missing element of the consideration is, the legal basis for a resulting trust exists on the facts.

(emphasis added)

[30]   The consideration received by Aveael on her case, was the promise to transfer Eastbourne to her. The promise claimed by Aveael will be performed on the death of the survivor of her parents.

[31]   Paragraph 46 of Mr McKenna’s submissions is inconsistent with his earlier submission that Aveael did not dispose of a portion of her interest in the Eastbourne property.

[32]   That a transfer has taken place for consideration is inconsistent with the presumption of a resulting trust.5

[33]   The other problem with the resulting trust argument is that Aveael  only had  a half-interest in the Eastbourne property. There cannot be a resulting trust entitlement to the entire property when Aveael only ever had a half-interest.

Aveael’s evidence in more detail – what was the arrangement?

[34]   While Aveael’s sworn evidence  is  that  her  parents  promised  to  transfer the Eastbourne property back to her under their wills, that is not how she described the arrangement in an email she sent to her parents on 24 June 2009. It is important to note that at that 2009 Aveael was a qualified solicitor.

[35]   At the time the 24 June 2009 email was written, Brian and Eleanor were in the United States. After some family news, Aveael said in the email to her parents:

I would also like to ask that you note in your wills that my Family Trust has the option of receiving Margret’s Eastborne property on death of the survivor and the value of such is to be taken as a satisfaction to that extent of any share I may be left in the residuary estate and shall be brought into account on the distribution of the residuary.

5      See Lendich v Codilla, above n 1.

[36]   The email goes on to say: “My reasons for this are the follow (sic)” and she then refers to something of a falling out with one of her brothers and says that her brother:

…would not be aware that when I sold you both my half share in Eastborne that:

…

(c) that you both said that as I was selling to you that I would get the opportunity to re-own it in the future again as part of my share in your wills.

…

I would very much love to end up with Eastborne again one day. I know that [Margret] did want me and [Ms McGee] to own it and I don’t want any potential fighting with [her brother] over it.

[37]   Aveael’s caveat is not on the basis that she might “… end up with Eastborne again one day” but rather the caveat asserts it is a certainty she would receive the property upon the death of her parents. Similarly, Aveael caveat does not claim that she has “… the opportunity to re-own it in the future …” but is that she has a fixed and certain right to the property upon her parents dying.

[38]   Brian replied on 26 June 2009 and, other than responding to the family news, said:

If you wish we can include a provision that if the beneficiaries wish to sell Eastbourne then you have first refusal at the valuer’s assessment (assuming we still own the property). I do not suppose that all four of you would want to keep it as a rental property (like we suggested you and [Ms McGee] should do) and it is only fair that you should have first choice.

[39]   This email exchange is inconsistent with Aveael’s present evidence. Again, Aveael was a solicitor in 2009 when she wrote the 24 June 2009 email and, at least in the extract set out at [35], used legal language. Inherent in Brian saying: “assuming we still own the property” is that Brian and Eleanor could sell the property if they wished. Brian makes it express that Aveael will not be gifted the property outright but that if the beneficiaries want to sell the property, then Aveael would have first right of refusal. Brian’s email in general terms reflects what Aveael sought Brian and Eleanor

do in their wills, and is consistent with what Aveael records Brian and Eleanor told her at the time of the contract that:

… as I was selling to you … I would get the opportunity to re-own it in the future again as part of my share in your wills.

[40]Of her email of 24 June 2009, Aveael says in her evidence that:

In 2009 I asked in an email that instead of the property coming directly to me could they instead leave it to my family trust. This email also backgrounds the facts around the sale, including the promise to leave the property to me.

(emphasis added)

[41]   This is Aveael endorsing the 24 June 2009 email as accurately recording the 1996 arrangements.

[42]   In her affidavit, Aveael refers to Brian’s reply that when he and Eleanor came to New Zealand they would look to amend their wills so that Aveael’s family trust:

… was given first option to buy the house from their estate out of my ¼ share of the estate. They did not dispute that they had made that promise and agreed that it was the fair thing to do (with the provision that my three brothers were not disadvantaged or that my parents may not be able to make good on the promise if they faced financial difficulty in the meantime).

(emphasis added)

[43]   When Aveael says: “they did not dispute that they had made that promise”, the promise she refers to is  not a binding commitment by her parents  to leave her      the Eastbourne property outright, but that she would receive the Eastbourne property as part of her inheritance, that is, it would be included in her one-quarter share (Aveael having three siblings) of her parents’ estates.

[44]   Underlying Aveael’s position recorded above, is an expectation she would benefit from her parents’ estates and that she would like to receive the Eastbourne property as part satisfaction of her share.

[45]   Aveael’s email of 24 June 2009 confirmed in her evidence is inconsistent with her having the fixed and certain right to the Eastbourne property claimed in her caveat. Aveael, in her evidence, refers to a discussion with Brian in 1997 as follows:

9.2 After they got the property, a few months later I asked my father  verbally if this had been done. He said that they would still do it but were going to also put something in the wills to make sure my brothers got extra then me from the rest of the estate to balance out the value of Eastbourne coming to me. This was a change but as their Estate was large enough to support the claim, I was ok with it, as I would still get Eastbourne as agreed.

[46]   Aveael’s email does not describe a right to the property, instead describing an expectation that part of her share of the estate would be made up of a transfer of the Eastbourne property. In other words, Aveael describes her “paying” for Eastbourne, by way of a deduction from her expected inheritance, not a right to receive Eastbourne whether she was provided for in her parents’ wills or not.

[47]   The ability to acquire Eastbourne as described by Aveael in the June 2009 email is dependent on her parents deciding to leave her part of their estates. For Aveael’s caveat to be valid, she would have to establish an arguable case to a right to Eastbourne, whether or not a provision was made for her in her parents’ wills.

[48] Aveael does not seek to explain the inconsistency between her own 2009 email and her present evidence that her parents said they would leave her Eastbourne in their wills. This is not an issue for cross-examination as Mr McKenna asserted, as this inconsistency arises on Aveael’s own evidence. As the passage set out at [17] above shows, the Court is entitled to take a robust view of vague, contradictory and implausible assertions in the affidavit evidence of the caveator. Because Aveael did not seek to explain or qualify her June 2009 email, indeed, as I have set out above, she essentially endorses and adopts what she said there, I can only conclude that the email is an accurate record of the agreement.

Decision

[49]   I find Aveael has not established a reasonably arguable case for the interest claimed  in  the  caveat.  The  interest  claimed  by  Aveael  in  her  evidence  and  the submissions made by her counsel are of a contractual promise to leave the

Eastbourne property to her. As discussed above, Aveael’s evidence is she hopes to be able to receive Eastbourne as part of her inheritance, not of an entitlement to do so. The caveat does refer to a resulting trust being created by the agreement but in reality what is asserted is a testamentary promise. A testamentary promise that meets the requirements for an enforceable contract to leave an interest in land might give rise to a caveatable interest,6 but such does not give rise to a resulting trust over the property.7

[50]   Aveael’s application to sustain her caveat is dismissed. Costs follow the event on a 2B basis together with disbursements as fixed by the Registrar.

The way forward

Brian and Eleanor’s position is that given Aveael’s three brothers did not receive anything in their grandmother’s estate, they intend to leave them half the value of the Eastbourne property. The remainder of their estates, including the other half-share of the Eastbourne property is to be divided equally between the four children. Brian says, considering the size of his and Eleanor’s estates, he anticipates that Aveael will have sufficient equity in the estates to purchase the Eastbourne property from their estates. At the conclusion of the hearing, Aveael confirmed what she wished to achieve was, in effect, what Brian envisages will occur. Given what Brian envisages and what Aveael seeks to achieve is essentially the same, and given Brian believes there will be sufficient value in his and Eleanor’s estates to achieve that outcome it is possible to put in place arrangements that give Aveael confidence that what she and Brian and Eleanor intend can occur. It is possible for parties to contract out of the Law Reform (Testamentary Promises) Act and if Brian and Eleanor’s assets are left equally to their four children, the prospects of Aveael bringing a successful Family Protection Act claim are remote indeed. Aveael could acknowledge that such an arrangement satisfied any moral duty her parents owed her. I strongly recommend that the parties

6      Francis Barlow and others Williams on wills (11th ed, Butterworths, London, 2021) at [3.6].

7      Aveael’s alleged contract sees her acquiring Eastbourne from her parents. Aveael is in the same position as a purchaser under an agreement for sale and purchase as subject to the absence of writing, Aveael says her contract of sale gave her the right to receive the property. In an agreement for sale and purchase the vendor may be a constructive trustee – see McMorland Sale of Land 4th ed, para 10.06. Given the contractual nature of Aveael’s asserted claim, her interest is not greater than a purchase under an agreement for sale and purchase.

reflect on the fact that the positions reached at the end of the hearing are effectively the same.

Associate Judge Lester

Solicitors:

McKenna King Dempster, Hamilton (for Applicant) Skinners Law, Auckland (for Respondents)