Wei v Du HC Auckland CIV-2011-404-2289

[2011] NZHC 1255

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-2289

UNDER  The Land Transfer Act 1952

IN THE MATTER OF     an application by Wen Wei for an order that a second caveat be allowed to be lodged pursuant to s 148(1) of the Land Transfer Act 1952

BETWEEN  WEN WEI Applicant

ANDYALI DU Respondent

Hearing:         30 August 2011

Appearances: Mr F Deliu for Applicant

Ms L Kearns and Ms Wang for Respondent

Judgment:      22 September 2011 at 4:00 PM

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

22.09.11 at 4 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Amicus Lawyers, Newton, Auckland –  [email protected]

L J Kearns, Barrister, Auckland –  [email protected]

WEI V DU HC AK CIV-2011-404-2289 22 September 2011

Introduction

[1]      In this case the applicant lodged a caveat against a residential property owned by the respondent situated at 11 Saltburn Road, Milford, North Shore (“the Saltburn property”).  The caveat lapsed and the applicant now seeks leave pursuant to s 148 of the Land Transfer Act 1952 for leave to lodge a second caveat.   She says in her application that the previous caveat lapsed “though no fault of her own”.

[2]      No evidence was provided as to why the first caveat lapsed.  Mr Deliu told me from the bar that it was because of a mistake on the part of the lawyer then acting for the applicant.

Background facts

[3]      The applicant was in a de facto relationship with the respondent’s son, Mr Chen.   Exactly when this relationship was commenced is disputed and is further discussed later in this judgment.

[4]      In December 2008, the applicant and Mr Chen signed a sale and purchase agreement to purchase a property at 36A Michaels Avenue, Ellerslie, Auckland (“the Michaels Avenue property”).   The Michaels Avenue property was held jointly in both the applicant and Mr Chen’s names as an investment property; the applicant and Mr Chen did not reside there.

[5]      In April 2010, Mr Chen purchased the Saltburn property.  There is evidence from bank records showing that a sum of $714,000 which was paid as part of the settlement of the property had originated from the respondent’s bank account, before being transmitted to Mr Chen’s account (and subsequently the solicitor’s account). Mr Chen’s evidence, as supported by documentary evidence, showed that the acquisition of the Saltburn property was neither funded by the applicant nor Mr Chen’s funds.  Mr Chen, though, became the legal owner of that property.  There is evidence that Mr Chen and the applicant lived together in the Saltburn property during the course of their de facto relationship.

[6]      Approximately two months later the Michaels Avenue property was sold - in

June 2010 - for a price of $420,000.   Following the sale, a broad division of the

parties’ interests in that property took place.  Mr Chen withdrew $210,000 from the joint account, which was applied towards paying off the mortgage of the Saltburn property.   The applicant agrees that, a little later, she received $244,600 from the parties’ joint account after this property had been sold.   She seems to have used this for her own purposes.

[7]      On 6 September 2010, the applicant’s relationship with Mr Chen ended. Shortly afterwards, Mr Chen transferred the Saltburn property to his mother, the respondent.

[8]      In February 2011, the applicant lodged a caveat against the Saltburn property, which lapsed on 29 April 2011.  The reasons for this were not made explicit in her evidence. As I have earlier noted, the applicant has submitted merely that the lapse was due to a mistake or error on the part of her solicitor at the time.  The applicant now applies to the Court for leave to lodge a second caveat.

[9]      The grounds upon which the applicant claims to be entitled to a caveat on the

Saltburn property, are stated as follows:

c.The Applicant has a reasonably arguable case for lodging the caveat against the Respondent in that:

i.         The Applicant has a genuine beneficial interest in the property by virtue of her contributions to the property, inter alia the purchase, and to the relationship, property or otherwise, generally;

ii.        The property was transferred to the Respondent by her son (who was in a de facto relationship with the Applicant) and without bona fide consideration so therefore the Respondent is presumed to not be a bona fide purchaser and/or obtained title to the property in a sham transaction; and/or

iii.       The property is defined as relationship property under the Property (Relationships) Act 1976 and therefore the Respondent holds this in trust for the Applicant.

[10]     It would appear that the application therefore is based upon two alternative grounds.   The first may be broadly stated as the constructive trust ground.   The second as an application under the Property (Relationships) Act 1976 (“the PRA”).

[11]     I observe that unless the applicant had an interest in the Saltburn case, the fact that the son transferred it to to his mother, the respondent, it is neither here nor there and does not on its own and give rise to any rights in the Saltburn property

Section 148 of the Land Transfer Act 1952

[12]     The Act provides, so far as relevant:

148     No second caveat may be entered

(1)       If a caveat has been removed under section 143 or has lapsed, no second caveat may be lodged by or on behalf of the same person in respect of the same interest except by order of the High Court.

[13]     In  Lowther  v  Kim[1]   Randerson  J  considered  the  approach  that  the  Court should adopt when applying (the previous version of) s 148 and said:

[1] Lowther v Kim [2003] 1 NZLR 327 (HC) at [17]–[19].

Section 148 of the Land Transfer Act provides:

148     No second caveat may be entered

When any caveat in either of the forms hereinbefore provided has lapsed, it shall not be lawful for the Registrar to receive any second caveat affecting the same land, estate, or interest by the same person, or in the same right and for the same cause, except by order of the High Court.

The Court of Appeal has held that an order under s 148 will not lightly be made.     It  is  an  indulgence  and  the  applicant’s  claim  is  “scrutinised carefully”:  [Cotton  v  Keogh  [1996] 3 NZLR 1 at 8]. In Mueller  v Montagnat [(1986) 2 NZCPR 520 at 523–524], Thorp J reviewed previous authorities.  He determined that the Court is given an unfettered discretion under s 148 but the Court will generally have regard to:

(a)       The  strength  of  the  case  made  by  the  applicant  to  support  the claimed interest in the land;

(b)       Any explanation for failure to exercise the caveator’s rights under s

145; and

(c)       Whether unavoidable prejudice would be suffered by those who have acted in reliance on the register and in the belief that the caveator was not pursuing the claim.

Thorp J, rightly in my view, did not accept the submission made to him that an order under s 148 should only be made in exceptional cases.   In considering the strength of the applicant’s claim to an interest in the land, it is appropriate to adopt the standard of a reasonably arguable case as identified in Sims v Lowe [[1988] 1 NZLR 656 (CA) at 659–660], but with

the reminder that careful scrutiny is required where leave to lodge a second caveat is sought.

[14]     If it seems unlikely that the Court would be persuaded to uphold the interest which is the subject of the second caveat, then it is unlikely that an order will be made:  Cotton v Keogh.[2]   I propose to be guided by the above statement of principle when determining the application before me.

[2] Cotton v Keogh [1996] 3 NZLR 1 (CA) at 9 per Blanchard

[15]     I also consider it is of assistance to have regard to the dictum of Mustill J in the  case  of  Ninemia-Maritime  Corp  v  Trave  Schiffahrtsgesellschart  mbH  & Co KG [“The Niedersachsen”].[3]     In that case, the Court considered the test to be applied when deciding whether to exercise its statutory discretion to grant a Mareva injunction involved an assessment of whether the plaintiff has shown that he has at least a good arguable case.  The Judge said that a “good arguable case” is one:

… which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success.

[3] Ninemia-Maritime Corp v Trave Schiffahrtsgesellschart mbH & Co KG [“The Niedersachsen”] [1984] 1 All ER 398 (QB).

[16]     While the formulation “good arguable case” is linguistically different from “reasonably arguable case”, I consider that Mustill J’s statement of principle is of assistance.

[17]     The task that the applicant has is to demonstrate that she has a reasonably arguable case that she will be able to establish to the satisfaction of the Court the following.  First, she will need to demonstrate that there is a proper explanation for the lapsing of the first caveat, which she now seeks to replace.   Secondly, some evidence is required which enables the Court to conclude that she has an arguable claim under the PRA or under equity on grounds that she is a beneficiary under a resulting or constructive trust in relation to the Saltburn property, which is owned by

the respondent.

[18]     I also note that the discretion of the Court may be exercised against the grant of the application for the caveat in circumstances which were referred to in Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd:[4]

If, on the facts of a case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of money secured over the land or specific performance of an agreement or if the caveator’s interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate  for  the  caveat  to  be  removed  notwithstanding  that  the  right  to  the claimed interest is undoubted.

Trust as basis for caveat

[4] Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 at 656 (CA).

[19]     Mr Deliu for the applicant submitted:

67.       The Applicant has made a contribution to the acquisition of the property.

The  Applicant  has  detailed  in  her  affidavit  that  funds  [from]  the  joint account [were] applied to the mortgage for the property in the amount of

$210,000  and  further  it  is  submitted  that  the  Applicant  has  provided

evidence that [shows] that she had in fact contributed to the renovations project, maintenance of the property prior to separation.

[20]     Ms Kearns for the respondent submitted that the claims by the applicant were limited to the following:

One  payment  of  $1,901.25  made  to  CLC  Consultancy  Group  from the

parties’ joint account in Mr Chen’s absence overseas.

The sum of $500.00 to erect a temporary fence to contain the dog.    The sum of $109.00 to pay towards a hot water cylinder.

$48.00 to Green Garden Bags.

[21]     I should  add that the applicant apparently also  asserts that the $210,000 which was taken out of the joint account and paid to the mortgagee of the property after the respondent had been registered on the title was not a relevant contribution which could give rise to a claim on her part to be beneficially entitled to the Saltburn property.

[22]     Dealing first with the alleged “contributions” by the applicant, it is necessary to keep in mind that the imposition of the constructive trust is an equitable remedy.

The contributions must make it just and reasonable to impose a constructive trust which protects an interest in the property for the applicant.

[23]     Based on such evidence as has been put forward, I do not accept that it would be just and reasonable to base a constructive trust on the contributions which Ms Kearns noted in her submission – that is the contributions other than the $210,000.  It would be neither just nor reasonable to recognise any appreciable interest in the Saltburn property (which would seem to be valued at $1 million plus) based upon the trifling contributions set out above.

[24]     Further, the fact that a partner in a relationship makes a payment which is incurred as part of the cost of the parties housing themselves, does not, without more, give rise to an interest in the property that they happened to be living in at the time.

[25]     Mr Deliu covered all the relevant authorities in his submissions.   Included with those was a reference to Lankow v Rose[5] where the following passage is to be found in the judgment of Hardie-Boys J:

In the first place, by contributions to assets one is not referring to those contributions to a common household that are adequately compensated by the benefits the relationship itself confers. The contribution must manifestly exceed the benefits. Putting it in conventional estoppel terms, the plaintiff's contributions must have been to his or her detriment; or in Canadian terms they must have resulted by the end of the relationship in the enrichment of one to the juristically unjustified deprivation of the other.

[5] Lankow v Rose [1995] 1 NZLR 277.

[26] On the material that is before the Court, there is no way of knowing whether the financial contributions of approximately $2500 which I have set out at [20] above fell into that category.

[27]     Nor is it apparent, on the face of the evidence filed by the applicant on this application, that she has an arguable case which would meet the following criteria

stated by Tipping J in his judgment in the same case: [6]

[6] Ibid at p 295.

Before discussing further the question of contributions, I summarise what the de facto claimant must show:

Contributions, direct or indirect, to the property in question. The expectation of an interest therein.

That such expectation is a reasonable one.

That the defendant should reasonably expect to yield the claimant an interest.

[28]     I deal next with the $210,000 issue.   As I have noted elsewhere in this judgment, a de facto division of the money and the parties’ joint bank account took place.  Then she initially swore her evidence, the applicant did not mention the fact that she had taken $244,600 from the joint account and paid it into her personal account until after this matter had been raised by Mr Chen in his deposition.  This is relevant to the present issue because the monetary contributions which the applicant made seem to have come from the joint account.  Certainly, the applicant stated that all the specifically claimed payments (for example, the payment in respect of plans for the renovations) came from the joint account, except for the $500 payment made to construct the fence to keep the dog in, which applicant says she paid from her personal account.

[29]     I now set out my views concerning the $210,000 and whether that sum can give rise to an arguable case of a contribution to the acquisition etc of the Saltburn property,  The applicant submits that the payment made in reduction of the mortgage over the property, made from the $210,000 which was approximately the other half of the money in the joint account, should be seen as creating an item to her credit when the Court is considering her claim to have an interest in the property pursuant to a constructive trust.

[30]     I notice also that while the applicant apparently accepts that the parties had separate entitlements in apportionment of the joint account.  She says that the actual division  that  took  place  does  not  reflect  what  should  have  been  the  proper proportions.  She does not give details as to what the correct division ought to have been.  The position disclosed on the evidence filed so far is that she seems to have taken in excess of 50% of the funds in the joint account at about the time when the parties’ relationship ended. The problem is that without further evidence explaining

the position it is not possible to conclude what the effect of this de facto division was.

[31]     Upon closing of a joint  bank  account,  the presumption  of equal  sharing applies irrespective of the parties’ contributions to the account:  see Jones v Maynard [1951] Ch 572.

[32]     A more recent statement of the position by the Court of Appeal on the rights of husband and wife in relation to a joint bank account is to be found in Re Berry [1978] 2 NZLR 373 at 378:

The concern is to ascertain the intentions of the parties in their particular circumstances and in relation to the events which have arisen. Their circumstances are inevitably variable. This seems to me pre-eminently an area where each case should be decided on its own facts and in my opinion there are dangers in elevating approaches adopted in other fact situations into general principles and presumptions.

[33]     While I respectfully agree with that statement, I nonetheless consider that in the absence of any evidence on the topic, the presumption that I have referred to above is at least a provisional guide to what the parties must have intended.   The position here is that no attempt has been made, even in a general way, to establish what contributions the plaintiff made to the bank account as a guide to what the parties’ intentions may have been on when it came to the ultimate division of the money in the account.  Nor is there any evidence of an understanding being reached which could reasonably have founded an expectation that a given proportion of the funds in the account would be distributed to either party.

[34]     There are other problems with the trust argument which were not dealt with by the applicant’s counsel in submissions.  Constructive trusts in the context of a de facto relationship are generally imposed over property of which the other partner is the beneficial owner.  The party who receives the benefit of the contribution which enables the acquisition, retention or maintenance etc of the property, is compelled to account to the benefit provider by means of the recognition of an interest in the property.   There has to be congruity, in other words, between the recipient of the benefit and the ownership of the property in regard to which the trust is sought.  That is not present here.  It may be that cases where there is connivance by the owner of

the property in an attempt to take the benefit of the contribution without accounting to the benefactor may be found to be included in the category of those whose property can be subjected to the imposition of a constructive trust over property which they beneficially own.

[35]     The  conferment  of  the  benefit  here  took  place  after  the  point  had  been reached where Mr Chen was no longer the owner of the property but his mother was. There would at least need to be some evidence that what in fact happened was the conferment of a benefit, the source of which was the applicant’s property.  It is not self-evident that the applicant had any interest in the $210,000 or those funds from the joint account which were spent on items such as the renovations plans.

[36]     Another  way  of  looking  at  the  matter  is  to  ask  whether  there  is  any reasonable expectation that the applicant will obtain a benefit from the imposition of the caveat.[7]   On the evidence and arguments which have been presented to the Court to date, it is likely that the Court would answer this enquiry in the negative.

[7] [1995] 1 NZLR 277 See ibid.

[37]     Further, it is difficult to understand how the applicant could have made any significant contributions to the acquisition, maintenance and retention of the Saltburn property.  She agrees that the purchase of the Michaels Avenue property was a 50–

50 venture.   She also agrees that she received $244,600 from the parties’ joint account after the property at Michaels Avenue had been sold.  It is not suggested that this was an additional entitlement that she had or that it was anything other than her share of the funds in the account which included the net realisation recovered after the sale of the Michaels Avenue property.

[38]     My conclusion is that the trust claim cannot survive the close scrutiny that is called for when an applicant applies for an order under s 148 of the Land Transfer Act 1952 or, alternatively, that it is unlikely that any benefit would result to the

applicant from mounting an argument based on constructive trust.

The Property (Relationships) Act 1976

[39]     The  applicant  cannot  bring  a  relationship  property  claim  against  the respondent.   Any rights that she has in respect of the Saltburn property must be derived from her relationship with Mr Chen.   Only if she has established such an entitlement to a reasonably arguable standard, is it necessary to go on and consider whether there is a basis upon which she can persuade the Court that her relationship property interest must be recognised by means of an order in relation to the Saltburn property.   When I asked Mr Deliu about this aspect of the case, he told me the necessary link between the applicant and the respondent was provided by s 44 of the PRA.

[40]     Section 44 of the PRA which provides:

44       Dispositions may be set aside

(1)       Where the High Court or a District Court or a Family Court is satisfied that any disposition of property has been made, whether for value or not, by or on behalf of or by direction of or in the interests of any person in order to defeat the claim or rights of any person (party B) under this Act, the Court may make any order under subsection (2) of this section.

[41]     In order for the applicant to show that she has a caveatable interest deriving from her rights under the PRA, she needs to establish that it is reasonably arguable

that the following legal contentions can be justified.  They are that:

Mr Chen and the applicant lived in the Saltburn property in the course

of their relationship;

That  relationship  was  of sufficient  duration  to  bring it  within  the provisions of the PRA so that an entitlement to an interest in that

property accrued to the applicant under the Act; and

Mr Chen was the beneficial owner of the property;

Thesubsequent transfer of the property back to the respondent was intended to defeat the rights of the applicant and therefore is able to be set aside under s 44 of the PRA.

[42]     The first point, that Mr Chen and the applicant lived in the Saltburn property during the course of their relationship, is not in dispute.   The other three points, however, are, and will be examined in the following sections.

The duration of the relationship

[43]     As  to  the question  of whether  the applicant  is  able to  establish  a claim founded on a de facto relationship, she has to show a reasonably arguable case that she was in such a relationship for at least three years.  Essentially, she says in an affidavit in reply that she met Mr Chen at the Auckland airport 12 February 2006 and that it was “love at first sight”.  Thereafter she speaks about a “relationship” and that by September 2006 they were in a de facto relationship.

[44]     One of the problems that she has is that a document has been placed in evidence which was signed by her and which was provided to the immigration service in which she stated that she had been in a de facto relationship with Mr Chen since June 2008.   She gave that information in the form of a letter and also in a statutory declaration which she executed on 25 July 2009.  She now wishes to argue that in fact she and Mr Chen lived together for a longer period in the vicinity of five years which ended when she left the Saltburn property in September 2009.   This contrasts with the assertion she now makes that a de facto relationship started as long ago as October 2006.   Mr Deliu argued that the inconsistent letter and statutory declaration provided to the immigration service should not necessarily defeat her claim.  He said the reason why she gave that date in the document was that Mr Chen had suggested to her that she should.  It is unlikely that this will assist the applicant because that establishes the reason why she made an untrue statement but does not enable her to avoid the conclusion that she deliberately made such an untrue statement.  Further, there are other documents in which she has indicated that the de facto relationship commenced on another date which are again inconsistent with her having lived in a three year de facto relationship with Mr Chen.

[45]     The admitted evidence therefore establishes that the applicant gave untrue evidence in one circumstance or the other.   It has made clear that the applicant is prepared  to  give  self  serving  evidence.     In  those  circumstances  it  becomes particularly important to look to the surrounding circumstances and the inherent

probabilities of the case to determine whether the evidence which the applicant offers is of such a quality that the Court cannot rule out the possibility that at trial the Court might accept it.

[46]     The  respondent  has  provided  detailed  corroborative  materials  such  as electricity accounts which are consistent with his account of when the relationship started. The applicant has not provided the same type of evidence bearing on the question of when the parties began to cohabit.

[47]     Mr Deliu submitted to me that it was not the job of the Court on hearing the present application to resolve whether or not the applicant was now telling the truth in her affidavit.

[48]      However,  it  is  the  concern  of  the  Court,  when  examining  the  issue  of whether there is a reasonably arguable case,  to see if there is some  apparently credible  evidence  upon  which  she  can  base  her  claim  to  the  existence  of  the necessary de facto relationship.

[49]     It seems likely to me that the applicant will have difficulty persuading the Court that her relationship with Mr Chen and began earlier than 11 June 2008.   It seems  likely that  that  is  the date when  they moved in  together at  the Sentinel Apartment.  The requirement of s 2D of the PRA is for an applicant to establish that the parties were living together in a de facto relationship. Parties can be living together but not be in a de facto relationship, of course.  The section prescribes quite a  number  of  matters  that  the  Court  must  take  into  account  when  determining “whether  two  persons  live  together  as  a  couple”.     Included  in  the  list  of circumstances that are relevant is “(b) the nature and extent of common residence”. That suggests that parties may be in a de facto relationship in the sense that they are living together as a couple even though actual cohabitation is not continuous. Therefore, association between the parties before they commenced cohabitation at the Sentinel Apartment may provide a sufficient additional element to establish the duration of the relationship.

Conclusion on PRA claim

[50]     While I have placed considerable focus on the statutory declaration, it is necessary not to lose sight of the fact that the applicant’s sponsorship form stated that 10 June 2008 was “the date [their] partnership commenced”.  I suppose that it is possible that a person may acknowledge that full-time cohabitation commenced on that date but does not necessarily exclude the possibility that a de facto relationship commenced prior to that point.  If that were so, it is arguable that the relationship would have enured for the three years required in order to found an entitlement under the PRA.

[51]     There is sufficient imprecision in the evidence before the Court to come to the view that the issue of the duration of the parties relationship cannot be decided in the context of the present application.

Whether Mr Chen owned the property beneficially

[52]     There would seem to be two possibilities.  The first is that Mr Chen acquired the Saltburn property as a trustee for his mother who, having provided the purchase price, would be viewed as the equitable owner of it.  Though the respondent did not attempt any elaborate analysis of the nature of the interest which Mr Chen might have had on the property, it appears that the respondent’s position is that the property was bought in Mr Chen’s name for reasons of convenience, as she was then living outside New Zealand.  The respondent’s case therefore appears to be that Mr Chen never held the property beneficially, but only as trustee for her and, when called upon to transfer it back to her, did so.

[53]     The  other  possibility  is  that  the  transaction  which  resulted  in  Mr  Chen becoming the registered proprietor of the fee simple title to the Saltburn property would be governed by the presumption of advancement so that the Court would in fact conclude that Mr Chen’s mother, the respondent, intended to gift the property to him because of the circumstance that she acquiesced in him taking the title even though she had provided the purchase price.

[54]     There is evidence from bank records which show that the sum of $714,000 which was undeniably paid as part of the settlement of the Saltburn property had originated from the respondent’s bank account where it was then transmitted to her son Mr Chen’s account before being paid into the solicitor’s account for application for the purposes of purchasing the Saltburn property.   No funds belonging to the applicant or Mr Chen were used for the acquisition of the Saltburn property.  This is established by the evidence of Mr Chen and, critically, is supported by documentary evidence of the state of the relevant accounts and the movement of funds through them.  In fact, the only possible source of substantial funds which could have funded the purchase of the Saltburn property would have come from the sale of the Michaels Avenue property.  But the sequence of events rules out that possibility.  That is to say, the Saltburn property was acquired in April/May 2010 but the proceeds of sale of the Michaels Avenue property did not come to hand until August 2010.

[55]     Mr  Chen  did  make  various  payments  to  the  mortgage  of  the  Saltburn property, including the $210,000 payment referred to above.   It is asserted for the respondent that such payments were, in substance, payments made in repayment of an earlier advance that his parents had made to him in order to facilitate his acquiring an interest in the Michaels Avenue property.

[56]     If the respondent’s account of matters were to be accepted, the property could not be properly categorised as relationship property of Mr Chen and no claim would lie under the PRA.

[57]     The alternative argument is that, in providing for a transfer of property which she had paid for to Mr Chen, the respondent gifted the property to her son.  If that is the case, the applicant may have a claim that the transfer of the property back to the respondent ought to be set aside.

[58]     The learned editors of the “Gifts” volume of The Laws of New Zealand state:[8]

[8] Laws of New Zealand Gifts (online ed) at [45] (emphasis added).

Where it is a mother, not a father, who has provided the purchase money or made the transfer in the name of her child, the law has long been that there is generally no presumption  of  advancement  or  gift  unless  there  is  evidence  of  the  mother’s intention either to place herself in loco parentis or to make a gift. Very slight

evidence of intention is sufficient, little additional motive beyond the relationship being required to induce a mother to make a gift to her child.  A mother has been said to stand in loco parentis to her child where she has put herself in the place of the natural father with reference to those offices and duties which consist in making provision for a child; or where she has survived the father and has been left all his property; or where, the father having died, the mother has acted as the head of the family in all respects.

[59]     It must be noted though that the same authors go on to question whether such a distinction between advances made by a father on the one hand and a mother on the other will be continued to be observed by the Courts in light of contemporary attitudes.  It is therefore arguable that the acquisition of the Saltburn property in the name of the son was in the nature of a gift.

Whether the transfer of the property to the respondent was intended to defeat the rights of the applicant

[60]     For the purposes of this judgment it is necessary to make limited reference to the section of the PRA which empowers the Court to set aside dispositions.

[61]     Section 44 of the PRA provides as follows:

44  Dispositions may be set aside

(1)       Where [the High Court or a District Court or a Family Court] is satisfied that any disposition of property has been made, whether for value or not, by or on behalf of or by direction of or in the interests of any person in order to defeat the claim or rights of any person [(party B)] under this Act, the Court may … make any order under subsection (2) of this section.

[(1A) The Court may make an order under this section on the application of party B, or (in any proceedings under this Act or otherwise) on its own initiative.]

[62]     The applicant does not advance any evidence about the circumstances behind the transfer of the property from Mr Chen to the respondent in September 2010.  She relies upon an inference that she says can be drawn from the circumstance that, almost as soon as her relationship with Mr Chen came to an end, the Saltburn property was transferred to the respondent within a few weeks.  That, it was argued, suggests that the reason for the transfer was to defeat the rights of the applicant under the PRA.

[63]     Mr Chen explained the reasons why his mother arranged for the property to be transferred to him as legal proprietor.   He says that because she and his father were resident outside New Zealand, they would not be able to obtain a mortgage over the property whereas he was resident in New Zealand and was able to.

[64]     The transfer back of the property may not bear the sinister interpretation which the applicant apparently places on it.   It may be that Mr Chen’s parents considered that, with the ending of their son’s relationship with the applicant, they should remove any uncertainty about the status of the Saltburn property by taking title of it themselves.  They may have had expectations that the relationship between the son and the applicant would be permanent and that it behoved them to help the couple by making possession of the house, but nothing more, available to them.  On the failure of the relationship, they may have been apprehensive that legal complications would arise, which might be avoided if the property was transferred back to respondent and that step was taken, but in the absence of any objective of attempting to defeat the legitimate rights of the applicant.  Given that there had been a better than 50–50 split for the applicant of the funds of the joint account and there was no reason to imagine that Mr Chen apprehended that there would be a further adjustment in favour of the applicant, it is difficult to understand why he would have contrived to enter into an arrangement designed to defeat the putative further rights of the applicant under the PRA.

[65]     In all these circumstances it is difficult to mount an inference that the transfer of the Saltburn property to his mother after the relationship between himself and the applicant had ended bears the sinister complexion that the applicant’s counsel suggested.

Reasons why the first caveat lapsed

[66]     I also note that no explanation is provided as to why the first caveat lapsed. This is a substantial problem with the application.  Section 148 reposes a discretion in the High Court to make orders for second or subsequent caveats.  Obviously that discretion must be exercised on a rational basis and in a principled way.   Such an

approach is by definition impossible where there is no evidence as to why it is now necessary for the Court to grant an order under s 148.  No doubt it was for reasons along those lines that the Court in Keogh v Gillies[9] referred to the need for consideration to be given to any explanation that has been provided.  Particularly in cases where matters are finely balanced, the absence of reasons why the applicant permitted the first caveat to lapse must be of interest to the Court.  Particularly in cases where the grant of an application could result in prejudice to the respondent, the provision of inadequate reasons or no reasons at all may be influential.  Where

there is no appreciable risk of genuine prejudice, this issue may not be so important. In an otherwise deserving case, the Court would prefer not to decline leave where the only discretionary reason which might be suggested is to mark its disapproval of the fact that the applicant was careless or slept on its rights.

[9] Keogh v Gillies HC Rotorua CP6/86, 10 March 1986.

[67]     Argument was addressed to me concerning the prejudice that might result to the respondent from permitting a further caveat to be lodged.  Rather than treating this as a discrete topic, I think it is a factor that underlies the reasons why the Courts have insisted on the establishment of a reasonably arguable case for the interest claimed.  I respectfully agree with the authors of Hinde, McMorland and Sim[10] that

[10] G W Hinde and others Hinde, McMorland & Sim Land Law in New Zealand (online ed) at [10.019(b)].

the position is as stated in Sims v Lowe[11]  follows.  In that case, which was decided

[11] Sims v Lowe [1988] 1 NZLR 656 (CA).

under s 143, Somers and Gallen JJ said:[12]

[12] Ibid, at 660.

The caveator seeks to clog or fetter the proprietary interest of another.  As a matter of principle it seems right that he must justify the continued existence of his caveat. He will do that if he can show he has a reasonably arguable case for the interest he claims.  The issue is the same as that which arises under s 145.  The onus under s

143 should lie on the caveator: see New Zealand Limousin Cattle Breeders Society

Inc v Robertson [[1984] 1 NZLR 41 at 43].

Conclusion

[68]     I now set out my conclusions on whether or not the application should be granted.

[69]     I do not consider that the applicant has established that there is a reasonably arguable  case  for  a constructive trust  to  be declared  in  respect  of the  Saltburn property.  Even on the evidence adduced by the applicant, there seems to have been a substantial division intended of the joint account.  As the applicant had taken more than one half of the funds and has not pointed to any basis upon which differential sharing would be justified, it is hard to understand how the $210,000 remaining, which was later applied to paying off the mortgage of the Saltburn property, could comprise a fund in which she had an interest.

[70]     If the matter went to trial on the basis of the evidence adduced, the Court could not conclude that the property should be impressed with a constructive trust harder based on contributions will because the transaction was designed to defeat an interest that the applicant had in the property.

[71]     It is not reasonably arguable that the applicant made contributions to the Saltburn property which gave rise to an equitable interest in the property and that Ms Du’s interests in the property are subject to that interest.  There was no attempt to show that she knew of the applicant alleged interest in the property and acquiesced in it being transferred to her in circumstances that amounted to equitable fraud. Unless fraud can be established, it was not explained to me how Ms Du can be viewed as  a trustee for the applicant.     I make the last remark because of  the complete absence of explicit evidence about the necessary knowledge that the respondent would have to have had of Mr Chen’s intention to defeat the rights of the applicant if a trust was to be imposed over the Saltburn property.   That argument would not get over the line founded only on such inferences as can be drawn from the familial relationship between respondent and son and the sequence of events which occurred in September 2010.

[72]     As for the PRA claim, I have concluded that it is possible for the applicant to navigate her way around the issue about the duration of the relationship and that it is therefore,  arguable  that  the  parties  lived  together  in  a  de  facto  relationship  of duration which entitles the applicant to make a claim under the Act.

[73]     However,  she  would  need  to  go  on  and  show  that  there  was  some matrimonial property to which her claim could attach.  I have concluded that it might be possible to view the Saltburn property as having been acquired beneficially by the son as a gift from his mother which he and the applicant lived in as their relationship home.    But  given  that  the  son  transferred  the  property  to  a  third  party,  the respondent, and because there is no direct PRA claim to be brought against the respondent, the applicant would need to obtain an order setting aside a disposition of property which would revert to its status of relationship property.   In the latter regard, her case seems to be nothing more than that the transferee of the property happens to be the mother of her former partner.   Also, there is evidence that the mother provided the funds for the purchase of the property in the first place and this could well explain the later inter-family transfer back to the mother, rather than any intent to defeat rights that the applicant might have under the PRA.

[74]     I do not consider that it is more than barely arguable that the transfer of the house from the son to the respondent contravened s 44 of the PRA.  The case which the applicant makes is certainly not reasonably arguable.

[75]     Even if the applicant reaches the point of establishing that there may be an interest which ought to be protected by a notice of claim, then she needs to provide some basis for the Court to exercise its discretion to give leave to lodge a second caveat.  The applicant has not provided any evidence as to why the first caveat was permitted to lapse.  The only material bearing on that issue is a submission by her counsel that the lapsing of the first caveat was due to a mistake or error on the part of her solicitor; this is not fatal to the application.   But the Court is going to be less inclined to assist an applicant in the position of Ms Wei where the application is light on the merits and no evidence is advanced establishing that she has made proper efforts to protect her own position.

Order

[76]     The application is dismissed.  The parties should confer on the matter of costs and if they are unable to agree file memoranda not exceeding three pages on each side within 10 working days.

J.P. Doogue

Associate Judge