Werder v Singh
[2025] NZHC 294
•28 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-002160 [2025] NZHC 294
BETWEEN IAN KEVIN WERDER
Plaintiff
AND
ROSHYN SINGH
First Defendant
RAJESHWARI SINGH
Second Defendant
ROSHYN SINGH LYONS TRUSTEE COMPANY LIMITED
Third Defendant
JAG SAI RAJ TRUSTEE COMPANY LIMITED
Fourth Defendant
Hearing: 5, 6, 7, 8, 9 August 2024 Appearances:
P McCutcheon for Plaintiff
A R Gilchrist for First and Third Defendants M Singh for Second and Fourth Defendants
Judgment:
28 February 2025
JUDGMENT OF ANDERSON J
This judgment was delivered by me on 28 February 2025 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
.…………………………..
Registrar/Deputy Registrar
Solicitors:Kiely Thompson Caisley, Auckland Glaister Ennor, Auckland
WERDER v SINGH [2025] NZHC 294 [28 February 2025]
Table of Contents
Para No
Background[4]
The present proceeding [19]
Issues[27]
Evidence and witness reliability [32]
Discussion of key events and documents[44]
The Calgary Street purchase and contributions up until its transfer[45]
The authenticity of the 1997 Agreement[48]
Findings on authenticity of the signatures[51]
Date of the document[55]
Provenance of the copy before the Court[57]
The 1997 Instruction [60]
The August 1997 transfer[63]
The Stoddard Road finance offer[69]
The 2000 and 2003 Documents[72]
The 2000 Document[73]
The 2003 Document[80]
Who authored the 2000 and 2003 Documents?[83]
Ms Gosai’s knowledge[87]
Significance of the 2000 and 2003 Documents[89]
The 1997 Draft Agreement [96]
The Ian-Tao Trust and associated transactions[100]
Documented Trust transactions[102]
Evidence about the Trust and its transactions[115]
Operation of the property portfolio [125]
The Family Court proceedings[131]
The dynamics in the Family Court proceedings[133] Contentions Mr Werder made from the Family Court evidence[138] Mr Werder’s conduct in the Family Court proceedings[149]
Analysis of the fiduciary duty claim arising from the 1997 Joint Venture Agreement [152]
Alleged joint venture agreement on the terms of the 1997 Agreement[153] Alleged oral terms of the joint venture agreement[156] Claim of breach of fiduciary duties arising under the 1997Agreement[166]
Resulting trust[173]
Relief[181]
Affirmative defences [183]
Laches[184]
Estoppel/accord and satisfaction[191]
Limitation[194]
Result[196]
[1] Mr Ian Werder brings claims in equity relating to events that began over a quarter of a century ago. They arise out of a complicated relationship dynamic between the three central figures in this proceeding: Mr Werder, Mr Roshyn Lyons (né Singh) and Ms Rajeshwari Gosai (also née Singh).1 Mr Lyons and Ms Gosai are the first and third defendants. The second and fourth defendants are family trusts associated with Mr Lyons and Ms Gosai respectively.
[2] Mr Werder alleges that Mr Lyons and Ms Gosai have dealt with certain properties contrary to fiduciary duties owed to him. Those duties are said to have arisen as a result of a joint venture agreement entered into by the three of them in January 1997. Alternatively, Mr Werder alleges a resulting trust that arose in August 1997 over one particular property. He seeks, among other things, an account of profits and to trace those properties or their proceeds to the second and fourth defendants. For their part, the defendants deny the existence of a joint venture agreement or resulting trust. They also raise defences of limitation, the doctrine of laches, accord and satisfaction and estoppel.
[3] Ultimately, Mr Werder’s claim fails at the first hurdle because he has failed to establish the existence or operation of the alleged joint venture. I am left with a view that there may well have been some other arrangement relating to the properties in question. However, no such alternative arrangement is pleaded, and it would be wrong for me to fill in the gaps. Whatever arrangement once existed, I find that it was supplanted by other arrangements in 2005. Mr Werder’s claim would also be barred by laches in any event. Accordingly, his claim is dismissed.
Background
[4] Mr Werder and Mr Lyons met in the early 1990s and commenced an intimate relationship. In 1994, they acquired a property at 22 Calgary Street, Sandringham (the Calgary Street property) as tenants in common. At the time, Mr Lyons and Mr Werder were around 27 and 39 years old respectively.
1 Roshyn Singh and Rajeshwari Singh are the names (expressed by various abbreviations) that feature in various contemporaneous documents.
[5] Mr Lyons had graduated with a Bachelor of Engineering in 1993 and subsequently commenced work as an electrical engineer. Mr Werder had previously trained as a Catholic priest in his youth but had left the seminary. When he met Mr Lyons, Mr Werder was working as an inspector at the Ministry of Agriculture. The relationship between Mr Werder and Mr Lyons ended around 1995, when Mr Werder resumed his training for the priesthood and moved to Otago to study.
[6] Mr Lyons subsequently married Ms Gosai in an arranged marriage in Australia in late 1996. Ms Gosai had been living in Australia and had just completed her Bachelor of Commerce. She was 19 at the time of the marriage. Following what is described as a second, “cultural”, ceremony in December 1996, Ms Gosai moved into the Calgary Street property with Mr Lyons. Mr Lyons’ mother was also living there and continued to do so until around 2005.
[7] In August 1997, Mr Werder and Mr Lyons transferred the Calgary Street property to Mr Lyons and Ms Gosai jointly. Mr Werder maintains that this was pursuant to an underlying joint venture agreement entered into on 31 January 1997 (the 1997 Agreement), under which the Calgary Street property was to be used as equity for the acquisition of future properties.
[8] Mr Lyons and Ms Gosai went on to accumulate an Auckland residential property portfolio that was ostensibly owned beneficially by the two of them in their personal names. The first investments were two units in Wynyard Road, Mt Eden (the Wynyard Units). In early 1999, properties at 131A Stoddard Road, Mt Roskill (the Stoddard Road property) and 131H St Georges Road, Avondale (the St Georges Road property) were purchased.
[9] The couple had three sons, born in 1999, 2001 and 2003 respectively. Ms Gosai worked in a finance/accounting role (first at the Housing Corporation and then at a finance company) until shortly before the birth of her first son in mid-1999. Mr Lyons was responsible for managing their properties until that point. Ms Gosai says she took over this role after giving up her job and, after a hand-over period, she became primarily responsible for managing the growing portfolio. Mr Lyons had retrained as a secondary school teacher by this time.
[10] Meanwhile, Mr Werder returned to Auckland in 1998 following the completion of his theology degree. He had been refused ordainment for reasons I need not elaborate. Mr Werder moved into the Stoddard Road property in 2000. Then, in 2002, Mr Werder moved into a sleepout at the back of the Calgary Street property. Mr Werder became integrated into the family unit: sharing meals, caring for the boys, and going on family holidays. Unknown to Ms Gosai, Mr Werder and Mr Lyons also recommenced their intimate relationship while Mr Werder was living at the Calgary Street property. This relationship continued on and off until 2011.
[11] The extent of Mr Werder’s financial contribution to family and other expenses, and indeed his contribution to the children’s lives, is in dispute. However, Mr Werder became godfather to all three of the couple’s sons and I accept that he played a significant role in their lives.
[12] In 2005, Mr Werder settled a trust named the Ian-Tao Trust2 (the Trust) for the benefit of the three boys. Mr Werder, Ms Gosai and Mr Lyons were all trustees. This trust subsequently acquired two residential properties: the first in March 2005 at 1/89 Nikau Road, Otahuhu (the Nikau Road property) in a 50 per cent partnership with Mr Lyons and Ms Gosai, and the second in April 2007 at 37 Park Avenue, Papatoetoe (the Park Avenue property). The Park Avenue property was wholly owned by the Trust. Several of the Trust’s transactions are incomprehensible. At least some of the transactions were known by all three not to reflect the Trust’s true financial position. I discuss these later.
[13] When Mr Werder was living at the Stoddard Road property between 2000 and 2002, he was paying $700 every fortnight to Mr Lyons and Ms Gosai. When he moved into the Calgary Street property in 2002, he says that he continued to pay that amount, although this is disputed. There are records showing fortnightly payments of $700 from January 2007 until October 2012. The parties dispute whether this is properly characterised as rent/board, or payments toward the mortgage pursuant to the joint venture alleged by Mr Werder.
2 “Tao” roughly translates to “godfather”.
[14] The marriage of Mr Lyons and Ms Gosai broke down in early 2011. Mr Lyons informed Ms Gosai that he was gay and had commenced a relationship with a man, whom he has since married. The relationship between Mr Lyons and Mr Werder also broke down at this point. However, all three continued living at the Calgary Street property until the end of 2012 and early 2013, when both Mr Lyons and Mr Werder moved out. Mr Lyons ultimately moved to a unit at 9H/3 Whitaker Place, Grafton (the Whitaker Place unit) that was part of the property portfolio. Mr Werder moved into another such property at Eldon Road, Mt Eden until around the middle of 2013. Ms Gosai and the boys remained at the Calgary Street property. Mr Werder ceased all payments to Mr Lyons and Ms Gosai after he left the Eldon Road property.
[15] Mr Lyons issued relationship property proceedings against Ms Gosai in 2014. The bitterly fought proceedings were finally determined by Judge S J Maude in a closely considered judgment in July 2020 (the Family Court judgment).3 Many affidavits were filed and there was cross-examination of the parties. Mr Werder assisted Ms Gosai in these proceedings and followed her progress closely.
[16] An issue of contention in the Family Court proceedings was whether Ms Gosai had been receiving cash from Mr Werder for his occupation of Calgary Street towards the end of 2012 and at the beginning of 2013. Ms Gosai denied this.
[17] As at the end of the parties’ relationship, Mr Lyons and Ms Gosai held 11 properties plus the two Trust properties. Most of these properties have since been sold to unrelated parties, with seven being sold by the end of 2013. The exceptions are those that were occupied by Ms Gosai and Mr Lyons, being the Calgary Street property and the Whitaker Place unit respectively.
[18] In accordance with the Family Court judgment, Mr Lyons elected to purchase the Calgary Street property. He transferred it at around market value to the third defendant, a family trust he had just established. The Whitaker Place unit remains unsold and currently has a caveat over it lodged by Mr Werder. The proceeds from the sale of the other Lyons/Gosai properties were distributed to the parties in
3 Singh v Singh [2020] NZFC 5571 [Family Court judgment].
accordance with the Family Court judgment or earlier as interim distributions. This includes proceeds being paid to the fourth defendant.
The present proceeding
[19] In late 2020, subsequent to the Family Court judgment, Mr Werder issued proceedings against Mr Lyons and Ms Gosai. He did so without any letter before action. In fact, he has not communicated with Mr Lyons since 2013. The second and fourth defendants were later joined to proceedings.
[20] Mr Werder pleads four causes of action in his latest statement of claim. First, he claims that Mr Lyons and Ms Gosai have breached their fiduciary duties to him by dealing with the proceeds of sale of the properties in the property portfolio, including the Calgary Street property, for the benefit of themselves and their entities without accounting to him. The fiduciary duties are said to have arisen pursuant to an alleged joint venture agreement recorded in the 1997 Agreement. Mr Werder pleads that this agreement was discussed, finalised and signed by the parties at a meeting in the dining room of the Calgary Street property on 31 January 1997. He says that a further document provided to the Court (the 1997 Draft Agreement) was produced for that meeting, but that this document does not record the final joint venture terms. Mr Werder also pleads terms that he alleges were orally agreed.
[21] Secondly, Mr Werder brings an undue influence claim, seeking to avoid apparently documented arrangements dating from 2000 and 2003. These handwritten documents (the 2000 Document and the 2003 Document respectively) ostensibly record a reduction of Mr Werder’s “equity interest” in the property portfolio from
32.15 per cent in July 1998 to 21 per cent in January 2003.
[22] Thirdly and in the alternative, Mr Werder claims a resulting trust over the Calgary Street property. He says that the trust arose in August 1997, when he transferred his half-share in the property to Mr Lyons and Ms Gosai jointly. He says that Mr Lyons and Ms Gosai breached their duties as trustees by dealing with the property contrary to the resulting trust.
[23] Fourthly, if the Court finds that the 1997 Agreement existed between Mr Lyons and Mr Werder only and not Ms Gosai, Mr Werder claims he is entitled to the same relief against Ms Gosai as he seeks against Mr Lyons. Mr Werder says that Ms Gosai “knew about, acquiesced in, and facilitated the activities and transactions undertaken pursuant to the [joint venture] agreement” from which she ultimately benefitted.
[24] By his pleadings, Mr Werder seeks an account of profits, various forms of declaratory and consequential relief, interest and costs. On the first day of the trial, Mr Werder advised that he wished to obtain monetary relief in this proceeding rather than have a separate hearing by way of an account of profits. He claims half the capital value of the Calgary Street property (or that his half-share be recognised on the title). He also claims $823,742.03. This sum is based on a calculation produced to the defendants for the first time as an annexure to opening submissions, derived from documents identifying proceeds of sale.
[25] Mr Lyons and Ms Gosai both deny signing or entering into the 1997 Agreement or having knowledge of its existence at any material time. They say that the only joint venture that existed related to two properties acquired by the Trust. They further deny that there is any resulting trust over the Calgary Street property. Mr Lyons and Ms Gosai also raise defences of estoppel/accord and satisfaction, laches, and limitation. Among other things, the estoppel/accord and satisfaction defence rely on alleged arrangements between the parties relating to the Trust.
[26] There is a cross-claim by Ms Gosai against Mr Lyons in the event that the former is found liable to Mr Werder. Ms Gosai says that any such liability arose out of dealings between Mr Lyons and Mr Werder and that these dealings were unknown to her. Accordingly, she asserts that Mr Lyons and his associated family trust should indemnify her for any loss arising out of those dealings.
Issues
[27]The key issues are:
(a)Was there a joint venture agreement between the parties on the terms of the 1997 Agreement and certain additional terms pleaded in Mr Werder’s claim?
(b)If so:
(i)Did it give rise to fiduciary duties on the part of Mr Lyons and Ms Gosai?
(ii)If yes, did Mr Lyons and Ms Gosai breach their fiduciary duties?
(c)Is there a resulting trust in respect of the Calgary Street property?
(d)If the answer to any of (a), b(ii) or (c) is yes, are Mr Werder’s claims barred by the defendants’ affirmative defences?
(e)If the answer to any of (a), b(ii) or (c) is yes and none of the affirmative defences apply, what is the appropriate relief?
[28] A noticeable omission from my list of issues is the question of whether the 2000 Document and/or the 2003 Document are void for undue influence. Mr Werder maintains that any joint venture is on the terms of the 1997 Agreement and any subsequent arrangements recording a reduced interest in the 2000 and 2003 Documents are ineffective on the grounds of undue influence.
[29] Mr Werder’s case is that he signed the 2000 and 2003 Documents when he was particularly vulnerable. He says that he was suffering from significant mental health issues at the time, and that his dyslexia and financial reliance on the defendants exacerbated his vulnerability. He says there is a presumption of influence because of the fiduciary duties he was owed under the 1997 Agreement, and that the transactions recorded in the documents call for explanation.4
4 Barclays Bank v O’Brien [1994] 1 AC 180.
[30] I accept that Mr Werder was vulnerable for the reasons he describes. However, I do not need to determine Mr Werder’s undue influence claim. This is for two reasons. The first is that Mr Werder has not established the claimed joint venture, so it becomes legally irrelevant whether changes to the terms of “that” joint venture were ineffective or not. The second is that none of the parties contend, even on an alternative basis, that these documents have any legal effect or status. The defendants assert that they know nothing about the 2000 and 2003 Documents. In cross- examination, they were asked by Mr McCutcheon for the plaintiff to confirm that they “renounced” the documents and they did so.
[31] In those circumstances, the undue influence claim is not a live claim. The 2000 and 2003 Documents remain relevant to determining whether there was a joint venture pursuant to the 1997 Agreement and to issues of credibility.
Evidence and witness reliability
[32] Mr Werder, Ms Gosai and Mr Lyons all gave evidence. They were cross-examined on previous affidavits and evidence, including Mr Werder on his nine previous affidavits in this proceeding and Mr Lyons and Ms Gosai on their Family Court proceedings. The events in question occurred so long ago that independent recollections from the parties are unreliable.
[33] I also heard evidence from handwriting experts called by each of the parties.5 Additionally, Mr Werder called a clinical psychologist to support his undue influence claim and to give evidence on his mental health issues and background.
[34] Unfortunately, there are now relatively limited contemporaneous documents. That is because Ms Gosai cleared out a filing cabinet containing most of the relevant files, after the terms of the Family Court judgment required her to urgently leave the Calgary Street property.6 I accept that there was no intent to destroy documents that would be relevant to this claim. The present proceeding was not foreshadowed by
5 The handwriting experts called for Mr Lyons and Ms Gosai had limited briefs.
6 Some key documents were retained by Ms Gosai. Most significantly, this included the 2000 Document, the 2003 Document and the 1997 Draft Agreement signed only by Mr Werder but with handwritten annotations from an unidentified person. The 1997 Agreement was discovered and produced by Mr Werder.
Mr Werder at the time. The loss of the files is relied upon by the defendants to support their laches claim.
[35] I have formed negative views on the reliability of all three central witnesses. Mr Werder’s evidence in particular was riddled with inconsistencies. He contradicted his previous affidavits, maintained incredible positions, and introduced new scenarios that had never been raised previously. By way of examples only:
(a)In his first affidavit in support of an application for formal proof on 12 February 2021, Mr Werder asserted that he had “paid substantial additional monetary contributions in lump sums to the bank account [through which the property mortgages were paid] from time to time over the years … over and above any rental payments that I was required to make”. He did not maintain this in his brief of evidence for trial. By that time, Mrs Gosai had discovered bank statements dating back to 2007. These statements showed that there were no such payments from Mr Werder.
(b)In an affidavit sworn for Mr Lyons in the Family Court on 6 July 2019, Mr Werder said that he had conducted work on the properties until December 2013, including maintenance, materials and rental management. He maintained in the affidavit that he had not been paid for any of this. In contrast, Mr Werder was adamant during the trial that he received $50,000 in 2005 (and accepted prior affidavits were wrong in not acknowledging this).
(c)Mr Werder introduced for the first time in cross-examination that the reason for the abnormally high hours on his invoices for some work he said he did was due to obtaining help from a flatmate.
(d)When cross-examined on transactions associated with the Trust, Mr Werder was challenged on why these did not reference the 1997 Agreement. He responded:
That agreement, as I’ve said [all] along, is something that always sat in the background and was agreed to in the background, we did not relitigate it in any way or renegotiate it in any way, it just sat there.
[36] Mr Werder gave similar responses when questioned on why he did not raise his claim to the properties with Mr Lyons at any point between 2013 and 2020, despite the ongoing Family Court litigation over those very properties. Yet, on Mr Werder’s own evidence, the arrangements between the parties were discussed again at least in 2000 and 2003.
[37] Mr Werder called Dr Karl Jansen, a psychologist, who gave evidence concerning Mr Werder’s mental health issues and background. He identified that Mr Werder’s memory could be “somewhat untidy” (at least as to the detail) due to his mental health episodes, but that his basic integrity would be unaffected.
[38] I found Mr Werder to be a witness who was largely trying to tell the truth, indeed a little quick to make concessions. However, he does appear to have memory problems which in my view he compensated for by advancing inconsistent, confused and inaccurate recollections.
[39] Mr Werder’s default response when addressing difficult questions was to say that he had placed complete trust in Mr Lyons and Ms Gosai and did not have the experience or knowledge to grasp the complexities of matters. I formed the view that Mr Werder does have difficulty with financial concepts. I also accept evidence regarding his dyslexia, ADHD and other vulnerabilities. However, I apprehend that he had significantly greater insight into the transactions when they occurred than he now suggests. He had run his own consultancy for the Ministry of Agriculture while in Dunedin and had several post-graduate qualifications. Further, lawyers acted on some of the transactions that underpin his claims.
[40] As for Ms Gosai, she tended to distance herself from events on the basis that she was excluded from the relationship between Mr Lyons and Mr Werder. Her default response was that any financial arrangements that existed were between the two men and that she had no knowledge of what they had agreed. In my view, that placed a retrospective lens (now knowing that Mr Lyons and Mr Werder were in an intimate
relationship during her marriage to Mr Lyons) on events that she had more involvement in at the time. This is the case from at least 2002, when the parties were living in a family-type situation and when she says she was administering the property portfolio. I also consider that Ms Gosai tended to understate her financial acumen. She had a Bachelor of Commerce, had worked in financial roles, and her management of the property portfolio demonstrated financial capability. Like Mr Lyons, her evidence in this Court also had some inconsistencies with what she had said in the Family Court.
[41] Mr Lyons’ evidence was replete with bare assertions, bare denials and the repeated claim that he did not have the relevant information. Mr Lyons’ explanations are simply not credible on some key aspects. In particular, I do not accept his evidence denying that certain documents are in his handwriting and/or signed by him. Mr Lyons’ evidence also had some inconsistencies with his Family Court evidence.
[42] Both Mr Lyons and Ms Gosai distanced themselves from the Trust’s transactions. Yet I am confident that they were central to the architecture and implementation of these.
[43] In summary, the evidence leaves a confused and incomplete story. The parties have delivered competing and unreliable accounts that are often diametrically opposed. Some key documents are either inconsistent with each other or inconsistent with uncontested facts. In approaching this unsatisfactory state of the evidence, in a case that is intensely factual, I remind myself that it is Mr Werder who bears the onus of establishing the joint venture he alleges.
Discussion of key events and documents
[44] I now turn to address some of the key events and documents that will determine Mr Werder’s claims:
(a)the purchase of the Calgary Street property (the Calgary Street purchase);
(b)the 1997 Agreement;
(c)a June 1997 instruction from Mr Werder to solicitors to transfer the Calgary Street property to Mr Lyons (the 1997 Instruction);
(d)the transfer of the Calgary Street property from Mr Lyons and Mr Werder as tenants in common to Mr Lyons and Ms Gosai jointly (the August 1997 transfer);
(e)the finance offer from National Bank to fund the purchase of the Stoddard Road property (the Stoddard Road finance offer);
(f)the 2000 Document and the 2003 Document;
(g)the 1997 Draft Agreement;
(h)the Trust and associated transactions;
(i)the operation of the property portfolio and alleged contributions by Mr Werder; and
(j)the evidence in the Family Court proceeding between Mr Lyons and Ms Gosai, and Mr Werder’s involvement.
The Calgary Street purchase and contributions up until its transfer
[45] The parties dispute whether Mr Werder started with any equity in the Calgary Street property, and whether his contributions equalled Mr Lyons’ contributions by 1997. This is relevant to assessing their respective narratives about why the property was transferred to Mr Lyons and Ms Gosai in August 1997. In turn, the credibility of their narratives is relevant to assessing whether there was a joint venture or resulting trust in respect of the property.
[46] The Calgary Street purchase was primarily financed by bank funding. Mr Werder and Mr Lyons paid the deposit and the costs of conveyancing and settlement. Mr Lyons says he funded the full deposit, having received money from his mother to assist. Mr Werder says he contributed $9000, with Mr Lyons
contributing $19,000. I find that they both contributed approximately the amounts described by Mr Werder towards the acquisition costs, which comprised the deposit, solicitors’ fees, loan fees and costs on settlement.7
[47] Mr Werder says that while he was away studying to be a priest between 1996 and 1998, he continued to contribute equally to the mortgage and other outgoings of Calgary Street. This is disputed by Mr Lyons. I consider it more likely than not that Mr Werder did struggle to keep contributing to the mortgage during this period, despite his evidence of continuing to do consulting work for the Ministry of Agriculture while studying. I find he fell behind in what he and Mr Lyons had agreed he would contribute. Mr Lyons says he paid all rates and insurance, which is also likely correct given he had the benefit of occupying the property.
The authenticity of the 1997 Agreement
[48] The 1997 Agreement is ostensibly signed by all three parties. Mr Werder was unwavering in his position that he saw the other two parties sign this document at the dining room table on 31 January 1997, the date that it bears. Mr Lyons and Ms Gosai are equally insistent that they did not sign the agreement then, or at all. They say they had no knowledge of the document until it was produced as part of the proceedings. There is no dispute that Mr Werder signed it.
[49] The document records that in January 1997 the parties agreed to a 50/50 joint venture over properties declared to be owned jointly and others to be purchased by agreement. I set the document out in full:
AGREEMENT BETWEEN ROSHYN AND RAJESHWARI SINGH AND IAN KEVIN WERDER.
BOTH PARTIES AGREE that the properties held by R & R Singh Properties are owned jointly by the above parties. That an undivided 50% share is held by Roshyn and Rajeshwari Singh and the other 50% share is held by Ian Kevin Werder.
7 Mr Lyons says he put $20,000 in and Mr Werder put in nothing. A handwritten note of Mr Werder’s refers to the sums of $19,000 being paid by Mr Lyons and $8000 plus other acquisition expenses being paid by Mr Werder. The note is undated, but appears to have been written before Mr Werder went to the seminary. I consider it unlikely that Mr Werder contributed nothing.
That at [sic] no property may be purchased or sold by R & R Singh Properties without the express permission of all parties.
That each party will pay rental for the properties that they live in equivalent to the mortgage share outstanding on that property unless a different rate is agreed to by all parties to this agreement.
The shares in R & R Singh properties that each hold may not be sold to a third party without the express permission of all parties.
Roshyn Singh Rajeshwari Singh Ian Kevin Werder Dated 31 January 1997
[50] The terms set out in this document are the terms of the joint venture that Mr Werder alleges existed, alongside pleaded oral terms that I discuss later. The authenticity and provenance of the document is therefore of critical importance to ultimately determining Mr Werder’s claims.
Findings on authenticity of the signatures
[51] I find that Mr Lyons did sign the document. I do not accept his evidence to the contrary. The expert document examiner called by Mr Lyons was inconclusive as to whether Mr Lyons signed. In contrast, the handwriting expert called by Mr Werder was more definitive in concluding that Mr Lyons’ signature on the document is genuine, albeit qualifying her evidence due to limitations on its quality. Mr Lyons says that if it is his signature, then someone has “transposed it” onto the document. I reject this argument. There is no realistic possibility of a cut-and-paste of Mr Lyons’ signature onto the 1997 Agreement given the position of the signature, which overlaps the typed text.
[52] Secondly, I find that Ms Gosai did not sign the 1997 Agreement. Mr Werder’s own expert concludes that the signature is probably an assimilation, although she could not entirely exclude that the signature itself is genuine. Ms Gosai’s expert agrees. I also accept Ms Gosai’s evidence on this point.
[53] Mr Werder maintained that the agreement was drafted, negotiated and signed by himself, Mr Lyons and Ms Gosai on the date of signing. However, this is undermined by other aspects of his evidence:
(a)I accept the evidence that the parties had no printer at the Calgary Street property. Mr Werder postulated they may have left the house to get the document printed. This is unlikely.
(b)Mr Werder firmly maintained that the parties had printed out and made annotations to the 1997 Draft Agreement before the 1997 Agreement was signed on 31 January 1997. This is patently wrong for reasons I will return to.
(c)Mr Werder claimed for the first time at trial that there had been an earlier draft prepared by his solicitor, Peter White, and that the parties rejected the solicitors’ draft in favour of their own version. Mr Singh highlighted this as an example of the many inconsistencies in Mr Werder’s evidence concerning historic events. That is a fair criticism.
(d)The 1997 Agreement refers to each of the parties paying rent in respect of the property they lived in, at a rate equivalent to the mortgage share outstanding on that property unless a different rate was agreed. This was never the case. Mr Lyons’ earnings were paid into an operating account from which all the mortgages were being paid. Mr Werder was mostly paying a static $700 per fortnight. When it was put to Mr Werder that what occurred was inconsistent with this clause in the agreement, he claimed to recall a discussion where a different rate was “agreed”. I do not find this evidence credible.
[54] My findings mean that someone has forged Ms Gosai’s signature. When that occurred, or for what purpose, I need not decide. I am satisfied that Mr Gosai did not sign.
Date of the document
[55] To buttress the case that Ms Gosai did not sign the document nor agree to its terms, Mr Singh for Ms Gosai highlighted the circumstances as at 31 January 1997. At that point, Ms Gosai had only been in New Zealand for around eight weeks and
hardly knew her new husband, much less his property affairs. She had only met Mr Werder for the first time at her cultural wedding ceremony in December 1996, where he was introduced as a family friend. There are differing accounts as to how often they had met before 31 January 1997, but I accept that this was no more than a handful of occasions.
[56] This context makes it highly improbable that Ms Gosai signed a document on 31 January 1997, purporting to bind her to a long-term property joint venture. However, I conclude that the document was not prepared or signed in January 1997, despite the document bearing this date. In my view, it was signed at some significantly later point. That is because:
(a)The agreement refers to “properties held”. As of 31 January 1997, Mr Werder and Mr Lyons only owned the Calgary Street property.
(b)Although there is reference to “the properties they live in,” Mr Werder was still living in Dunedin as of January 1997.
Provenance of the copy before the Court
[57] The Court did not have the original 1997 Agreement. The only copy of the document was discovered by Mr Werder. He says that he last saw the original when he and Ms Gosai were going through filing cabinets at the Calgary Street property in 2013, as Ms Gosai was preparing to move out in accordance with the Family Court judgment. Mr Werder said that he took a copy at that point, which Ms Gosai denies. Mr Werder also contends that Ms Gosai provided the document to her Family Court lawyer.
[58] The Family Court record does not reflect Ms Gosai seeing the 1997 Agreement during those proceedings. Had she seen the document in 2013, I would have expected her many affidavits in the Family Court to have reflected some greater awareness of the agreement in the way she described past events. I would also have expected Ms Gosai to have provided the document to her lawyer in those proceedings. Her lawyer has confirmed that this did not happen.
[59] Mr Werder relied on a range of other matters to support that there was an agreement on the terms of the 1997 Agreement. I turn to address all of these.
The 1997 Instruction
[60] In June 1997, Mr Werder executed an instruction to Penney Patel Law to prepare a transfer of the Calgary Street property, then jointly in his and Mr Lyons’ names, to Mr Lyons’ sole name for the consideration of $1. Penney Patel Law were the solicitors that had acted for them both on the earlier acquisition of the property. Prior to that, they had acted for Mr Lyons.
[61]Mr Werder’s instruction recorded:
I confirm that all financial transactions between [Mr Lyons] and myself have been personally attended to and I do not require your involvement in that regard.
[62] Mr Werder says that the above reference was to the 1997 Agreement. Yet it is not consistent with a “three-way” agreement. Moreover, I would expect the instruction to refer expressly to the 1997 Agreement that, as Mr Werder claims, they had only recently signed. Accordingly, this instruction tends against existence of the 1997 Agreement (although towards there being some kind of other arrangement).
The August 1997 transfer
[63] Subsequently, on 18 August 1997, Mr Lyons and Mr Werder signed a memorandum of transfer of the Calgary Street property from them as joint tenants in common to Mr Lyons and Ms Gosai jointly. There are no documents or reliable evidence that bridge the gap between the intention in the 1997 instruction (to transfer into Mr Lyons’ name) and this transfer (where Mr Lyons and Mr Werder transferred the property to Mr Lyons and Ms Gosai jointly). The stated consideration for the transfer was $1, accompanied by a note recording that “receipt of [the consideration] is acknowledged”.
[64] Mr Lyons says that by the time of the August 1997 transfer, Mr Werder was not paying his 50 per cent share of expenses and owed more than his equity in the property. He says that the above transactions were intended to relieve Mr Werder of
his ongoing financial obligations. This is his explanation of why Mr Werder was prepared to receive only $1 in consideration for the transfer.
[65] To the contrary, Mr Werder says that he and Mr Lyons had equity in the Calgary Street property as at August 1997. Mr Werder said it would not make sense for him to transfer the property for $1. He argues that such a transaction is consistent with the 1997 Agreement, under which he retained a 50 per cent beneficial interest in the property. I do not have sufficient evidence before me to assess what equity Mr Werder had in the property. I acknowledge that Mr Werder had contributed to the initial equity. I accept that his net equity at this point was low.
[66]I consider there is some truth in the accounts of both Mr Werder and Mr Lyons:
(a)I accept Mr Lyons’ evidence that Mr Werder was struggling to keep afloat and that the latter benefitted from relieving himself of a direct mortgage liability. As Mr Lyons and Ms Gosai highlight, Mr Werder’s interpretation of the 1997 Agreement means that he had no financial liability for the mortgage on the Calgary Street property or any of the subsequent mortgages. They say that they would not have agreed to such an uncommercial proposition when they had personal liability through guarantees.
(b)However, I also accept Mr Werder’s position that at the time of this transfer, it was intended that he retain some interest in the Calgary Street property, at least as between himself and Mr Lyons. I consider it improbable that he would transfer the property and divest himself of any interest for $1.
(c)I reject that the transfer was pursuant to the terms of the 1997 Agreement or any agreement whereby he would maintain a 50 per cent interest, at a time when he was earning a relatively low income compared to Mr Lyons and Ms Gosai.
[67] Mr Werder gave conflicting accounts of his knowledge of the effect of this transaction. At one point, he said he realised the property was being placed in the couple’s personal names (which he said was so they could deal with matters more easily while he was in Dunedin). On another occasion, he said he had thought the property was being placed into a company.
[68] Ms Gosai says that she was not aware of the transfer into her name until later. However, the property records show the discharge of one mortgage with the Bank of New Zealand and its replacement with another from ANZ at the time of this transfer. Although Ms Gosai did not sign the transfer, inevitably she signed bank documents at this time consistent with becoming a joint owner and became liable under the mortgage. In those circumstances, I find that she knew of the transfer.
The Stoddard Road finance offer
[69] In early 1999, Mr Lyons and Ms Gosai changed lenders. They refinanced the Calgary Street property with Westpac and drew down on mortgages obtained from that bank for the acquisitions of properties at Stoddard Road and St Georges Road. Further borrowings from Westpac funded the renovation of Calgary Street in 2002.
[70] Before the acquisition of the Stoddard Road property, the National Bank made an offer of finance to Mr Werder, Ms Gosai and Mr Lyons. One of the conditions of the National Bank offer was Mr Werder confirming he could provide the $2,000.00 deposit for the property. The loan offer was not taken up. Mr Lyons and Ms Gosai accept that they gave serious consideration to Mr Werder joining them on this investment. However, they say that he failed to provide the deposit. They instead proceeded to purchase the property themselves with finance from Westpac. Whether that evidence is credible requires the finance offer to be understood in the context of the 2000 and 2003 Documents, which I turn to shortly.
[71] Mr Werder says that the National Bank letter is just one of many bank documents he signed relating to the properties in the portfolio over the years, which would all be available if documents had not been destroyed. In fact, Mr Werder did not sign the National Bank document as the offer was not accepted. I do not accept
that he was involved in signing bank documents other than initially regarding the transfers and as related to the Trust.
The 2000 and 2003 Documents
[72] The 2000 and 2003 Documents are handwritten. The first page of the 2000 Document bears the date 30 May 2000. Each page is initialled. The 2003 Document are dated 21 January 2003. The first page is initialled, and the second page bears full signatures. The initials and signatures on both documents purport to belong to Mr Lyons and Mr Werder.
The 2000 Document
[73] The 2000 Document is headed “Prepared for I.K. Werder & Singh Investments & Properties”. It purports to assess Mr Werder’s “% share” of the properties held by Singh Investments & Properties. The document commences with the following “Notes”:
1) Initial investment for Werder is as at July [1998].
2) % of share is calculated over the equity only as at July, for the following prop’s: Calgary St & Wynyard Rd.
3) All prior monies paid by Singh’s & received by Werder has been taken into account in the initial investment figure.
4) The % share for Werder is over all of Singh Investments & Properties.
5) Werder has met all his financial obligations to set up the company (Singh Investments & Properties).
[74] Mr Werder’s share is then calculated for the properties owned as at July 1998, being the Calgary Street property and the two Wynyard Units. Values as at July 1998 are attributed to these properties and mortgage borrowings at that date are deducted to produce a net equity figure of $200,977.70. Mr Werder’s share is then calculated at
32.15 per cent by taking what is described as Mr Werder’s “initial investment” sum of
$64,623.30 as at July 1998 as a proportion of the net equity. There is no itemisation of the “initial investment”, but it is evidently the “initial investment figure” referred to in the above introductory “Notes”.
[75] The 2000 Document then calculates to the last cent what are referred to as “company set-up costs (common [e]xpenses)” for subsequent properties acquired in 1999 at St Georges Road, Stoddard Road and Hendon Avenue. The costs itemised are deposits, as well as the conveyancing and other costs payable at settlement (rates and body corporate bank fees). These total $27,335.48. Consistent with the Stoddard Road finance offer, the deposit for that property is listed at $2,000. The document calculates Mr Werder’s 32.15 per cent share of these costs as $8,788.36.
[76] The 2000 Document also itemises certain “Non-common [e]xpenses for Werder only: (major only)”. These total $5,400, being $3,900 for a car and $1,500 for “O/due Rent/Mortgage”. Mr Werder’s share of the unpaid “company set-up costs” and “non-common expenses” total $14,188.36.
[77]The 2000 Document then “adjusts” Mr Werder’s share downwards from the
32.15 per cent calculated earlier to an “adjustment for future share” of 25.09 per cent. Mr Werder’s unpaid expenses of $14,188.36 is deducted from the “initial investment figure” of $64,623.30 to produce an adjusted “investment” figure of $50,434.94. The figure of 25.09 per cent is reached by describing the reduced figure of $50,434.94 as a percentage of the earlier $200,977.70 net equity figure.
[78] Mr Werder’s share of the assets held as at 2000 is then calculated as $300,327. This is 25.09 per cent of $1,197,000, the aggregate value of the properties owned as at May 2000.8 How the individual value of each property is derived is not stated. On its face, the figure of $300,327 purports to be Mr Werder’s share of gross value, not his net equity with borrowings subtracted.
[79] A discrete section at the end of the 2000 Document describes “common costs not taken into account” for 1998 and 1999 totalling $13,068.62. These are stated to be costs not met out of rental income for certain listed expenses such as rates, water, insurance, and various other costs. The document records Mr Werder’s share of these at 32.15 per cent ($4,181.96) and alternatively at 25.09 per cent ($3,278.90).
8 These comprised the Calgary Street, St Georges Road, Hendon Road and Stoddard Road properties, as well as the two Wynyard Units. The individual value of each property is also listed.
The 2003 Document
[80]The introductory notes to the 2003 Document dated 21 January 2003 state:
1)General/common property expenses have not been met by Werder for the years 98, 99, 00, 01, 02 thus far.
2)There is a need to accommodate these expenses (Werder’s share) i.e. adjust share amount.
3)We have agreed to use the figure of 25.09% for Werder’s share of expenses.
4)We have agreed to use the old figures of 98 and 99 as the expenses figures for 00, 01 and 02. This is done because Werder has contributed to some of the common expenses of which records have not been kept but is accepted by all. Also the 2nd objective is to preserve Werder’s share amount as much as possible. The common expenses for 00, 01 and 02 have been progressively higher [i.e.] more than for 98 and 99.
[81] The 2003 Document then calculates Mr Werder’s “expense share” for 1998-2002 at $8,197.25.9 This sum is then deducted from Mr Werder’s adjusted investment of $50,434.94 from the 2000 Document to reach a resulting figure of
$42,237.69. This is then taken as a proportion of the net equity of $200,977.70 as at July 1998 calculated in the 2000 Document. The result is a revised share of 21 per cent as at January 2003.
[82] The document concludes with the statement that: “It is envisage[d] that now Werder is in full-time employment (Primary School Teaching) all common expenses will be paid at the rate of 21%”. The background is that Mr Werder had retrained as a primary school teacher in 2002. Mr Werder says, and I accept, that prior to training as a teacher he was earning a reduced salary because of his depression. He returned to Taranaki and did some work from home. It was evidently a difficult time for him financially, and a difficult time from the perspective of his mental health.
9 This is based on a biannual rate of $3,278 in expenses for 1998–1999 and 2000-2001. This figure is itself reached by calculating 25.09 per cent share (Mr Werder’s “adjusted” share as calculated in the 2000 Document) of the expenses from this period. Mr Werder’s share of expenses for 2002 is calculated separately at $1639.45.
Who authored the 2000 and 2003 Documents?
[83] As outlined earlier, Mr Werder relies upon these documents as evidencing the 1997 Agreement. Both Mr Lyons and Ms Gosai reject all knowledge or involvement in the 2000 and 2003 Documents. Mr Werder plainly did not fabricate them. They were discovered by Ms Gosai, and also undermine his assertion that a 50 per cent joint venture existed.
[84] Mr Werder’s handwriting expert was of the view that the notes were probably written by Mr Lyons (apart from the section addressing “common costs not taken into account” in the 2000 Document, which is more debatable) and that Mr Lyons probably signed and initialled them. The other two experts were not asked to comment on whether Mr Lyons was the author. Mr Werder confirms that the other set of initials and signatures are his own.
[85] Ms Gosai’s expert concluded that her handwriting was not on the documents. The evidence of Mr Werder’s expert supported that view. I accept this evidence. I also find that Mr Werder signed and initialled the documents but did not write the text.
[86] Mr Lyons baldly rejected that these documents are in his handwriting and denied all knowledge of them. The inevitable conclusion not only from the expert evidence but by process of elimination is that Mr Lyons wrote the 2000 and 2003 Documents. I reject his assertions to the contrary.
Ms Gosai’s knowledge
[87] Mr Werder’s evidence at trial was that he recalled the 2000 and 2003 Documents being signed around the dining table at the Calgary Street property. He was adamant that Ms Gosai provided the calculations for them and was present. I find that this recollection is flawed. Mr Werder had forgotten the documents existed until they were discovered, detracting from his now firm account of the circumstances in which they were signed. The documents also appear to have been signed on different occasions, yet his recollection appeared to be directed at a single event, undermining the weight of his account.
[88] However, I also conclude that Ms Gosai had some awareness of both documents when the 2003 Document was signed:
(a)Item 4 of the 2003 Document records that it is “accepted by all” that Mr Werder had contributed to some of the common expenses in the period 1998-2002. That is consistent with more than two people being involved in the document.
(b)Ms Gosai’s evidence was that she started learning how to manage the property portfolio when she stopped work to look after her family in about 2000. By 2003, I find that she was at least assisting with (and perhaps by that time had responsibility for) the financial administration of the portfolio. She had a financial background through her degree and brief work history. It is plausible that she provided the detail for the calculations.
(c)The couple had also been married for five years by 2003, with Mr Werder living with them since 2002. In those circumstances, I consider it unlikely that these documents were not prepared without some knowledge or involvement by her, whether or not she was present when they were signed.
(d)The earlier Stoddard finance offer was addressed to all three of Mr Lyons, Ms Gosai and Mr Werder. This suggests Ms Gosai had knowledge of Mr Werder’s involvement.
Significance of the 2000 and 2003 Documents
[89] The 2000 and 2003 Documents suggest that the parties viewed Mr Werder as having an interest in the properties owned as at July 1998, the date used in the 2000 Document to calculate Mr Werder’s “initial investment” share, and as at January 2003, the date of the 2003 Document. Even on the calculations used, they also support the view that the parties considered Mr Werder to have built up equity by this time.
[90] References to “company set-up” give weight to Mr Werder’s evidence that he thought a property holding company had, or would, be set up (or at least that this was what he thought at the time the 2000 and 2003 Documents were drafted). Reference to Mr Werder being overdue in his “rent/mortgage” also supports his position that the money he was paying was regarded as having a dual character, rather than simply being rent as Mr Lyons and Ms Gosai asserted.
[91] However, the documents do not support that the parties (or even Mr Werder and Mr Lyons) considered themselves bound by the 1997 Agreement. If that was the case, one would expect that document to be referenced. Yet it is missing from any of the analysis.
[92] Moreover, references to percentages based on contribution suggest that it is unlikely Mr Lyons (or Ms Gosai) ever agreed to Mr Werder having a 50 per cent share. As discussed earlier, Mr Werder contributed less than Mr Lyons towards the initial acquisition of the Calgary Street property and (as I have found) had fallen behind in his contributions when in Dunedin.
[93] The 2000 and 2003 Documents support that Mr Werder had been unable to contribute the deposit for the Stoddard Road property at the time of the Stoddard Road finance offer. However, Mr Lyons and Ms Gosai said that as a result they went ahead with that purchase and subsequent ones without him. The 2000 and 2003 Documents demonstrate this to be incorrect, or at least that Mr Werder was re-included in arrangements regarding the properties retrospectively.
[94] As I said earlier, because no one asserts the 2000 and 2003 Documents have any legal effect, I do not need to make conclusions on the undue influence claim. However, the type of arrangements recorded in the documents are highly irregular and a commercial nonsense in the way they purport to adjust Mr Werder’s percentage of equity. The documents demonstrate extreme commercial naivety on Mr Werder’s part. This is consistent with views I formed of him at trial.
[95] There is no evidence that the parties ever applied the 21 per cent approach to contributions/equity that is outlined in the 2003 Document. The only witness who
acknowledged the documents’ existence, Mr Werder, did not say it was ever implemented. This approach was certainly not being taken from 2007 onwards, when bank records are available. The fact that Mr Werder had forgotten the documents existed until they were discovered support that they were not acted upon. I consider it likely that the documents were put to one side and not treated as a final or formal arrangement.
The 1997 Draft Agreement
[96] I now return to the 1997 Draft Agreement referred to earlier. This is a document in the same typed form as the 1997 Agreement but which has handwritten annotations in the form of proposed amendments. It was discovered by Ms Gosai. The document bears Mr Werder’s signature. I identify the handwritten amendments below in bold with deletions:
BOTH PARTIES AGREE that the properties held by R&R Singh Properties are owned jointly by the above parties except for the property at 22 Calgary Street, Sandringham. That an undivided =
50%79% share is held by Roshyn and Rajeshwari Singh and the other50%21% share is held by Ian Kevin Werder on all other properties except 22 Calgary Street.
That
atno property may be purchased or sold by R & R Singh Properties without the express permission of all parties.
That each party will pay rental for the properties that they live in equivalentto the mortgage share outstanding on that property unless a different rate isagreed to by all parties to this agreement.
The shares in R & R Singh properties that each party holds may not be sold to a third party without the express permission of all parties.
[97] Mr Werder was adamant in his evidence that this document was prepared and the handwritten proposed changes were made on 31 January 1997, before (he says) the 1997 Agreement was signed. As the defendants submitted, that is an absurd proposition. The handwritten changes insert the precise figure of 21 per cent, which represented Mr Werder’s revised share in the properties as recorded in the 2003 Document. In turn, this figure was based on precise calculations from property transactions post-dating 1997.
[98] Mr Lyons denied that he was involved in this document. However, I find that Mr Lyons made these mark-ups after 21 January 2003, the date of the 2003 Document.
That conclusion is also supported by the evidence of Mr Werder’s expert that the annotations were probably written by Mr Lyons.
[99] I have no evidence about the circumstances in which the annotations were made. However, the annotations themselves tend to suggest that there continued to be fluidity about what arrangements should or did exist even after the 2003 Document. My conclusion that no finalised binding agreement between the parties eventuated is not so surprising when one considers that the parties were living as a family unit.
The Ian-Tao Trust and associated transactions
[100] Mr Lyons and Ms Gosai say that the only joint venture that ever existed between the parties was a limited joint venture between them and the Trust, which was settled by Mr Werder. They say that their obligations under any joint venture are discharged by a payment of $100,000.00 to Mr Werder pursuant to transactions associated with the Trust. Mr Werder received approximately $90,600.00 of this sum in two tranches of $76,602.55 (the proceeds of sale of the Nikau Road property, which I discuss shortly) and $14,000.00. Hence, only around $9,400.00 would be outstanding to Mr Werder, subject to any other set off.
[101] Mr Werder says that the approximately $90,600.00 he received is Trust money which is loaned to him. He says the arrangement between the parties was that when the Trust received funds from properties it had an interest in, he was to have free use of those funds until 2033, when the Trust is to be wound up. He says he retained his interest under the 1997 Agreement in the other properties and the Trust transactions have no impact on that.
Documented Trust transactions
[102] The contemporaneous documents are the natural starting point for analysing the Trust transactions. However, as I will go on to explain, the documents are inconsistent with what any of the parties allege occurred, and some later transactions are inconsistent with earlier transactions. In other words, my summary will not be internally consistent.
[103] The Trust Deed is dated 16 February 2005. Mr Werder is the nominal settlor and holds the power of appointment of trustees. All three of Ms Gosai, Mr Lyons and Mr Werder are named as trustees. The Trust is for the benefit of Mr Lyons’ and Ms Gosai’s three sons. Mr Werder is not a beneficiary. The distribution date, unless brought forward by trustee agreement, is when the youngest of the sons turns 30 in 2033. Mr Werder would be 78 by this date.
[104] On 18 March 2005, the Trust acquired a half-share in the Nikau Road property, with the other half-share held by Mr Lyons and Ms Gosai. Then, on 27 April 2007, the Trust acquired sole ownership of the Park Avenue property. Rental receipts, mortgage payments and other outgoings for these properties were administered through the same operating account as the properties not connected with the Trust.
[105] On 12 April 2005, the parties had signed a deed of acknowledgement of debt recording an advance by Mr Werder to the Trust of $100,000 (the Deed of Acknowledgment of Debt). This “debt” was forgiven progressively by deeds of gift signed by Mr Werder between April 2005 and 12 September 2008. Solicitors acted on these transactions.10
[106] The earliest available financial accounts for the March 2011 financial year show $100,000 as the Trust’s contribution to the capital of “Singh Partners”. This was the name given to the joint venture between the Trust and Ms Gosai/Mr Lyons.
[107] The Trust properties were the first to be sold following the parties’ relationship breakdown. The parties sold the Park Avenue property in November 2012 and the Nikau Road property in July 2013.
[108] Mr Werder established a new bank account in July 2013. He said this was the Trust’s account, but no other trustee was involved in establishing it and he had sole authority. Pursuant to a signed joint instruction, the three parties directed the solicitors
10 To distance himself from these transactions, Mr Werder suggested that Ms Gosai instructed the lawyers acting on the forgiveness of debt because of a file note from a caller referred to as “her” being critical of how high their legal fees were. Whether or not this was a call from Ms Gosai, it is plain from the file that Mr Werder was the client and I infer that the lawyers must have explained the documents to him at the time.
acting on the Nikau Road property sale to transfer the net proceeds of sale of approximately $76,602.55 to this new account. The notation on the settlement statement was “I Werder – repmt of advance.” The solicitors’ instruction annexed the Deed of Acknowledgement of Debt as a supporting document. Singh Partners’ statements for the March 2015 financial year account for $76,603 as drawings by the Trust.
[109] Mr Werder used the proceeds of the Nikau Road property to, among other things, pay off credit card debt and overdraft, buy a motorbike from Mr Lyons, pay for car repairs, and acquire and transport a piano (which Mr Werder said was for the boys). He initially claimed that this money went to pay for work he had done at the St Georges Road property. Mr Werder modified this at trial to say that only some of the funds were used for this purpose and that this was through paying off transactions that had gone through on his credit card. I do not accept this.
[110] Subsequently on 2 August 2013, net proceeds of $23,397.45 became available from the sale of a property at 21D Fort Richard Road, Otahuhu (the Fort Richard Road property), previously owned by Mr Lyons and Ms Gosai. The settlement statement for the transaction refers to this sum as: “I Werder – balance owing.” A handwritten solicitor’s note on the statement records: “Do not pay. Clients to handle themselves. Full balance to be held pending further instructions – in dispute.” Whatever the commercial rationale for these transactions, it is clear that the two settlement statements contemplate Mr Werder receiving $100,000 in total, being the “balance owing” of $23,397.45 and the $76,602.55 earlier paid.
[111] From Mr Lyons and Ms Gosai’s perspective, the $23,397.45 balance would also have been paid out to Mr Werder had it not been for a dispute between them that intervened. Right through to the Family Court hearing, they fought over whether there was a period when Mr Werder had been paying his fortnightly $700 payments in cash to Ms Gosai that she had not disclosed post-separation. Mr Lyons asserted that either Ms Gosai needed to account for such funds on her side of the relationship property, or Mr Werder must be in arrears for these sums, in which case the arrears should be a set off against the $23,397.45 balance held by the solicitors. Mr Lyons believed Mr Werder and Ms Gosai were colluding on this issue.
[112] In the course of this dispute, Mr Lyons demanded payment of $14,000 rent from Mr Werder. Mr Werder did not respond at all, let alone suggest he had a wider claim that dwarfed this amount.
[113] On 8 June 2015, the solicitors’ trust ledger for the Fort Richard Road property sale shows $14,000 being debited to “Ian Werder - advance”. This was a sum that Mr Lyons became prepared to release to Mr Werder despite the above dispute. It was paid into another account, different to the one Mr Werder had established in July 2013. The notation on the statement is “advance”. Mr Werder applied this to personal expenditure, apart from a sum of $6,000 which he loaned or gifted to Ms Gosai on 10 June 2015. With the $14,000 paid, there remained a shortfall of some $9,400 from the
$100,000 purportedly owed to Mr Werder. Ultimately, this balance was treated by Ms Gosai and Mr Lyons as Ms Gosai’s relationship property. She would account to Mr Werder for the balance if he claimed it.
[114] Mr Lyons and Ms Gosai are no longer trustees of the Trust. Mr Lyons says he couriered a notice of his resignation as trustee to Mr Werder’s workplace in 2014. Mr Werder professes to be unaware of that resignation. In 2020, Mr Werder had his solicitors draft a notice and deed of removal purporting to remove Mr Lyons and Ms Gosai as trustees of the Trust. However, it appears that the notice and deed were never sent. Mr Werder says that this was because he had difficulty securing replacement trustees.
Evidence about the Trust and its transactions
[115] I now need to go behind the documentation and examine what the parties said about the above transactions.
[116] The parties’ explanations for the Trust transactions and the genesis and purpose of the Trust were both opaque and misconceived:
(a)Mr Lyons and Ms Gosai characterised the Trust as Mr Werder’s entity and as his vehicle for the only joint venture that existed. In Mr Lyons’ words, Mr Werder was “principal Trustee” so had some special status. The defendants said that the $90,600 Mr Werder received from the
above transactions was his beneficially. That is contrary to the documented position, given that Mr Werder is not a beneficiary.
(b)In evidence in the Family Court proceedings, both Mr Lyons and Ms Gosai described the acquisition of the two Trust properties as part of some arrangement paying him out. I return to this when I discuss those proceedings.
(c)Mr Werder says that he was in financial distress when the Trust was set up and the associated transactions took place. He says that he was seeking payment from Mr Lyons and Ms Gosai of $50,000 for his work, outlay on materials and outgoings on properties he was “owed”, all of which related to the property portfolio. He further claimed that Mr Lyons and Ms Gosai told him he would receive the $50,000 only if he entered into the Deed of Acknowledgement of Debt. The defendants deny they paid this money to Mr Werder or in the circumstances he alleges. Mr Werder was firm that he received it. I note that Mr Werder’s concept of being “owed” money for work and materials is somewhat inconsistent with his assertion that it was orally agreed he would contribute his labour to a joint venture (one of the pleaded oral terms I discuss later).
[117] Mr Werder had also previously deposed in an affidavit of 16 November 2021 in support of a freezing order application that the Trust was settled after property sales in 2010 in the following circumstances:
[Mr Lyons and Ms Gosai] wanted to take money from the business in the sell down for themselves. They did not want to give me any…I was concerned they were acting selfishly and wanted to put money from the business beyond my reach. I convinced them that the spare money should be put into a trust for the boys. That we did …
[118] In fact, the Trust was settled in 2005, not 2010. When challenged on this point, Mr Werder’s reaction was to suggest he may have been talking about another trust, until he acknowledged this was wrong in further questioning. The Wynyard Units appear to have been sold around 2004, with the Trust set up early the next year.
There were no property sales in 2010. Hence, although Mr Werder has referenced the incorrect year, the substance of his explanation could be correct. Putting aside the date error, the above explanation given as part of the freezing order application in 2021 suggests (and I find) that it was Mr Werder’s idea to set up the Trust.11
[119] Mr Werder’s evidence in his freezing order application also has an element of consistency with the evidence regarding the Trust that Mr Lyons gave in cross-examination in the Family Court. He said that a couple of Trust properties were bought to “pay [Mr Werder] back separately” for his share in the Calgary Street property, which they did when these properties were sold. In a later exchange, he said that the Nikau Road property was purchased to “make up” for Mr Werder not having received the value of a half-share in that property. Mr Lyons’ responses in the Family Court are contrary to his position now, which does not concede that there was any basis for Mr Werder needing to be paid back for earlier property transactions. Both Mr Werder’s and Mr Lyons’ explanations suggest that the Trust property transactions were a way of resolving a position with Mr Werder.
[120]As noted above, it is common ground that Mr Werder was intended to receive
$100,000 from transactions associated with the Trust. However, the transactions involving the $100,000 sum are highly irregular. Mr Lyons, Ms Gosai and Mr Werder all say that the $100,000 “advanced” by Mr Werder to the Trust never existed. That is, the Deed of Acknowledgement of Debt recording the Trust as indebted to Mr Werder for this sum in 2005 and the progressive gifting of the sum to the Trust were all paper transactions. Equally, the Trust’s recorded capital contribution to the Singh Partners joint venture of $100,000 was a fiction. The parties could not tell me why this fiction was created, yet all three were participants in formulating this structure.
[121] All three parties also signed the solicitors’ instruction which annexed the Deed of Acknowledgement of Debt for $100,000 as the source document for funds of
$76,600 being paid to Mr Werder from proceeds of sale of the Nikau Road property. I received no sensible explanation for this. Not only was this documented advance
11 Mr Lyons’ evidence was also that it was Mr Werder’s idea.
illusory, but it had already notionally been gifted off by progressive deeds of gift. Accordingly, it cannot be reconciled with the (falsely) documented position.
[122] Mr Werder had a complicated explanation about the $100,000. It involved the Trust “receiving” this notional sum, then advancing it to “R & R Singh Properties,” which he understood to be the joint venture company. He said that the $90,600 sum he received was a repayment to the Trust of this notional advance. Hence, he says these were Trust funds, not intended for him beneficially, but on loan until the Trust wound up. Mr Werder says that this was pursuant to an arrangement made when the Trust was established. The arrangement contemplated that any funds that became available to the Trust would be able to be used by Mr Werder. However, Mr Werder would have to repay any funds taken back to the Trust for the boys when the Trust wound up in 2033. He described the rationale as a way of guaranteeing that at least
$100,000 became part of the Trust’s funds and would ultimately go to the boys.
[123] Mr Werder’s explanation presents as incredible, if not absurd. However, as noted above, the March 2015 financial accounts recorded $76,603 as drawings by the Trust from Singh Partners. Correspondingly, the 2015 accounts for the Ian-Tao Trust show a new advance of $83,222 being made to Mr Werder in the same year. Accordingly, bizarre as Mr Werder’s explanation seems, there is a degree of corroboration of aspects of this in the externally prepared financial accounts. Although Ms Gosai was reluctant to assume responsibility for these accounts, in my view the instructions to the external accountants likely came from her.
[124] I return to my conclusions on the above transactions later when I determine Mr Werder’s claims.
Operation of the property portfolio
[125] After 2003, Mr Lyons and Ms Gosai continued to buy properties. Some were sold, such as the Wynyard Road Units.
[126] Ms Gosai managed the financial and tenancy administration. Mr Werder refers to regular documented meetings of the “joint venture”, the records of which he says have now been destroyed. I do not accept this because I do not consider there was any
such formality about the arrangements. However, I find that all three discussed the management of the properties on a regular basis because they were living together, and it is common ground that Mr Lyons and Mr Werder conducted maintenance on the properties.
[127] Mr Werder says that all the properties acquired were joint venture properties, but that Mr Lyons and Ms Gosai wholly controlled the “joint venture.” He said he was reliant on them for financial information and advice about the business. I accept that administration of the property portfolio was beyond Mr Werder’s abilities. However, I consider that after 2005 Mr Lyons and Ms Gosai did not regard Mr Werder as being part of any joint venture other than arrangements relating to properties owned by the Trust or Singh Partners. Accordingly, their conduct regarding other properties becomes immaterial.
[128] As outlined earlier, when Mr Werder moved into the Stoddard Road property in 2000, he says he started to pay $700 per fortnight in rent into the account which mortgages were paid from. Mr Werder says he continued to pay this $700 per fortnight for the occupation of the sleepout at the back of the Calgary Street property when he moved there in 2002. Mr Lyons and Ms Gosai say that Mr Werder paid considerably less than $700 for the sleepout at the Calgary Street property in the early days. I accept that evidence. However, Mr Werder was clearly paying $700 per fortnight from 2007 as there are bank records of payments of this sum.
[129] Mr Werder maintained that this fortnightly payment was his contribution to the mortgages. He asserted that this exceeded market rates for renting the sleepout at the time. He relied on hearsay evidence that I found to be unsatisfactory to prove his proposition in this regard. The parties were also in dispute as to what other benefits Mr Werder was receiving that were included in the fortnightly sum he paid.
[130] Because I have found that Mr Werder has not made out his claim based on the 1997 Agreement, the characterisation of the $700 payments as either rent/board or mortgage has little significance. In my view, what arrangements did exist were unsettled and imprecise. The $700 figure was static for many years. Whatever
characterisation it originally had, over time I do not think much thought was given to exactly what the fortnightly payments were intended to cover or contribute towards.
The Family Court proceedings
[131] The parties’ conduct and evidence in the relationship property proceedings are relied upon by each side as relevant to the existence of a joint venture and as material to the laches/estoppel defences.
[132] The parties waged acrimonious war over six years in the Family Court. Mr Werder made an affidavit and appeared as a witness for Ms Gosai at the hearing on the issue of separation date. Early on, he also supplied an affidavit for Mr Lyons, which he saw as assisting with Mr Lyons having access to the boys. There were numerous interlocutory applications and associated affidavits during the proceeding.
The dynamics in the Family Court proceedings
[133] Mr Werder placed most of the Family Court record onto the High Court record and his counsel cross-examined Mr Lyons and Ms Gosai on it. He placed significant emphasis on the evidence in that proceeding. The dynamics of the Family Court proceedings are relevant to assessing the materiality of this.
[134] First, it is common ground that Mr Werder gave Ms Gosai substantial assistance in the Family Court proceedings. Mr Werder’s evidence was that Ms Gosai talked to him a lot about what was happening in the proceeding. He attended confidential meetings with Ms Gosai’s lawyer and she gave him documents from the proceedings to read.12 Mr Werder did not engage with Mr Lyons at all and has not talked to him since 2013.
[135] Secondly, the Family Court Judge described Mr Lyons and Ms Gosai as behaving “appallingly” during the proceeding.13 As Mr Lyons accepted, he had forged the signature of a bank manager on an email. Ms Gosai was criticised in the Family
12 In his prior affidavit in support of discovery of the Family Court record, Mr Werder stated categorically that Ms Gosai shared all the information from the Family Court proceedings with him, including all letters received from Mr Lyons.
13 Family Court judgment at [287].
Court judgment for having lied about whether she had earned any income from the sleepout after Mr Werder left and attempting to cover up receipt of funds for the purposes of minimising the relationship property pool. For her part, she rejected these findings in cross-examination in the present proceeding. Much like the Family Court Judge, I have a sense that Mr Lyons and Ms Gosai were both so emotionally invested in their dispute and bitter towards each other that they regarded the ends as justifying the means.
[136] Thirdly and somewhat relatedly, there was a disproportionate emphasis in the Family Court interrogatories, affidavits and cross-examination on the aforementioned issue of whether Mr Werder had paid rent in cash to Ms Gosai post-separation, for which she had not accounted. On that issue:
(a)Ms Gosai repeatedly diverted questions on this issue by maintaining that because Mr Lyons and Mr Werder were lovers, Mr Lyons had always handled all issues relating to Mr Werder’s financial involvement and occupation of property. This made no sense as an explanation for the relevant period, which was the post-separation period of mid-2012 to mid-2013. By that time, Mr Lyons and Mr Werder were no longer speaking to each other. Ms Gosai and Mr Werder were the ones with a continuing positive relationship.
(b)To counter the proposition that she received rent in cash, Ms Gosai was eager to characterise payments made by Mr Werder as going towards the mortgage, not rent. This lies in stark contrast to her position now.
(c)Mr Werder said in cross-examination in the current proceeding that he was indeed paying his $700 per fortnight in cash to Ms Gosai. He also confirmed that there had been a written tenancy agreement, which Ms Gosai also denied in the Family Court.
[137] I conclude that Ms Gosai’s evidence in the Family Court on Mr Werder’s role and living arrangements is highly unreliable. That undermines the conclusions Mr Werder invited me to draw from it, which I address below.
Contentions Mr Werder made from the Family Court evidence
[138] Mr Werder relies upon Ms Gosai’s evidence in cross-examination in the Family Court as demonstrating that Ms Gosai held the 1997 Agreement, was familiar with it, and accepted its terms. The high point of this assertion derives from the following exchange:
Q.Why did [Mr Werder] come to Court with you on Monday and spend the day here to support you if he is not your friend?
A. Because he has an interest in Calgary Street, too, sir.
Q. What is his interest in Calgary?
A.By my understanding, I can’t recall when, so many years ago, [Mr Lyons] made the agreement or some sort of arrangement that Mr Werder was going to have 50% of R&R Singh Investment and we were left with 50% which is 25% each.
Q. [MsGosai] there is no evidence before the Court that Mr Werder still has an interest in Calgary Street, you have not put any evidence and neither has Mr Werder to suggest that he still has an interest in Calgary. Do you accept that?
A. I don’t want to go into that, sir, that’s not my area.
[139] The context is that Ms Gosai had vacillated about whether she wanted to buy out Mr Lyons’s interest in Calgary Street. Mr Werder was encouraging her to do so. He wanted the boys to maintain their base. Mr Werder said in evidence in this proceeding:
… I can remember [Ms Gosai] was trying to work out staying in the property or leaving it, I had a discussion with her saying that, “Hey you’ve only got to worry about 25 per cent of it which his [Mr Lyons’], I’ve got 50 per cent and you’ve got 25 per cent, so there’s only 25 per cent that you need to worry about.
[140] In my view, the above exchange only reflects discussions between Mr Werder and Ms Gosai around how the latter could remain in the Calgary Street property. I do not consider that it evidences a common understanding of the 1997 Agreement’s existence.
[141] I form this view in part because the Family Court proceedings to that point had only concerned the division of property between Ms Gosai and Mr Lyons, on the basis that each would receive 50 per cent of the relationship property pool. To that end, there had been interim distributions on a 50/50 basis to each of Ms Gosai and Mr Lyons from the proceeds of sale of properties. As regards the Calgary Street property, the focus was on each party’s 50 per cent interest. Accordingly, the above comment at the hearing came out of left field. It reflected the agenda Mr Werder was advancing close in time to the hearing, namely encouraging Ms Gosai to maintain a foothold in the Calgary Street property. I do not consider that it shows that Ms Gosai had the 1997 Agreement.
[142] There is inconsistency and imprecision in the way Ms Gosai described prior arrangements with Mr Werder. This tells against Ms Gosai having specific knowledge of a continuing legal (as opposed to moral) arrangement with Mr Werder. I set some of these out below, reiterating that they are in a context where Ms Gosai was being accused of hiding rent received in cash from Mr Werder:
(a)In opposing certain interlocutory applications in June 2016, Ms Gosai commented that:
[Mr Lyons and Mr Singh] were ex-lovers and they both purchased the property at 22 Calgary Street, Sandringham. Mr Werder’s financial assistance helped towards the deposit of the property and he remained involved with us financially for many years.
I note the use of the past tense here.
(b)In an affidavit in December 2019, Ms Gosai stated:
When I married Mr Singh it was made very clearly [sic] to me that Ian Werder was in a financial partnership with us and the godfather of our children. It was always understood that he would always be able to live in one of the properties without payment of rent. He did make payments towards the properties however, and towards the loans via the operating account. Of course, it transpired that he was actually [Mr Lyons’] lover. There was never any tenancy agreement with Mr Werder.
(c)Ms Gosai responded to questions in cross-examination in the Family Court about Mr Werder’s occupation of the Calgary Street property post-separation as follows:
Q. And [Mr Werder] paid $350 per week.
A. He wasn’t a tenant, he was part of (inaudible) Trust. We had two properties that he had shares in and he was contributing – that was the understanding that [Mr Lyons] had given me, because whatever affairs, because they were lovers, sir, whatever arrangements, financial arrangements they had, I had no say, I was not to interfere. But from a distance I knew that he was contributing into the mortgage.
[143] These exchanges show that there were financial arrangements between Mr Lyons and Mr Werder of which Ms Gosai was aware. That is contrary to Ms Gosai’s present evidence. However, the exchanges do not evidence a joint venture on the terms of the 1997 Agreement, nor provide any specifics of an alternate arrangement.
[144] Mr Werder also relied on Ms Gosai’s counsel’s cross-examination of Mr Lyons as providing insight into her knowledge of the 1997 Agreement. Ms Gosai’s counsel put to Mr Lyons:
Q: You did tell [Ms Gosai], didn’t you, that because Mr Werder had not received anything like 50% in your joint properties, and he was acting as a godfather to your sons throughout their childhood, that he was to be looked after and remain able to use rental properties throughout the relationship, that was the arrangement, wasn’t it?
A: No.
Q.Do you accept he received far less than he would have been entitled to, and has chosen not to pursue you for any claims?
A. No.
[145] Soon after, Mr Lyons was cross-examined on whether money provided by his mother to assist with the deposit on the Calgary Street property was a loan. In this context, there was the below exchange:
Q.You didn’t transfer Mr Werder’s half share to [Ms Gosai] for the value of the half share of the property, did you?
A: No,that was a transfer that [Ms Gosaithe ], [Mr Lyons], and Mr Werder worked out. We then subsequently went and purchased a property for Mr Werder to make up that.
Q: What property was that? A: Nikau Road.
Q: It was still owned by you, the three of you?
A The three of us, to actually get a loan on it, but it was solely in Werder's
…
Q: Which is why—
A: That was there.
Q: —he continued to make mortgage payments towards the joint mortgage through those years didn’t he?
A:Yeah, he didn’t make any mortgage payments. He was renting one of our rental properties and he was paying rent. There was no payment of mortgages by Mr Werder.
Q.He would say he was paying towards the mortgage, wasn’t he, because you were in a three-way property ownership agreement?
A: I don’t know what he would say but I can tell you that he wasn’t making direct mortgage payments, he was paying and there’s evidence of bank statements to show that he was paying rent at $700 a fortnight which is going into the joint account. There was no direct mortgage payment from him.
[146] I find that the two lines of questioning of Mr Lyons in the above extracts have their genesis in Mr Werder’s behind the scenes involvement in the proceeding, evidenced particularly by the proposition in the first:
Do you accept he received far less than he would have been entitled to, and has chosen not to pursue you for any claims?
[147]And in the second:
He would say he was paying towards the mortgage, wasn’t he, because you were in a three-way property ownership agreement?
[148] These present as being derived from what Mr Werder had been discussing with Ms Gosai. In those circumstances, they do not support Ms Gosai’s independent knowledge of the 1997 Agreement. Indeed, the questions asked do not faithfully reflect its terms in any event.
Mr Werder’s conduct in the Family Court proceedings
[149] As discussed above at [144], Mr Werder accepts he was given Family Court documents to read from Ms Gosai. He also had Ms Gosai’s barrister’s letter of 11 July 2012, which annexed a “Relationship Property Schedule” listing all 11 properties owned. This schedule noted these properties (apart from the Nikau Road and Park Avenue properties) as being jointly owned between Mr Gosai and Mr Lyons. The documents are clear that the parties are in dispute over the division of all the properties in their entirety, not the division of half-shares in each property. I do not accept that Mr Werder could have understood otherwise.
[150] Mr Werder offers several reasons for his lack of action during the Family Court proceedings. He says that:
(a)he thought the properties were owned by a company;
(b)he thought Mrs Gosai was protecting his interests due to his discussions with her about the 1997 Agreement; and
(c)the 1997 Agreement was an agreement among friends and hence he thought once the parties reached a resolution of their position, they would then pay him out his share.
[151] These explanations are unconvincing. I accept Ms Gosai’s contention that Mr Werder did not convey to her that her relationship property claim was subject to a claim by Mr Werder or that the relationship property pool could not be divided on a 50/50 basis because of his alleged interest. I do not consider Mr Werder even saw himself as ultimately pursuing any claim. At best he saw himself as facilitating Ms Gosai remaining in the property.
Analysis of the fiduciary duty claim arising from the 1997 Joint Venture Agreement
[152] I can now draw together the above evidence analysis to set out my conclusions on the key issues.
Alleged joint venture agreement on the terms of the 1997 Agreement
[153] I have determined above that there was no joint venture on the terms of the 1997 Agreement:
(a)The purported 1997 Agreement was not in fact prepared and signed in 1997. This means that it was prepared and signed after the transfer of the Calgary Street property into Mr Lyons’ and Ms Gosai’s names in August 1997, and after further properties were acquired in their names. The document contemplates all three parties signing it to have effect. I have concluded that it was signed only by Mr Werder and Mr Lyons. It is not binding on this basis alone.
(b)In any event, I do not accept that it was regarded as binding by Mr Lyons and Mr Werder after it was signed or that it was acted upon by them as forming the basis of arrangements, even between those two parties.
(c)Because of my conclusion that the 1997 Agreement post-dated 1997, statements in the 1997 Instruction, in particular Mr Werder’s assertion that “all financial transactions between [Mr Lyons] and myself have been personally attended to”, did not reference the 1997 Agreement. Nor, plainly, did such an agreement form any basis of the transfer of the Calgary Street property to Mr Lyons and Ms Gosai in August 1997.
(d)The 1997 Instruction, the 2000 Document and 2003 Document are all consistent with Mr Lyons and Mr Werder having some sort of arrangement. However, had the 1997 Agreement formed the basis for this arrangement, in my view the 1997 Instruction and/or the 2000 and 2003 Documents would have made some reference to this or the specific terms of the 1997 Agreement. They do not.
(e)More specifically, neither the 2000 Document nor the 2003 Document refer to Mr Werder ever having had a 50 per cent interest in a joint venture, as provided for by the 1997 Agreement. Rather, the 2000
Document calculates a starting interest of 32 per cent. At best, the documents suggest that the existing arrangement was founded on initial contributions.
(f)There is no evidence that the arrangements in the 2000 Document and 2003 Document were acted upon. No party relies upon them as legally effective in any case.
(g)The parties’ evidence and conduct in relation to the relationship property proceedings do suggest that Mr Werder was regarded as some form of co-investor by Mr Lyons and Ms Gosai, or someone to whom moral obligations were owed. However, with limited exceptions, the evidence in that proceeding and the conduct of Mr Lyons and Ms Gosai in it suggest that both considered whatever interest Mr Werder held was resolved or subsumed by arrangements involving the Trust. Again, with limited exceptions, the evidence does not support Mr Werder’s claim there was an agreement on the terms of the 1997 Agreement.
(h)The exceptions are Ms Gosai’s counsel’s questions of Mr Lyons that refer to a 50 per cent share in properties that Mr Werder was not pursuing, and an exchange with Ms Gosai in cross-examination that describes Mr Werder as having a 50 per cent interest in the Calgary Street property. However, I accept Ms Gosai’s evidence that this information came from Mr Werder and not independently from Ms Gosai. Ms Gosai relayed what Mr Werder had suggested might best enable her to stay in the Calgary Street property, which was her objective at the time. The Family Court evidence predominately suggests that Ms Gosai had been aware of some form of arrangement with Mr Werder but had viewed this as resolved by the Trust transactions. The evidence also suggests that Ms Gosai did not have the 1997 Agreement on which Mr Werder now relies.
[154] Accordingly, the facts indicate that Mr Werder was involved jointly with Mr Lyons and Ms Gosai in the earlier acquisitions of property, at least before 2005. I find that this did not crystallise into any defined agreement that the parties treated as binding. I do not consider there was ever a settled arrangement that Mr Werder would have a 50 per cent share in the properties comprising the property portfolio. I therefore find that there was no agreement on the terms of the 1997 Agreement.
[155] Mr Werder does not plead any alternative agreement or arrangement. His case puts all his eggs firmly in the 1997 Agreement basket.
Alleged oral terms of the joint venture agreement
[156] Mr Werder’s statement of claim also asserted that the alleged 1997 Agreement and subsequent joint venture included the following additional terms agreed orally between himself, Mr Lyons and Ms Gosai:
(i)The plaintiff’s contribution to the joint venture (“JV”) would include provision of practical services in the maintenance and improvement of the JV Properties and the administration of tenancies;
(ii)In the event of the sale of a JV Property, any decision to apply the proceeds to the purchase of another property, or the distribution of the proceeds as cash, would be decided in consultation between them;
(iii)No proceeds from the sale of any JV Property would otherwise be distributed without consultation and agreement between them; and
(iv)The plaintiff was accepted as having less financial and commercial experience than the first and second defendants and it was agreed that his contribution was to comprise practical services in relation to[:] the acquisition and disposal of the JV Properties, the administration and maintenance of the JV Properties, and the administration and management of tenancies;
(v)The first and second defendants used various names including “R & R Singh Properties”, “R & R Singh”, “R & R Singh Investments and Properties”, “Singh Investments & Properties” and “the company” in various documents and when talking with the plaintiff about the joint venture and its business. They are all the same business, the JV subject to the JV Agreement;
(vi)The first and second defendants explained the joint venture concept to the plaintiff in terms of a company and fostered the belief and understanding by the plaintiff that it was a company of which he was a significant shareholder and a director.
[157] In his evidence, Mr Werder outlined what work he said he did on the various investment properties and discussed Ms Gosai’s involvement as property manager. However, he did not outline how the pleaded oral terms above ever came to be agreed or in what circumstances. Nor did he put this in any direct way to Ms Gosai and Mr Lyons. The case was presented more as if Mr Werder was advancing an unpleaded claim to an institutional constructive trust based on his contributions to the properties, or perhaps some form of unpleaded emerging agreement by conduct. For these reasons the claim that there were oral terms cannot be maintained.
[158] For completeness, I address two aspects of the pleaded oral terms on which much evidence was directed:
(a)Mr Werder’s asserted understanding that there was a corporate entity.
(b)Non-financial “contributions” by Mr Werder.
[159] As to the first, there are various references to “Singh Investments & Properties”, “R & R Singh Properties”, “R & R Investments & Properties” and “R & R Singh” throughout the documents produced. Mr Werder maintains that he always believed he was a 50 per cent shareholder and a director of such a company. He claims he only realised there was no company, and that properties were held in the personal names of Mr Lyons and Ms Gosai, when he approached his current lawyer in these proceedings at the end of 2020.
[160] The references used over the course of the management of the properties simply reflect the name of the unincorporated property management business. They were not used with a view to misleading Mr Werder.
[161] The 1997 Agreement can be read to refer to a company. The 2000 and 2003 Documents also refer to “company” set-up costs. This supports that Mr Werder understood back then that a company was being established. Whatever his understanding at this time, it is difficulty to accept that Mr Werder continued to believe he was part of the business/company without signing any documents in that capacity. At best, for his case, I accept that Mr Werder wrongly and astonishingly continued to
believe that there was a company. However, I do not accept that he continued to understand he had some place in it, at least beyond 2005 when the Trust arrangements were entered into.
[162]In an email to Mr Lyons’ solicitor on 17 May 2013, Mr Werder stated:
I have every confidence in [Ms Gosai’s] ability to care for the three boys if only Roshyn would pay child support and his share of the cost of running their joint company.
(emphasis added)
[163] The above email demonstrates that Mr Werder recognised that he was not part of whatever company he thought existed.
[164]With respect to Mr Werder’s contributions to the properties:
(a)I accept that a running spreadsheet record maintained by Mr Werder of work undertaken was genuine and contemporaneous. It records work such as showing tenants around, collecting keys, minor repair work, cleaning, collecting bond and garden and lawn maintenance.14
(b)Whatever arrangement or basis there was for Mr Werder undertaking the work on the properties, Mr Werder himself maintains that he was paid $50,000 for work to that point in around 2005. Ironically, this is inconsistent with what he had said several times previously (being that he was not paid for his work on the properties) and was also denied by Ms Gosai and Mr Lyons. However, that he was paid $50,000 is now his firm position to this Court and not one I consider I am obliged to look behind.
(c)The primary invoices issued by Mr Werder that still exist were for work after the relationship of the parties broke down between 2013 and 2015. The handwritten invoices Mr Werder produced are from an invoice book where the invoices are consecutive in number. Yet the dates of
14 Mr Werder’s records run from April 2002 to March 2008.
the invoice jump back and forth in time. This supports the view that they were not produced at the time of the work done or even at the end of a financial year, despite Mr Werder’s assertions to the contrary. The invoices include claims for very high hours of work, purportedly done in a suspiciously short timeframe. When challenged on this apparent inconsistency, Mr Werder claimed for the first time that his flatmate had assisted him. That seems to me to be a last-minute invention. For the above reasons, while I accept that Mr Werder did continue to do some work with Ms Gosai beyond 2013 to assist her, I conclude that these invoices are excessive and do not accurately reflect the work done.
[165] In short, Mr Werder has failed to establish both the 1997 Agreement and the oral terms pleaded. The unreimbursed work Mr Werder claims he did on properties may support the existence of some expectation of payment on his part, but this is not the basis for his claim.
Claim of breach of fiduciary duties arising under the 1997Agreement
[166] Mr Werder’s pleaded claim is that there was a joint venture pursuant to the 1997 Agreement out of which fiduciary duties arose.15 Given my finding that Mr Werder has failed to establish the 1997 Agreement and any accompanying oral terms, it follows that his claim for breach of fiduciary duty must fail.
[167] Specifically, a claim for breach of fiduciary duties for some other arrangement that may have existed or arisen from the circumstances is not before me. There is no alternative position asserted by any of the parties. A very late amendment to the pleading might accommodate this in some circumstances, but no application was made. In any event, there was no have sufficient evidence of what, if any, alternate arrangement was in place.
15 A v D and E Ltd [2024] NZSC 161; and Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433.
[168] Even had I ventured down that track, any alternative arrangement would need to be assessed in the light of arrangements involving the Trust. I deal with this now, although it is also relevant to the estoppel and laches defences.
[169] In my view, the parties’ opaque arrangements involving the Trust were intended to resolve any interest Mr Werder had in the property portfolio held by Mr Lyons and Ms Gosai. I draw together earlier conclusions supporting this:
(a)Mr Werder has received close to $100,000 which the defendants say he is not obliged to repay to the trust. Mr Werder says he also received
$50,000 for work undertaken.
(b)There are unsatisfactory explanations around the set-up, purpose and transactions of the Trust and Singh Partners. Mr Werder says this
$100,0000 was a loan from the Trust that he is required to repay when it expires in 2033. However, for their part Ms Gosai and Mr Lyons say the $100,000 was for Mr Werder’s benefit and constituted a payout for any interest he had.
(c)In particular, Mr Lyons’ evidence in the Family Court indicated he viewed the Trust’s acquisition of the Nikau Road property as a “payout” due to Mr Werder’s earlier contributions. Mr Werder’s evidence supports that he initiated the Trust to address concerns about what Mr Lyons and Ms Gosai wanted to do with capital gains released from the properties, and to guarantee funds for the boys, to whom he was very close.
[170] I find that the intention of the parties was that any prior arrangement between the parties would be supplanted by the Trust and arrangements associated with it. These arrangements include the $50,000 Mr Werder says he was paid for prior work done on the properties in the portfolio and the subsequent $100,000 he received to his benefit or for his account (either for the Trust or through the Trust). Mr Werder saw the $100,000 as his retirement funds.
[171] I anticipate that Mr Werder would have also received additional funds if the Trust had it made further capital gains, with those funds eventually going to the boys as he intended. However, the relationship breakdown and sale of the properties owned by the Trust brought that prospect to an end. It was not suggested that there are remaining funds available from the Trust.
[172]Accordingly, in summary:
(a)Mr Werder’s breach of fiduciary duty claim falls away because it is founded on the 1997 Agreement.
(b)If fiduciary duties arose from some other unparticularised arrangement, these would not have been breached because of the superseding Trust-related arrangements.
Resulting trust
[173] As already outlined, on 18 August 1997, Mr Lyons and Mr Werder signed a transfer of the property from them as joint tenants in common to Mr Lyons and Ms Gosai jointly. The operative clause recorded that the transfer was effected for $1 in consideration, receipt of which is described as “acknowledged” on the memorandum of transfer.
[174] I have rejected Mr Werder’s claim that this transaction was pursuant to the 1997 Agreement he asserts. This alternative resulting trust claim relates only to the Calgary Street property. Mr Werder says that because he did not receive anything in this transfer (apart from perhaps the $1 consideration), a resulting trust arose. The defendants were required to hold on trust for him his 50 per cent interest in the property.
[175] A resulting trust scenario usually involves one party buying property for another. Equity presumes that a party who pays for property intends to retain beneficial ownership of the property, absent some contrary intention.16
16 Reid v Castleton-Reid [2019] NZCA 372, [2019] NZAR 1655 at [37].
That presumption will only arise where a settlor has expressed no intention to confer the beneficial interest on the legal transferee.17 In those circumstances, the law will “fill the vacuum” by presuming an intention on the part of the settlor to retain the beneficial interest.18
[176] As set out by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council, there are two types of resulting trust:19
... (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B; the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ... (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest ...
[177] The presumption may be rebutted by evidence of a contrary intention, such as evidence of a gift, or by the counter presumption of advancement.20 An outright transfer might occur through consideration or by way of gift.21 Evidence of intention is highly relevant.22
[178]This claim for a resulting trust fails for two reasons.
[179] The first is the context. I do not consider this is a case where there was a vacuum of intention. Mr Lyons and Mr Werder did have some form of understanding or arrangement underlying the transfer, but it was not pursuant to the agreement Mr Werder asserts. There is no vacuum supporting Mr Werder having a half-share interest resulting by operation of law.
17 Potter v Potter [2003] 3 NZLR 145 (CA) at [14].
18 At [14].
19 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL) at 708 (original emphasis), applied in Crampton-Smith v Crampton-Smith [2011] NZCA308, [2012] 1 NZLR 5 at [35].
20 Reid v Castleton-Reid, above n 16, at [38].
21 At [40].
22 At [43].
[180] If I am wrong in that view, and this can be pigeonholed into a resulting trust scenario, I agree with Mr Lyons’ argument that the transfer from Mr Werder and Mr Lyons to Mr Werder and Ms Gosai jointly was indeed made for consideration. Indeed, acknowledgement of the consideration having been received is being clearly and unequivocally noted on the memorandum of transfer. Although this is only a nominal consideration of $1, the recent decision of the Court of Appeal in Lendich v Codilla has made clear that nominal consideration will be sufficient.23
Relief
[181] Mr Werder claimed an account of profits in his pleading, which contemplated a further quantum hearing. That position was maintained until the first day of trial, when he said that he wanted the Court to determine relief together with his claims. The only support for his claimed relief was a registered valuation of the Calgary Street property (Mr Werder seeking half of that value or that he be placed on the title) and a table that purported to calculate Mr Werder’s “half share” of funds released from the sale of properties. The table is simply based on amounts of sale proceeds.
[182] I accept the defendants’ submission that the above evidence is an unsatisfactory basis for making an order of a money sum in Mr Werder’s favour. Because of my findings on liability, I do not address this point further.
Affirmative defences
[183] Given my findings on the fiduciary duty and resulting trust claims, it is not strictly necessary for me to set out the defences advanced by the defendants. I do so only briefly and for completeness.
Laches
[184] The defendants contend Mr Werder’s claims are barred by the equitable doctrine of laches. This operates to prevent a remedy where it would be unjust to provide one, either because a party has by their conduct effectively waived their right to such, or because they have put the other party in a situation where it would not be
23 Lendich v Codilla [2023] NZCA 222, (2023) 24 NZCPR 374 at [86]–[87].
reasonable assert such a right.24 The essential question is whether it would be unconscionable to grant relief in the light of the reasonable expectations of the parties.25 Delay and the nature of acts done in the interval which might affect either party are of particular relevance to that assessment.26
[185] The defendants submit that, were a remedy granted, Mr Werder’s delay in bringing proceedings would result in significant prejudice to them due to steps taken in the interim. I agree. Mr Werder has been aware of his claim since at least 2013 but did not bring proceedings until 2020. The delay has impacted significantly on the quality of the evidence because so many documents no longer exist. Ms Gosai had thrown out relevant documents when departing the Calgary Street property prior to proceedings being issued. Similarly, relevant bank and solicitors’ documents have been destroyed in the ordinary course of business. The loss of documents is a direct consequence of Mr Werder not bringing or notifying his claim promptly.
[186] I also accept the defendants’ submission that a remedy in this case will cause them significant prejudice. Their relationship property dispute proceeded with Mr Werder’s knowledge yet without their knowledge of a potential claim. Had they been aware of Mr Werder’s claim at the time of those proceedings, they would have brought it to a head or defended it then. Any successful claim could have been accounted for in the distribution of property following those proceedings. There were also interim distributions which were spent by the defendants long ago, without knowing Mr Werder intended to pursue a claim.
[187] I have not accepted Mr Werder’s justifications for inactivity, particularly, that he understood the proceedings related to the couple’s 50 per cent share of the properties, rather than to the 50 per cent of the assets that he says were for him. That argument does not bear scrutiny given that he was privy to the documents from the proceeding.
24 Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239, as applied in Proprietors of Wakatu v Attorney-General [2017] NZSC 17, [2017] 1 NZLR 423 at [456].
25 Wellington City Council v New Zealand Law Society [1990] 2 NZLR 22 (CA) at 26.
26 At 26.
[188] I have not accepted Mr Werder was reasonably relying on Ms Gosai to protect his position. I find that Mr Werder did not convey to Ms Gosai that he would ultimately be pursuing an interest in the properties. Indeed, as noted above, cross- examination of Mr Lyons by Ms Gosai’s counsel was to the effect that Mr Werder had chosen not to pursue a claim.27 I have found that this information came from Mr Werder. If it did not come from Mr Werder, it was an assumption that was fairly made in the circumstances.
[189] Nor do the above arguments address the fact that Mr Lyons was not given any indication that Mr Werder intended to pursue a claim. Mr Werder suggested that the cross-examination of Mr Lyons by Ms Gosai’s counsel about his potential interest in the Calgary Street property and questioning about a “three-way venture” constituted effective notice to Mr Lyons by him of his claim. That proposition is meritless. Mr Lyons’ answers in those proceedings suggest he thought any earlier interest of Mr Werder’s had been resolved with the Trust arrangements. The questions put did not mirror the terms of the 1997 Agreement that Mr Werder alleges, in any event.
[190] Accordingly, in all the above circumstances, had I concluded Mr Werder’s claim(s) should succeed, I would have determined that laches applied.
Estoppel/accord and satisfaction
[191] As a further alternative, the defendants submitted that Mr Werder is estopped from bringing his claim. 28
[192] The estoppel defence in this case is largely just a repackaging of the laches defence, relying on much the same conduct. The only aspect that differs, pleaded by Ms Gosai, is that Mr Werder’s conduct in respect of Trust transactions gave rise to an estoppel or accord and satisfaction.
27 At [143] above.
28 The principles of estoppel are well-established and outlined in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [44]; and Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.
[193] As I discussed earlier, I accept that at the time of the Trust transactions in 2005, the payment of $50,000 to Mr Werder and agreement that he would receive $100,000 either by way of 20-year loan as Mr Werder says or beneficially as the defendants say, were intended to resolve any prior arrangements that existed. Accordingly, I consider that an estoppel would also bar Mr Werder’s claim(s).
Limitation
[194] I raised during the trial that Mr Werder’s claims may be subject to the Limitation Act 1950 (the 1950 Act) instead of the Limitation Act 2010 (the 2010 Act). Having reflected on the issue, I am of the view that it is the 2010 Act that applies. The conduct alleged to constitute breaches of fiduciary duty (the transfers of proceeds and property) occurred after the 2010 Act came into effect on 1 January 2011.
[195] On the assumption most favourable to the defendants that the claims are for “monetary relief”29 the conduct alleged to constitute breaches of fiduciary duty falls within the six-year window from the date Mr Werder filed his original statement of claim on 29 October 2020, barring minor transfers of proceeds. Accordingly, the claims are not time-barred.
Result
[196] The claims fail. The cross-claim by Ms Gosai against Mr Lyons does not arise for consideration.
[197] If costs cannot be agreed, I will receive submissions on costs by the defendants within 14 days, and by the plaintiff in a further 14 days. I will then determine costs on the papers.
Anderson J
29 Whether an action for an account of parties for breach of fiduciary duties is a claim for “monetary relief” cannot be said to be settled: under the 1950 Act, see FAI (NZ) General Insurance Co Ltd v Blundell & Brown Ltd [1994] 1 NZLR 11 (CA), which was applied by Lawrence v Glynbrook 2001 Ltd [2014] NZHC 2876. Under the 2010 Act, see Matvin Group Ltd v Crown Finance Ltd [2022] NZHC 2239 at [263] and JC Corry Limitation Act Handbook (LexisNexis, Wellington, 2011).
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