Wolfe v Wolfe

[2021] NZHC 2878

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-075-95

[2021] NZHC 2878

BETWEEN

GEOFFREY LYALL WOLFE and JAMES ROGER WOLFE
Plaintiffs/First and Second Counterclaim Defendants

AND

WILLIAM THOMAS WOLFE

Defendant/Counterclaim Plaintiff

MICHAEL WOLFE

Third Counterclaim Defendant

Hearing:	30 June 2021 – 2 July 2021, further submissions 15 July 2021
Appearances:	S Elliott for the Plaintiffs and Counterclaim Defendants ML Dillon for the Defendant and Counterclaim Plaintiff
Judgment:	28 October 2021

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 28 October 2021 at 12.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date…………………..

Solicitors:             Insight Legal Limited, Warkworth

Miller Poulgrain, Thames

To:S Elliott, Auckland M Dillon, Hamilton

WOLFE v WOLFE [2021] NZHC 2878 [28 October 2021]

Introduction  [1]

Factual background – more detail  [8]

The pleaded claims  [59]
Observations on the evidence  [69]

Proprietary estoppel  [78]

Legal principles  [78]
Evidence as to Michael’s alleged promise  [93]

Did Michael make the promise as alleged?  [102] Observations on reliance and detriment, and any equity binding James and Geoffrey          [112]

Constructive trust claim  [130]

Legal principles  [132]

Analysis  [138]

Result and costs  [141]

Introduction

[1]                 This dispute arises, like many unfortunately do, in a family context. The plaintiffs (Geoffrey and James) seek an order for possession of a property of which they are the registered proprietors, but in which the defendant (William) and his family have lived for some 12 years.1

[2]                 William and James are brothers. The property (which I will refer to in this judgment as the “Waiomu Property”) was owned by their late mother Susan. Sadly, Susan passed away in 2008 not long after being diagnosed with brain cancer. Her will left her estate (largely comprising the Waiomu Property and a property in Thames (the “Thames Property”)) to her husband Michael (the third counterclaim defendant), to whom she had been married for 19 years. Michael is accordingly William and James’ step-father.

[3]                 Susan, Michael, William and James were all living at the Waiomu Property when Susan died.2 James moved out a couple of years later in 2010. In 2015, Michael was arrested and later sentenced to a term of imprisonment. William, his partner and their children have continued to live at the Waiomu Property to the present day.

[4]                 William says this arrangement came about as a result of a promise Michael made to him (and James) shortly after Susan’s death, to the effect that Michael would hold the Waiomu and Thames properties for his step-sons during his lifetime (the Waiomu Property for William and the Thames Property for James), and each would then pass to them upon his death. William says that on the basis of this promise (which he says James was aware of and did not disagree), he did not bring a claim for provision from Susan’s estate pursuant to the Family Protection Act 1955, and instead continued to reside at the Waiomu Property, to which he has made more than minor contributions.

[5]                 Michael denies any such promise or arrangement. So too does James, who has continued to meet most of the financial outgoings on the Waiomu Property, despite not

1      I have used the parties’ first names to avoid confusion (as they all share the same surname).

2      William having moved back home shortly before her death to help look after her.

living there since 2010. A complicating factor is that at the time the alleged promise was made, Michael was not the sole owner of the Waiomu Property, having already transferred a half share to James. And more recently, in 2018, Michael gifted his remaining half share to his brother Geoffrey, in return for Geoffrey assisting him while he was in prison and upon his release.

[6]                 Against this background, in early 2019, Geoffrey and James took formal steps to remove William from the Waiomu Property, by issuing a notice to vacate. William did not vacate, and accordingly Geoffrey and James commenced these proceedings in which they seek an order for possession. In response, William counterclaimed, alleging that in light of Michael’s promise, his reliance on that promise and the contributions he has made to the Waiomu Property, he ought to be recognised as the equitable owner of it. His primary claim is one of promissory estoppel, with a claim of constructive trust in the alternative.3 On both causes of action, William seeks an order that Geoffrey and James transfer title to the Waiomu Property to him. William accepts that if his counterclaim is not successful, he has no defence to the application for a possession order.

[7]The balance of this judgment is structured as follows:

(a)First, I set out the factual background in more detail.

(b)Second, I summarise William’s pleaded claims.

(c)Third, I make some brief observations on the evidence overall.

(d)Fourth, I address William’s claim based on promissory estoppel.

(e)Finally, I address William’s claim based on constructive trust.

3      A third cause of action seeking an account of profits from Michael was not pursued.

Factual background – more detail

[8]                 Michael acquired the Thames Property in 1987. In May 1989, Susan acquired a property in Te Aroha. Michael and Susan married on 9 December 1989. At some point in 1990, Susan acquired the Waiomu Property.

[9]                 In 1991, Susan made a will in which she bequeathed all her estate to Michael unless he predeceased her, in which case William and James were to share her estate equally. It seems that up until Susan’s own death in 2008, it was expected that Susan would outlive Michael (Michael suffering from serious type 1 diabetes and being in poor health as a result).

[10]              In 1992, Michael and Susan entered into a matrimonial property agreement in which they agreed that the Thames Property was Michael’s separate property, and the Waiomu and Te Aroha properties were Susan’s separate property.

[11]              On 9 July 1998, Susan and Michael entered into a sale and purchase agreement pursuant to which Susan bought the Thames Property from Michael (for $26,500). The following day, the couple entered into another matrimonial property agreement, in which they agreed that the Thames Property was matrimonial property. The same day, Susan also executed a deed of acknowledgement of debt to Michael for $26,500.

[12]              It seems, however, that steps were not taken at that time to transfer title to the Thames Property to Susan. However, the certificate of title for the Thames Property records a transfer from Michael to Susan in February 2000. Shortly thereafter, in April 2000, Michael formally forgave Susan the debt of $26,500.

[13]              As of that point, therefore, while all properties were owned by Susan, the Thames Property was agreed to be matrimonial property, while the Waiomu  and    Te Aroha properties remained subject to the 1992 matrimonial property agreement, reflecting that they were Susan’s separate property.

[14]              While the evidence was not entirely clear, it seems that the Waiomu Property was the family home throughout this time, with Michael, Susan and James living there

(William having moved out in 2003). The Thames and Te Aroha properties were rented out.

[15]              At some point after 2003 (but before 2005, again the timing is not particularly clear), William moved into Susan’s Te Aroha property. James says that his mother told him at the time that she had said to William that if he wanted the Te Aroha property, he could have it, so long as he paid the rates and kept it maintained. James says that William did not pay the rates and the condition of the property generally deteriorated while he was living there. William disputes this, and says that his mother had asked him if he wanted to move into the Te Aroha property, as it had been vacant and had been broken into and damaged. William said it was only ever intended to be a temporary arrangement. He says he lived there for about four months with his (then) partner who was pregnant with their child, and at her instigation, they moved out (precisely when is not clear) and in with her mother, the property not being suitable for a new born baby.

[16]              In the event, I have not found it necessary to come to any concluded view on the arrangements relating to the Te Aroha property, not being of direct relevance to the issues I must determine. At the very least, James did not profess to have any detailed or first-hand knowledge of arrangements between his mother and William in relation to the property, and his evidence about the property’s deterioration was somewhat vague and general. Michael, who was a difficult witness and who did not recall many relevant events (discussed further below at [71] to [74]), said he could not recall the arrangements and that it was not his business anyway, the Te Aroha property being Susan’s property. William accepts he did not pay rates on the property but says that he was never asked to do so.

[17]              At some point in 2005, Susan sold the Te Aroha property, it being common ground that this was because of unpaid rates which had accrued to that time.

[18]              Susan, Michael and James (and his then girlfriend) continued to live at the Waiomu Property. James paid about $80 per week in rent to his mother. The Thames Property continued to be rented out, and it was subject to a relatively long-term tenancy to a family friend, a Mr Green, from at least May 2008.

[19]              In or around April/May 2008, Susan became ill and largely bedridden. William came to visit (living and working at that time in Hamilton), and was concerned at his mother’s condition. In the event, he and/or his partner arranged for Susan to go to the doctors. Not long after, Susan was diagnosed with brain cancer.

[20]              At that time, James was working fulltime and accordingly was not in a position to care for Susan. He did, however, take over her financial affairs. This included collecting the rent on the Thames Property, paying the rates on that property (and any other outgoings, which did not include insurance, as it was not insured at the time), and paying the insurance on the Waiomu Property (following a call James said he received from the insurance provider, presumably about overdue amounts). He also started paying $400 per fortnight on accrued and continuing rates on the Waiomu Property.

[21]              Michael was evidently not coping with Susan’s diagnosis. He said that he had lost an earlier partner and in 2008, he was “going downhill right to the wire”. He accepts that he became withdrawn from Susan at this time. He also agreed that William (and his partner and their two children) moved back to the Waiomu Property at some point in 2008 in order for William to help care for Susan.

[22]              Uncontested evidence from a friend of William’s, Ms Jensen, a trained palliative caregiver who became Susan’s caregiver, was that William was responsible for Susan’s care when Ms Jensen was not there, and that Michael and James did not tend to stay at home with Susan very much, or take any interest in her care when they were around. I reiterate, of course, that James was working full time at this time, being the only person in the household in paid employment, and Michael was clearly not coping with Susan’s deteriorating health.

[23]              William said that during Susan’s illness, and prior to the last couple of weeks of her life when her mental health declined, she said to him on a number of occasions that she wanted to change her will, so that the Waiomu Property would go to him and the Thames Property would go to James. James said that William was telling him at the time that their mother wanted to change her will, and that William was “pressuring him” to go and get a will kit for this purpose. William disputes this and says that he

told his mother that she shouldn’t be worrying about these sorts of things at that time, and they’d sort it all out later.

[24]              That Susan wanted to change her will and/or her general desire was that her properties would ultimately pass to or be available to her sons, is supported by a number of non-family members whose evidence was admitted pursuant to s 9 of the Evidence Act 2006 (and taken as read). Ms Jensen said that on one occasion when she was caring for Susan, Susan said to William  that she wanted to  change her  will.  Ms Jensen also said that Susan wanted her grandchildren to grow up in the Waiomu Property “and she wanted the grandkids to be looked after with the houses when she died”. A Ms Hansen, a friend of Susan’s, said she had visited the Waiomu Property for dinner one evening when Susan was ill, and Susan had been adamant that the Waiomu Property was a family home with an “open door policy” for her children and their children. Ms Hansen also said that James said he was “happy to take the townhouse” (which I infer to be the Thames Property), as he was “already collecting rent from the property”, and the homestead was too big for him and that it was only fair that that William “has the house.” A Mr Hutchings, another family friend, said that he spoke to Susan quite a few times before she died, and she said the Waiomu Property would “become William’s when she was gone.” A neighbour, a Mr Dehar, said that Susan had said on numerous occasions that her houses would pass down to her boys if anything ever happened to her. Mr Green, a family friend who, as noted, was renting the Thames Property, said that the Waiomu Property was “supposed to go to William” but his evidence does not specify how he knew this. He also said that he had visited Susan before she died and that she was in tears and telling William that she wanted to change her will and that she didn’t want “those bastards to get anything”. Mr Green’s evidence was that William told her not to worry and they would sort it out later.

[25]              In contrast to this evidence, Michael said that Susan was adamant that nothing was to go to William, given his alleged reckless behaviour in relation to the Te Aroha property and his alleged involvement with drugs. I am hesitant, however, to place much weight on this evidence, which I consider unreliable. I discuss further below my concerns about Michael’s evidence generally (see [71] to [74]). In addition to those concerns, the suggestion that Susan was adamant William receive nothing is

inconsistent with the uncontested evidence of all of those persons referred to at [24]. All of that evidence involves “deceased hearsay” evidence. Nevertheless, it was admitted by agreement. While that evidence was not tested, and some of it is expressed in general and fairly high level terms, a common theme is that Susan’s broad expectation was that her two properties would ultimately pass to her children, or at least be available for their (and their children’s) enjoyment. There is no reason to conclude that all those witnesses have been entirely untruthful or inaccurate in their briefs of evidence.

[26]              For completeness, the agreed statement of facts in relation to those witnesses’ evidence also records that “those witnesses have no knowledge what Susan Wolfe (deceased) may have said to others regarding her intentions as to her will and estate”. While that may be so, there is no evidence from others to whom Susan may have spoken prior to her death. It would therefore be inappropriate for me to speculate that she might have expressed different views to other (unknown) persons.

[27]              Turning back to the chronology, Susan died only a few months after her diagnosis, on 14 September 2008. At that time, and while she had not changed her 1991 will, I am satisfied that she had a general expectation that the Waiomu and Thames properties would ultimately end up passing to or being available to William and James. While such intentions are not binding, they do provide some context for the (suggested) discussion between Michael, William and James and upon which William relies in this proceeding.

[28] In addition to those financial contributions referred to at [20] above, shortly before Susan’s death, James took out a personal loan of $7,000 from ANZ Bank to pay for Susan’s funeral.

[29]              On 30 October 2008, Michael transferred a half share in the Waiomu Property to James, the consideration for which was a deed of acknowledgment of debt in an amount of $135,000. The same day, Michael forgave $27,000 of that debt, leaving a balance of $108,000 (payable on demand, interest free). At that time, $27,000 was the maximum amount of the debt which could be forgiven in any one year period, without attracting gift duty.

[30]              James said that this transfer took place in the context of securing a new mortgage on the Waiomu Property. The background to this is as follows.

[31]              A bank loan from ANZ Bank to Susan, with an outstanding amount of $16,000, was secured by a mortgage against the Waiomu Property. James said that he was struggling paying all the bills for the Waiomu and Thames properties, plus the repayments on the loan he had taken out to pay for Susan’s funeral. James said that his recollection was that it was his idea to take out a new mortgage against the Waiomu Property, to enable the various debts to be consolidated and so the (substantial) outstanding rates could be cleared. He discussed this with Michael who evidently agreed, though it seems that ANZ Bank required James to be a party to the loan/mortgage given he was the only member of the family in paid employment.

[32]              In the event, on 23 December 2008, Michael and James, as joint borrowers, took out a loan from ANZ Bank in an amount of $56,294, secured by a new mortgage over the Waiomu Property. It is not clear why the transfer of the half share in the Waiomu Property to James took place on 30 October 2008, while the new loan from ANZ was not taken out until 23 December 2008.4 This was not explored in evidence, though I infer that it might have had something to do with the fact probate in Susan’s estate was not granted until 12 December 2008, at which point Michael was appointed executor.5 James said that he didn’t ask for or want a half share, but it was a step required to take out the loan, and in turn, to ensure the Waiomu Property could be kept as the family home. It is not in dispute that William was not privy to any of the discussions between Michael and James about the loan or new mortgage. William in fact said that Michael “let it slip” a year or two after his mother’s death that there was a mortgage over the Wiaomu Property.

[33]              Approximately $23,000 of the new loan was used to repay the existing $16,000 loan and discharge the earlier mortgage, and to repay James’ $7,000 loan for Susan’s

4      Though the loan had originally been approved by ANZ Bank on 23 October 2008.

5      The Waiomu and Thames properties were then conveyed to Michael, as executor, on 23 December 2008, then on the same day, to Michael as beneficiary under Susan’s will, and then the Waiomu Property was transferred (also the same day) to Michael and James in equal shares. The new ANZ Bank mortgage was then registered against it.

funeral.6 A large part of the balance was used to repay all outstanding rates on the Waiomu Property. James couldn’t remember how much that was, but said it was a “big bill” (he thought maybe around $10,000 to $12,000). He also agreed with Michael that he could use $10,000 of the balance to buy a car, and he also thought he might have bought a television. He said that a number of other household bills were paid from the loan, though could not remember the details of them. He recalled that there was about $3,000 or so left over, but did not have any memory of what became of that money.

[34]              Going forward, there was no dispute that James made all the mortgage repayments. William does not suggest he made any contribution to them.

[35]              The next relevant event is a discussion which William says took place in early 2009, probably in January 2009, between himself, Michael and James. William says that the three of them had a discussion around the dining table about what to do with the Thames and Waiomu properties, and that during that discussion, Michael made a promise to him and James to the effect that:

(a)he would hold the Waiomu Property for William during his lifetime and that William would receive title to the property when he (Michael) died;

(b)William, his partner and his daughters could live in the Waiomu Property with him while he was alive; and

(c)he would hold the Thames Property for James during his lifetime, and James would receive title to the property when he (Michael) died.

[36]I will refer to this alleged promise as “Michael’s promise”.

[37]              As noted earlier, Michael denies that any such discussion took place or that he made the promise as suggested. In his brief of evidence, James says that there was never any conversation or meeting as suggested by William, about how either house

6      Settlement statements from the solicitors handling the various transactions were produced in evidence which confirm these repayments being made.

was going to be held by Michael for William or himself. James says that “in fact Michael was adamant that the houses would not go to my brother because my brother was or had been into the drug scene.”7

[38]              Given the evidence concerning Michael’s promise is central to William’s claims, I address the competing evidence, and my factual findings in relation to it, in more detail when assessing the merits of William’s claims.

[39]              Returning to the factual narrative, William said that not long after his mother had died, he set up an automatic payment to make a contribution to the Waiomu Property rates. He did not suggest that these payments would cover the full rates; rather, he said that he intended that they would “make a dent” in the rates and “with the theory of paying whatever was left over when the rates came in due”. William produced bank statements from 2014 (statements prior to 2014 no longer being available), which showed some automatic payments being made.8 I interpolate to note that while “paying whatever was left over when the rates came in due” might have been William’s intention, there is no evidence that any further contributions or one off payments were made by him to keep the rates up to date. The available evidence demonstrates that arrears of rates continued to accumulate over time. For example, at least from 1 July 2014, there was an outstanding balance of $327.43, which increased over  the  intervening  years  to  an  outstanding  balance  by  the  middle  of  2019 of

$4,123.91.     The   rates   schedule   produced   does   show   payments   of between

approximately $800 and $1,400 each year, which would be broadly consistent with William’s contributions. Unfortunately, however, penalties also accrued during this time, and increased in size as the outstanding balance increased.9

[40]              William also said that he made some contributions to the power bill while James was living at the Waiomu Property (the account being in James’ name at that time, until he moved out in 2010).

7      There was no suggestion in James’ evidence that this was also his mother’s view.

8      The frequency of the automatic payments is difficult to discern from the bank statements (parts of which have been “cut off” in the copying process). They show payments of $20 and $30 dollars to two sets of council rates, potentially twice per month. But only statements for May and June each year were put into evidence (why is not known). There is no suggestion that the amount of the automatic payments changed over the years.

9      James paid a lump sum of $1,800 towards rates arrears in June 2020.

[41]              James says that while he was living at the Waiomu Property, he paid the majority of the rates, but that once he moved out in 2010, he left them to be paid by Michael and William. He continued, however, to pay the mortgage and the insurance. He said that once he found out how far behind the rates had got, he started making payments towards them again. The evidence was not clear as to when this occurred or in what amount (noting that there were outstanding rates from at least 2014, as discussed above). Ultimately, William agreed that James paid the majority of the outgoings on the Waiomu Property, at least in relation to the mortgage and rates. I would add to this insurance.

[42]              Michael, William, William’s partner and their children continued to live at the Waiomu Property from 2010 to 2015. There was no suggestion that there were any particular difficulties during this time, such as hostilities between Michael and William.

[43]              On 27 February 2015, the Thames Property, which at that time remained registered in Michael’s name but in his capacity as executor of Susan’s estate, was transferred to Michael in his personal capacity. The same day, Michael transferred title in the property to James, and James signed an acknowledgment of debt for the purchase in the sum of $107,000. At the same time, Michael forgave the full debt. James accordingly became the sole owner of the Thames Property.

[44]              The evidence was not clear on why this transfer was made. Michael could not recall doing it, and James did not know why it had happened. I infer that it might have had something to do with events concerning Michael which occurred in 2015, as discussed in the following paragraphs.

[45]              At some point in 2015, Michael was arrested and initially held in custody. It is not necessary for the purposes of this judgment to detail his offending, it being sufficient to say that it led to a fracture in his relationship with William. Having been released on bail, Michael sought help to get William “evicted” from the Waiomu Property. William knew of this. Mr Hutchings’ evidence was that in about early 2016, Michael came to the Thames Property to visit Mr Green (the then tenant), and asked

Mr Hutchings to “physically throw William and his family out” of the Waiomu Property. Mr Hutchings said:

I refused to do what Mike wanted because it went against Susan’s wishes. The property was to become William’s as far as I was aware. Also, Mike only wanted William kicked out since he got arrested.

[46]Mr Green gave similar evidence. He said:

Mike got arrested in 2015 …. I stayed in touch with his [sic] for a while. He became very angry toward Will and tried me to get him (sic) thrown out of his house at 44 Waiomu Valley Road, Thames. No one would do that though because the house was supposed to go to William anyway.

[47]              In the event, Michael went to live at the Thames Property (Mr Green’s tenancy having been terminated for that reason).

[48]              Michael ended up pleading guilty to the charges he faced and was sentenced to a term of imprisonment.10 William evidently had no contact with Michael following his arrest, and James also said that he had not spoken with Michael since he went to prison.

[49]              Following Michael’s incarceration, William and his family continued to reside at the Waiomu Property as before. Also as before, James continued to pay the mortgage and insurance, and at least from some point after 2015, a portion of the rates.

[50]              On 13 November 2017, Michael arranged for a half share of the Waiomu Property to be transferred to him in his sole name, thus changing his and James’ ownership from joint tenants to tenants in common. Again, the reasons for this were not explored in any detail the evidence, Michael having no memory of it, and James not knowing why the change had been made. Again, I infer it might have been in preparation for Michael to gift his half share to his brother (which took place the following year, see [51] below).

[51]              On 30 November 2018, Michael gifted his half share in the Waiomu Property to his brother Geoffrey. Geoffrey gave evidence as to the background to this.

10     The length of his sentence was not confirmed in evidence, but he had only been released from prison very shortly before the hearing in this matter.

[52]              He said that in or around 2016, Michael had asked him for help getting William out of the Waiomu Property. In his brief of evidence, Geoffrey said “it took 12 months approximately of considering and reviewing how I could best help my brother in his dilemma.” He said that he and Michael agreed that Michael would transfer his half share to Geoffrey, in return for Geoffrey covering any legal expenses regarding the property (and Michael’s trial, which did not eventuate given Michael’s guilty pleas), and supporting Michael while he was in prison and on release. In his oral evidence, Geoffrey confirmed that the transfer of the half share had originally been his idea. He said he had sent $20 per week to Michael while he was in prison, and has supported him generally after his release. Geoffrey confirmed that he has not paid any legal expenses for Michael.

[53]              James says that it was ultimately his idea to take formal steps to get William removed from the Waiomu Property, and that the “straw that broke the camel’s back” was when he received a telephone call from William demanding that James get the house rewired. James said this was about a week after he got an email from the Thames-Coromandel District Council saying that the rates were in arrears and this “basically broke my will to keep paying for the house and even owning the house to be quite honest with you”. James said that this was also some time after he had approached William to ask him to contribute more financially to the Waiomu Property, to which William had replied that he would if he “got his name on the title”. James said he wouldn’t have had any real problem with that if William had contributed financially to the property. James also said that he discussed the possibility of William’s name being put on the title once or twice with Michael, but said Michael was adamant that “it wasn’t gonna happen.”

[54]              William agreed that his brother had asked him to contribute more financially to the Waiomu Property, and that he was quite upset by this when “I was paying, you know, putting in for the rates and doing the upkeep on the house”. William also said that he had had about 60 per cent of the wiring replaced in the property, and given he “[hadn’t] got anything on any paperwork or anything to say that I’m gonna get anything out of it at the end of it”, he asked James to pay for the balance.

[55]              In the event, on 18 February 2019, James and Geoffrey issued a formal notice to William requiring him to vacate the premises, which he did not. I interpolate to note that (less formal) communications with William about vacating the property must have commenced earlier than this, given William’s counterclaim pleads that “up until 2018” neither Michael, James or Geoffrey indicated a position which was inconsistent with Michael’s promise. When William did not vacate the property, James and Geoffrey commenced these proceedings (in the District Court at Thames) in June 2019. Following William’s counterclaim being filed, the proceedings were transferred to this Court in June 2020.

[56]              Finally, there was no real dispute that since living at the Waiomu Property, William has carried out some maintenance and other similar works to it. This includes building a barbeque and fish filleting area, putting up some fencing to keep his dogs in, and relining and painting a bedroom (though it seems these works were carried out while Michael was still living at the property). There is also no doubt that William has done some additional painting, decorating and maintenance type work, including relining and painting the bathroom, replacing some rotten door frames, fixing some leaks in the concrete water tank, updating the kitchen units, replacing a balcony roof, replacing an oven, water pump and internal fireplace, and putting new shells on the property’s driveway. No independent expert evidence was called as to the extent of these works, or whether they have added any material value to the Waiomu Property. However, having reviewed the (relatively limited) evidence on the works and the associated photographs produced in evidence, they seem more in line with general upkeep and maintenance as and when required, rather than very significant works or alterations.

[57]              Geoffrey and James also conducted a (Court-ordered) inspection of the Waiomu Property in mid-2020. Both gave evidence that they considered the property to be very run down and poorly maintained. James said its condition overall had deteriorated since he had lived there. However, following cross-examination, I took his and Geoffrey’s evidence to relate more to the general tidiness and visual state of the property, rather than, for example, its structural maintenance and integrity.

[58]              Against that factual background, I turn now to summarise William’s pleaded claims.

The pleaded claims

[59]              Mr Dillon, counsel for William, confirmed that William’s primary claim is that of promissory estoppel.

[60] As will be evident from the above factual background, William’s counterclaim centres on what became referred to at the hearing as the “informal arrangement” between himself, Michael and James. William alleges that during the discussion which took place in or about January 2009, Michael made the promise set out at [35] above.

[61]              It is not pleaded that James made a similar representation or promise to hold his share of the Waiomu Property for William (or that James was holding his share of the property on trust for Michael, to support Michael’s promise to William). It is alleged, however, that James did not indicate that he had any issue with Michael’s promise at the time it was made, or at any time before 2018.

[62]              Given Michael was not the sole proprietor of the Waiomu Property at the time of his alleged promise, Mr Dillon accepts that Michael did not have an unqualified power of disposition over the property, or in other words, he could not unilaterally dispose of the equitable interest in the property without reference to James.11 Accordingly, Mr Dillion confirmed that none of William’s pleaded claims involve an alleged express trust. I note that in any event, and as I discuss later in this judgment, William’s own evidence was that Michael disavowed a proposal put to him to hold the properties on trust for William and James during his lifetime.12

[63]              William’s counterclaim goes on to allege that he reasonably relied on Michael’s promise and incurred detriment as a result of his reasonable reliance. That detriment is said to arise from:

11     Edwards v Carter [1893] AC 390.

12 See [95] below.

(a)foregoing the opportunity to pursue a claim against Susan’s estate under the Family Protection Act 1955; and

(b)contributing in a more than minor way to the preservation and enhancement of the Waiomu Property.

[64]              It is alleged that this gives rise to a beneficial interest in the Waiomu Property for William, which is enforceable as against James, given:

(a)James was a party to Michael’s promise; and

(b)James has, subsequent to Michael’s promise, taken a half share in the Waiomu Property (as a tenant in common), other than as a bona fide purchaser for value without notice of William’s beneficial interest.

[65]              William’s equitable interest is also said to be enforceable as against Geoffrey, in that he is a successor in title to the Waiomu Property who is not a bona fide purchaser for value.

[66]              William’s second cause of action is styled “constructive trust”. The pleading alleges that in reliance upon Michael’s promise, William contributed in a more than minor way to the preservation and enhancement of the Waiomu Property and held a reasonable expectation that he would continue to reside at and ultimately receive title to it. The pleading alleges that these circumstances gave rise to (what I infer to be an institutional) constructive trust over the Waiomu Property in favour of William. It is alleged that Michael breached that trust by causing the property to be held in common (with James), and transferring a half share to Geoffrey.

[67]              I interpolate to note given the pleading that William contributed in a “more than minor way” to the preservation and enhancement of the Waiomu Property, I enquired during the hearing whether the constructive trust cause of action was being pursued on a Lankow v Rose basis.13 Mr Dillon submitted that the evidence adduced

13 Lankow v Rose [1995] 1 NZLR 277 at 686, per Hardie Boys J. The terminology of “more than minor” contributions used in William’s counterclaim is in fact drawn from Hardie Boys J’s language.

is sufficient for a constructive trust to be imposed on that basis, though emphasised that all the claims are tied to reasonable and detrimental reliance on Michael’s promise.

[68]              The counterclaim alleges that the constructive trust of which William is the beneficiary is enforceable against each of James and Geoffrey on the basis that:

(a)both James and Geoffrey are volunteers who have acted inconsistently with William’s equitable interest upon learning of it;

(b)each of James and William knowingly received trust property;

(c)unjust enrichment, in that James and Geoffrey have each acquired the Waiomu Property and are attempting to deprive William of the benefit of Michael’s promise; and/or

(d)unconscionability more generally.

Observations on the evidence

[69]              As will be evident from the above, William’s claims turn largely on matters of fact. There was, unsurprisingly, not a lot of relevant contemporaneous documents produced in evidence, partly due to the key events having taken place some 13 years ago, and partly because the events occurred within a family environment.

[70]              Given the factual nature of this case, I have had to make assessments as to the credibility and reliability of the witnesses who gave evidence. I observe, however, that other than perhaps the suggested promise made by Michael, much of the case is not about credibility or truthfulness per se, but about the parties’ respective interpretation of events which took place a long time ago, and the reliability (or accuracy) of what they now recall.

[71]              Turning first to Michael’s evidence. As noted earlier, Michael was a difficult witness. Despite his role as a counterclaim defendant and the maker of the alleged promise at the centre of this case, he was clearly not engaged in the court process and made it clear that did not want to be giving evidence. He frequently took umbrage at

being asked questions by counsel. He effectively gave the impression of not really caring about the outcome of the proceeding.

[72]              There is also no doubt that Michael suffers from ill health, and he confirmed that he suffers from type 1 diabetes and has had head injuries in the past. He had also only very recently been released from prison. He had difficulty hearing some of the questions, and was clearly confused at times as to relevant timeframes and events. He did not remember some of the events in issue. It also transpired that he was unable to read, and his counsel read his brief of evidence for him (which he then confirmed as correct).

[73]              Nevertheless, I formed the view that Michael did understand many of the questions that were put to him (at least when they were repeated or re-framed), as well as the content of his responses. It became clear, however, that about halfway through his evidence he effectively “gave up”, and thereafter generally answered that he “didn’t remember,” or words to a similar effect.

[74]              Given the above, I cannot ascribe significant weight to much of Michael’s evidence.

[75]              I observed both of James and William to be broadly credible and reliable witnesses, though I gained the sense that both were, understandably, recounting parts of their evidence through a (subconscious) lens of hindsight, and reflecting what they personally thought ought to be the fair and appropriate outcome. I should emphasise that I do not suggest that either actively lied in their evidence. I am satisfied they both sought to tell the truth and believed what they were saying. But as their oral evidence progressed, and as is often the case, what they said was sometimes not as stark or as clear as suggested in their written briefs of evidence. James also proceeded at times on the basis of what he understood the position to be, without having first-hand knowledge (for example, arrangements made between William and Susan in relation to the Te Aroha property, and William’s working arrangements immediately prior to coming to live at the Waiomu Property to help look after Susan). I also got the sense that both James and Geoffrey’s evidence about the state of the Waiomu Property when they carried out their inspection was somewhat exaggerated.

[76]              Finally, Geoffrey also struck me as a broadly credible witness, though there were some issues in relation to reliability, in that aspects of his oral evidence were not particularly clear, and he was reasonably vague as to timing of some events and other similar matters (for example the discussions leading up to and the rationale for the transfer of Michael’s remaining half share in the Waiomu  Property to him). Nevertheless, the crux of Geoffrey’s evidence, namely that he had been gifted his half share in the Waiomu Property and since then has made contributions to the rates, was not seriously in dispute.

[77]I turn now to my analysis of William’s claims.

Proprietary estoppel

Legal principles

[78]              For some time in New Zealand, there has been less focus and reliance by parties (and courts) on the historical and different forms of estoppel (estoppel by representation, promissory estoppel and proprietary estoppel), and instead recognition and adoption of a unified doctrine of equitable estoppel based on unconscionability.14

[79] In this case, however, William had pleaded and relies on the particular cause of action of proprietary estoppel. I accordingly approach the claim on that basis. I record, however, that I do not consider the result would be any different were the cause of action viewed through the lens of the unified doctrine of equitable estoppel. The unified doctrine is still framed by reference to three elements which are consistent with the elements of a proprietary estoppel claim (as set out at [80] below).15 Further, the claim in this case is in relation to an interest in land, the traditional reach (and limitation) of proprietary estoppel. In addition, and unlike other forms of estoppel, it has never been in doubt that proprietary estoppel may be used as a cause of action (that is, as a sword rather than a shield).16

14   See generally James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 19.1.3(1).

15 The Court of Appeal in Gold Star Insurance Co Ltd v Grant [1998] 3 NZLR 80 stating (at 86) that the core “three elements” of a claim of equitable estoppel are first, the creation or encouragement of a belief for expectation; second, reliance by the other party; and third, detriment as a result of that advice.

16 Every-Palmer, above n 14, at 19.1(3).

[80]              Turning to the elements of proprietary estoppel, counsel referred to Lord Walker’s judgment in Thorner v Major, which confirmed them to be:17

(a)a representation or assurance made to the claimant;

(b)reliance on it by the claimant; and

(c)detriment to the claimant in consequence of his or her (reasonable) reliance.

[81]              As to the nature of the promise or assurance relied on, a key issue  in  Thorner v Major was the standard, or threshold, required in order for the promise or assurance to bind the defendant (assuming of course, that the other elements of the claim were made out). Lord Walker, with whom the other members of the House agreed, rejected the standard of a “clear and unambiguous” promise or assurance, instead requiring that  the  relevant  promise  or  assurance  be  “clear  enough”.  Lord Walker stated that “what amounts to sufficient clarity, in a case of this sort, is hugely dependent on context”.18 The “sort” of case in Thorner v Major was (like this one) alleged assurances given in a family context.

[82]In this jurisdiction, leading commentary notes that:19

A “clear and unequivocal representation” will often be required to give rise to an estoppel. For example, estoppels have not arisen where the representation relied on was ambiguous, overly general or merely a comforting sound.

[83]However, the same commentary goes on to observe that:20

…it is more accurate to say that what is required is for the representation to be sufficiently unequivocal to justify the other party’s reliance on it. That is, the mantra of a “clear and unequivocal representation” understates equity’s ability to deal with the circumstances of a particular case and may lead to confusion.

17     Thorner v Major [2009] UKHL 18 at [29].

18 At [56].

19     Every-Palmer, above n 14, at 19.3.4, citations omitted.

20     Ibid.

[84]In that context, the commentary endorses Lord Walker’s approach in

Thorner v Major referred to at [81] above.

[85] I respectfully agree with and endorse the observations referred to at [83] above. This is particularly so in the context of claims made in a family context, where it is understandable that family members will often not speak or act as between themselves with the same degree of “precision” as might be expected in a commercial setting.

[86]              Thorner v Major also highlight the distinction between a statement as to a person’s current intention (often relevant in the context of testamentary intentions) and a definite assurance, irrespective of changed circumstances, that someone will acquire an interest in property and to which the maker of the statement ought to be bound.21 As noted in Thorner v Major:22

… a problem inherent in every case in which a representation about inheritance prospects is the basis of a proprietary estoppel claim, is that the expected fruits of the representation lie in the future, on the death of the representor, and, in the meantime, the circumstances of the representor or of his or her relationship with the representee, or both may change and bring about a change of intentions on the part of the representor.

[87]              On which “side of the line” any given representation ought to fall can be difficult to determine. As always, context will be key. Gillett v Holt is a good example.23 In that case, it was accepted that Mr Holt had made several assurances to Mr Gillett over a period of some 30 years that he would leave the bulk of his estate to Mr Gillett. Relations between the two soured, however, and Mr Holt later changed his will to leave his estate almost entirely to another person. Mr Gillett, who had spent his working life as farm manager for and friend of Mr Holt, sued in promissory estoppel. At first instance, the Judge found that the relevant assurances, while sufficiently clear, could not reasonably have been understood by Mr Gillett as being irrevocable, in the sense that the estate would be left to him regardless of any change in circumstances. Mr Gillett’s appeal was upheld. Walker LJ, with whom the other members of the Court of Appeal agreed, noted that “the circumstances may make clear

21     See, for example, at [2] and [3] per Lord Hoffman, and [74] per Lord Neuberger of Abbotsbury. See also James v James [2018] EWHC 43 (Ch).

22     At [19], per Lord Scott.

23     Gillett v Holt [2000] EWCA Civ 66, [2001] Ch 210 (CA).

that the assurance is more than a mere statement of present (revocable) intention, and is tantamount to a promise.”24 The circumstances in that case were assurances which were:25

…repeated over a long period, usually before the assembled company on special family occasions, and some of them (such as “it was all going to be ours anyway” on the occasion of The Beeches incident) were completely unambiguous.

[88]              Walker LJ also emphasised that claims such as that brought by Mr Gillett need to be viewed in the context that the elements of promissory estoppel are not “watertight compartments” and that:26

…the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.

[89]                Turning to reliance, a claimant must show they have actually relied on the promise or assurance, which will generally be shown through the claimant changing their conduct as a result.27 Ongoing reliance must also be reasonable: where a party has relied on a promise or assurance but becomes aware that the other party intends to depart from it, the first party must take reasonable steps to mitigate its position.28

[90]              In terms of detriment, no estoppel will arise if the plaintiff has not or will not suffer detriment as a consequence of the other party resiling from the promise or assurance. “Mere disappointment from an unfulfilled promise is not a sufficient detriment”.29 As commentary explains:30

The cases show that the relevant detrimental reliance may take one of two forms. First, the party claiming the estoppel may have spent time, effort, or money in reliance on the belief or expectation in question which would not have been spent if the representation had not been made and which is rendered worthless if the belief or expectation is abandoned. Secondly, in reliance on the belief or expectation the party claiming the estoppel may have foregone other opportunities to gain the benefit which will be lost (or avoid the detriment which will be suffered) if the belief or expectation is abandoned.

24     At 228.

25     Ibid.

26     At 225.

27     See, for example, Attorney General of Hong Kong v Humphrey’s Estate [1987] AC 114.

28     Every-Palmer, “Equitable Estoppel”, above n 14, at 19.2.2.

29     Every-Palmer, “Equitable Estoppel” above n 14, at 19.2.3.

30     Ibid, citations omitted.

[91]              Again, however, a broad approach is to be taken. As Walker LJ stated in Gillett v Holt:31

The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.

[92]              Finally, and as to remedy, as Dunningham J stated in Carroll v Bates, having surveyed the earlier case law:32

… it is clear that the remedy will be what is required to reflect the representations given, and to remedy any unconscionability. In other words, the doctrine of proprietary estoppel can be applied so as to enable a property to be transferred where there has been a representation or assurance made to the plaintiff, reliance on it by the plaintiff and detriment to the plaintiff as a consequence of reasonable reliance. The remedy is discretionary and can respond to the particular circumstances of the case.

Evidence as to Michael’s alleged promise

[93] William’s evidence in chief was that that there had been a specific discussion between him, James and Michael in January 2009, around the dining room table, about what was to occur with the Waiomu and Thames properties. It was during this discussion that William says Michael made the promise outlined at [35] above. William said that at the time, his understanding was that Michael was the sole registered proprietor of the Waiomu Property, not being aware of the earlier transfer of a half share to James.

[94]              While as noted earlier, William’s claim does not allege any specific representation or promise by James (but rather that James was a party to Michael’s promise and did not disagree with it), William said in his oral evidence that the discussion with Michael and James in January 2009 was an “agreement in the family”.

[95]              In answer to questions put to him in cross-examination, William said that he had originally wanted the properties to be put into trust by Michael, but Michael didn’t

31     At 836.

32     Carroll v Bates [2018] NZHC 2463 at [74].

want to “do anything like that ‘cos he said ‘they’re my properties but they’re gonna be yours so I will just hold to them (sic) and you guys can have them afterwards’”. William also said that after Susan had died, Michael turned into a very secretive person. He said that “my little brother unfortunately got led down the garden path by someone that we trusted and has unfortunately ended up having to deal with that”. He clarified that the “someone” was Michael, and that by suggesting both he and James had been “led down the garden path”, he meant “we both got told different stories by my stepfather … about what was happening with the properties obviously in respect of who was getting what and why”.

[96]              In this context, the following exchange  took  place  between William  and Mr Elliot, counsel for Geoffrey and James:

Q.       What were you told?

A.I was told that the properties would come to me and my brother and it was after my mother died that we agreed that the property in Waiomu was to go to me and the property in town was to go to James because I had the children and James didn’t need a very big house to be in and he didn’t really want any of the responsibility to anything.

Q.       Your stepfather told you that?

A.       Yeah.

Q.       And, but you said he told James something different?

A.       Yeah and he’s told James obviously different.

Q.So you each had a different understanding about how the houses were to be dealt with?

A.Yes  we didn’t realise this until afterwards but yes we both had a  different understanding on how the houses would be dealt with.

Q.       You say “afterwards”, what do you mean, after what?

A. It wasn’t until all this court stuff’s come to light that we’ve actually worked out what the story was behind it as in James getting told that I wasn’t going to get anything and Mike telling me that the house in Waiomu was mine and the house in town was James’s.

[97]The following exchange also took place:

Q.So is it – I know it’s  hard to look back in hindsight but is it really a   case that maybe everyone had slightly different understandings of exactly what the situation was but it was never really talked about

really specifically so everyone just kind of had a slightly different view?

A. Yeah you could say that.  I could never pin everybody down all at once to clarify it all to make sure that we all had it all 100% and get it written down or anything like that. It was nigh on impossible.

Q. So you were under the impression that you were living there, the financials were dealt with as they were dealt with and eventually the house would come to you, is that what you’re saying?

A.       Yes.

Q. James said yesterday and today that he had a different view and you’re saying that was maybe because your stepfather was telling him something different?

A.       Yes.

Q. And Michael said he was adamant it would never go to you but he  doesn’t really remember much now, correct?

A.       Yes.

Q. So you each had a slightly different view of what the position was regarding the house?

A.       Yes.

Q.And I guess you didn’t really have to deal with that until as you say   the court case and you now looking to have to be evicted out of the house?

A.       Yes.

Q. So and again there’s  no criticism intended here but isn’t it then a  situation where in hindsight you’re looking back and saying: “Look my understanding after Mum died was that I would get, I could live in the house and then I would get the house when Michael died” but others had a different view?

A.No, we all had the same thoughts when my mother died as to who was getting what i.e. the properties. It wasn’t until after, a little bit down the track, probably a good couple of few months that I started hearing not straight to my face but, you know, things were starting to get said where I was starting to question what I was getting told.

Q. I guess I’m just trying to reconcile these two things. On the one hand you’re saying there was this really specific meeting where you sat down, you wanted a trust, Michael wanted to hold the properties himself but you all agreed that it was going to be this very specific way where Michael held them on trust for the two of you?

A.       Yep.

Q.But then you’ve also said today that you think that you and James    were kind of told slightly different things about how the houses were to be dealt with and you said, you sort of agreed with me a moment ago, that you know everyone kind of had a different understanding and it’s only really coming to light now what this understanding is worth so how does those two things match up?

A.When we sat down and had the discussion in the kitchen that was   where everybody was on the common understanding that the houses were to come to me and my brother and that Mike was gonna hold onto them until such time and it wasn’t ‘til after that that everything starting going a little cloudy and a little bit well who’s saying what as in my little brother saying that Mike’s saying Will’s not getting anything type thing. It wasn’t until after that meeting that that sort of happened.

Q. Right, so you’re saying that everybody was clear at this meeting about what was going to happen?

A.       Yep.

Q.       But after that everyone kind of formed a different view?

A.My view was still the  same.   My little brother and my stepfather I   don’t know what their views, how their views changed at the time but their views were obviously different to what my thoughts were on it afterwards.

Q. Well James has been pretty clear that there was never this meeting and you’re saying that he’s not been truthful about that?

A.       That’s definitely exactly what I’m saying.

[98]              In his oral evidence at the hearing, James maintained his position that there had never been a specific meeting or discussion at which he was present in relation to what would become of the properties. He said that he saw the Waiomu Property as a “family house”, and that was why he had organised to get the mortgage in late 2008, to try and keep the house for the family. He also said he had no difficulty with William continuing to live at the Waiomu Property after Susan passed away, and indeed that he did not really care who lived there so long as the rates were paid and the property was maintained. He said that he thought that William would get more benefit from the property at that time, given William had young children and he did not.

[99]              James was adamant, however, that there was no specific promise made, that he was aware of or a party to, that William would get title to the Waiomu Property, and that if that had been the case:

I would never have agreed to take a mortgage out on the house and basically tie my entire life to this one property if I was not gonna be, you know, if I was just going to be a placeholder for someone else, I don’t really think that would be fair for me and the effect it has then had on my life I – no I wouldn’t have ever done any of what I have done if there was that agreement in place.

[100]          James did, however, acknowledge that there had been at least some agreement or understanding about William continuing to live at the Waiomu Property, stating “Well the agreement was to do the maintenance on the property”. He clarified that:

A. My thingwas that yeah like  I said as long [as] the upkeep of the  property was there and the mortgage – not mortgage sorry, the rates were being paid then I didn’t really care who lived there.

Q.       So that was the agreement with William as far as you are aware?

A. Yeah I, I just wasn’t worried who lived there really because I had no interest in the property. Like Thames was not a place I wanted to live.

[101]          James said that this informal arrangement was made while Michael was still living at the property, and the fact that William and his family continued to live at the property over the years “just sort of fell into being”.

Did Michael make the promise as alleged?

[102]          The starting point is that Susan’s will left her estate to Michael. Accordingly, irrespective of what Susan’s own intentions might have been as to the ultimate disposition of her estate, Michael was prima facie free to deal with the properties as he wished.

[103]          In the event, I have reached the conclusion that William has not discharged the burden on him to prove that Michael made the promise as alleged, or at least in a sufficiently clear form which requires transfer of title in the Waiomu Property to William. I have reached this conclusion for the following reasons.

[104]          First, there is Michael and James’ firm denial of any such promise being made. While for the reasons outlined earlier, I put little weight on Michael’s evidence, as noted, James impressed me as a broadly credible and reliable witness.

[105]          Second, I do not suggest that William lied about the promise being made to him. Again, as noted, he impressed me as a credible and broadly reliable witness. I accept that he believed what he was saying in his evidence. But he was giving evidence of a suggested discussion which took place nearly 13 years ago in a family context, against the backdrop of what he clearly understands to have been his mother’s intentions, and no doubt in the context of his current aggrievement and disappointment at how events have transpired. This context, and the passage of time gives rise to a risk, in my view, of William recalling what occurred through a (subconscious) lens of hindsight.

[106]          I particularly note William’s clear evidence in cross-examination that he considers both he and James were told different things by Michael. This is contrary to his pleaded case (and evidence in chief) of the specific discussion between the three of them, and that James was a party to Michael’s promise and, until 2018, did not disagree with it.

[107]          Third, and perhaps most importantly, Michael’s suggested promise is also inconsistent with aspects of the surrounding context and subsequent events:

(a)At the time the suggested promise was said to have been made, Michael had only just transferred a half share of the Waiomu Property to James. It seems unlikely in that context, and certainly in the presence of James, that Michael would promise that he would hold the Waiomu Property for William during his lifetime and that it would pass in its entirety to William upon Michael’s death.

(b)Similarly, if the promise had been made as suggested, one would also have expected James to have voiced his concerns, and no doubt quite strongly, given he had just taken out a $56,000 mortgage jointly with Michael, and there being no suggestion that anyone other than James was to repay it.

(c)James’s evidence was that Michael had been adamant at the time that William would not get anything from him (that is, from Michael).

William appears to accept that Michael did express those views to James (hence his evidence of the two brothers being “led up the garden path”). If that was Michael’s view at the time, it is inconsistent with him nevertheless making a sufficiently clear promise to William, at or around the same time, that the Waiomu Property would be his, irrespective of any changed circumstances going forward.

(d)There is also no suggestion that William took any particular steps to familiarise himself with the financial outgoings on the Wiaomu Property and to be in a position to pay them, which might have been expected if Michael was essentially “holding” the property for him until Michael passed away. I accept that William set up an automatic payment to make a contribution to the rates, though his evidence did not suggest this was specifically in response to Michael’s alleged promise. In the event, I consider this financial contribution to be neutral, in terms of whether the alleged promise was made. It is equally consistent with a desire to contribute in some way to the “family home” in which he, and his family, were then living rent free.

(e)Michael’s alleged promise, to which James was a party and to which he did not object, is also inconsistent with the fact that James paid the majority of the outgoings on the Waiomu Property, including after he had moved out in 2010, a fact that must have been known to William at the time. William certainly became aware of the mortgage about a year or so after Susan’s death, and did not suggest he contributed to it. William also did not suggest he made any contribution to the insurance (noting that he knew the house was insured, being a condition of the mortgage), which again was paid by James at all times.

(f)If the Waiomu Property was being held by Michael for William while Michael was still alive, and it was to pass to William upon Michael’s death, it is also not clear why William expected James to continue to contribute to its financial upkeep, particularly after James had moved out.

(g)Finally, William’s own evidence was that he had suggested shortly after Susan had died that the properties be put into trust by Michael but that Michael had not wanted to do so. This ought to have signalled to William that Michael wanted to retain control over the properties while he was alive, which is inconsistent with a sufficiently clear assurance that he was “holding” the Waiomu Property for William.

[108]          In reaching the above conclusion, however, I do not exclude the possibility that Michael might given some indication to William that the Waiomu Property would likely pass to him in the future. But the evidence is simply insufficient, in my view, to give rise to a “clear enough” assurance that the property would pass to William, irrespective of how events transpired over the years.

[109]          I accept, however, that the evidence establishes that there was some form of arrangement or understanding between Michael, James and William that William and his family could continue to live at the Waiomu Property, subject to the rates being kept up to date and the property maintained. James’ evidence was to that effect, and Michael permitted William, his partner and children to continue to live (rent free) at the Waiomu Property after Susan’s death.

[110]          How events have actually transpired are ultimately consistent with this “family arrangement”. William has paid some, though by no means all, rates on the Wiaomu Property. He has made a number of contributions to it by way of general upkeep and maintenance, consistent with ongoing use of the property by him and his family. Those contributions have not been rendered “worthless” by James and Geoffrey’s more recent attempts to regain possession; William and his family have had full use and enjoyment of the property since 2009, and on an exclusive basis since 2015. This use and enjoyment has been without the corresponding obligation to pay rent, a mortgage, insurance or the full rates. Ultimately, the maintenance William has carried out on the Waiomu Property was the “quid pro quo” of unrestricted use and occupation of it. But an agreement or arrangement as to unrestricted use is not an assurance of a proprietary interest.33

33     See, for example, Sutherland v Lane [2020] NZHC 721.

[111]          I also do not accept that the arrangement was that William and his family could live (exclusively) at the Waiomu Property indefinitely, and irrespective of any future change in circumstances. Such an arrangement would effectively deprive its legal owners of the property, despite their ownership and own financial contributions to it. Standing back and considering the evidence as a whole, I accept that there was an understanding by all in 2009 that, for the time being, and subject to rates being paid and maintenance being carried out, William and his family could live at the Waiomu Property. Beyond that, I consider the arrangement simply continued over the years without the parties really turning their minds to it, at least until Michael’s arrest in 2015 and the breakdown of his relationship with William.

Observations on reliance and detriment, and any equity binding James and Geoffrey

[112]          Having concluded that Michael’s promise is not made out on the evidence, it is strictly unnecessary to consider the other elements of the promissory estoppel cause of action. I accordingly make some brief observations only.

[113]          Turning first to reliance, there are also some difficulties in William’s case in this regard, and in particular, in relation to ongoing reliance.

[114] Even if the promise had been made by Michael as suggested, on William’s own account, the position had become unclear to him only a few months later. As noted in the extract from William’s evidence at [97] above, William said that:

… we all had the same thoughts when my mother died as to who was getting what i.e. the properties. It wasn’t until after, a little bit down the track, probably a good couple of few months that I started hearing not straight to my face but, you know, things were starting to get said where I was starting to question what I was getting told.

[115]          William did not say he engaged further with Michael (or James) as a result, for example, seeking further clarification of the position.

[116]          In addition, William’s evidence was that “Michael has tried to get me off the property since he got sent to prison”. Accordingly, from that time, William was on notice that Michael did not consider he had any obligation to continue to allow William and his family to remain in the Waiomu Property. In addition, William said that in

discussions with James, when James asked him to contribute more financially to the Waiomu Property, he was not prepared to do so given “I haven’t got anything on the paperwork or anything to say that I’m gonna get anything out of it at the end of it”. This again tends to suggest that William was not operating at all times up until 2018 on the basis of a clear promise from Michael that he would inherit the Waiomu Property in due course.

[117]          Finally, on William’s pleaded case, from 2018 he was clearly on notice that Geoffrey and James were seeking to recover possession of the Waiomu Property.

[118]          Standing back, the above evidence suggests that much of the maintenance and other works William has carried out on the Waiomu Property were carried out at times when he either suspected or knew that Michael, James and more recently Geoffrey do not consider he has any entitlement to remain at the property.34 Reliance in those circumstances would be unlikely to be considered reasonable, at least in an ongoing sense.

[119]          In terms of detriment, there was relatively limited evidence as to nature of the works carried out by William to the Waiomu Property over the last 13 years. There was also no evidence of the extent of financial expenditure associated with those works, or to what extent, if any, they have added any significant value to the property.

[120]          I record that if I had been required to determine whether these works alone gave rise to any detriment, I am unlikely to have found that they did so, or that any detriment was substantial. As best as I can assess, most of the works appear to be relatively routine and ongoing maintenance and upkeep of a property of this type over a 12 or 13 year period.35 In other words, they are consistent with family arrangements whereby those with use and occupation of a property undertake ongoing maintenance and upkeep. It seems unlikely, in my view, that the tangible value of the works would outweigh (or outweigh to any significant extent) the commensurate benefit to William

34     I note, for example, that in his brief of evidence dated 19 June 2021, William says “I have started

refurbishing the interior, and I have a full kitchen set up to be installed” (emphasis added).

35     William said “the work that I’ve done on the property is never ending as a property is, you know there’s always something to do on it.”

and his family of living in a property rent free for nearly 13 years, with the only other financial contribution being a modest contribution to rates.

[121]          The other pleaded detriment is William foregoing the opportunity of making a Family Protection Act claim for provision from his mother’s estate. William said he had considered such a claim at the time, and indeed tried to seek legal advice on it, though had been referred, it seems, to Michael’s lawyer in his capacity as executor of the estate. Unsurprisingly, that lawyer told William he could not advise him on such matters. There was no evidence that William took any further steps to seek legal advice. While the evidence on this topic was very limited, I am nevertheless satisfied that William’s (unchallenged) evidence demonstrates that he did consider such a claim, and supports an inference that he did not pursue it given his understanding of Michael’s alleged promise.

[122]          Forgoing court proceedings which would have otherwise been commenced (and which have some prospect of success) can qualify detrimental reliance in an estoppel claim.36 It is of course not clear what the outcome of any Family Protection Act proceedings by William would have been, but I accept there is a realistic prospect that a claim for both maintenance and support would have been successful. There was clearly an ongoing relationship between William and Susan over the years (even Michael said that the relationship between them during Susan’s illness was “a bit shaky but not bad”). This is not a case, like many that come before the courts, where the deceased and their claimant child have been estranged for many years. The evidence would no doubt have also suggested that William was a party in need of support and maintenance from Susan’s estate, and that there was no guarantee that he would be fully provided for through Michael’s estate.

[123]          Given the claim would effectively be made against a living step-parent, however, whom had been married to the deceased for a considerable period of time, it is unlikely that the relief would have extended to a full equitable interest in the Waiomu Property, to exclusion of all others (effectively what is sought in this proceeding).

36     See, for example O’Malley v Mutual Credit Corp Limited, HC Christchurch, 25 November 1991, AP 12/91.

Mr Dillon, quite responsibly in my view, acknowledged that that would likely be the case.

[124]          Finally, and assuming all the above elements of the proprietary estoppel claim had been made out, there is the question of whether any equity arising in William’s favour ought to bind James and/or Geoffrey.

[125]          When Michael’s promise was said to have been made, James had already taken a half share in the Waiomu Property. Even assuming that Michael has no intention of ever seeking to recover the balance of the purchase price from James,37 in return for the half share, James took on a significant debt by way of the joint loan of $56,000. The evidence suggests that only around $10,000 or so of the loan was for James’ own personal benefit, and there was no suggestion Michael was going to (or ever did) contribute to the repayments. I am therefore satisfied that James gave value for the acquisition of the half share, at a time when he could not have had notice of William’s claim (Michael’s suggested promise not yet having been made).

[126]          Nevertheless, had I been satisfied that Michael’s promise had been made to William, and that James had been a party to it and had not dissented at any time, I am likely to have found that James would be bound by the equity arising in William’s favour. He would have knowingly acquiesced in William’s reliance on Michael’s promise, when he (James) knew he already had a half share in the Waiomu Property, and that (on his evidence), Michael did not intend to pass the property to William. James’ pre-existing half share and the not insignificant financial contribution he has undoubtedly made to the property would, however, have needed to be reflected in any relief granted to William. This would likely have been something well less than a full proprietary interest in it.

[127]               Turning to Geoffrey’s position, he confirmed that he has not in fact paid any legal fees for Michael, and the only evidence of “value” exchanged for the half share in the Waiomu Property was the money sent to Michael while he was in prison and supporting Michael in a general sense upon his release. Such steps may well have been taken by Geoffrey in any event, to assist his brother in difficult times. In other

37     Which on the evidence I consider to be the most likely position.

words, I am not persuaded these particular steps were taken specifically in exchange for receipt of Michael’s half share in the Waiomu Property.

[128]          As noted in Pounamu Properties Ltd v Brons, and at least in the context of equitable tracing, “a volunteer who derives title otherwise than for value can be in no better position than the wrongdoer, notwithstanding innocence of any wrongdoing.”38 Given those matters discussed in the preceding paragraph, Geoffrey might be considered a volunteer. Nevertheless, there is no suggestion he was a party to Michael’s alleged promise or was aware of it prior to taking his half share in the property, and since then, he has made modest financial contributions to it. These matters would again have needed to have been taken into account when considering what relief ought to be granted if William’s claim had otherwise been made out. As observed earlier, this would likely be something well less than a full proprietary interest in the property.

[129]I turn now to William’s constructive trust claim.

Constructive trust claim

[130]          I can deal with this claim briefly, given it must also fail in my view. Ultimately, this cause of action was also dependent upon Michael’s alleged promise, which I have found not to have been made out on the evidence.

[131]          I briefly summarise the applicable legal principles, and then set out my reasoning for reaching the above conclusion.

Legal principles

[132]          The imposition of a constructive trust is equity’s response to circumstances in which equity “will not allow the legal owner to deny the claimant a beneficial interest”.39 Such circumstances are wide and varied, but tend to be marshalled around the concept of remedying unconscionability. The cases demand a principled approach

38 Pounamu Properties Ltd v Brons and Anor (HC Taupo, CIV 2008-470617, 30 March 2012 at  [176], referring to Foskett v McKeown [2001] 1 AC 102 (HL) at 103. See also Inwards v Baker [1965] 2 QB 29 at 37..

39 Lankow v Rose, above n 13, at 699 per Tipping J.

when determining what is unconscionable, rather than simply applying broad (and potentially subjective) notions of what is or is not fair.

[133]          Constructive trusts are often described as “institutional” or “remedial”. Tipping J in Fortex Group Ltd (in rec & liq) v Macintosh explained that an institutional constructive trust is one which arises by operation of equity’s response to certain events or circumstances, and is thus not dependent for its existence on a court order.40 Rather, a court order declaring an institutional constructive trust recognises the trust, and provides for its implementation in whatever way is considered appropriate. In contrast, a remedial constructive trust is only created by the order of a court, such order being “creative rather than simply confirmatory”.41

[134]          Leading commentary lists the more common examples of institutional constructive trusts, being where:42

(a)a fiduciary makes an improper profit from his or her fiduciary position;

(b)an intended transfer of property is invalid because of defective formalities;

(c)relevantly for present purposes, a person makes an unconscionable assertion of ownership in respect of property to which another has contributed;

(d)an agreement has been made to execute mutual wills and after the death of one party the other revokes the will or acts inconsistently with it;

(e)a vendor has entered into a contract to sell land;

(f)property has been obtained by fraud; and

40     Fortex Group Ltd (in rec & liq) v Macintosh [1998] 3 NZLR 171(CA) at 172-173 per Tipping J.

41     At 173 per Tipping J.

42     Jessica Palmer “Constructive Trusts” in Andrew Butler (ed) Equity and Trusts in New Zealand

(2nd ed, Thomson Reuters, Wellington, 2009) at [13.2.1].

(g)property is acquired by killing.

[135]          The common factor to scenarios in which an institutional constructive trust will arise is said to be:43

… the unconscionability of the defendant in denying the plaintiff an equitable interest in the relevant property because of a previous understanding, whether subjectively agreed upon between the parties or more commonly deemed by the law to have been appropriate in the circumstances. It is the element of consent or intention (or lack of either of these, as the case may be) that triggers the institutional constructive trust which arises to reverse the defendant’s unconscionability.

[136]          The leading authority on the circumstances necessary to give rise to an institutional constructive trust of the type described at [134(c)] above is Lankow v Rose.44 There are two broad requirements: that the plaintiff contributed in a more than minor way to the acquisition, preservation or enhancement of the defendant’s assets, and that in all the circumstances, the parties must be taken to have reasonably expected that the plaintiff would share in them as a result.45 Hardie Boys J elaborated that:46

…by contributions to assets one is not referring to those contributions to a common household that are adequately compensated by the benefits the relationship itself confers. The contribution must manifestly exceed the benefits. Putting it in conventional estoppel terms, the plaintiff’s contributions must have been to his or her detriment.

[137]          Tipping J, in a much cited passage, summarised the elements of a claim of constructive trust as being:47

(a)contributions, direct or indirect to the property in question;

(b)the expectation of an interest therein;

(c)that such an expectation is a reasonable one; and

43     Ibid.

44     Lankow v Rose, above n 13.

45     Lankow v Rose, above n 13, at 686 per Hardie Boys J.

46     Ibid.

47     At 700.

(d)that the defendant should reasonably expect to yield the claimant an interest.

Analysis

[138] As can be seen from the summary of William’s pleading at [66] above, the suggested basis for a constructive trust in this case is a Lankow v Rose type arrangement. To recap, the pleading alleges that:

…reliant on Michael’s promise, William contributed in a more than minor way to the preservation and enhancement of the Waiomu Valley property;

William held a reasonable expectation that he would continue to reside at, and ultimately receive title to, the Waiomu Valley property as a result.

[139] For essentially the same reasons the promissory estoppel claim fails, any expectation William might have had that he would, in due course, receive full title to the Waiomu Property, was not a reasonable one in all the circumstances. In particular, William alleges that that expectation came about because of Michael’s promise, which I have found not proven on the evidence. And as discussed at [114] above, it seems that fairly soon after the alleged promise was made, the position reverted to being quite unclear, as William himself explained.

[140]          Further, and for the reasons set out at [119] to [120] above, William has not demonstrated that the contributions he has made to the Waiomu Property were more than minor, at least in the sense of demonstrably exceeding the corresponding benefit he has enjoyed as a result of his and his family’s continuous use of the property since 2009, and exclusive use since 2015. To adopt the words of Hardie Boys J from Lankow v Rose, the contributions made, in all of the surrounding circumstances, have not been to William’s detriment.

Result and costs

[141]For the reasons set out in this judgment, William’s counterclaim is dismissed.

[142]          As accepted by William, in the event his counterclaim was not successful, he has no defence to Geoffrey and James’ application for an order for vacant possession.

I make an order accordingly, namely that William is to vacate the Waiomu Property and render it up to Geoffrey and James in a clean and sanitary state.

[143]          Given, however, the family dynamic in which these proceedings have arisen, the length of time William and his family have been living at the Waiomu Property, the current difficulties arising from COVID-19 restrictions and the time of the year this judgment is being delivered (not too far away from Christmas), the order for vacant possession will not take effect for four months from the date of this judgment, to provide William and his family time to arrange their affairs appropriately.

[144]          It will also provide the family members involved an opportunity to consider whether some other agreement on the ongoing use and occupation of the Waiomu Property might be appropriate, should they wish to do so. In this context, I have found that at least Susan’s intention was that both James and William would ultimately benefit from her estate. I also note that despite James’ evidence that he and William have not had a close relationship in the past, both were emotional during their evidence, and there was a clearly a strong and emotional connection between them towards the end of the hearing. I also record James’ acknowledgement that the Waiomu Property was a family home, and his stated desire to provide for his niece and nephew.

[145]James and Geoffrey also sought the following order:

An order that, in the event that the defendant does not vacate the property forthwith after being served with a sealed judgment, the plaintiffs and their agents may use such force as is reasonable to remove the defendant and his belongings from the premises.

[146] I do not consider it appropriate to make such an order. In my view, in the event the order made at [142] above is not complied with, there poses a real risk of unnecessary confrontation in the event “the plaintiffs and their agents” were to seek to secure vacant possession by way of “reasonable force”. Rather, the appropriate step would be for James and Geoffrey to apply for a possession order pursuant to Part 17 of the High Court Rules, and in particular, r 17.80. Such an order permits and requires “an enforcing officer” to deliver possession of land in accordance with an order of the

Court, and thus envisages an independent court officer taking any necessary steps to secure possession.

[147]          As to costs, I understand William is legally aided. Should however, the parties require any orders on costs:

(a)Geoffrey, James and/or Michael may file and serve a costs memorandum within 15 working days of the date of this judgment.

(b)William may file and serve a memorandum in response within a further

10 working days.

[148]          No memorandum is to be longer than three pages in length. Unless I need to hear further from counsel, costs will be determined on the papers.

[149]I thank counsel for their assistance.

Fitzgerald J