BFP TRUSTEES NO. 1 LTD AND BFP TRUSTEES NO. 2 LTD AS TRUSTEES OF THE BIRCHES NO. 1 TRUST V WARREN ANDREW CURRIN AND NICOLA JANE CURRIN HC WHA CIV-2010-488-000167

BFP TRUSTEES NO. 1 LTD AND BFP TRUSTEES NO. 2 LTD AS TRUSTEES OF THE BIRCHES NO. 1 TRUST V WARREN ANDREW CURRIN AND NICOLA JANE CURRIN HC WHA CIV-2010-488-000167 22 April 2010IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY CIV-2010-488-000167BETWEEN BFP TRUSTEES NO. 1 LTD AND BFP TRUSTEES NO. 2 LTD AS TRUSTEES OF THE BIRCHES NO. 1 TRUST Applicants AND WARREN ANDREW CURRIN AND NICOLA JANE CURRIN Respondents Hearing: 21 April 2010 Appearances: A Gilchrist for Plaintiff P Magee for Defendant Judgment: 22 April 2010ORAL JUDGMENT OF ASSOCIATE JUDGE BELLSolicitors/Counsel: Dyer Whitechurch (M C Bhanabhai/L M Nicholson), PO Box 5547, Wellesley Street, Auckland Thomson Wilson, PO Box 1042, Whangarei A Gilchrist, PO Box 5444, Wellesley Street, Auckland[1] This is an application about a caveat. The Court made an order without notice sustaining the caveat. The registered proprietors then sought a hearing on the matter with a view to having the caveat removed. They said that they were negotiating the sale of the property and, as it turns out, they have a conditional agreement for the sale of the property. They were keen to have the matter determined so that they can know whether the caveat stands or not. In the event that agreement has been put in evidence and it shows that the agreement is conditional and a new condition has been inserted into the agreement which relates to whether the caveat can be sustained or not. [2] The parties to this proceeding are, on the one hand, the caveators who are the trustees of the Birches No. 1 Trust, and, on the other hand, Warren Andrew Currin and Nicola Jane Currin who are the owners of a property at 303 Three Mile Bush Road, Kamo, in Whangarei. The caveat put on the title is 8419202.1. It was lodged on 17 February 2010. The property is a 1.094 hectare property, Lot 1 DP 315443, identifier 60799. [3] The interest claimed in the caveat is:Pursuant to an implied trust in respect of matters, including the land contained in the aforementioned Certificate of Title and made between the registered proprietors, Warren Andrew Currin and Nicola Jane Currin as trustees, and the caveator as beneficiary.[4] It is necessary to refer to some background history for the matter to understand how this arises. [5] The former trustees of the Birches No. 1 Trust were George Hull and Yvonne Hull. They commenced a relationship in 1984 and married in 1990. They were the original trustees of the Birches No. 1 Trust. That trust acquired a property at 3 Mile Bush Road in December 1998 and in about 2000, they began a subdivision of that. Under that subdivision the property was divided into three titles. The property in issue in this case is lot 1 of that subdivision. The two other lots are referred to informally as the Greagh Gardens. Title issued in October 2005.[6] It does not seem to be disputed that Mr Hull's health was deteriorating and the issue arose of transferring lot 1 to Mrs Hull's son, Warren, one of the defendants. The intention seems to have been that Warren and his wife, Nikki, should be encouraged to take lot 1 and build a home there to allow them to live close to their mother, given that Mr Hull expected at that stage that he might not have long to live. [7] In May 2007, the Birches No. 1 Trust transferred the title to lot 1 in the subdivision to the Westridge Family Trust, which is the family trust of Warren and his wife, Nikki. No money passed hands for that transfer. However, it was a transaction which was subject to GST. Obviously, the Birches No. 1 Family Trust had acquired the land subject to GST and the transfer to an associated person attracted GST at the market value. At the time, a desk top valuation by Quotable Value was obtained and the property was held to have a deemed market value of $240,000 and GST was paid on that, apparently by the transferees. [8] The other circumstances relating to the transfer are in controversy. The registered proprietors regard this transfer as an outright transfer to them, free of any interest back to the transferor and they point to the absence of any documentation that would support any interest back in favour of the Birches No. 1 Trust. In that they are supported by Yvonne Hull, who has also sworn an affidavit in their support as well. [9] George Hull contends otherwise. He says that in arranging the transfer, while there was an intention to create a lot where Warren and Nikki Currin could live, ultimately there would be subdivision in the future. On that subdivision Warren and Nikki Currin on their family trust would have to account back to the Birches Family Trust to the extent that they had more than just a house lot. He refers in his evidence to a letter of intent that was prepared before the transfer, seemingly at the end of 2006, which has a schematic drawing showing an area which would be reserved back to the transferor, and there is reference to that being secured by a mortgage as well. [10] What Mr Hull is asserting, it seems to me, is that although there was a transfer from the Birches Family Trust to the Westridge Family Trust, it was not an absolute transfer in the sense that title was to pass absolutely. He is saying thatwhereas the presumption of advancement would ordinarily arise, this is a case where that presumption can be rebutted and he points to certain matters that happened in that time to support the fact that something was intended to be held back. He points to the letter of intent. That letter of intent was signed by himself and Nikki Currin alone. It was not signed by Warren Currin or his mother, Yvonne Hull. Nevertheless, it is evidence that points towards an intention that something would be held back by way of an alleged implied trust. [11] Similarly, his accountants have produced a file note that was prepared on 19 February 2007 by the trustees' accountant, Mr Couch. That file note shows that Mr Hull went to the accountants and discussed this transaction and Mr Hull apparently told his accountant that Warren was contemplating building on the block and might potentially subdivide the one hectare into smaller lots. The note goes on to say:The intention is that he would pay back to the trust when he got and sold the titles. The amount is around $600,000.And then further on the note goes on to say:Even if Warren does not subdivide in the future he may not have to repay the amount that becomes part of George of Yvonne's estate planning.And also:However, they do want to have an IOU or acknowledgement of debt in place in case anything untoward happens.[12] I read those instructions to the accountant as evidencing an intention that the transfer to Warren and Nicola or the family trust has not been an absolute one but is pointing towards some form of trust. As it happens, and the parties are agreed on this, nothing was formally documented to support any interest back. However, I accept the point made by Mr Gilchrist that this was a family transaction where people might have elected to proceed relying on trust and good faith without insisting on having every legal point tied down. [13] I find accordingly that Mr Hull has an arguable case. That is all he has to show on a caveat application. There are also indications to the contrary in the evidence which go against the case that he mounts and those are matters which canbe raised by the registered proprietors. I note in particular in submissions for them that they have referred to the dicta of Asher J in the case Capital Merchant Investments (In Receivership) v Russell Management) (2009) 10 NZCPR 199 at 14[?] where he says:The Court is not in a position in a caveat hearing to resolve disputed questions of fact. That does not mean, however, that the Court has to accept all assertions by deponents on face value. The Court is able to apply its own analysis and judgment to undisputed facts to decide on what inferences, if any, can safely be drawn.[14] I regard that dicta as useful guidance in this case. I bear in mind, of course, the Court's caution to accept bare assertions without proper foundations but in this case I am not taken to the stage where I could say conclusively that I am satisfied, just on the evidence before this Court today, that the plaintiff trustees have no interest in the land. There are still issues of fact and conflicts in the evidence between the parties which, in my view, can only fairly be resolved by everyone coming to Court, giving evidence and being cross-examined. Findings of fact can only be made after everyone has given evidence in full. [15] Accordingly, I make an order that the caveat is to be sustained to be on condition that the plaintiffs are now to issue proceedings in this Court. The proceeding is to be directed solely at obtaining relief recognising the interest claimed in the land, and any ancillary orders, but is not to raise any other causes of action, even though there may be other differences between this trust and the other parties relating to the breakdown of the marriage between Mr and Mrs Hull. Those matters should not clutter this proceeding. [16] This proceeding should be kept within a confined compass so that it can be brought on for hearing quickly. The parties addressed me on balance of convenience. I do not think I have to address that in particular but I do see that other proceedings are under way between Mr and Mrs Hull in the Family Court. It does not look as though those proceedings are going to be resolved ahead of these proceedings which I am directing should be issued now, and so this proceeding can also be run conveniently in tandem with the Family Court issues.[17] I direct that the plaintiffs are to issue their proceedings within 21 days of today, that is 15 working days, and I also direct that the defendants are to file a statement of defence within a further 15 working days. I also direct that this matter is to be given a telephone conference for 12:30 pm on 14 June 2010. But I will expect that once the pleadings are exchanged, the parties to be able to move ahead quickly with discovery so that the matter can be disposed of as quickly as time resources in this Court allow. [18] It also follows from this that the plaintiffs are entitled to recover their costs on this application. I award costs to the plaintiffs on a 2B basis. I invite counsel to confer as to the calculation. I am sure that counsel will be responsible about that but if no agreement is reached, I will accept memoranda. I do strongly urge counsel to reach agreement. Disbursements are to be approved by the Registrar, if necessary. __________________________ R M Bell Associate Judge