NUKU V TAYLOR AND TAYLOR CA99/2014 [2014] NZCA 312

NUKU V TAYLOR AND TAYLOR CA99/2014 [2014] NZCA 312 [8 July 2014]IN THE COURT OF APPEAL OF NEW ZEALANDCA99/2014[2014] NZCA 312BETWEEN JEAN TE URUHAU NUKUAppellantAND LOMA EMIRI TAYLOR AND PETERDAVID TAYLORRespondentsHearing: 19 June 2014Court: Ellen France, Venning and Mallon JJCounsel: J W G Grant for AppellantS M Cooper for RespondentsJudgment: 8 July 2014 at 10 amJUDGMENT OF THE COURTA The appeal is allowed. The caveat described in the application before the High Court is to lapse. If necessary, the solicitors for the appellant are authorised to sign a withdrawal of caveat.B There is no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Venning J)[1] Jean Nuku owns a property at 236 Smart Road, New Plymouth (the property). In a decision delivered on 30 January 2014 Courtney J dismissed anapplication by Jean Nuku for an order removing a caveat the respondents had lodged against the property.1 Mrs Nuku appeals from that decision.Background[2] Mrs Nuku and her three brothers acquired the property as joint tenants fromtheir mother, Mereaina Taylor, in 1985 shortly before she died. Mrs Nuku's brothershave since died leaving her the sole owner by virtue of survivorship.[3] In late 2013 Mrs Nuku decided to sell the property to enable her to buy another property in Hawera so that she could be closer to her husband, who had been admitted to a rest home in Eltham.[4] When the respondents, who are Mrs Nuku's sister-in-law and nephew, learned of the sale they registered a caveat against the property.[5] The caveat claims the following interest in the property:The caveators, who are children of Michael Taylor, claim an interest in the land in that they, together with Jean Te Uruhau Nuku, and other children of the said Jean Te Uruhau Nuku, Donald Andrew Taylor, Michael Taylor and Tukitahi Taylor are beneficiaries of a constructive or resulting trust created when Mereaina Taylor transferred the land to her children Jean Te Uruhau Nuku, Donald Andrew Taylor, Michael Taylor and Tukitahi Taylor in April 1985 and in respect of such trust the Registered Proprietor, Jean Te Uruhau Nuku, is the remaining trustee following the deaths of Donald Andrew Taylor, Michael Taylor and Tukitahi Taylor.The High Court decision[6] The matter came before Courtney J as a matter of urgency. The sale of theproperty and Mrs Nuku's purchase were both due for settlement on 31 January 2014. After hearing argument on the 30 January, the Judge refused Mrs Nuku's applicationwith reasons to follow. In her reasons (delivered promptly on 3 February), the Judge considered that it was reasonably arguable Mrs Nuku held the property as a constructive trustee.2 The Judge noted that following the transfer of the property to Mrs Nuku and her brothers it had been used as a home base available to any of the1 Nuku v Taylor [2014] NZHC 30. The reasons decision was delivered on 3 February 2014.2 Nuku v Taylor [2014] NZHC 37.whanau who might need it and, following the death of the last remaining brotherAndrew, Michael Taylor, Mrs Nuku's nephew, had moved into the house at herinvitation in 1997 and lived there until very shortly before the hearing.[7] Courtney J considered that on the evidence it was arguable the deceased did not appreciate or intend that the transfer of land to her children as joint tenants would have the result of conferring beneficial ownership on the ultimate survivor to the exclusion of other members of the family.3 It was also arguable that the children,including Mrs Nuku, understood Mrs Taylor's intentions and accepted the transfer onthe basis that the property would be treated as Maori land and maintained for the benefit of the whanau.4 The Judge accepted the respondents' argument that thereexisted other means by which Mrs Taylor could have ensured that the land was managed so as to benefit the widest number of her descendants as possible if Mrs Nuku was not willing to accept the transfer on that basis.Decision[8] The principles to apply on an application to remove a caveat are settled. The onus rests on the caveator to establish that they have a reasonably arguableinterest in the land but an order for the removal of the caveat will not be made unlessit is clear the caveat cannot be maintained: either because there was no valid groundfor lodging it, or that such valid ground as may have existed no longer does so.5An interest can be the subject of a caveat even if it is not registrable.6[9] There was a degree of confusion before us as to the basis for the caveatable interest claimed. As noted, in the caveat the respondents claimed to be beneficiaries of a constructive or resulting trust. The respondents rightly no longer rely on aresulting trust. However, Ms Cooper maintained the respondents' reliance on theimposition of a constructive trust. She sought to support the judgment on the basis that there was an institutional constructive trust created in 1985,7 or in the3 At [20].4 At [21]–[22].5 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660 and 662.6 Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [151], citing Waitikiri Links Ltd v Windsor Golf Club Inc (1998) 8 NZCPR 527..7 In this sense an "institutional" constructive trust is synonymous with an "orthodox" constructivetrust or, simply, a constructive trust.alternative, that there was an interest-based institutional constructive trust that arose in 2013 when Mrs Nuku entered the contract to sell the property.[10] For the reasons that follow, we are satisfied that if there is a trust which could support the interest the respondents claim in Mrs Nuku's property, it must be basedon an oral express trust imposed on Mrs Nuku and her brothers when they bought the property in 1985,8 so that it would be a fraud for Mrs Nuku to now assert her beneficial interest in the property to the exclusion of the respondents. If that were the case, the Court would impose an institutional constructive trust upon Mrs Nuku'slegal title to the property.[11] Tipping J summarised the different characteristics of express and institutional and remedial constructive trusts in Fortex Group Ltd (in Receivership and Liquidation) v MacIntosh:9An express trust is one which is deliberately established and which the trustee deliberately accepts. An institutional constructive trust is one which arises by operation of the principles of equity and whose existence the Court simply recognises in a declaratory way. A remedial constructive trust is one which is imposed by the Court as a remedy in circumstances where, before the order of the Court, no trust of any kind existed.The difference between the two types of constructive trust, institutional and remedial, is that an institutional constructive trust arises upon the happening of the events which bring it into being. Its existence is not dependent on any Order of the Court. Such order simply recognises that it came into being at the earlier time and provides for its implementation in whatever way is appropriate. A remedial constructive trust depends for its very existence on the Order of the Court; such order being creative rather than simply confirmatory.[12] An institutional constructive trust exists in its own right. The Court merely declares it. It is recognised because it would be unconscionable to allow the trustee to deny the equitable interest claimed by the beneficiaries. In the present case that requires consideration of the circumstances when the property was transferred in 1985. Either the property was transferred subject to an express trust at that time or it8 In referring to an express trust, we include an implied trust to the extent it is said that MereainaTaylor's intention is to be inferred from her words or actions: Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thompson Reuters, Wellington, 2009) at [3.2.6(4)].9 Fortex Group Ltd (in Receivership and Liquidation) v MacIntosh [1998] 3 NZLR 171 (CA) at 172.was not. If it was not subject to a trust, then no issue can arise from Mrs Nuku'sdecision to sell the property in 2013.[13] Ms Cooper suggested during submission that perhaps a trust of the nature contemplated in Lankow v Rose might apply in the present case.10 Although Peter Taylor deposed to a number of improvements he made to the property, most were of a personal comfort type and he had been living in the property rent free, only paying insurance since about 1997. Further, given the way the respondents advance their case, Peter Taylor could have had no expectation of acquiring a personal interest in the property.[14] We are left with the sole issue in this case being whether it is reasonably arguable that, when the property was transferred to Mrs Nuku and her brothers in 1985, Mereaina Taylor intended to create a trust and transferred the property to them on the basis they would hold the property for the wider and extended whanau into the future. The Judge considered it was.[15] With respect to the Judge's finding, we do not consider the evidence supports her conclusion that it was reasonably arguable Mrs Nuku accepted the transfer onthat basis. It seems that an important part of the Judge's reasoning in coming to thatdecision was her understanding that Mrs Nuku and her brothers had not paid any monetary consideration for the property in 1985. She said there was no mention of consideration and inferred there was no consideration paid.11 However, that finding is contrary to the record in the transfer document itself. It seems that document was not referred to the Judge. The transfer records:in consideration of the sum of $40,000.00 paid to the transferor [Mereaina Taylor] by JEAN TE URUHAU NUKU OF NORMANBY MARRIED WOMAN, DONALD ANDREW TAYLOR OF WELLINGTON FITTER, MICHAEL TAYLOR OF HUNTER ELECTRICIAN AND TUKITAHI TAYLOR OF NEW PLYMOUTH, PUBLIC SERVANT (hereinafter called the transferee) the receipt of which sum the transferor hereby acknowledges the transferor hereby transfers to the transferee all the estate and interest of the transferor in the land above described.The transfer is then signed by the deceased Mereaina Taylor.10 Lankow v Rose [1995] 1 NZLR 277 (CA).11 Nuku v Taylor, above n 2, at [2].[16] The consideration of $40,000 was, in 1985, more than nominal consideration.It provides strong support for the appellant's case that the property was nottransferred subject to any trust. The transfer for consideration is consistent with the transaction being a sale without any element of a trust. Mrs Nuku deposes there wasno mention of any trust. We accept Ms Cooper's point that there need not be anyexpress reference to a trust for one to come into existence,12 but we read Mrs Nuku'sevidence as going further than that, namely that there was no reference to the interest the respondents now argue for. Mrs Nuku explained:It is my recollection she took this step [transferred the property] so that each of her children could share in this homestead property but only while each was still alive.[17] The evidence from the respondents does not address or explain why Mrs Nuku and her siblings would have paid $40,000 to Mereaina Taylor if they were to hold the property on the general terms now argued for.[18] Another important feature of the evidence is that the transfer took placeshortly before Mereaina Taylor's death and at a time when she had already disposedof or transferred other property to other family members. For example, Peter Taylor deposes that Mereaina Taylor had provided for the neighbouring farmland to be held between his father and Mrs Nuku, and had given her Wellington land interest to her Wellington based child and transferred an adjacent property at Smart Road to herother son Te Toro "Edward" Taylor.[19] Mereaina Taylor acquired the property in 1959. At the time it was Maori freehold land within the meaning of the Maori Affairs Act 1953. In 1968 a declaration was made under Part 1 of the Maori Affairs Amendment Act 1967 that the land was to cease having the status of Maori land. The declaration was noted on the title.13 The Judge considered that Mereaina Taylor might not have understood the implications of the change in status of the land or the joint tenancy. In coming to that view she relied on evidence that Mereaina had a limited understanding of the English language and the will say statements of Mr Mason, a valuer, that many12 Relying on Bannister v Bannister [1948] 2 All ER 133 (CA).13 Under s 11 of the Maori Affairs Amendment Act 1967 the Registrar was required to notify the owner the land had ceased to be Maori land.Maori did not understand the effect of the law change that occurred in 1968.14 She also noted the will say statement of Mr Tapuke, a kaumātua, who expressed his opinion that the deceased would not have understood the concept and implication of a joint tenancy.[20] Putting to one side the issue of the admissibility of the will say statements, there is evidence that Mereaina Taylor was not mistaken about the status of the property and would have understood the implications of the transfer. It is apparent that the deceased was well versed in Maori land rights and affairs. She took an active interest in her land and landholdings. As one of the deponents for the respondents, Aronuku Marie Taylor says, the deceased fought for her land and for years often attended the Maori Land Court and always attended meetings with lawyers to fight for her land to ensure it was safe for future generations. Peter Taylor says she had numerous meetings with Council members and staff about her land and Maori land. Further, as noted, Mereaina Taylor had transferred or disposed of a number of other blocks of land that she owned in both Taranaki and Wellington. Finally, even if she was mistaken as to the effect of a joint tenancy as opposed to a tenancy in common, that cannot affect the validity of the transfer to Mrs Nuku and her brothers. If the respondents cannot establish the property is held on trust then the effect of the transfer is to vest legal and equitable ownership in Mrs Nuku.[21] The issue remains whether, taken overall, the evidence (including the evidence of the consideration recorded on the transfer) provides an arguable basis forthe respondents' case that at the time the property was transferred in 1985 it was transferred subject to a trust.[22] As this Court noted in Harvey v Beveridge:15As with any case involving a trust, it is essential to articulate precisely the relevant terms of the trust at issue.14 The Maori Affairs Amendment Act 1967 came into force on 1 April 1968.15 Harvey v Beveridge [2014] NZCA 72 at [29].[23] A similar point was made by the English and Wales Court of Appeal inBannister v Bannister. There must be a "sufficiently defined beneficial interest in the property" in order for a constructive trust to arise.16[24] The fundamental difficulty with the respondents' case is that there is not one clear exposition in the evidence from the respondents' deponents as to the terms ofthe trust for which they seek to argue. A number of the deponents refer to thedeceased's intentions and wishes but importantly there is no evidence of the transfer being subject to a trust, nor any evidence of the actual terms of the trust.[25] The various statements relied on by the respondents to support the proposition include:(a) Loma Mary Taylor (daughter-in-law) – "Mereaina always toldme that [the Property] Must never be sold as it is here for all her whanau to come home at any time when in financial or emotional situations or when there is a death in the family."(b) Loma Emiri Taylor (granddaughter) – "[My] grandmotherMereaina Taylor told all of her mokopuna that our Papkainga [the Property] is our home and will always remain as a homefor all generations to come."(c) Mereana Taylor (granddaugher) – "Mereaina taught us that the[Property] was never to be sold, it will always be there for her mokopuna so they have a place to return to in time of need."(d) Kalven Paul Taylor (grandson) – "My Grandmother alwayssaid that the doors will forever be open to family who need tocome home, that this house is going to always be there for us."(e) Peter David Taylor (grandson) – "The idea was that my fatherand his children became the rock owning 236 Smart Road forall""I believe that Nan did not intend the Pakeha view ofland holding to apply to 236 Smart Road. All Nan knew of land was that on death it went to the children of the deceased."(f) Robert Iain Weir ("Pakeha Son") – "She worried about hermokopuna and did not want them to be homeless. She believed that times could get hard in the future and that the 236 Smart Road property was for all of the grandchildren to have a home base." "I always understood that Michael owned 50%...16 Bannister v Bannister, above n 12, at 136.and Jean [Nuku] the other half. However it was intended for Peter to live at 236 Smart Road."The statements are in part the deponent's recollection of the deceased's expressionsof desire or wishes and in some cases are the deponent's views or belief as to the deceased's wishes. Some are inconsistent amongst themselves. The statements donot provide a clear basis for the trust alleged. There is an important difference between the family and Mrs Nuku being aware of the deceased's attachment to theproperty and her general wishes in relation to it, and the proposition that when she transferred it to Mrs Nuku and her brothers (thereby keeping it in the family for the foreseeable future) it was impressed with a trust. It could be said the desire or wishes have been met to the extent Mrs Nuku made the property available to Peter Taylor when he and his family needed a home in 1997.[26] When pressed, Ms Cooper submitted that the terms of the trust were that the property was to be held by Mrs Nuku and her brothers (or the survivor of them), on terms restricting alienation of the land similar to those under the Maori Affairs Act or Te Ture Whenua Maori Act 1993. That was consistent with her submission that it was intended the land would be kept within the family. However, such powers as may exist under the Acts do not assist in clarifying the terms of the trust now sought to be recognised as applying to Mrs Nuku which must be based on the express trust discussed above.[27] Further, some of the deponents suggested it was intended that the land could never be sold. To that extent, the suggested trust would breach the rule against perpetuities. Subject to limited exceptions provided in the Te Ture Whenua Maori Act, (none of which apply in this case) the trust must also comply with the provisions of the Perpetuities Act 1964.17[28] Importantly, some of the evidence for the respondents is directly contrary to the suggestion that the property was to be kept for broader whānau. For exampleMs Loma Taylor deposes that the deceased came to Huntly with legal documents to give the property over to her but that she declined the offer. Mr Peter Taylor, who has been resident at the property for some time says when he became aware that17 Te Ture Whenua Maori Act 1993, Part 12 generally and s 235.Mrs Nuku proposed to sell the property he asked her for first option on the sale. That evidence is inconsistent with the suggestion that Mrs Nuku held the property on trust for all the family and future generations.[29] In summary, there is no direct evidence that when Mereaina Taylor transferred the property to Mrs Nuku and her brothers in 1985 the property was impressed with a trust. The only contemporaneous documentary evidence, the transfer, is contrary to that proposition. The evidence of the only surviving party to the transaction, Mrs Nuku, is contrary to it as well. The general expressions ofMereaina Taylor's wishes do not satisfy the requirement that the terms of the trustmust be clearly articulated.[30] For the above reasons the respondents are not able to make out a reasonably arguable case for the interest they claim in the property.[31] In the circumstances it is unnecessary to consider the balance of convenience point raised by Mr Grant.Result[32] The appeal is allowed. The caveat described in the application before the High Court is to lapse. If necessary, the solicitors for the appellant are authorised to sign a withdrawal of caveat.Costs[33] There was no order for costs in the High Court. Because the respondents are legally aided we make no order for costs in this Court.Solicitors:JT Law, Wellington, for AppellantQuin Law, New Plymouth, for Respondents