TAIMOORI v ANMOL RESIDENTIAL LTD [2021] NZHC 533

TAIMOORI v ANMOL RESIDENTIAL LTD [2021] NZHC 533 [18 March 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-000036[2021] NZHC 533BETWEEN MIRZA AREEB BAIG TAIMOORIPlaintiffAND ANMOL RESIDENTIAL LIMITEDFirst DefendantANMOL SETHSecond DefendantANMOL INVESTMENTS LIMITEDThird DefendantHearing: 1–2 March 2021 (via VMR)Counsel: BP Rooney for PlaintiffJR Duckworth for Second DefendantJudgment: 18 March 2021JUDGMENT OF DOWNS JThis judgment was delivered by me on Thursday, 18 March 2021 at 10 ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors/Counsel:Lovegroves, Auckland.Jennifer G Connell & Associates, Auckland.BP Rooney, Auckland.A breach of fiduciary duty?[1] Mirza Taimoori and Anmol Seth are members of Auckland's Indiancommunity and know each other this way.1 Mr Taimoori sues Mr Seth for breach offiduciary duty in relation to a property development.2 Mr Taimoori says Mr Seth tooka lot of money from him to develop property, then did nothing. He wants his moneyback. Mr Seth says Mr Taimoori entered an investment which failed, for whichMr Taimoori is partially responsible.[2] The case has a particularly serious aspect. Mr Seth produced invoices, sayingthey corroborate development expenses. Mr Taimoori contends the evidence revealsthem as fake.Background[3] In about August 2015, Mr Seth invited Mr Taimoori to join a venture in relationto the development of Mr Seth's property at 185 Gray Avenue, Papatoetoe.3 Mr Sethbought the property in 2014 and on 16 April 2015 obtained resource consent for itssubdivision to three dwellings.4[4] Mr Seth later asked Mr Taimoori to invest $300,000 on the bases Mr Sethwould contribute to the property and the pair share the profit of its development.[5] Mr Taimoori had no experience in property development. He assumed Mr Sethwas a successful businessperson. Mr Seth had told him this. Mr Taimoori was alsoinfluenced by social medial images. Mr Seth's Facebook page referred to the"Anmol Entertainment Group" and described him, among other things, as the"business advisor at Anmol Wineries"; "Vice President at Anmol Hotel and Resorts";"Chief financial officer at Anmol Investments Ltd"; and "MD at AnmolConsultants". The same Facebook page contained an entry for the "Anmol GroupCorporation", which apparently extended to "Anmol Hotels & Resorts"; "Anmol1 The parties disagree about their involvement in a 2013 Bollywood event, "Temptations Reloaded",and whether Mr Seth owed Mr Taimoori $18,000 in relation to this. Nothing turns on this.2 And for breaching the Fair Trading Act 1986.3 The property.4 The consent included detailed plans.Architect's Group"; "Anmol Construction"; and "Anmol Barristers". Hashtags on theFacebook page referred to "LordAnmol" and "billiondollarclub", replete with imagesof expensive cars and private jets.[6] Mr Taimoori did not have $300,000. Mr Seth suggested Mr Taimoori borrowthe money, relying on equity Mr Taimoori had in his family home.[7] On 6 August 2015, Mr Seth sent Mr Taimoori a "Memorandum ofUnderstanding".5 The MOU provided Mr Taimoori and Anmol Residential Ltd,6 acompany controlled by Mr Seth, were recording an "investment agreement".[8] Anmol Residential was described as "in charge" of the "construction project".Mr Taimoori was "to commit to an initial investment of $300,000 via homere-finance". Mr Taimoori would then "be granted a JV"—presumably, a jointventure—in relation to the development of the property. The MOU provided it wouldbe "superseded" by a second agreement between the parties, the "scope and intent" ofwhich was to be "broadly defined by this MOU". The MOU was signed by Mr Sethfor Anmol Residential, dated 6 August 2015.[9] The same day, Mr Taimoori transferred $50,000 of personal savings toAnmol Residential. Mr Taimoori signed the MOU the next day.[10] Mr Taimoori's bank would not lend him the balance of the money. Mr Sethtold him he had a contact at Westpac who could help. The contact arranged financefor Mr Taimoori. She corresponded as Mr Seth's "EA", seemingly on behalf of"Anmol Consultants Limited, Accounting, Tax and Business Advisory".[11] Mr Seth's lawyer was Shean Singh Law.7 Mr Seth encouraged Mr Taimoori tosee Shean Singh in relation to the loan. Mr Taimoori did so. He said he did not thinkthere was anything unusual about this.5 The MOU.6 Anmol Residential.7 Shean Singh.[12] The loan was drawn 20 August 2015, through Shean Singh. The same day,Mr Taimoori transferred $220,000 to Anmol Residential.[13] On 25 August 2015, hence five days later, Mr Taimoori saw comments on ablog describing Mr Seth as a "conman". Mr Seth later reassured Mr Taimoori this wasnot true at a meeting attended by others.[14] The property has not been developed in any way. The single home on theproperty remains, as it was. No construction occurred.[15] On 29 September 2016, Mr Seth transferred $10,000 to Mr Taimoori. BetweenMarch and October 2017, Mr Seth transferred a further $20,680 to Mr Taimoori.Mr Taimoori and Mr Seth corresponded digitally in this period. Mr Taimoorirepeatedly asked Mr Seth for information about the property.[16] On 9 January 2018, Mr Taimoori filed a claim against Mr Seth andAnmol Residential.[17] In October 2018, Anmol Residential was placed in liquidation, stayingMr Taimoori's claim against it. Other companies in the Anmol group were also placedin liquidation at that time.[18] Mr Seth disputes three aspects of this narrative. First, he says Mr Taimooriapproached him, asking to participate in a property development. Second, Mr Sethsays the development did not proceed because Mr Taimoori invested $270,000, not$300,000; and because costs became prohibitive. Third, Mr Seth says the monies hetransferred to Mr Taimoori were not partial repayments of the $270,000, hence anadmission of wrongdoing; rather, compassionate loans to someone in need. It iscommon ground Mr Taimoori came under financial pressure; the digital messagesreveal as much.[19] The claim's messy history to trial need not be recorded, other than the lateinvolvement of Mr Rooney for Mr Taimoori and Mr Duckworth for Mr Seth broughta discipline and focus that had not hitherto existed. I record my appreciation to bothcounsel for their assistance.The claim[20] Mr Taimoori advances two causes of action against Mr Seth. First, breach offiduciary duty. Second, contravention of the Fair Trading Act 1986 by misleading anddeceptive conduct, false representation and other misleading conduct in relation toland; and false and misleading representation about the investment of money.Mr Rooney helpfully identified the first cause of action as the primary one. Indeed,he candidly acknowledged the second "added little".[21] Mr Taimoori seeks orders Mr Seth pay him $239,320;8 interest; and costs.Mr Taimoori also seeks a declaration he has a proprietary interest in the property.[22] Mr Seth's pleadings do not require mention beyond that an apparent defenceof frustration "due to ... illness" was not advanced at trial.9Trial[23] The two-day trial coincided with Auckland's fourth lockdown in consequenceof the COVID-19 pandemic.10 Counsel appeared by Virtual Meeting Room. So toothe three witnesses: Mr Taimoori; Richard Hayes, about whom more soon; andMr Seth.[24] By agreement, Mr Seth and Mr Duckworth were at the same location. Severalshort adjournments were required to ensure each could be easily heard; there was anoccasional audio problem at their end. The hearing was otherwise unremarkable, thetechnology adequate.8 The figure is the money Mr Taimoori invested minus Mr Seth's alleged repayments.9 Amended statement of defence for the second defendant dated 18 August 2020 [Amendedstatement of defence] at [3].10 On the Sunday immediately before trial, Mr Duckworth filed a memorandum. The memorandumalerted the Court to his client's instructions of possible impediments to commencement: Mr Sethwas in Wellington with his ill mother; and Mr Seth's laptop was in Auckland. The Registrarcontacted me. At 7 pm, I conveyed this message through the Registrar, who, I note, was still atwork at the courthouse: "Trial to proceed. Telephone conference at 9 am tomorrow to discussformat. I am amenable to use of VMR if required". At Monday's conference, everyone agreedthe trial should proceed by VMR.Breach of fiduciary duty?Did Mr Seth owe a fiduciary duty to Mr Taimoori?[25] Traditionally, fiduciary duties attach to particular types of relationship; two ofthe most obvious being doctor-patient and lawyer-client. However, Courts have longsaid these categories are not closed.11 Similarly, albeit more recently, Courts have saidfiduciary relationships can arise on particular facts.12[26] Fisher J captured these points—and the orthodox features of a fiduciaryrelationship—in Cook v Evatt (No 2):13(a) The existence and scope of fiduciary obligations are not to bedetermined by placing the instant case into a preconceived categoryand then invoking the duties thought to attach to that category; theymust be tailored to the particular case after a meticulous examinationof its own facts.(b) The essence of a fiduciary relationship is an inequality of bargainingpower brought about by the trust or confidence reposed in, andaccepted by, the fiduciary to perform some function for another'sbenefit in circumstances where the beneficiary lacks the poweradequately to control or supervise the exercise of that function Oneapplication of that principle is that persons will generally assumefiduciary obligations in circumstances where they may benefit from atransaction and know that the other party is relying upon them forguidance and advice with respect to that transaction.(c) When that test is applied to certain relationships – of which directorsto companies, trustees to beneficiaries and solicitors to clients areexamples – the inherent nature of the relationship will make fiduciaryobligations inevitable. In others there may not be any relationshipcustomarily understood to attract fiduciary obligations as a matter ofcourse. In the latter cases fiduciary obligations may nevertheless flowfrom the particular circumstances affecting the parties and thetransaction in question.(d) Even where a fiduciary relationship is established, the scope of thefiduciary's obligations is determined by the nature and extent of thereliance or trust which had been placed by the beneficiary upon or inthe fiduciary. Again, this requires a meticulous examination of thefacts of each individual case.(e) In most cases beneficiaries will have trusted their fiduciaries to avoidusing the fiduciary office to gain a personal advantage ("the use offiduciary position" rule) or placing themselves in positions where the11 Cook v Evatt (No 2) [1992] 1 NZLR 676 (HC) at 685.12 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [75].13 Cook v Evatt (No 2), above n 11, at 685.fiduciaries' interests would conflict with those of the beneficiaries onthose matters where, by virtue of the trust relationship, thebeneficiaries would be at the mercy of the fiduciaries ("the conflict ofinterest rule"). The latter does not mean avoidance of all conflicts ofinterest. An examination of the individual facts will be necessarybefore it will be possible to define the precise scope of the trust whichhad been placed in the fiduciary and hence the areas within which aconflict would be impermissible.(f) In those cases where fiduciaries have entered into transactions withbeneficiaries, the latter will usually have relied upon the former todisclose those facts known to the fiduciaries which would be likely toinfluence the beneficiaries in their decision to enter into the proposedtransaction and, if so, on what terms ("the non-disclosure rule").Again, the scope of the reliance in this respect will be a question offact to be determined in each case.[27] Mr Rooney argues a fiduciary relationship arose because: Mr Seth held himselfout as an accountant and financial adviser; Mr Taimoori looked to Mr Seth for financialand business-related advice; the relationship was unequal: Mr Seth had experience asa property developer; Mr Taimoori had none; Mr Seth, through Anmol Residential,had exclusive control of the development; Mr Taimoori was an investor only, relianton Mr Seth; the nature of the transaction—a joint venture—was consistent with afiduciary relationship; and because Mr Seth had taken money from Mr Taimoori withan associated promise to use it a particular way (to develop the property, then shareprofit).[28] Mr Duckworth argues no fiduciary relationship arose because the men were onreasonably equal terms, any joint venture was arm's length, commercial transaction;and Mr Taimoori was dealing with Anmol Residential, not Mr Seth.[29] Mr Rooney's analysis is unquestionably correct. First, the features heidentifies are grounded in largely uncontroversial fact.14 For example, Mr Seth'spleadings acknowledge his holding out "as an accountant, a financial adviser, anentrepreneur, and a property trader and developer".15 And, Mr Seth's own social media14 In evidence in chief, Mr Seth said he told Mr Taimoori "to carry out his own due diligence".Mr Duckworth did not put this precise point to Mr Taimoori in cross-examination. Rather, heasked Mr Taimoori whether Mr Seth provided him "figures" about the development, and whether"as part of the due diligence, [Mr Taimoori] had costings". Mr Taimoori said he looked at the titleto the property, the development work Mr Seth had completed, and the file Mr Seth had at themeeting.15 Second amended statement of claim dated 30 October 2020 [Second amended statement of claim]at [1]; and Amended statement of defence, above n 9, at [1].pages (adduced by Mr Taimoori) demonstrate the point. Mr Seth said inevidence in chief he learned about property development from his father. Mr Taimoorisaid he had no such experience, about which he was not challenged. And so on, andso forth.[30] Second, the arrangements between Mr Seth and Mr Taimoori were unequal.Mr Seth contributed more to the development; he provided the property. Developmentwas the preserve of Anmol Residential, a company Mr Seth controlled. Mr Taimoorihad no role beyond passive investor. Mr Taimoori's only source of information aboutthe development, and what was happening to his money, was Mr Seth. It followsMr Seth controlled the development, Mr Taimoori's related investment, and whatMr Taimoori knew about each.[31] Third, Mr Seth knew Mr Taimoori could not afford to invest other than throughborrowing against his family home. Mr Seth arranged alternative finance (through acontact) when Mr Taimoori's regular bank would not provide it, and he encouragedMr Taimoori to consult a lawyer who was other than independent. These aspectsunderscore Mr Taimoori's trust in Mr Seth, and the inequality of their relationship.[32] An otherwise unimportant fact is illustrative. Mr Taimoori said he believedMr Seth a lord—"Lord Anmol"—as this is what Mr Seth wished to be called withinthe Hindu community, and how Mr Seth referred to himself on social media.Mr Taimoori said "only recently" had he discovered this was fabrication.16[33] Fourth, it is clear from the terms of the MOU, which, incidentally, Mr Sethsourced online,17 that Mr Taimoori provided the money for a specific purpose:development of the property. It follows Mr Seth could not, absent Mr Taimoori'sagreement, use that money for any other purpose. It also follows Mr Seth had a dutyto return any money not used for that purpose.[34] These observations address Mr Duckworth's arguments. The men were noton equal terms, nor arrangements arm's length. True, Anmol Residential was the other16 Notes of evidence at p 46, li 10–15.17 Brief of evidence of Anmol Seth dated 2 February 2021 at [30].party to the MOU, not Mr Seth. However, Mr Seth controlled Anmol Residential; andthe property to be developed was Mr Seth's, not the company's. In any event, Mr Sethsaid in evidence in chief the MOU was "a means to an end". Anmol Residential wasmerely a corporate vehicle.Did Mr Seth breach this duty?[35] This, unsurprisingly, was the heart of the trial and very much in dispute.[36] Mr Taimoori's pleadings allege Mr Seth breached the fiduciary duty upon himthis way:18(a) Unbeknown to Mr Taimoori, Mr Seth bought the property throughvendor finance, and the vendor, Vicki Katu, still has an interest in theproperty.(b) The property was not available to Anmol Residential to carry out thedevelopment.(c) Mr Seth did not have authority to develop the property.(d) Through (a), (b) and (c), "no participation in a joint venture for thedevelopment was available" to Mr Taimoori.[37] Mr Taimoori said he was "now aware Vicki Katu says that she was notpaid the full purchase price" for the property. Mr Seth accepted in cross-examinationMs Katu had lodged a caveat against the property on the basis of unpaid vendorfinance. However, Mr Seth denied he owed money to Ms Katu. Mr Seth said this iswhy he had not mentioned anything about this to Mr Taimoori.[38] Little evidence, if any, was adduced in relation to (b) and (c).[39] Had Mr Taimoori's case rested exclusively on these points, it would have beenin jeopardy. Mr Taimoori offered no evidence Mr Seth owes money to Ms Katu, only18 Second amended statement of claim, above n 15, at [13].his understanding of this allegation. Mr Seth did not admit he owes Ms Katu money.Ms Katu did not give evidence. No other material evidence about (a) was adduced,beyond a copy of the caveat, as registered. Moreover, as observed, little if anyevidence was adduced in relation to (b) and (c).[40] However, Mr Taimoori's case was advanced on a broader, self-evident basis:that Mr Seth failed to develop the property; and failed to repay Mr Taimoori hismoney.19 Indeed, this is the gist of Mr Taimoori's case and his related testimony.[41] As to the latter, Mr Duckworth questioned Mr Taimoori closely. Cross-examination did not expose any material flaw in Mr Taimoori's evidence, orcredibility.[42] Mr Taimoori's evidence is consistent with his digital correspondence withMr Seth in 2017. As observed, this reveals repeated requests of Mr Seth forinformation about the property. A snapshot is sufficient.[43] On 21 November 2017, Mr Taimoori asked Mr Seth for "any news" about theproperty. Mr Seth replied he had fallen, and "cut open my skull". Mr Taimoori saidhe was sorry to hear this, then asked if the real estate agent had been able to sell theproperty. Mr Seth did not reply.[44] The next day, Mr Taimoori asked Mr Seth "what is happening"? He notedit had been more than a year since they had been "trynna sell this house". Mr Taimooriadded, "I need the money bro". Mr Seth counselled patience, "we can endure watevercomes". Mr Taimoori said financial pressure had stopped "my kid from [buying]things". He then asked Mr Seth for the "project cost sheet". Mr Seth replied thatMr Taimoori had not "invested under pressure". Mr Taimoori said, "The project wasnot handled the way on which the money was [to be] invested". Mr Seth said he was"sick off [Mr Taimoori's] pressure". Mr Taimoori expressed surprise at this answer:"Wtf?" He pressed Mr Seth for "the project cost sheet". Mr Seth said he was "not[responding] anymore" and would talk when Mr Taimoori could approach things19 These facts were pleaded; see, for example Second amended statement of claim, above n 15, at[8]. There could be no suggestion of ambush. None was."maturely". Mr Taimoori responded he had been "very patient and understanding",but he needed "that money back". Mr Seth did not reply.[45] Like exchanges are replicated throughout the messages.[46] As will be recalled, Mr Seth's case is that he used Mr Taimoori's money tomeet development costs, but the project failed, in part because Mr Taimoori did notinvest the full $300,000. Mr Seth said the $30,680 he transferred to Mr Taimoori wasnot partial repayment of the money Mr Taimoori had invested, but a loan.[47] Mr Seth's evidence was vague and elusive. Some aspects were distinctlyunsatisfactory.[48] Mr Seth signed a brief of evidence 2 February 2021, a month from trial. Inthis, he said Mr Taimoori's money was used "to assist in the preliminary work towardsStage 2 where construction would begin". Mr Seth continued: "I have producedvarious invoices which confirm the use of monies received were used. These showStage 1 was moving forward and expenses were being met as and when they wereincurred". Mr Seth did not give more detail in his brief. Indeed, Mr Seth did notidentify in his brief the invoices to which he was referring.[49] Mr Seth served a list of documents 5 February 2021.20 The list included eightinvoices and one statement. Six of the eight invoices contained redactions, includingthe identity of the person or organisation allegedly responsible for the invoice.[50] Mr Rooney objected. On 23 February 2021, Mr Seth discovered unredactedversions of some of the documents.[51] Mr Seth relied on the invoices and statement at trial. Mr Seth did not adducea single receipt for the invoices, nor corresponding bank records. Mr Seth did not callany of the documents' authors.20 His list was due 30 October 2020.[52] The largest invoice produced by Mr Seth is from Gladstone Trust toAnmol Residential. The invoice is for $138,000; dated 8 April 2016; and has thenumber 080415.21 The narration is "Development Engagement". I call it the 2016invoice.[53] I referred earlier to Mr Hayes as a witness. Mr Hayes is the manager of theGladstone Trust, a consultancy in relation to property development. Mr Hayes was alate witness for Mr Taimoori; late because Mr Seth did not discover the unredactedinvoice until 23 February 2021.[54] Mr Hayes testified he had not seen the 2016 invoice before. He saidGladstone Trust sent an invoice to Anmol Residential for $215.11; dated 8 April 2015;with number 080415. Its narration is, "Travel to CHC regarding meeting with Eddie".Mr Hayes said the number on the invoice reflected the (correct) date. I call this the2015 invoice.[55] Mr Hayes said Gladstone Trust did not send an invoice to Anmol Residentialdated 8 April 2016, nor any other document that "could have been confused" with the2015 invoice. Mr Hayes said he checked Gladstone Trust's bank records. It neverreceived $138,000 from Anmol Residential.[56] In cross-examination, Mr Hayes accepted Gladstone Trust had providedservices to Anmol Residential. Mr Hayes said these included a Christchurch-basedproject, and contingency fees that were never rendered. Mr Hayes agreed aJanuary 2016 email to Anmol Residential referred to blocks of time which, ifmultiplied by an hourly rate, produced a figure of $138,000. However, Mr Hayes saidthe email did not refer to services in connection with the property, but a disputebetween Mr Seth and a third party. Mr Hayes reiterated Gladstone Trust did notinvoice Anmol Residential for $138,000.[57] Mr Hayes presented as straight-forward, and as someone who was attemptingto assist the Court years after the narrated events. Mr Hayes' reference to21 The seven other invoices produced by Mr Seth concern alleged services totalling $80,537.51.Christchurch-related services is consistent with the narration to the 2015 invoice("Travel to CHC ").[58] Mr Seth did not explain in oral evidence how Anmol Residential usedMr Taimoori's money. But, he insisted the 2016 invoice was genuine. Mr Seth saidthe Trust provided "project management feasibility" and "introduced" contractors inrelation to the property. Mr Seth did not elaborate.[59] I mentioned earlier a statement. Mr Seth produced a statement onBurton Partners' letterhead, implying the law firm was owed $19,570 in relation to theproperty as at 31 December 2015. Mr Seth did not explain the document or call awitness from the firm.[60] Mr Seth was often evasive under cross-examination. When asked why he hadredacted some of the documents, Mr Seth said he did so to protect the identity of thoseinvolved. Mr Seth said Mr Taimoori had taken "every measure outside [of] court" toplace witnesses under "duress" and create "tarnishment" and "oppression".[61] Mr Rooney asked Mr Seth about the January 2016 email; see [56]. Mr Rooneyput in evidence, without objection, a different version of the email. Unlike thatproduced by Mr Seth, the email had "818 cost recoveries" in its subject line;Anmol Residential's Christchurch project concerned 818 Colombo Street. Mr Rooneyasked Mr Seth why the version Mr Seth adduced did not have "818 cost recoveries"in its subject line. Mr Seth said he had produced what evidence he could in theavailable time, and he had been outside of Auckland immediately prior to trial due toa family bereavement.[62] I asked Mr Seth what services Gladstone Trust had performed forAnmol Residential to the value of $138,000. Mr Seth said, "developmentengagement" and "add[ing] other contractors on board". When I pressed a little more,Mr Seth said, "project management", but he could not remember "the nitty gritty".[63] Mr Seth's evidence cannot be reconciled with the property itself.No development has occurred; the single home remains. Mr Seth's evidence cannotbe reconciled with the digital messages either. These reveal Mr Taimoori ascomplainant, not the other way around. Mr Seth's exhibits—the invoices andstatement—are unsupported by extrinsic evidence. Indeed, the only extrinsic evidencein relation to the largest invoice implies it a forgery. The sequence in relation to itsdiscovery and its trial deployment are, frankly, troubling.22[64] As will be apparent then, I accept the evidence of Mr Taimoori and Mr Hayes.I reject Mr Seth's contrary testimony as unreliable, and his evidence about the invoicesas worse. I find Mr Seth breached his fiduciary duty to Mr Taimoori by failing todevelop the property and failing to repay all but $30,680.Fair Trading Act claim[65] This part of Mr Taimoori's claim relies on the same ingredients as [36], albeitas misleading and deceptive conduct, and false and misleading representations. Thesame evidential problems arise. This conclusion makes it unnecessary to addressMr Seth's limitation period defence (under s 43A of the Fair Trading Act).[66] This cause of action fails.A constructive trust, institutional or otherwise?[67] This leaves a tricky point.[68] Mr Taimoori's pleadings allege he was "the beneficiary of a constructive trustconferring on him a proprietary interest in the property".23 The pleadings say thisarose because Mr Seth breached his fiduciary obligations to Mr Taimoori in relationto the invested money.[69] Mr Rooney's opening address said little about this topic. I said to Mr Rooneywhen he closed the next day, I would need to hear more.22 This should not be understood as criticism of Mr Duckworth.23 First amended statement of claim dated 23 April 2020 at [18.2].[70] Mr Rooney's closing address helpfully identified the principles in relation tofiduciary relationships, with the well-known cases of Cook v Evatt (No 2) (which Ihave already discussed),24 Gillies v Keogh,25 and Lankow v Rose.26 The second andthird deal with constructive trusts, more particularly, when they arise. However,Mr Rooney again said little about how Mr Taimoori had a constructive trust inthe property, as against a constructive trust over profit from its sale(post-development). Mr Rooney said "the facts of this case speak for themselves. Isit reasonable that [Mr Seth] keeps both [Mr Taimoori's] money and the property?". Iacknowledge a powerful piece of advocacy. However, the submission contains nostatement of principle.[71] I asked Mr Rooney to identify the most helpful case for Mr Taimoori. He saidRead v Almond.27 In Read v Almond, family members argued there was an oralagreement between them that when the property in dispute was purchased, they wouldeach have shares based on their respective financial contributions to the purchase priceand later improvements. Thomas J held such an agreement existed. The Judge alsoconcluded each plaintiff had a reasonable expectation of an interest in the property.The Judge concluded a constructive trust had arisen in relation to the property.[72] It is convenient now to stand back. Doing so will introduce my concerns.[73] An institutional constructive trust arises when a person makes anunconscientious assertion of ownership to property to which another has contributed.The most frequently encountered circumstance lies in relationship property.Gillies v Keogh and Lankow v Rose are both relationship property cases, with the latterrecognised as the leading one, and Tipping J's judgment therein, the most cited.[74] Tipping J identified four things a claimant must establish to have a beneficialinterest in property, owned in law, by another.28 First, that the claimant contributed tothe property. Second, that the claimant did so with the expectation of an interest in the24 Cook v Evatt (No 2), above n 11.25 Gillies v Keogh [1989] 2 NZLR 327 (CA).26 Lankow v Rose [1995] 1 NZLR 277 (CA).27 Read v Almond [2015] NZHC 2797.28 Lankow v Rose, above n 26, at 294.property. Third, that the expectation was reasonable. Fourth, that the defendant oughtreasonably expect to yield an interest to the claimant.[75] Lankow v Rose does not occupy the field in relation to the ingredients of aninstitutional constructive trust. This may also arise when the claimant contributes tothe property in consequence of a common intention the claimant will have a share inthe property. In this situation, it is not necessary "to fall back on reasonableexpectations".29 Cooke P made these points in Gormack v Scott.[76] Read v Almond involved both instances of a constructive trust.The contributing parties did so in consequence of a common intention, and each hada reasonable expectation of an interest in the property. Read v Almond involved aninstitutional constructive trust, meaning the institution of a trust arose as the eventsoccurred, merely to be recognised thereafter by the Court. A remedial constructivetrust, however, as its name implies, is the remedy of a trust imposed by the Court whenpreviously there was none. The former is commonplace. The latter is anything but.[77] I return to this case. Clearly, Mr Taimoori gave Mr Seth a lot of money todevelop the property. However, it is not clear Mr Taimoori actually contributed to theproperty. The assumption animating Mr Taimoori's fiduciary duty claim is thatMr Seth failed to apply Mr Taimoori's money as he ought. It is not clear howMr Taimoori contributed to the property if, as is almost certainly the position, hismoney never reached it.[78] Relatedly, it is not clear Mr Taimoori had an expectation of an interest in theproperty itself, as distinct from the expectation of an interest in profit from theproperty's sale. Like observations attach to the third and fourth ingredients identifiedby Tipping J.[79] The common intention variant of a constructive trust is no more promising.The MOU does not appear to contemplate Mr Taimoori having an interest in theproperty, nor the men's related dealings. Mr Taimoori's own evidence supports thisconclusion:29 Gormack v Scott (1995) 13 FRNZ 43 at 47–48.Anmol told me that he wanted me to invest $300,000 into the development toget it under way by contracting a builder and starting construction, on the basisthat he or one of his companies would enter into the joint venture with me tocarry out the development project, and that he would make the propertyavailable to be developed by the joint venture. We were each to be repaid forour contributions once the development was completed. The contributionswere the property itself (contributed by Anmol) and any investments. I wasaware that Anmol had a mortgage to Westpac over the property, which wasalso to be repaid (as part of the repayment of Anmol's contribution). Theprofits were then to be shared.[80] Despite the pleadings then, what Mr Rooney really argues for is a remedialconstructive trust which, again, "does not exist until declared by order of the court."30Professor Jessica Palmer says such a trust is "a remedy in situations not alreadycovered by institutional constructive trusts in which Judges feel a proprietaryremedy is necessary to achieve justice."31 Professor Palmer also says remedialconstructive trusts constitute "an illegitimate use of equity to disrupt proprietary rightsand obligations [absent] a sound, reasoned, basis" for their existence.32 In other words,the remedial constructive trust is controversial.[81] In Commonwealth Reserves I v Chodar, Glazebrook J discussed attendantprinciple, drawing on observations of Tipping J:33[41] In Fortex Tipping J stated that there needs to be some asset or assetsin the defendant's hands upon which the Court considers it appropriate toimpress a trust. He says that this must be on a principled basis vis-à-vis boththe person owning the assets and any third party who has an interest in theassets. He went on to say:"Equity intervenes to prevent those with rights at law from enforcingthose rights when in the eyes of equity it would be unconscionable forthem to do so."[42] The question that must be answered in this case is what that principledbasis is. There appear to be two potential triggers for the exercise of theCourt's discretion to grant a remedial constructive trust. One is unjustenrichment. The other is unconscionability.30 Fortex Group Ltd (in rec and liq) v MacIntosh [1998] 3 NZLR 171 (CA) at 173.31 Jessica Palmer "Constructive Trusts" in Andrew Butler (ed) Equity and Trusts in New Zealand(2nd ed, Thomson Reuters, Wellington, 2009) at [13.3.1].32 At [13.3.1].33 Commonwealth Reserves I v Chodar [2001] 2 NZLR 374 (HC) at 383–384.[46] There is, however, a significant distinction between havingjurisdiction to impose a remedial constructive trust, and choosing to exercisethat discretion. It is apparent that a remedial constructive trust is potentiallyavailable as a remedy in cases of unconscionability and unjust enrichment. Itis not inevitable that one will be awarded.[47] Reliability and certainty are primary considerations of any system ofproperty rights, and the unprovoked alteration of those rights is to be avoidedwhere possible. This is all the more true in a commercial rather than adomestic context. The Court must carefully examine the reasons why otherforms of relief are inadequate, the interests of any third parties and the othercircumstances of the case, and consider whether proprietary relief can bejustified.[48] In cases where the interests of third parties would be prejudiced by aproprietary remedy, particularly if those third parties are in a substantiallysimilar position to the plaintiff, or where the plaintiff has accepted the risk ofthe defendant's insolvency, then proprietary relief is likely to be inappropriate.[82] I decline to declare Mr Taimoori has a remedial constructive trust over theproperty for three reasons. First, it is quite possible others claim an interest in theproperty. Ms Katu alleges Mr Seth did not pay the full amount for the property;see [37]. Anmol Residential is in liquidation; see [17]. Interests of creditors may bein play; a remedial constructive trust could affect others' rights. Second, an orthodoxremedy is available: restitution of the outstanding balance. The evidence does notimply this relief would necessarily be inadequate. Third, a remedial constructive trustwould provide Mr Taimoori an interest in the property even though his claim of aninstitutional constructive trust fails: see [77]–[79].Result and orders[83] The fiduciary duty cause of action is upheld, save for the contention of aconstructive trust:(a) Mr Seth must pay Mr Taimoori $239,320.(b) Interest under the Interest on Money Claims Act 2016.[84] The Fair Trading Act cause of action fails; and is dismissed.Costs[85] At the end of the trial, Mr Rooney said if Mr Taimoori were successful, hesought 2B scale costs, with a 25 percent increase from 5 February 2021.34 As will berecalled, that date is when Mr Seth provided discovery, albeit with redactions;see [49]–[50]. I did not understand Mr Duckworth to protest increased costs ifMr Seth were unsuccessful, given:(a) Mr Seth should have discovered his documents by 30 October 2020, adate based on a consent memorandum.(b) The redactions were unjustifiable.(c) Late, redacted discovery compromised Mr Taimoori's ability toinvestigate the invoices, hence address an important aspect of Mr Seth'scase.[86] I award costs as sought. I record Mr Seth's behaviour might have justified ahigher increase, even indemnity costs.Police referral[87] In light of the testimony about the 2015 invoice and the 2016 invoice, andMr Seth's introduction of the latter as evidence of an expense in relation to theproperty, I direct the Registrar send this judgment to the Commissioner of Police.Postscript[88] On 15 March 2021, Mr Rooney filed and served a decision ofAssociate Judge Bell in relation Ms Katu and Mr Seth.35 The Judge concluded34 High Court Rules 2016, r 14.6(3).35 Katu v Seth [2021] NZHC 416.Ms Katu did not have a caveatable interest in the property. I read the decision aftercompleting this judgment (but obviously, before releasing it)...Downs J