MAHON v THE STATION AT WAITIRI LIMITED [2017] NZCA 387

MAHON v THE STATION AT WAITIRI LIMITED [2017] NZCA 387 [5 September 2017]IN THE COURT OF APPEAL OF NEW ZEALANDCA209/2017[2017] NZCA 387BETWEEN NEVILLE CHRISTOPHER MAHONAppellantAND THE STATION AT WAITIRI LIMITEDRespondentHearing: 26 July 2017Court: Winkelmann, Brewer and Peters JJCounsel: A M Glenie for AppellantD J Chisholm QC and MJW Lenihan for RespondentJudgment: 5 September 2017 at 2.30 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Winkelmann J)[1] The appellant, Mr Mahon, seeks to sustain a caveat over properties in Park Street, Queenstown. The properties are currently registered in the name of the respondent, The Station at Waitiri Ltd (Waitiri). Waitiri is a company associated with the interests of Mr Timothy Edney.[2] Mr Mahon alleges that he and Mr Edney agreed that the land would be transferred to a company associated with Mr Edney, and that this vehicle would beused for the special purpose of holding the land. The special-purpose vehicle would hold the land until Mr Mahon was in a position to pay the agreed price for it, at which point the land would be transferred to him by means of the transfer of all ofthe shares in the company. Mr Mahon's case is that, as a result of this agreement, heacquired a caveatable equitable interest in the land.[3] Mr Edney disputes there was any such agreement and has refused to transferthe land to Mr Mahon. He began procedures to remove the caveat. Mr Mahon'sresponse was to apply to the High Court for an order sustaining the caveat, an application declined by Associate Judge Bell.1 Mr Mahon now appeals against that decision.Background[4] Mr Mahon is a property developer. He has done business with Mr Edney, a financier and land investor, over the course of many years.[5] In 2015 Mr Mahon identified the Park Street properties as a good prospect for development. On 25 June 2015 Mr Mahon, through his company Coronation Road Holdings Ltd (Coronation), agreed to buy the land for $5 million. But Mr Mahon soon recognised that he would not have sufficient funds available to complete due diligence on the land (in order to make the purchase agreement unconditional) by the required date of 19 October 2015, or to have the purchase settle on 30 November 2015. He approached Mr Edney to see if he would be interested in taking the entire transaction over from Coronation. Mr Edney was interested and discussions proceeded from there.[6] Mr Mahon negotiated extensions to the due diligence and settlement dates while discussions continued between him and Mr Edney. It is the content of these discussions which is at the heart of the dispute between them. On Mr Mahon'sevidence an oral agreement was reached during a discussion in December 2015 as follows:1 Mahon v The Station at Waitiri Ltd [2017] NZHC 631 [HC judgment].(a) Mr Mahon would nominate a special-purpose vehicle associated with Mr Edney to settle the transaction on 27 January 2016. (While the identity of the special-purpose vehicle was not made clear at the initial meeting, it subsequently transpired that it was to be Waiwhakatu Ltd.) Mr Edney would pay the purchase price to the vendor and would take the legal title to the properties in the name of the special-purpose vehicle.(b) Mr Mahon's partner, Ms Saren Loo, would be a director of thespecial-purpose vehicle.(c) The special-purpose vehicle would hold the properties on Mr Mahon'sbehalf for a period. Mr Mahon refers to this as a warehousing arrangement. When Mr Mahon considered that he was in a position to do so, he would exercise an option to purchase the special-purpose vehicle by giving Mr Edney a date on which shares in the special-purpose vehicle would be transferred.(d) In return for warehousing the land Mr Edney would be paid $5 million plus either:(i) a sum representing a 15-per-cent internal rate of return on Mr Edney's investment during the warehousing period (less the rents generated by the properties during the warehousing period, as the land had existing buildings which could be rented out), and in any event no less than $200,000; or(ii) an apartment in the complex to be developed on the site which Mr Edney would purchase at cost.[7] Mr Edney's evidence is that whilst there may have been discussions about thesale of the land at the December 2015 meeting, no binding agreement was reached requiring Mr Edney to convey the land to Mr Mahon. Mr Edney claims it isimprobable he would make such a commitment when Mr Mahon owed him substantial sums of money.2 Mr Edney says:I was not going to waste my time and my money on reaching agreement and documentation until Mr Mahon could prove to me that he could procure thefunding. This was a prerequisite for me to move from "discussions" to a potential "agreement". I also said that I wanted the [debt] addressed (Mr Edney's emphasis.)[8] Mr Edney says all that was agreed was the purchase of the properties by a company nominated by Mr Edney.[9] On 17 December 2015 Mr Edney paid the deposit of $300,000. On 27 January 2016 Waitiri completed the purchase of the properties and became the registered proprietor. For this to occur, two deeds of assignment of the sale and purchase agreement were prepared and executed. The first assignment was between Coronation and the special-purpose vehicle that Mr Edney had established to own the land, Waiwhakatu — of which Mr Mahon's partner, Ms Loo, was a director.The second deed of assignment was between Waiwhakatu and Waitiri.[10] Mr Mahon was not a party to the second deed but he was aware of it. Shortly before 27 January he was told Mr Edney's plan was that Waitiri, not Waiwhakatu, would hold the properties, and that Ms Loo could not be a director of Waitiri. Mr Mahon queried this change in plan with Mr Edney's lawyer Mr Tim Johnston but was told that, because of Mr Edney's banking arrangements, the properties were to be acquired by an entity wholly owned and controlled by Mr Edney.[11] In an affidavit filed in these proceedings, Mr Edney offers a different explanation for the late change to Waitiri. He says it was his decision that Waitiri would hold the properties and that the decision was not driven by banking requirements. He made the change because: despite what was said at our December 2015 meeting, Mr Mahon had notprovided any evidence to me of him being able to finance a purchase of the Properties himself. Nor had he provided any evidence that he was going tobe able to address the [debts] 2 Mr Mahon disputes that he owes significant sums of money to Mr Edney.[12] Mr Edney says one of the purposes of having the properties transferred into a special-purpose vehicle was so that it could be transferred cleanly to a third party at short notice with limited tax implications. If that was not going to be an available outcome in the short term, then he would use Waitiri to hold the land for a longer time. Waitiri was not suitable to use as a special-purpose short-term vehicle as it owns assets other than the properties.[13] After Waitiri took title, Mr Mahon continued to spend both time and money on the development. He claims he would not have done this unless he had thebenefit of Mr Edney's agreement that the properties would be transferred back to him in due course in accordance with the agreed terms.[14] The next significant event for the purposes of this proceeding occurred on 28 May 2016. The two men, Mr Edney and Mr Mahon, met at a café to discuss the arrangements over the properties. On Mr Mahon's evidence they reached anagreement as follows:(a) Mr Edney would transfer the shares in the company holding the properties to Mr Mahon (presumably Waitiri) and settlement would take place in seven weeks.(b) Mr Edney would retain all of the rents received from the properties on the land up to that point.(c) Mr Mahon or his interests would pay Mr Edney:(i) the original purchase price of $5 million plus an uplift to coverMr Edney's transaction costs of $100,000; and(ii) $200,000 in exchange for a vintage car.[15] Mr Edney agrees a meeting on that date took place and that they discussed a sale of the land to Mr Mahon including setting up a company to hold the land and transferring the shares in that company to Mr Mahon. But he says their discussions were mainly about debts owed by Mr Mahon's interests to Mr Edney. He would nothave agreed to sell the land to Mr Mahon without proof that he had funding to pay both the purchase price and clear those debts.[16] Following that meeting Mr Edney emailed Mr Mahon setting out terms for the sale of the land. By return email Mr Mahon disputed that the terms set out by Mr Edney in that email were the terms they had agreed on 28 May.[17] Mr Mahon says that Mr Edney has reneged on their original December 2015 agreement for the re-transfer of the land to him. As recorded by Associate Judge Bell, the caveat that Mr Mahon ultimately lodged described the estate or interest claimed as follows:3As beneficiary under constructive trust arising on or prior to 16 December 2015, in connection with an agreement or representation giving rise to an estoppel to the effect that the registered proprietor, The Station at Waitiri Limited, would transfer the property to the caveator upon notice.High Court proceeding[18] In the High Court, Mr Mahon argued that he had a caveatable interest in the property on three bases:(a) Under an oral option agreement made in December 2015, enforceable by reason of part performance in early 2016.(b) Under an institutional constructive trust, reflecting a common intention formed in December 2015 between Mr Mahon and Mr Edney that the land would be re-transferred to Mr Mahon.(c) Under an institutional constructive trust arising out of an equitable estoppel, which arose from representations by Mr Edney in December 2015 upon which Mr Mahon reasonably relied to his detriment.3 HC judgment, above n 1, at [1].[19] Although those grounds do not conform entirely to the way in which the interest is expressed in the caveat, Waitiri did not dispute that the estate or interest claimed was not sufficiently clear from the information provided in the caveat.4[20] Associate Judge Bell rejected each of the three grounds and Mr Mahon now appeals that finding.General principles on caveat applications[21] To support a caveat, the interest claimed must come within s 137 of the Land Transfer Act 1952 which provides as follows:137 Caveat against dealings with land under Act(1) Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person—(a) claims to be entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or(b) is transferring the land or estate or interest to any other person to be held in trust.(2) A caveat under this section must contain the following information:(a) the name of the caveator; and(b) the nature of the land or estate or interest claimed by the caveator, which must be stated with sufficient certainty; and(c) how the land or estate or interest claimed is derived from the registered proprietor; and(d) whether or not it is intended to forbid the making of all entries that would be prevented by section 141 or a specified subset of them; and(e) the land subject to the claim, which must be stated with sufficient certainty; and(f) an address for service for the caveator.(3) Caveats under this section must be executed by the caveator or thecaveator's attorney or agent.4 Buddle v Russell [1984] 1 NZLR 537 (HC) at 539.(4) Caveats under this section must be entered on the register as of the day and hour of their receipt by the Registrar.[22] Mr Mahon must therefore show that he has a present interest in land. The grantee of an enforceable option to purchase the land acquires an immediate equitable interest in the land capable of supporting a caveat. So too does the beneficiary of an institutional constructive trust, as they are implied trusts for the purposes of s 137.[23] It is common ground between the parties that the relevant principles governing the determination of applications to sustain caveats are as set out inPhilpott v Noble Investments Ltd:5[26] The applicable legal principles which governed the application to sustain the caveats, and which now govern this appeal, are as follows:(a) The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;(b) It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;(c) The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and(d) When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Courtmust be satisfied that the caveator's legitimate interestwould not be prejudiced by removal.First ground of appeal: Is there an enforceable option agreement giving rise to a caveatable interest?[24] The issues Mr Mahon faced with this claim in the High Court are as follows. First, Mr Edney disputed that he had ever granted an option to Mr Mahon. Secondly, Mr Edney contended that the alleged agreement did not give rise to a caveatable5 Philpott v Noble Investments Ltd [2015] NZCA 342 (footnotes omitted).interest because the option, if exercised, only entitled Mr Mahon to the transfer of shares in a company — not to transfer of the land itself. Finally, Mr Mahon conceded that the agreement he alleged had been reached had not been reduced to writing. Oral agreements for the disposition of land are not, as a general rule, enforceable.6[25] To step around that last obstacle, Mr Mahon needs to show that he has partly performed the option agreement; the law allows unwritten but partly performed contracts affecting land to be enforced in certain circumstances.[26] We consider each of these issues in turn.First issue: Was it reasonably arguable that Mr Edney had agreed to grant an option to Mr Mahon?The High Court judgment[27] The Associate Judge reviewed the conflicting accounts of what had been agreed between Mr Mahon and Mr Edney in 2015, and concluded he could notdismiss Mr Mahon's version as implausible.7 He said that which account was to be preferred was an issue for trial and not suitable for resolution in a caveat application.8 He nevertheless accepted Waitiri's submission that the agreementMr Mahon claimed had been reached lacked commercial reality. Experienced businessmen like Mr Mahon and Mr Edney would have recorded any agreement between them in writing and it was, he thought, improbable that Mr Edney would have agreed to an open-ended option over the property.9 On Mr Mahon's account,there was no end date to the option. Associate Judge Bell concluded on this point:[32] The lack of commercial reality to the arrangements alleged by Mr Mahon makes it implausible that the parties would enter into an oral agreement in the terms he describes, or that any realistic effect can be given to them. Accordingly, the case is to be approached not on the basis that there was an oral agreement but instead that any discussions amounted to no more than suggesting that some time in the future the parties might make an arrangement for buy-back.6 Property Law Act 2007, s 24.7 HC judgment, above n 1, at [27].8 At [29].9 At [30].Analysis[28] Having reviewed the affidavit evidence, we agree with the Associate Judge that the question of whether such an agreement was reached raises issues of fact unsuitable for determination in the context of an application to sustain a caveat. Although Mr Edney denies such an agreement was reached, events which heconcedes occurred tend to corroborate Mr Mahon's account — the creation of Waiwhakatu as the special-purpose vehicle and Mr Edney's agreement thatMr Mahon's partner, Ms Loo, would be a director of Waiwhakatu. We also have regard to Mr Mahon's continued efforts to develop the property and to manage the rental side for Mr Edney.[29] While the evidence is by no means clear-cut (some early emails from Mr Mahon do lend weight to Mr Edney's account), it seems to us that Mr Mahon'sclaim that such an agreement existed is more consistent with the general course of events and dealings between the parties than Mr Edney's "no agreement" version ofevents. Nevertheless, these are issues to be determined in the context of a trial with the benefit of cross-examination.[30] We do not, however, agree with the Associate Judge that Mr Mahon's claimto a caveatable interest could be dismissed because the agreement had a lack ofcommercial reality. First, we see tension between the Associate Judge's finding tothat effect and his earlier finding that he could not dismiss Mr Mahon's evidence ofsuch an agreement as implausible. Secondly, these were men who were used to doing business together, as is plain from both their accounts (notwithstanding a difference between them as to how satisfactory those dealings were). In that context, the absence of documentation is perhaps not surprising. Nor the absence of an expiry date for the option. We consider that it was an issue for trial whether the absence of an expiry date was fatal to Mr Mahon's claim.Second issue: If the agreement existed, would it create a caveatable interest?High Court judgment[31] The Associate Judge held that even if the agreement was as Mr Mahon alleged, it was an agreement for the sale and purchase of shares in a land-holding company. Mr Mahon did not claim the agreement provided for the freehold title to the properties to be transferred to him directly. Since a shareholder does not have a proprietary interest in the assets of the company, Mr Mahon did not have a caveatable interest by reason of that agreement.10[32] On appeal, Mr Glenie for Mr Mahon does not dispute the proposition that a shareholder ordinarily has no caveatable interest in the assets of the relevant company. But, he says, this principle does not extend to the situation where the shareholder holds all of the shares in the company. He relies on Focus Securities Ltd v Campbell-Frear, a decision of Master Kennedy-Grant, where an application to sustain a caveat was granted where the caveator owned all of the shares in a land-holding company.11 Mr Glenie argues that the approach he articulates makes good commercial sense as transactions for land are often carried out through special-purpose companies.Analysis[33] The principle that Mr Glenie seeks to attack is one of long standing and good pedigree. In Macaura v Northern Assurance Co Ltd, the House of Lords addressed the question of whether a shareholder has any insurable interest in any particular asset of the company.12 Lord Buckmaster said as follows:13It is true that the timber was owned by the company, but practically the whole interest in the company was owned by the appellant. He would receive the benefit of any profit and on him would fall the burden of any loss. But the principles on which the decision of this case rests must be independent of the extent of the interest held. The appellant could onlyinsure either as a creditor or as a shareholder 10 HC judgment, above n 1, at [40].11 Focus Securities Ltd v Campbell-Frear HC Auckland CP510/96, 3 February 1997.12 Macaura v Northern Assurance Co Ltd [1925] AC 619 (HL).13 At 625–626.Turning now to his position as shareholder, this must be independent of the extent of his share interest. If he were entitled to insure holding all the shares in the company, each shareholder would be equally entitled if the shares were all in separate hands. Now, no shareholder has any right to any item of property owned by the company, for he has no legal or equitable estate therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplusassets when the company is wound up. In the present case, though it might be regarded as a moral certainty that the appellant would suffer loss if the timber which constituted the sole asset of the company were destroyed by fire, this moral certainty becomes dissipated and lost if the asset be regarded as only one in an innumerable number ofitems in a company's assets and the shareholding interest be spread over alarge number of individual shareholders.[34] Lord Sumner added:14He owned almost all the shares in the company, and the company owed him a good deal of money, but, neither as creditor nor as shareholder, could heinsure the company's assets. The debt was not exposed to fire nor were the shares, and the fact that he was virtually the company's only creditor, whilethe timber was its only asset, seems to me to make no difference. He stoodin no "legal or equitable relation to" the timber at all. He had no "concern in" the subject insured. His relation was to the company, not to its goods, and after the fire he was directly prejudiced by the paucity of the company'sassets, not by the fire.[35] That principle has since been applied in a situation analogous to the present. In Ten Pin Properties Ltd v Bowlarama (NZ) Ltd, Ten Pin applied to remove a caveat lodged by Bowlarama, one of its shareholders.15 Tipping J said as follows:16It is suggested that the registered proprietor bought the land in circumstances in which Bowlarama was to have an interest as shareholder in [Ten Pin] and then it is said that by virtue of the intended shareholding of Bowlarama, Bowlarama as shareholder was entitled or is entitled to a share in the land.This seems to me to run quite contrary to the well established rule that a shareholder has no proprietary interest whether legal or equitable in the assets of the company in respect of which he holds his shares. It seems tome that the caveat would have to go, simply on the basis of the way in which it is claimed to exist because it runs quite contrary to that rule and no submission has been made to me to demonstrate why the rule should not apply in these particular circumstances.[36] The case on which Mr Glenie seeks to rely, Focus Securities, is distinguishable. In that case the party seeking to sustain a caveat had entered into an14 At 630.15 Ten Pin Properties Ltd v Bowlarama (NZ) Ltd HC Christchurch M655/89, 18 December 1989.16 At 2–3.agreement to purchase the shares in the land-owning company. The agreement for sale and purchase of the shares contained a provision giving the applicant the right to caveat the land. Master Kennedy-Grant found the applicant had an arguable case for a caveatable interest.17 That was for two reasons. First, the shareholders purported to confer a right to caveat on the applicant. Second, they were the sole shareholders and were therefore in a position to bind the company. On our reading of the case, the presence of the contractual clause conferring a right to caveat was crucial to theMaster's assessment of arguability. No such clause exists on the present facts so thecase does not assist Mr Mahon.18[37] We find unattractive Mr Glenie's argument that allowing a caveatable interestin the circumstances of this case would accord with the reality that commercial parties dealing with land often utilise company structures to hold the land. If a commercial party chooses to hold an entity through a company, then that is a choice that they have made and by which they must be bound. A party cannot utilise an incorporated structure for the benefits that it brings them but then disavow the necessary legal consequences of the use of that structure when it suits. To hold otherwise would undermine the basic concepts of incorporation and limited liability. It would run counter to the clear doctrine of separate legal personality as enshrined in s 15 of the Companies Act 1993.Third issue: Is there a sufficient act of part performance so that the oral agreement is enforceable?[38] Given the nature of the agreement Mr Mahon alleges, s 24 of the Property Law Act does not apply. On his evidence, the agreement was an option to purchase shares in a special-purpose vehicle. It was not a contract relating to the disposition of land. We therefore give this issue no further consideration.17 Focus Securities Ltd v Campbell-Frear, above n 11, at 6.18 We note that the reasoning regarding a contractual clause being able to confer a right to caveathas been criticised by academic commentators: DW McMorland "No equitable interests in the land – ability to confer equitable interests by contract" (1997) 7 BCB 270. We therefore expressno opinion on the validity of that reasoning.Second ground of appeal: common-intention constructive trust[39] Mr Mahon argues that even if he cannot establish an enforceable contract of the nature alleged, he can claim a caveatable interest based on what he calls a"common intention" institutional constructive trust. He relies on the case ofAvondale Printers & Stationers Ltd v Haggie.19 He submits that Mr Edney obtained the land on the basis of an understanding with Mr Mahon, which makes it an equitable fraud for him to later refuse to convey the land to Mr Mahon. Waitiri therefore holds the land as constructive trustee of the relevant interest.High Court judgment[40] The Associate Judge found that there was no reasonably arguable case for Mr Mahon that Waitiri held the land subject to a common-intention constructive trust.20 His reasoning was that, even if Mr Mahon could bring himself within the principles outlined in Avondale Printers, that case was concerned with procedural not substantive law and did not stand as authority for the proposition that the existence of equitable fraud could create an interest in land where none had previously existed.21 If Avondale Printers involved a constructive trust, it was a remedial — not an institutional — constructive trust and could not support a caveat.22[41] The Associate Judge said that no proprietary interest was recognised inAvondale Printers and the relief ordered was in recognition of personal and not proprietary rights.23 He referred to his own earlier decision in Clear White Investments Ltd v Otis Trustee Ltd24 to that effect and to an English case he regarded as supporting his analysis — Cobbe v Yeoman's Row Management Ltd.25[42] Applying that approach to the case before him he said that Mr Mahon's casewas based on a promissory common intention, but not a concluded agreement, as to19 Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 (SC).20 HC judgment, above n 1, at [50].21 At [47]–[48].22 At [48].23 At [48].24 Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2823 at [40]–[55].25 Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752 at [40]–[44].a transaction to be performed.26 To recognise a proprietary interest in those circumstances would be to give effect to an agreement between the parties where none existed.27 Instead, even if he were able to bring himself within the principles inAvondale Printers, Mr Mahon's remedy was a restoration of the status quo (which hesaid is a personal remedy). He contrasted such a case to what he described as "thetraditional cases allowing parol proof [of] an existing interest in land, such asBannister v Bannister".28 The principles in those cases, if applicable, would mean a constructive trust had arisen.[43] On appeal, Mr Chisholm QC for Waitiri does not seek to support theAssociate Judge's statements that Avondale Printers was not a case involving the imposition of an institutional constructive trust and that, in cases like Avondale Printers, "[t]he court does not declare an interest in property ... because there is none".29 Rather, he says the issue for Mr Mahon is that he cannot bring himself within the principle established by Avondale Printers. It is not enough for Mr Mahon to show equitable fraud arising from Mr Edney's disavowal of a commonintention because at no point did Mr Mahon surrender or convey an interest in land in reliance upon a common intention; any interest in the land was that of Coronation. Coronation was the purchaser under the original sale and purchase agreement for the properties. For a claim to a constructive trust to have weight, Coronation would have to bring the claim.Analysis[44] We observe immediately that Mr Mahon's claim based upon a common-intention constructive trust does not appear arguable because, again, the agreement he alleges was for the transfer of the shares in Waiwhakatu. Whether or not Mr Mahon could prove that agreement, the pleaded basis for a caveatable interest suffers the flaw that even had the common intention been given effect by Mr Edney, Mr Mahon would not have acquired an interest in the land held by Waiwhakatu but only the shares.26 At [45].27 At [48].28 At [50] citing Bannister v Bannister [1948] 2 All ER 133 (CA).29 At [48].[45] Nevertheless, we wish to address the Associate Judge's discussion ofAvondale Printers as we consider that he has erred in his characterisation of thefindings in that case. The aspect of the Judge's discussion of Avondale Printers upon which we comment is his analysis that Mahon J in that case did not find an interest in the property in question, but rather ordered a personal remedy.[46] It is true that Avondale Printers constituted a significant development in the law of constructive trusts. Prior to that decision, a constructive trust would be declared over land (among other scenarios) where reliance on the Statute of Frauds (the earliest predecessor of s 24 of the Property Law Act) or a successive provision, to defeat an otherwise effective agreement or declaration of trust, would be fraudulent. As Mahon J said in Avondale Printers:30A familiar example of circumstances giving rise to a constructive trust in a case of disposition of land is the case where the land is conveyed to the person as trustee but where the trust agreement is in oral form, thus not complying with the modern counterpart of s 4 of the Statute of Frauds. Where the transferee denies the trust and relied upon absolute form of transfer, then it is competent for the transferor to prove the trust by parol evidence, notwithstanding the Statute of Frauds, and thereafter the transferee will be held a constructive trustee of the property for the benefit of the transferor.[47] We agree with the Associate Judge that Bannister v Bannister falls into this"familiar" category of case described by Mahon J. But as we discuss, theAssociate Judge was wrong to view Avondale Printers as a completely different category of case to Bannister, involving the application of different principles. The better view is that Mahon J extended the principle in Bannister from a constructive trust arising because of fraudulent reliance on the Statute of Frauds, to a constructive trust arising because of a fraudulent denial of a common intention or promise.Another way of putting this, and contrary to the Associate Judge's finding, is thatMahon J extended the principles discussed in Bannister to the case before him. The general consensus is that Mahon J extended the earlier law by finding that as a result30 Avondale Printers & Stationers Ltd v Haggie, above n 19, at 160. See also M Cope Constructive Trusts (Law Book Co, Sydney, 1992) at 584.of the defendant's fraudulent denial of an oral promise (even where it was not aperfected agreement or declaration of trust), a constructive trust would arise.31[48] The facts of Avondale Printers can be shortly stated. The plaintiff and the defendants were each tenants of land the owner wished to sell. The plaintiff came up with a plan to develop the site but it was the defendants who made an agreement with the owner to purchase the land. Following discussions between the plaintiff and defendants it was agreed that the plaintiff would be nominated as purchaser under the agreement; a deed of nomination was signed and the plaintiff paid the defendants an amount equivalent to the deposit. The plaintiff, however, ran into difficulty with securing finance for the development. It was therefore agreed that the defendants would complete the purchase of the land, but that the plaintiff would have a pre-emptive right to purchase the land at the end of two years with the formula to fix the purchase price to be worked out. The defendants completed the purchase and repaid the deposit to the plaintiff. Later the defendants disputed that any right of pre-emption had been agreed.[49] Mahon J found that the deed of nomination had amounted to a validassignment of the defendants' equitable interest in the land to the plaintiff, so that theplaintiff had become the owner in equity of the land.32 But he also held that the oral re-assignment of that interest by the plaintiff to the defendants was also effective. Mahon J then reviewed a number of authorities in which constructive trusts have been found, identifying as a connecting link between them a finding of fraud on the part of the person consequentially designated by the Court as a constructive trustee.33[50] The Judge also referred to a line of authorities, culminating (at that time) with the decision of the English Court of Appeal in Bannister. Mahon J said the rationaleof "all these decisions undoubtedly is that the transferor would not have parted with31 Cope, above n 30, at 600–601; JD Heydon and MJ Leeming Jacob's Law of Trusts in Australia(8th ed, LexisNexis Butterworths, Australia, 2016) at [13-41]; JD Heydon, MJ Leeming and PG Turner Meagher, Gummow and Lehane's Equity Doctrines & Remedies (5th ed, LexisNexis Butterworths, Australia, 2015) at [12-055]; and Jessica Palmer "Constructive Trusts" in AndrewS Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) 335 at [13.2.7].32 Avondale Printers & Stationers Ltd v Haggie, above n 19, at 142.33 At 159–160.his interest in the absence of the oral undertaking given by the transferee".34Mahon J considered these authorities applicable to the case before him. He said:35Where property is conveyed or proprietary rights released in consideration of an oral promise by the transferee that the transferor will retain or later acquire a beneficial interest in the property in question, and where retraction of the promise amounts to a fraud upon the transferor, then the transferee will be held a constructive trustee for the benefit of the transferor of either the whole property or of the relevant interest therein.[51] In Avondale Printers the plaintiff had re-assigned its equitable ownership of the land at issue on the basis of a common understanding that the plaintiffs had an option to purchase in the future. The genesis of the proceeding was that the defendants were attempting to renege on that understanding. Mahon J saw as key that the plaintiff would not have parted with its property but for the oral undertaking of the defendants. He said that it was a legitimate application of the principle inBannister to find that, where a proprietary interest had been abandoned in reliance upon the common understanding and where it was fraudulent to deny that understanding, a constructive trust had been created.36 As to relief, he ordered that the defendants re-transfer the property to the plaintiff but on terms to ensure theparties were restored to the "status quo ante".[52] In the present case, the Associate Judge saw the relief granted in Avondale Printers as supporting his analysis that the case was concerned with the recognition of personal rather than proprietary rights. He said that is because Mahon J did not make a declaration of the plaintiff's interest in the land, but rather ordered that thedefendants transfer the property to the plaintiff in return for being reimbursed with the purchase price and other incidentals. The Associate Judge said:37A promissory common intention is not a "sufficiently defined beneficial interest in property". In the absence of any concluded agreement, there is nobeneficial property interest to be recognised. The court does not declare an interest in property in cases such as the Avondale Printers because there is none. Instead, in the absence of evidence of a defined interest in property, the court grants relief based on claims arising out of the failure of the common intention. The relief is restitutionary. That is why Mahon J ordered a return to the status quo ante, but did not order performance of the34 At 163.35 At 163.36 At 164.37 HC judgment, above n 1, at [48] (footnote omitted).imperfectly formed contract. If the court were to order an interest in land by way of relief, it would be creating that interest, not declaring it. That would not be an institutional constructive trust but a remedial trust. That would not support a caveat because there is no pre-existing interest.[53] We do not agree. The relief granted by Mahon J was his assessment of the best way to give effect to the constructive trust in the circumstances of that case. It does not, we consider, provide support for the Associate Judge's analysis that theinterest recognised by Mahon J was personal rather than proprietary.[54] The Associate Judge also relied upon the case of Cobbe v Yeoman's RowManagement Ltd as supporting his analysis that what was at issue inAvondale Printers was personal, not proprietary rights.38 In Cobbe there were two prospective joint venturers, one the landowner, and the other a party wishing to develop property — we use "landowner" and "property developer" as convenientlabels for the parties.[55] The property developer spent money and effort in obtaining planning approval for the land, relying on an unenforceable arrangement with the owner that the property developer could buy the land and then continue the development with a wash-up distribution of profits at the end.[56] The property developer's constructive trust claim failed. Lord Scott ofFoscote said that the unconscionable behaviour of the land owner was not, in the circumstances of the case, sufficient to justify the property developer's claim to haveacquired, or to be awarded by the Court, a beneficial interest in the property.39The circumstance to which particular weight was attached was that the land had been owned by the landowner well before any joint venture negotiations began.40 But that case is clearly distinguishable from Avondale Printers, as in Cobbe the property developer had neither conveyed nor released a proprietary interest in the land in reliance upon the common understanding. There was no disposition of property induced by fraud. Cobbe does not then support the Associate Judge's recasting ofthe decision in Avondale Printers.38 Cobbe v Yeoman's Row Management Ltd, above n 25.39 At [37].40 At [33].[57] None of this analysis changes our view that Mr Mahon does not have a reasonably arguable case for a caveat on the basis of such a claim. As we have identified, his claim is that the agreement was for a transfer back of the shares and not the land.[58] Mr Chisholm argued that Mr Mahon's claim has a further difficulty. On thebasis of his evidence it was Coronation, and not Mr Mahon, who transferred its equitable interest in the land through execution of the deed of assignment. The principles expressed by Mahon J do appear broad enough to capture a structure where the claimant had no interest in the land prior to its transfer to the defendant, but where there was nevertheless some understanding it would in future be transferred to the claimant. Whether the principles should be so extended is a complex issue better left for a case in which it arises. We therefore express noopinion on Waitiri's further submission that for this pleading to succeed, Coronationwould need to bring the claim.Third ground of appeal: equitable estoppel[59] Mr Mahon further relies on equitable estoppel principles as the basis for the imposition of a constructive trust. His case is that Mr Edney represented to him in December 2015 that Mr Edney would take title to the land on the basis that Mr Mahon would then have an option to buy the land back. Mr Mahon relied on those representations to his detriment by assigning the agreement for sale and purchase to Waiwhakatu. Mr Mahon claims that had he known that Mr Edney would not honour the arrangement he would have sought and obtained alternative funding, and not caused the land to be transferred to Mr Edney. Mr Edney did not keep his word when he substituted Waitiri for Waiwhakatu and did not stick with the arrangements reached in the meeting on 28 May 2016.Analysis[60] It is not necessary for us to consider this ground at any length. This isbecause it is again fatal to Mr Mahon's claim to a caveatable interest that therepresentation Mr Mahon relies upon was a representation that shares in a company, and not land, would be transferred to him. Even were he to establish that such arepresentation had been made, and that he had relied upon it, it could not entitle him to the declaration of any interest in the land since, as we have already said, a shareholder does not have a beneficial interest in land owned by the company in which it holds shares, even if that holding is to the extent of 100 per cent.Conclusion[61] None of the three grounds upon which Mr Mahon seeks to sustain his caveat is reasonably arguable.41 The fatal flaw in each is that the agreement he describes is an agreement to purchase shares in a company. As shareholder, Mr Mahon can have no proprietary interest in the assets of that company. Mr Glenie was unable to advance any compelling reason as to why this conclusion, the result of the application of settled legal principle, should be displaced in this case. For these reasons the appeal is dismissed.Result[62] The appeal is dismissed. The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.Solicitors:Anderson Creagh Lai Ltd, Auckland for AppellantBrown Partners, Auckland for Respondent41 We stress that these findings relate solely to the question of a caveatable interest. We express noview as to the merits of Mr Mahon's claims against Mr Edney personally.