REID v CASTELTON-REID [2020] NZHC 2313

REID v CASTELTON-REID [2020] NZHC 2313 [7 September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-404-3009[2020] NZHC 2313BETWEEN ROSS RONAYNE REIDPlaintiffAND BARRY ROSS LAURENCE CASTELTON-REIDDefendantHearing: 23 July 2020Appearances: S Abdale for the PlaintiffM J Matthews for the DefendantJudgment: 7 September 2020JUDGMENT OF GORDON JThis judgment was delivered by meon 7 September 2020 at 12 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors: Clive Gardner Law, TaurangaRennie Cox, AucklandCounsel: S Abdale, AucklandTABLE OF CONTENTSIntroduction [1]Summary of facts [5]Further inquiry [12]Court of Appeal findings [14]Scope of resulting trust [19]Payment of $800,000 to Dee Ann in September 2009 [19]Payment for Barry's apartment (first Eclipse apartment) [80]Payment for Ron and Mrs Reid's apartment (second Eclipse apartment) [94]Allocation of the mixed fund and income earned between the parties [97]First affirmative defence: abuse of process [98]Validity of document and availability of revocation. [100]Second affirmative defence: equitable estoppel [134]Is equitable estoppel available to Barry? [134]Representation evidence. [150]Reliance evidence [161]Detriment evidence [162]Remedy [163]Third affirmative defence: change of position [184]Interest [211]Result [219]Orders [220]Costs [221]Introduction[1] Mrs Esme Dede Reid died on 22 November 2008. Her husband, the plaintiff,Ross Ronayne Reid (Ron), and their son, the defendant, Barry Ross LaurenceCastleton-Reid (Barry), have been in dispute for some years over matters relating toMrs Reid's estate. A large sum of money paid by Ron to Barry is in issue. Efforts atresolution in the earlier part of this decade failed, and have led to an extended periodof litigation. The situation has been substantially exacerbated by Ron's earlierunwillingness to obtain and act on legal advice. The issues which have arisen in thislitigation are a direct consequence of mistakes Ron has made about his powers, rightsand liabilities in several key transactions in the years since Mrs Reid's death.[2] This is the second time this matter has been before me. On the first occasion,I found against Ron on his three causes of action: breach of fiduciary duty; breach ofconstructive trust; and, restitution. This was on the basis of my finding that Ron hadgifted the money in question to Barry. Having regard to my decision I did not considerBarry's affirmative defences.1[3] Ron appealed my judgment to the Court of Appeal. The Court of Appeal foundBarry held the money on a resulting trust for Ron. The circumstances of thetransaction raised a presumption of a resulting trust in Ron's favour, which was notdisplaced by evidence of an alternative intention such as a gift or advancement. TheCourt of Appeal directed this Court to consider the three affirmative defencesadvanced by Barry and the allocation of the money between the parties giventransactions which occurred while Barry held the money on the resulting trust forRon.2[4] This judgment is therefore concerned with whether Barry can resist Ron'senforcement of Barry's obligations under the resulting trust by way of threeaffirmative defences: abuse of process, equitable estoppel and change of position. Asalso directed by the Court of Appeal, it is necessary to consider the status of a paymentof $800,000 made to Dee Ann Castleton-Reid (Dee Ann) (Ron's daughter and Barry's1 Reid v Castleton-Reid [2018] NZHC 782.2 Reid v Castleton-Reid [2019] NZCA 372.sister), and of other amounts paid by Barry to settle purchases of two apartments, inthe course of determining how the money in dispute is to be distributed between Ronand Barry.Summary of facts[5] The relevant terms of Mrs Reid's will appointed Ron as sole executor andbequeathed Dee Ann certain personal property and a life interest in the family homeat 27 Verbena Road, Birkdale (the castle). Barry was the residual beneficiary andreceived bequests of other property. Ron received no benefit under the terms of thewill. Barry was the major beneficiary.[6] There was also a sum of money in a bank account jointly held by Ron andMrs Reid of $1,750,000. The background to this amount is traversed in my earlierjudgment and need not be described again here for present purposes. FollowingMrs Reid's death, Ron paid, on 1 April 2009, $1,700,000 (the disputed amount) fromthe joint account to Barry. A share trading account was opened at a sharebroker inBarry's name. Ron was given authority to manage that share trading account. It is thedisputed amount that the Court of Appeal determined was held by Barry on a resultingtrust for Ron.[7] Over a period of about 12 months, with Barry's consent, Ron traded verysuccessfully in shares by investing the disputed amount (though without regard forBarry's tax obligations, a point of some significance, as I will address below). Duringthis time, other shares belonging to Mrs Reid solely were sold and the sum of $477,267was realised. Under the terms of Mrs Reid's will, these funds belonged to Barry (apoint no longer in dispute). This amount was added to the share trading account on8 July 2009 (Barry's funds). The share trading account was thus a mixed fund,comprising the disputed amount and Barry's funds (mixed fund). Barry's funds werepart of the mixed fund during the time Ron was buying and selling shares in the sharetrading account.[8] Also during this period, three substantial amounts were withdrawn from theshare trading account. First, Ron withdrew a total of $578,667 in Australian and NewZealand currency from the share trading account in 19 separate transactions between12 May 2009 and 26 April 2010. The share trading account became the mixed fundwith Barry's funds during this time. Prior to 8 July 2009, when Barry's funds cameinto the share trading account, Ron had withdrawn NZ$7,000 and AU$30,000. Thetwo most significant amounts, AU$110,714.36 and AU$210,909.23, were withdrawnon 17 July 2009 and 2 September 2009 respectively. The final withdrawal by Ron wason 26 April 2010. Second, an amount of $800,000 was withdrawn from the sharetrading account on 25 September 2009. This was paid by Barry to Dee Ann to settleher potential claim in relation to her mother's will. Finally, the sum of $395,169.61was used by Barry to settle the purchase of an apartment.3[9] In early May 2010, Barry sold the shares and transferred $1,545,017.29remaining in the share trading account in two payments to his solicitor's trust account.4This sum was subsequently paid to Barry. At this point, the funds in the share tradingaccount constituted the residue of the disputed amount plus income earned on that sumas well as all or part of Barry's funds plus income earned on that sum. Ron calculates,and Barry does not dispute his calculation, that adding together the two amounts whichwent into the mixed fund (the disputed amount and Barry's funds) and deducting fromthat the three amounts, referred to in [8] above, renders a gross profit, based on thefinal balance of the share trading account, of $1,134,047.[10] Ron's evidence indicates Barry paid income tax on this profit; Barry's evidenceis silent on this point. It is not clearly addressed by either party but I consider this canbe described as gross profit as there is no evidence to indicate Barry used funds fromthe share trading account to discharge his tax liability.[11] At this point, it is sufficient to say that the disputed amount did not constitutepart of Mrs Reid's estate as the $1,750,000, of which the $1,700,000 formed part,devolved to Ron solely as survivor. However, and this is a matter I will address inmore detail below, there is dispute as to whether Ron thought the money was part ofMrs Reid's estate.3 Barry had entered into the contract to buy this apartment prior to Mrs Reid's death. Ron and MrsReid had also entered into a contract to buy two other apartments in the same development. Barrysettled the purchase of one of those apartments.4 These transactions are not recorded in the share trading account statements filed in evidence. Adocument which appears to be a statement from Rennie Cox's trust account shows two depositsfrom ASB totalling $1,545,017.29 on 6 May and 12 May 2010 ($781,184.45 and $763,832.84).Further inquiry[12] The Court of Appeal directed a further hearing on two points:(a) Ron and Barry's share of the proceeds of $1,557,0565 (plus interestearned); and(b) Determination of Barry's affirmative defences.[13] In addressing the division of the disputed amount and interest, the Court ofAppeal noted that it was unclear how the $800,000 paid to Dee Ann was to be allocatedbetween Ron and Barry. There was also the additional withdrawal, by Barry, to settlethe purchase of the apartment he had contracted to buy prior to Mrs Reid's death.Court of Appeal findings[14] The Court of Appeal found that on payment of the $1,700,000 into the sharetrading account in Barry's name, a resulting trust arose in Ron's favour.6 This is apresumption which could be displaced by evidence of a contrary intention, includinggift or advancement (a counter presumption). After reviewing the evidence, the Courtof Appeal said " we do not accept that the evidence supported the finding Mr Reidintended to make a present gift of the $1,700,000 to Mr Castleton-Reid".7 Nor did theCourt of Appeal consider the presumption of advancement applied, given Barry'spersonal financial position and Ron's age and personal financial position.8[15] The Court of Appeal did not consider there was any other evidence of acontrary intention and concluded the presumption raised in Ron's favour was notdisplaced. Ron had retained the beneficial interest in the disputed amount, which washeld by Barry on a resulting trust for Ron. At most, the Court of Appeal found,"Mr Reid may have intended Mr Castleton-Reid to inherit the balance of the money5 The Court of Appeal referred to the transfer of $781,224 on or about 5 May 2010 and $773,832on 10 May 2010 totalling $1,557,056, at [21]. As noted in n 4 above, the solicitor's trust accountstatement records a deposit of a lesser amount on the second occasion.6 At [37].7 At [77].8 At [86].in the Trading Account on his death".9 The only exception was the proceeds of thesale of the shares in Auckland Airport and Air New Zealand, which the Court ofAppeal found belonged to Barry.[16] This Court necessarily has to proceed in light of the Court of Appeal's findings.The Court of Appeal made no particular findings on the $800,000 paid to Dee Ann butdid address the sum paid to Barry from the share trading account to purchase hisapartment. The Court of Appeal considered its finding that there was no gift of thedisputed amount did not preclude the possibility that the amount to purchase theapartment was a gift:[69] A substantial sum was withdrawn from the Trading Account toenable Mr Castleton-Reid to settle the purchase of the first Eclipse apartment.But that is not inconsistent with an intention that, on Mr Reid's death, theinvestments and proceeds in the account would form part of Mr Castleton-Reid's inheritance in any event. Nor is it inconsistent with Mr Reid retainingthe beneficial ownership of the funds and making a specific gift from thatamount for Mr Castleton-Reid's benefit. After all, it was Mr Reid, not MrCastleton-Reid, who authorised the payment as the operator of the account.(emphasis added).[17] The Court of Appeal thus found that Ron authorised the payment and that theremay have been a specific gift of that amount to Barry. It is therefore necessary toreview the evidence on this transaction. However, I also note the Court of Appeal'sobservation that:[59] When a donor intends to make a gift, they intend to part withproperty that he or she believes belongs to them. If Mr Reid believed themoney did belong to Mrs Reid's estate, and not to him, then he could not haveintended to gift it to Mr Castleton-Reid.[18] Whether there was a gift of the amount by Ron to Barry to complete thepurchase of his apartment depends on Ron's intention. Intention turns on Ron'sknowledge of his rights to the disputed amount at the time of the transaction. Whilethe Court of Appeal came to a conclusion on gift and presumption, and did so byreviewing the evidence, these findings do not extend to either Ron's knowledge or hisintention after the payment to Barry of the disputed amount on April 2009. In theabsence of a gift or presumption of advancement (or any other evidence of contrary9 At [88].intention), the Court of Appeal did not need to make findings on either and specificallyleft for this inquiry the question of the possibility of a subsequent gift to Barry of partof the disputed amount.Scope of resulting trustPayment of $800,000 to Dee Ann in September 2009[19] Ms Abdale, who appeared for Ron, submits this payment is premised on thefollowing evidence:(a) Ron authorised the payment from the share trading account; and(b) Ron considered the payment was to satisfy Dee Ann's claim againstMrs Reid's estate and Barry consented to it.[20] Ms Abdale's three alternative submissions on the allocation can be summarisedas follows:(a) The amount was to come entirely from Mrs Reid's estate:(i) There was an agreement that Barry would return $800,000 fromhis mother's estate;(ii) Barry is therefore responsible for the entirety of the payment;(iii) Loan documents signed by Ron and Dee Ann, to avoid liabilityfor gift duty, reflects this situation;(b) Alternatively, she submits there was an agreement between the parties,following a family meeting in December 2010, that Barry and Ronwould share the burden of the payment equally; and(c) In the further alternative, that Barry is liable for $500,000, being theportion due from his mother's estate, and Ron for the remaining$300,000 as an advance on Dee Ann's inheritance from him.[21] These three submissions reflect the manner in which Ron's account of thepayments to Dee Ann and Barry have evolved through the proceeding.[22] In his affidavit of 28 January 2016 (by which time Ron had received legaladvice that the disputed amount did not form part of Mrs Reid's estate), Ron said:I also withdrew from this account the sum of $800,000 on 25 September 2009which I gifted to my daughter, Dee-Ann Stewart, as an advance on herinheritance, given that she had received very little from her Mother's estate incomparison to Barry.[23] In that affidavit, Ron was clear that the disputed amount belonged to him sothe reference to "inheritance" can only mean a gift from him of the $800,000 toDee Ann.[24] In his brief of evidence of (undated) October 2017, Ron says:I also negotiated with Dee-Ann Stewart, my daughter, an advance on herinheritance in the sum of $800,000, given that she was threatening to contesther mother's will because she had received very little from her mother's estatein comparison to Barry. I gifted Dee-Ann the sum of $800,000 from thisaccount on 25 September 2009.[25] Ron's account of the payment to Dee Ann has changed substantially since hisabove evidence at the earlier hearing. There is general agreement on the negotiationswhich led to the payment. Dee Ann indicated her unhappiness with Mrs Reid's willshortly after Mrs Reid died. Ron met with Dee Ann and the payment was agreed. Inhis affidavit sworn 22 January 2020 for this hearing, he said:I recall that Dee-Ann and I spent about an hour discussing settlement beforeagreeing upon the settlement figure of $800,000. We did not record theagreement in writing. We did not obtain legal advice about the agreement.The defendant was not included in coming to the settlement figure, but hisconsent was subsequently obtained, following which I directed CraigsInvestment Partners to transfer $800,000 to him and he then paid that sum toDee-Ann.[26] In his 22 January 2020 affidavit, Ron now says afterwards a new arrangementwas reached:Subsequently, at the family settlement meeting held in December 2010, it wasagreed that the allocation between the defendant and I for the payment to Dee-Ann would be $400,000 each. If the Court accepts this allocation between thedefendant and me, then he also owes me $400,000 for his share of the paymentto Dee-Ann.[27] However, despite affirming his affidavit, this was not his oral evidence at thehearing. Ron was asked about Dee Ann's evidence that she asked only for $500,000.He said he responded to her:"How much do you want," and she said, "Oh half a million," I said, "All right,done," and we settled on that when she said, have I made a will, a new willand I thought where the hell's this going and I said no I hadn't and she saidwell, "Why don't you give the money you would have left me, now, and saveyou making the will, your will."10 I said, "Okay, how about another 300,000."I was making a lot of money on the exchange at the time, in fact in 12 monthsI cleared $1.1 million, so I had plenty of money as it were to play with, and Isaid, "Okay, so that's 800,000 altogether." Now it took me some little time toget that together and I think I did not – she came to see me a few days, a weekor so after my wife died but it wasn't until I think latish-September in '00 thatI managed to get Locke to sell enough shares to put in the trading account forme to pay to Barry so that he could pay Dee-Ann out of his cheque account. Ididn't have a cheque account [28] It can be seen Ron was clear that $500,000 was to settle any claim by Dee Annagainst Mrs Reid's estate and the balance was an advance on his own estate.[29] Dee Ann's evidence is that after seeing her mother's will on 23 November 2008(the day after Mrs Reid died), she complained to Ron and Barry about her inheritance,which was limited to her mother's personal possessions and a life-interest in the castle.She says that Ron told her, in September 2009, that he and Barry had agreed she wouldreceive $800,000 "from my mother's estate". Ron told her that the money had come"from my mother's estate". He subsequently said the funds came from the HallmarkTrust.11 She later signed the loan documentation prepared by Barry's accountant toavoid payment of gift duties. At that point, she says, Barry told her the funds hadalready been gifted to him by Ron and the payment to her had not come directly fromMrs Reid's estate.10 In an email to Barry, on 29 April 2010, Ron stated: "About ten years ago your mum and I finallyfaced the necessity of making our wills. These were identical each appointing the other as soleexecutors of what would become, on the death of either, the estate for the use and enjoyment ofthe survivor until their eventual death". However, it is notable that, on this occasion, Ron said hedid have a will.11 For a discussion of the Hallmark Trust, see Reid v Castleton-Reid, above n 1, at [23]-[24].[30] During cross-examination at this hearing, Dee Ann elaborated on thearrangements, indicating (consistently with Ron's evidence) that she asked for$500,000 to settle any claim she might make on Mrs Reid's estate. At this point, Ronand Dee Ann's accounts of the conversation diverge. According to Dee Ann, Ronresponded that he had done well in investing "[Barry's] share account" and that$500,000 was now worth $800,000 and that was what she would receive. Ms Abdaleput to Dee Ann the evidence Ron gave at the earlier hearing, that the $300,000 was anadvance against his estate, and Dee Ann responded in emphatic terms:That is absolute total farrago of lies. He said nothing of that. When we sat atthe table, he asked, "What do you want?" I said, 500,000. He said, "That'sa whimsical amount." And I said, I'm perfectly happy with that. I never askedfor any more. I didn't want any more. I did not ask – he also said at the tablein the presence of my husband, that my mother's and his Will were identical.I did not ask him to do a Will, I did not ask for anything more. I cannot sayanymore than that. I know what I'm saying, and I know it's the truth and that [what] he has just said is a complete tissue of lies.[31] In his brief of evidence dated 26 October 2017, for the first hearing, Barry sayshis father proposed the settlement with Dee Ann but that Barry had to arrange thepayment:I transferred $800,000 to my sister Dee-Ann. My father phoned me and saidhe proposed I give my sister $800,000 as she was going to dispute my mother'sWill/estate. I agreed as I felt my sister had received very little, she had alreadyvoiced her concerns to me directly, and I saw no issue with this. When I saidI was ok with this proposal my father responded "she can use that to lick thesalt out of her wounds". I instructed my father, as manager of my shareaccount, to transfer $800,000 to my bank account. My wife then had severalconversations with my bank to transfer this onto my sister. My father couldnot action this transfer, as claimed, as he had no access, and has never had anyaccess to my bank accounts. The money was first transferred out of myshareholding account into my ASB account on 25 September 2009, and thentransferred into Dee Ann's account, where it appeared as a credit on 29September 2009. I note that my father claims that he actioned this transfer –in fact it was me, with my father's encouragement – with the idea that it wasto settle any claim she might have against my mother's estate.[32] For completeness, I note Ron's oral evidence at this hearing that the transactionwas arranged through Barry because Ron did not have a cheque account at that time.[33] On its face, the evidence I have reviewed indicates that Ron gifted $800,000to Dee Ann. However, the finding of a gift turns on Ron's intention and, as the Courtof Appeal observed, forming such an intention required knowledge that the fundsbelonged to him.12 It is therefore necessary to establish such knowledge at the time ofthis transaction. I will review the contemporary documentary evidence to address thispoint. This evidence is primarily the emails between members of the Reid family afterthe payment of the disputed amount to Barry.[34] I will do so in some detail because some of the communications indicate Ron'sposition evolved considerably in response to changing circumstances. Thosecircumstances include, in particular, proceedings arising out of the contract enteredinto by Ron and Mrs Reid, prior to her death, to purchase two apartments in the Eclipsebuilding in Auckland and the interest the Commissioner of Inland Revenue took in thearrangements regarding the mixed fund. The latter particularly relates to Barry'sliability for gift duty for amounts withdrawn from the mixed fund and for income taxon Australian income earned by the mixed fund and for capital gains generated byRon's share trading activities.[35] There are no records of the arrangements which led to the September 2009payment from Ron to Dee Ann via Barry. However, the series of emails commencingat the end of April 2010, about seven months later, provide helpful context and aclearer picture of Ron's knowledge of his rights to the disputed amount. I start thenwith Ron's emails to Barry at the end of April 2010. In the first, sent on 23 April 2010,Ron drew a link between the possible re-introduction of estate duties and thearrangement entered into with Barry:Given the ongoing possibly that these [estate duties] could be reinstatedovernight I took the opportunity – in the terms of your mum's will – to put herestate residue into shares in your name.(emphasis added).[36] At the time the funds were put into Barry's name and the share trading accountopened, the only available funds were those from Ron's joint account with Mrs Reid.Mrs Reid's shareholdings in Auckland Airport and Air New Zealand would not besold, and transferred into the share trading account, until 8 July 2009. The only fundsRon could be referring to are those from the joint account and he describes them aspart of Mrs Reid's "estate residue". Ron does not refer to his own estate in this email.12 Reid v Castleton Reid, above n 2, at [59].Ron thought the funds from the joint account were part of Mrs Reid's estate andvesting those funds in Barry would avoid any liability for estate duties, should they bere-introduced.[37] This point is elaborated further in the second email, sent on 29 April 2010. Thecontext for this email was that Barry had apparently raised the issue of a mortgage onthe castle (which had passed to Barry). This mortgage secured the deposits on the twoEclipse apartments Ron and Mrs Reid had agreed to purchase prior to her death. Ron'soverriding concern was to assure Barry that the estate would meet any costs associatedwith Barry's ownership of the castle. This was expressed by Ron in the followingmanner:All costs, of any kind, attendant on your accession to the castle will be met bythe 'Estate' - a term which I'll define later. All legal fees, accountancy fees,taxation assessments, and maintenance costs – for at least two years – will bemet by the estate as and when due.[38] Ron did not go on to define what he meant by the "estate", at least notexpressly, though he explained that he and Mrs Reid executed identical willsappointing each other executor and granting life interests in the estate to each other:13About ten years ago your mum and I finally faced the necessity of making ourwills. These were identical each appointing the other as sole executors ofwhat would become, on the death of either, the estate for the use and enjoymentof the survivor until their eventual death.(emphasis added).[39] Mr Reid expressed his intention to preserve the estate (not "squander" it) whileenjoying his remaining years.13 This interpretation is confirmed by an email Ron sent to Barry's wife, Lisa, on 21 January 2011.After responding to a number of what he called "accusations", Ron stated: "The two main thingsto be determined are the monetary value of 'my remaining property' referred to in C.6 of the willand the time to be allowed for this exercise. It clearly was my wife's wish that this should take'so long as my trustee [me] shall think fit'." Clause 6 of Mrs Reid's will provided: "I GIVEDEVISE AND BEQUEATH all the rest of my property both real and person whatsoeverwheresoever and of what nature of kind soever including any property over which I may have apower of appointment or disposition unto my Trustee UPON TRUST to sell call in and convertinto money such parts thereof as shall not consist of money with power to my Trustee to postponethe sale calling in and conversion of any part thereof for so long as my trustee shall think fitnotwithstanding that it may be of a terminable or wearing out nature or may consist of a hazardousinvestment and so that no reversionary interest shall be sold unless my trustee see special reasonfor doing so". Clause 7 provided that Barry was to be the beneficiary of this trust, unless he didnot survive Mrs Reid, in which case Dee Ann was the beneficiary.[40] Of course, under the terms of Mrs Reid's will, Ron did have a discretion asexecutor but he was not a beneficiary. His discretion could only be exercised to theextent that Dee Ann, who had a life interest in the castle, or Barry, as the residualbeneficiary, would benefit from it. He could not apply the assets of the estate for hisown benefit as that would put Ron, as executor of Mrs Reid's estate, in breach of hisfiduciary duty to Dee Ann and Barry. This was not addressed by counsel insubmissions and I will not comment further on it as the issue to be determined is Ron'sknowledge and whether, in particular, Ron believed the disputed amount was part ofthe estate.[41] I find that he did. First, while the funds derived from the sale of Mrs Reid'sshares (which passed to Barry under her will) were, by this time, in the share tradingaccount, Ron did not distinguish between that amount and the disputed amount. Hereferred only to the share trading account. Second, the reference to "squander theestate" suggests a large sum of money. Much of Mrs Reid's estate involved realproperty, which was bequeathed to Barry. It was not in a liquid form. The funds inthe share trading account were either in liquid form or could easily be converted toliquid form. Ron referred to this large sum of money in terms of the estate. Third,Ron described his activities with the share trading account in the following terms:Now. I had understood that you were content with my setting up the share-trading account in your name. I did this to allow for the perfectly legalavoidance of gift duty and the ever-possible reintroduction of death duties.You are, in any case, the eventual beneficiary. If you now prefer it I will closedown this 'operation' and find other avenues for the estate which will notinvolve you in any way.[42] In this paragraph, Ron refers to the share trading account. By now, it was amixed fund. But Ron did not make that distinction. Indeed, if Barry's ownership ofthe share trading account was to end, Ron anticipated taking back all of the funds inthe share trading account, not just the disputed amount. The final sentence clearlyconnects the share trading account with the estate. The reference to Barry as "theeventual beneficiary" simply reflects Ron's construction of the terms of Mrs Reid'swill, as set out earlier in the email, conferring on Ron a life interest in her estate, ratherthan a reference to Barry taking ownership via Ron's estate. Finally, if the estate wasto meet any costs associated with Barry's ownership of the castle, as Ron stated, cashwas required. The most accessible form of cash in Mrs Reid's estate was the sharetrading account, as Ron had frequently demonstrated.[43] My findings on this email are further confirmed by another email, sent threedays later, in which Ron asked if Barry had received an email that Ron said addressed"the origin and proposed use of 'estate' monies?" I take this to be the 29 April 2010email. Ron added:If so please let me know if you are happy with my, thus far, reasonablyproductive share trading. If not I will revert the shares to the estate and 'takeit from there'.[44] Barry was the legal owner of the share trading account. Ron had managedthose funds. Ron did not distinguish between the different funds in the share tradingaccount. He characterised all of the funds in the share trading account as part of theestate. Ron's intention was for the estate – Ron as executor – to take control of theshare trading account from Barry if Barry was unhappy with Ron's activities. If Ronbelieved the disputed amount was his personal property, he would have no reason torefer to the estate in this email.[45] The life interest referred to by Ron in his 29 April 2010 email also explains hiscomment about timing, and the manner in which Ron described his relationship withthe funds in the share trading account, in a subsequent email which forms part of anemail chain between Ron and Barry on 3 May 2010:I can live with your - ah gracious understanding that I could use what patentlywas mine "for my own expenses" but it will never compute with saying "themoney is yours" It is the timing of the "understanding" which clearly is astray.I can accept having said that the money is yours but it would always have tobe on the basis that I have first call on it surely. Seeing as how it is my moneyI still can't get my head around your taking so much so soon [46] There is only one reference to the estate in this email. Ron says that the estateowed Barry $439,000, "which would bring you level with the distribution, thus far, toDee-Ann". At this time, Dee Ann had received $800,000 paid out of the share tradingaccount. If a payment to Barry of $439,000 would equal this amount, then Barrywould have already received $361,000. Some of the evidence suggests Barry received(around) this amount to settle the purchase of his apartment. Ron's statement says,therefore, that Dee Ann's payment had come from the estate and that Barry had alsoreceived a distribution from the estate.[47] As to Ron's statement that the money was his, this is explicable in terms of hisconstruction of his role as executor of Mrs Reid's will. In the context of the exchangesbetween Ron and Barry at this time, the statement that the money belonged to Ron orthat Barry's misunderstanding about the original transaction was one of timing, is notinconsistent with Ron's understanding that the funds in the share trading accountbelonged to Mrs Reid's estate. This is because Ron was of the view he had a lifeinterest in the estate and Barry was entitled only to the residue.[48] This is evident throughout the emails of this period. Ron refers to the sharetrading account in terms of the estate (the funds form part of the estate) but that Barry'sright to those funds is deferred because of Ron's construction of Mrs Reid's willconferring on Ron an absolute discretion to apply the funds for his own benefit andwhat amounts to a life interest. Ron was mistaken in several ways. First, that thedisputed amount formed part of the estate (they belonged to Ron as survivor). Second,that Mrs Reid's will gave him an interest in her estate (he was not a beneficiary of herwill and was not entitled to use funds for his own benefit). Third, that the "absolutediscretion" conferred on him in Mrs Reid's will permitted him to use estate propertyfor his own benefit (this would put him in breach of his fiduciary duties as executor).[49] Moreover, in his email to Barry of 16 May 2010, as the vendor commencedproceedings against Ron in relation to the contract to purchase the two Eclipseapartments he and Mrs Reid had contracted to buy, Ron instructed Barry to advise his(then) counsel in terms which expressly disclaimed any interest in the disputedamount:You should be aware that my client Ross R. Reid has no assets of cash or kind.Funds and property which he had expected on the death of his late wife were,instead, inherited by his only son Barry Castleton-Reid who is providing hisfather with such of his needs not met from his superannuation, his only sourceof income.[50] The purpose of this statement was to cause the vendors to withdrawproceedings because Ron had no assets they could pursue for breach of contract.[51] However, by 23 May 2010, Ron's position had changed. It appears he hadobtained some legal advice about Mrs Reid's will (among other matters). In an emailto Barry, he acknowledged that the will gave him no authority to spend "any of theresidue on myself" and that using funds from the share trading account to purchaseapartments in Australia was for Barry's "eventual" benefit. He made a similarstatement two days later for a specific reason which I consider below. This may havebeen a momentary insight into the scope of his authority as it is at odds with Ron'searlier statements and actions.[52] In his email of 25 May 2010, in the course of criticising legal advice Barry hadreceived, Ron stated:In my sworn duty as executor it would have been a criminal act for me to havediverted monies from the estate residue [which Ron considered included allfunds in the share trading account] to my personal gain. On completion of theAustralian property purchases, to cover this and any later estate disputation, Imade a declaration that the purchases were made from funds derived fromsales of your share-holdings and that they were made on your behalf in myname solely for the requisite bank financing. This document is lodged withthe bank, together with the title deeds, and instructions to forward alldocumentation to you on my demise.[53] Again, Ron expressly disclaimed any interest in the disputed amount.[54] In a 29 May 2010 email to Barry, Ron confirmed the $1,750,000 was part ofthe estate left to Barry under the terms of his mother's will (along with the castle andthe house at 21/55 Verbena Road). The same day, Ron accepted Barry was entitled tothe capital of the share trading account but Ron claimed the income earned. Later thatday, Ron emailed again stating "You still have the $1,750,000 which was left to you".He described his transactions in relation to the estate as "borrowed funds" which he"put to work; and then returned it". Ron was unhappy that Barry wanted to retain his"earnings" in addition to the rest of the extensive inheritance he had received. Hissubsequent exchanges focus on those earnings, which he wanted retained andconverted back into shares.[55] This is evidence of Ron's understanding the disputed amount was part ofMrs Reid's estate and Barry either was or would become entitled to those funds,subject to Ron's purported life interest and wide discretion to administer the estate.However, Ron's position continued to evolve further over time. In particular, in thecourse of an email sent on 25 July 2010, Ron stated: "I feel that I have been pushedunder a waterfall in the sudden realization that one half of what has been regarded asmy wife's "estate residue" is in fact mine!"[56] The significance of this remark was explained in a further email sent just overa week later on 3 August 2010. Ron's golfing companion the previous day had beena lawyer. During drinks afterwards, Ron reported that the lawyer's advice was thatRon had a matrimonial property claim against the estate for at least half the assets and,given the circumstances of the other beneficiaries, to all of the "residual estate". Ronassured Barry he did not plan any legal action, due to the cost. However, the lawyersuggested agreement between family members to share the estate was the best wayforward (and would, apparently, avoid gift duties and not require loans). Ron's tonewas conciliatory though he did calculate the extent of his share of Mrs Reid's estate,adjusting for the "$600,000 paid to me to date" (despite his earlier statements thatthese funds were used for Barry's benefit). Ron was satisfied with that payment butexpressed unhappiness with having "to beg for money".[57] As Barry pressed Ron on issues surrounding distributions from the HallmarkTrust,14 by early September 2010, Ron was describing the distributions as"matrimonial property". Indeed, he had "googled the Family Protection Act and foundthat the fact that assets were held in one name or another or at one time or anothercounts for little". And, in another email sent to Mr Riechelmann (a trustee of theHallmark Trust) and copied to Dee Ann and Barry, also sent in early September 2010,Ron had now read the statute and was assured of the validity of his claim:It was not until after my arrival in Townsville, and a chance discussion with agolfing lawyer, that I learned of the legal implications of 'matrimonialproperty'. Of course I'd heard of the term but it never had any kind of placein our marital relationship - as you yourself can well attest to.14 See n 11 above.Having now read the Family Protection Act I am satisfied that I could get anycourt in the land to agree that our family assets, on the untimely death of [my]wife, could not be considered to be other than 'matrimonial property', as amatter of record, resulting from more than sixty years of a truly happymarriage.[58] Ron insisted he had no plan to pursue his rights and told Mr Richelmann thatBarry could keep Ron's share of this matrimonial property, "since he and [his wife]Lisa are going to get it eventually anyway. And shouldn't have too long to wait".15[59] Ron's focus remained a matrimonial property claim through September 2010.In an email on 8 September 2010, he told his children half the funds in the share tradingaccount belonged to Mrs Reid and "were effectively [Barry's]". This was on thefollowing basis:After a bit of a spend-up I started buying Air N.Z. and Ak Airport shares finallytotalling 200,000 of each. THESE ARE NOWHERE MENTIONED IN THEWILL. Apart from a few thousand in a cheque acc. The rest of our money -1.75mil. was put in a term deposit fund in our joint names. THIS FUND ISNOWHERE REFERRED TO IN THE WILL..Now you don't have to be Oliver Wendell Holmes to see that Barry cannot layclaim to these assets. Unless, unless, you invoke the provisions of the FamilyProtection Act under which half of them - around 1.1mil. - would go into the'estate' for distribution as set out. He will just have to wait for the other half,the good news being A that it should not be too long - especially as I am to bechucked out on my ear into the cold cold world - and B I've always said thathe is welcome to hold the funds until that happy day. Provided only that heunderstands their status.(emphasis in original).[60] Ron had asked his former counsel for advice on these points, though there isno clear evidence on what advice was provided. Towards the end of 2010, the partiesattempted to resolve their disputes by agreement but these efforts were unsuccessfuland the dispute began to escalate. This included threats by Ron to make complaintsto Police against Barry. At the end of March 2011, Ron again referred to the "R.P. Act"(sic) and his right to a half share in Mrs Reid's assets.15 Mr Riechelmann apparently disclaimed any knowledge of such a claim as Ron reported to bothhis children three days later that " Butch [Mr Riechelmann] knows nothing of 'matrimonialproperty'. He did a year on law at uni We therefore cannot rely on him to shine much light intoour tunnel".[61] In her brief of evidence dated 26 October 2017, Dee Ann states Ron firstmentioned to her that the $1,750,000 in his joint account with Mrs Reid devolved tohim solely on Mrs Reid's death in an email sent on 10 January 2012. In this email,Ron recorded advice he had received from John Mather, an Auckland barrister whohad represented Ron in earlier enforcement proceedings. Mr Mather's advice was thatBarry had inherited certain property through Mrs Reid's will but the bank accountsjointly held by Ron and Mrs Reid at her death "legally are mine alone". For the firsttime since Mrs Reid had died, Ron clearly understood his rights to the disputedamount. In subsequent emails, Ron asserted he had always known the disputedamount belonged to him but that is directly contradicted by the earlier emails Ron sentto Barry.[62] Although Dee Ann's evidence is that Ron continued to assert his claim to thedisputed amount, discussions between them turned to an arrangement where Ronwould receive an income from Dee Ann and, in return, stop pursuing Barry. Duringthe course of this discussion, Ron sent Barry and Lisa a handwritten note dated27 February 2012. It indicated Ron had taken legal advice on recovering the disputedamount and decided against proceedings. Instead, Dee Ann would provide him anincome. He would not take any steps against Barry in exchange. A further document,dated 1 March 2012, gave effect to this agreement in the form of a declaration.[63] The evidence establishes, then, that Ron first knew of his rights to the disputedamount, as surviving joint account holder with Mrs Reid, in January 2012. Until thattime, he understood the disputed amount to constitute part of her estate but wronglythought he had a life interest in the disputed amount on account of his wide discretionas executor. It is for this reason Ron referred to Barry's interest as contingent. This isalso consistent with Ron's claim to a half share in Mrs Reid's estate under the "FamilyProtection Act".[64] In this context, it is also necessary to consider two emails attached to Ron'saffidavit in reply dated 4 March 2016. Both emails are dated June 2010, and would,ordinarily, be considered in the course of the chronology above. The first email isdated 6 June 2010 and is said to have been sent by Ron to Barry. It states:No I'm not angry - just rather surprised that you acted without first asking me.Bear in mind what is left of the one half of our 'liquid' assets which I'veearmarked for your mum's estate. The total comprised some $1,700,000 plus$477,000 odd in shares half of which is $1,123,500. From this I paid $500,000to satisfy Dee-Ann's claim for receiving so little from you mum. I gave heran extra $300,000 from my own money against my not changing my will.Which left also left her nothing. I have given you some $376,000 which leavesabout $246,000 to play with.[65] There are three points from this email. First, Ron refers to the division of hishalf share of what I take to be relationship property, the other half belonging toMrs Reid's estate (to which Barry was entitled). But the other emails in evidenceindicate this possibility first occurred to Ron in late July 2010, not the first half ofJune. It was developed further by Ron in August 2010 after his game of golf. Second,the amount of $500,000 was deducted by Ron from Barry's interest in the estate.Third, the $300,000 also paid to Dee Ann was given to her by Ron. Both are at oddswith Ron's statements about the nature of that payment in emails up to the end of June2010. I note that the email indicates Ron had a will.[66] The other email is dated 10 June 2010 and is purported to have been sent byBarry to Ron. It states:Dad I have been having trouble with the IRD, there's a woman in there whohas her hooks into me. I have had to declare that I inherited the money for theshares and my lawyer tells me that I will have to have you and Dee-Ann signfor "loans" to cover the outgoings from the share account. I will send thedocuments when my lawyer has done them. They will keep them in case theyare needed for the IRD. They won't be used for anything else.[67] The second sentence would suggest that Barry invented an explanation in June2010 in response to the Inland Revenue Department's (IRD) interest in his financialaffairs. The email is unclear but it would appear to be connected with the sumswithdrawn from the share trading account by Ron and the payment to Dee Ann andpossible liability for gift duty, rather than for income tax due on Australian income andon capital gains from share trading.[68] Neither the 6 June 2010 nor 10 June 2010 email is in the format of a traditionalemail. Barry says he has never seen the second one he is said to have sent to Ron on10 June 2010. He points out that it is purportedly sent from an email address whichdid not exist at that date. On the first email, Barry says this is not the email Ron senthim that day. He also says that he was not in contact with the IRD at this time but wasin discussions with his accountant.[69] In his reply evidence, dated 1 June 2016, Ron accepts the documents were notoriginal emails but "reproductions of emails sent." He was unable to provide them inthe original formats for the reason that "I lost all of my emails on my bigpond.au (sic)provider." Ron denies any effort to deceive but does not explain how he was able torecall the wording of emails sent just under six years earlier after they had been lost.[70] In summary, these two emails are challenged by Barry and were put togetherin circumstances which are far from clear. Moreover, they contain statements whichare at odds with other emails sent by Ron in June 2010, which are in evidence. Inparticular, it does not appear Barry had received communications from the IRD at thatpoint or that anyone had realised he would be liable for income tax on the funds earnedin the share trading account. Moreover, Ron had yet to receive his free legal adviceregarding his interest in relationship property. Less significantly, I note that Ron'srecent evidence is that he did not have a will (and Dee Ann asked for money from himin lieu of his making a will). The first email indicates he did have a will and isconsistent with other evidence that he made a will. My overall assessment is that Ican place no weight on these emails.[71] Drawing all the threads together, the position is that the payment to Dee Annoccurred in September 2009. There is no contemporaneous documentation about thepayment in evidence. But there is sufficient evidence to deal with Ms Abdale'ssubmissions. First, it is clear from the emails that at least until mid-2010, prior to hisgame of golf, Ron thought the entirety of the disputed sum formed part of Mrs Reid'sestate. Second, Ron thought that Mrs Reid's will conferred on him a life interest inher estate through the exercise of his broad discretion. It did not. Ron appears to haveappreciated this by insisting his purchase of the Australian apartments was for Barry'sbenefit, at least until his conversation after golf when he instead claimed half ofMrs Reid's estate. References by Ron to Barry inheriting the disputed amount onRon's death were therefore not a reference to Ron's estate (and therefore a claim byRon that the disputed amount belonged to him) but to the expiry of his life interest inMrs Reid's estate.[72] What can be taken from this is that all parties, Ron included, thought the$800,000 payment to Dee Ann from the disputed amount, was coming fromMrs Reid's estate. Ms Abdale is correct when she makes this submission. However,Barry cannot be liable for it. First, Barry did nothing more than consent to anarrangement agreed by Ron and Dee Ann. Barry did so as the residual beneficiary ofMrs Reid's estate. He then took steps to facilitate that arrangement following Ron'sdirections. Barry was not involved in those negotiations and was not a party to theagreement. Barry cannot be bound it. Barry complied with those directions as Ron'sagent and there was no breach of Barry's fiduciary obligations as he was acting onRon's instructions.[73] That Ron was in error in directing the payment cannot make Barry liable inthese circumstances. Moreover, Ms Abdale provides no basis for her submission thatBarry is liable for Ron's failure to properly administer Mrs Reid's estate. If Ronwishes to recover this amount, he must look elsewhere for a remedy. This addressesboth Ron's claim for the full $800,000 and for the partial amount of $500,000. Iconsider Ron's evidence at this hearing on the latter an effort to recast past events inlight of my finding in my first judgment that the funds in the joint account devolvedto him as survivor on his wife's death. His evidence at this hearing on this issue is notconsistent with the contemporary documentary evidence.[74] Claims for a contribution by Ron from Barry are not connected with thepayment of $800,000 to Dee Ann but go to arrangements reached afterwards. Suchclaims do not appear to be within the scope of this inquiry, concerned as it is with theallocation of the disputed funds, held on resulting trust by Barry for Ron. Such a claimis not concerned with enforcement of later agreements but rather with Barry'sfiduciary obligations to Ron.[75] However, even if I am wrong on this point, I cannot be satisfied that theevidence discloses such an agreement. It is based solely on Ron's recollection of afamily meeting in December 2010. At that point, Ron did not know the disputedamount belonged to him. The context for the family meeting at that point wereongoing disputes arising from Barry's decision to close the share trading account.[76] The emails establish that Barry's action was the consequence of the situationhe found himself in during the first half of 2010. First, there were the financialarrangements relating to the purchase of two apartments, which Ron and Mrs Reidcontracted to buy prior to her death, including the mortgage on the castle to secure thedeposit on them. Second, there was Barry's growing, and entirely legitimate, concernabout his personal liability for gift duties, owing to the way in which the share tradingaccount funds were being distributed by Ron. Third, and just as legitimate, wasBarry's concern about his personal income tax liability arising from Ron's sharetrading activities (both in relation to capital gains and dividend income earned onAustralian shares). Barry's efforts during this time were focused on identifying thenature and source of funds to determine his own tax liability. The resulting trust inRon's favour has no impact on Barry's liability for either, as he was the legal owner(even if Ron was the beneficial owner).[77] The significance of these observations is that, through 2010, Ron becameincreasingly frustrated at Barry's concerns about his tax position and his concern withthe settlement of the two apartments, which Ron and Mrs Reid contracted to buy, andcontinuing questions about the estate and his parents' financial arrangements. At thesame time, Ron was searching for a way to access the funds and settled on claiming ahalf share in Mrs Reid's estate under the "Family Protection Act". He pursued thisvigorously and his claims against Barry increased in stridence, with repeatedassertions that he would lodge a complaint with Police. There is a detailed record ofall these discussions. And yet, there is no record in evidence of the arrangements Ronalleges for payment of Dee Ann following the 2010 family meeting. Both Barry andDee Ann deny it.[78] In the circumstances, there is insufficient evidence before me to establish thatsuch an arrangement for Ron and Barry to equally share the cost of the $800,000payment to Dee Ann was reached or that it is enforceable by Ron against Barry.[79] For all the above reasons, I do not accept any of Ms Abdale's alternativesubmissions set out in [20] above, that Barry is liable for the full $800,000 or that heshares the burden equally with Ron or that he is liable for $500,000 of the total sum.Barry has no liability for any part of the $800,000 paid to Dee Ann in September 2009.When it comes to allocating the closing balance of the share trading account betweenRon and Barry, this payment is not a relevant consideration in determining anyentitlement Barry might have.Payment for Barry's apartment (first Eclipse apartment)[80] Ms Abdale's submissions follow Ron's evidence. His evidence appears toconflate the two different apartment transactions. In his 28 January 2016 affidavit,Ron said:I also gifted the sums of $316,000 to Barry on 24 November 201516 and$60,000 as advances on his inheritance, which sums Barry used to purchasean apartment in Vincent Street. These gifts came from the share tradingaccount [81] As noted above, in this affidavit, Ron was clear that the funds belonged to himso the reference to "inheritance" can only mean a gift from him of these funds to Barry.[82] In his brief of evidence (undated) in October 2017, Ron said:I also paid to Barry from the share trading account the sums of $316,000 on24 November 2009 and $60,000, which he used to purchase an apartment inThe Eclipse Apartments in Vincent Street, which his mother and I had enteredinto an agreement to purchase, and which after her death I no longer wishedto proceed with.[83] This evidence confuses two distinct transactions. Prior to Mrs Reid's death,Barry had contracted to purchase one Eclipse apartment. It is clear on the evidencethat Barry settled on this Eclipse apartment using funds drawn from the share tradingaccount. This transaction was not connected to the settlement, in June 2010, of thesecond Eclipse apartment, one of two Ron and Mrs Reid contracted to buy prior to herdeath (the vendor having agreed not to enforce the purchase of the second), whichoccurred after the share trading account was closed. It is also notable that this evidenceis disingenuous as Ron was subject to a binding agreement to purchase, secured by amortgage over the castle, now owned by Barry, and would have otherwise had to paydamages had Barry not taken over the purchase from him.16 The year stated is clearly an error. It should have been 2009. See Ron's further evidence in [82]below. The date 24 November 2009 is supported by a transaction statement for the share tradingaccount.[84] In his most recent affidavit of 22 January 2020, Ron offers an alternativeaccount of the payment to Barry of $333,914.93 on 24 November 2009 and $61,254.68on 8 January 2010.17 Ron says he "directed Craigs Investment Partners" to pay theseamounts to Barry using his "absolute discretion" contained in Mrs Reid's will tomanage her estate. He says the total amount of $395,169.61, was a distribution fromthe $477,267.34 paid into the share trading account following the sale of Mrs Reid'sshares, which Barry had inherited under the will.[85] Ron's evidence is now that Barry is entitled only to the balance of $82,097.73from the mixed fund (having been paid out $395,169.61 of the $477,267.34 whichbelonged to Barry). Ron also says that Barry is not entitled to any income earned bythis money while in the mixed fund because cl 9 of Mrs Reid's will provides (in full):I DECLARE that as between the capital and income of my estate there shallbe no apportionment of rents interest dividends and other periodical paymentsfor the period current at my decease.[86] Ron relies on this clause in the will to deny Barry any income earned on themoney deposited into the share trading account following sale of the shares Barryinherited from his mother.[87] Barry's account of the use of funds in the shareholding account to buy hisEclipse apartment differs. He says that the price paid for his Eclipse apartment was$323,619.44. He says he withdrew this sum from the shareholding account.[88] The email correspondence from Ron to Barry and Dee Ann provides furtherevidence on the nature of this transaction. On 29 April 2010, Ron emailed Barry aboutthe estate. As I have already found in [41] above, Ron did not at this point appreciatethat the disputed amount belonged to him and he considered that they belonged toMrs Reid's estate. As noted in [38] above, when I earlier considered this email, Rondid not define the term "estate" in the email, as he said he would do, but the onlyreasonable inference which can drawn from the terms of the email is that the "estate"he was referring to included the disputed amount. Ron also clearly expressed the view17 These figures differ to those given by Ron in his earlier evidence, as set out at [80] and [82]. Theamounts given here are taken from the share trading account statements.that the terms of Mrs Reid's will permitted him to apply her estate to his own benefitduring his lifetime (after which the residue would go to Barry).[89] Barry had apparently raised the issue of the mortgage on the castle, which hadpassed to him, securing the deposits on the two Eclipse apartments which Ron andMrs Reid had agreed to purchase prior to her death (this being the reason for Ron'semail). Ron's overriding concern was to assure Barry that the estate would meet anycosts associated with Barry's ownership of the castle. The only funds available tomeet Barry's costs was the money in the share trading account; Mrs Reid's estateotherwise comprised real property, her personal property and the Auckland Airportand Air New Zealand shares (which had been sold and passed into the share tradingaccount by the time of this email).[90] This background was set out in the first half of the email. The second half ofthe email focused primarily on Ron's administration of the estate. It includes thefollowing sentence:Since your mum's death I have managed well enough to distribute to you$50,000 and sufficient funds to purchase the Vincent St [Barry's Eclipse]apartment.[91] I first note that it is clear from the context (Barry not having yet settled on hisparent's Eclipse apartment) that the payments referred to are those connected withsettling Barry's Eclipse apartment ($333,914.93 to settle and $61,254.68 for relatedspending). Several other observations follow. First, this statement was made in thecontext of a discussion of Mrs Reid's estate. Second, the share trading account, at thistime, was considered by Ron to be part of her estate. Third, the share trading accountwas the most easily liquidated asset in the estate and Ron had already drawn fundsfrom it for his use and to pay Dee Ann. Fourth, Ron described the payments to Barryas a "distribution", and it can reasonably be inferred from the email that this was adistribution from the estate. Fifth, the purpose of this distribution is clear: to settle thepurchase of the Eclipse apartment by Barry. Finally, by this time, the funds derivedfrom the sale of Mrs Reid's shares were in the share trading account. But Ron did notdistinguish between Barry's entitlement to that amount and the disputed amount.Barry would receive the residue on Ron's death, given the terms of Mrs Reid's will(as Ron understood them).[92] Ron's evidence for the most recent hearing is not consistent with contemporarydocumentary evidence and I do not accept the transaction for the first Eclipseapartment acquired by Barry was a part payment of his undisputed share in the mixedfund. At the time the transaction occurred, Ron thought the disputed amount belongedto Mrs Reid's estate and that he was exercising his "absolute discretion" under the willto make a distribution to Barry to buy his apartment. The significance of this findinggoes to the final allocation of the mixed fund and the income earned and I will addressthis when considering Barry's affirmative defences.[93] At this point what can be said is that although Barry followed Ron's directionsin arranging the payment, it was not a gift to Barry. As the Court of Appeal noted,Ron could not intend to gift money he did not think belonged to him. There was nogift of this amount and Barry is liable under the terms of the resulting trust, subject tohis affirmative defences, to repay it.Payment for Ron and Mrs Reid's apartment (second Eclipse apartment)[94] Ron and Mrs Reid had entered into agreement to purchase two other Eclipseapartments. The arrangements included a mortgage securing unpaid deposits over thecastle, which formed part of the context to the transactions which need not be traversedhere. After extended negotiations, the purchase of one of the apartments wasabandoned and the other was completed by Barry on 21 June 2010. The final purchaseprice, including penalty interest and other expenses, was $358,338.40. Barry says thissum was paid using funds from the shareholding account. He also says he paid$19,500.57 for legal advice received in settling the purchase of this Eclipse apartment.[95] By the time of the settlement of the second Eclipse apartment, the share tradingaccount had been closed. Ron does not address this payment in his evidence. I havenoted above his confusion around the transactions with the Eclipse apartment in his(undated) October 2017 brief of evidence. Ron's 28 January 2016 affidavit is moreconsistent with what occurred, though does not necessarily preclude the confusionwhich arose in his later evidence.[96] Barry made the payment from the disputed amount to resolve the contractualobligations owed by Ron and the estate to the vendor. It occurred after Barry closedthe share trading account. Settling the transaction was not in itself a breach of theresulting trust. It was in Ron's interest for the legal dispute to be resolved in thismanner. Barry took title in his name and held the property on the resulting trust forRon, subject to his affirmative defences.Allocation of the mixed fund and income earned between the parties[97] I will consider the allocation of the mixed fund and the income earned on themixed fund in the context of my consideration of Barry's second and third affirmativedefences.First affirmative defence: abuse of process[98] The defence pleaded, stated shortly, is that Ron expressly relinquished anyclaim against Mrs Reid's estate or against Barry in writing. The document was signedby Ron on 1 March 2012. It is said this document followed an agreement reached withDee Ann the previous month. Ms Matthew, who appears for Barry, submits thisrelinquishment could not be revoked.[99] Ron either denies the document relied on by Barry is legally binding oralternatively submits that he has validly revoked the document after Dee Ann ceasedmaking the agreed payments to him. He was entitled to rescind the document due toher breach. As to abuse of process, Ms Abdale submits the authority relied on byMs Matthew (Nandro Homes Ltd v Datt,18 discussed below) is distinguishable becausethe detailed agreement in dispute in that case had settled earlier proceedings.Validity of document and availability of revocation.[100] Barry alleges the handwritten note dated 1 March 2012, left by Ron in Barry'smailbox, is a "notice of relinquishment" signed by Ron and delivered to Barry. Itcontains the following statement:I, Ross Ronayne Reid, the undersigned, hereby revoke and relinquish all andany claims which I may have, or be deemed to have, against the estate of mylate wife Esme Dede or against her son and heir Barry Ross LaurenceCastleton-Reid.18 Nandro Homes Ltd v Datt HC Auckland CIV-2008-404-6676, 16 March 2009.[101] The notice of relinquishment included details of an arrangement with Dee Annto pay Ron $12,000 per annum. Appended to the document were materials compiledby Ron in support of his planned proceedings to recover funds distributed by thetrustees of the Hallmark Trust.[102] Ms Matthew submits that through this notice of relinquishment Ron expresslyand conclusively waived his right to bring any of the causes of action against Barry.She describes the notice of relinquishment as an express gift to Barry, made in writingand signed, of a chose in action (Ron's right to bring any legal proceedings againstBarry). In the alternative, in the absence of contractual privity, Ms Matthew submitsBarry is entitled to rely on the document in terms of the Contracts (Privity) Act 1982.The agreement was made between Ron and Dee Ann. Ms Matthew's submission isthat Barry is identified in the contract and entitled to the benefit of the contract. Thatbenefit was the relinquishment of his right to bring a claim against Barry.[103] Before considering whether there is an abuse of process, it is necessary toaddress three questions. First, was there a valid contract establishing binding legalrelations between Ron and Dee Ann? Second, is Barry entitled to enforce the benefitof the agreement? Finally, is Ron entitled to revoke the agreement owing to Dee Ann'sbreach of her obligations by failing to pay the agreed sum to Ron?[104] I am satisfied that, applying an objective test, Ron entered into an agreementwith Dee Ann intending to be bound by its terms. Both the note of 27 February 2012and the document he signed on 1 March 2012 evidence that agreement. The note setout the terms. He drafted the document using what he considered to be languageappropriate for a contract. The statement responds to the agreement he and Dee Annhad entered into and the meaning of the text is clear. It was signed at a time whenthere had been prolonged negotiations between Ron, Dee Ann and Barry and Ron hadissued a number of threats and ultimatums regarding the disputed amount, or at leastthe income earned by the mixed fund. Ron had advised Barry he intended to lodge acomplaint with Police about Barry's actions in closing the share trading account anddepositing the mixed fund in his solicitor's trust account. Ron's declaration respondeddirectly to these circumstances. After drafting the document, Ron signed it anddelivered it to Barry's letterbox. In these circumstances, Ron is bound by the terms ofhis agreement with Dee Ann, which is enforceable.[105] However, Barry is not a party to the contract. Ron agreed to be bound inexchange for the payment promised by Dee Ann. Between Ron and Barry there is anabsence of contractual privity and, at common law, Barry would not be able to enforceit. For this reason, Ms Matthew relies on s 4 of the Contracts (Privity) Act 1982. ThisAct has been repealed and replaced by pt 2, subpt 1 of the Contract and CommercialLaw Act 2017 (CCLA). For the reasons given by the Supreme Court in ANZ BankNew Zealand Ltd v Bushline Trustees Ltd, in relation to the Contractual Remedies Act1979, I will apply the relevant provisions of the CCLA.19 This reasoning appliesequally to the repeal of the Contracts (Privity) Act, which is subject to a similartransitional provision in the CCLA.[106] Section 12 of the CCLA in part provides:12 Deed or contract for benefit of person who is not party to deed orcontract(1) This section applies to a promise contained in a deed or contract thatconfers, or purports to confer, a benefit on a person, designated byname, description, or reference to a class, who is not a party to thedeed or contract.(2) The promisor is under an obligation, enforceable by the beneficiary,to perform the promise.[107] The proviso in s 4 of the Contracts (Privity) Act is now in s 13 of the CCLA:13 Section 12 does not apply if no intention to create obligationenforceable by beneficiarySection 12 does not apply to a promise that, on the proper construction of thedeed or contract, is not intended to create, in respect of the benefit, anobligation enforceable by the beneficiary.19 ANZ Bank New Zealand Ltd v Bushline Trustees Ltd [2020] NZSC 71 at [11], n 12, adopting thereasoning in Kawarau Village Holdings Ltd v Ho [2017] NZSC 150, [2018] 1 NZLR 378 at [73],n 101 (per Ellen France J) and [214], n 255 (per William Young and O'Regan JJ). The SupremeCourt noted that "the relevant provisions of the Contractual Remedies Act and the CCLA do notdiffer in any material respect, this makes no difference to the analysis or the outcome". The samecan be said of the provisions of the Contracts (Privity) Act and the CCLA.[108] As I have noted, Barry is not a party to the contract. It contains a benefit toBarry in that Ron promises to relinquish all claims against him. The language is verybroadly expressed and can be construed to include future claims too. Ron is obligedto perform his promise and Barry is permitted to enforce Ron's obligation, subject tothe proviso. However, the proviso cannot apply. Barry is named as a direct beneficiaryof Ron's promise. It is one Ron intended to be bound by, in exchange for the paymenthe would receive from Dee Ann. There is nothing in the contract to suggest Barryshould not be able to enforce Ron's obligation.[109] Finally, Ms Abdale submits Ron was entitled to rescind the agreement because,in breach of her promise, Dee Ann stopped paying the agreed amount to him.Ms Matthew responds that breach confers a right to damages but not rescission. Forthe reasons set out in [105] above, pt 2 of subpt 3 of the CCLA now governs thecircumstances in which a contract may be cancelled.[110] Section 36 permits cancellation if another party repudiates a contract:36 Party may cancel contract if another party repudiates it(1) A party to a contract may cancel the contract if, by words or conduct,another party (B) repudiates the contract by making it clear that Bdoes not intend to—(a) perform B's obligations under the contract; or(b) complete the performance of B's obligations under thecontract.(2) This section is subject to the rest of this subpart.[111] Section 37 sets out the circumstances in which a party may cancel a contractbecause the other party is or will be in breach:37 Party may cancel contract if induced to enter into it bymisrepresentation or if term is or will be breached(1) A party to a contract may cancel it if—(b) a term in the contract is breached by another party to thecontract; or(c) it is clear that a term in the contract will be breached byanother party to the contract.(2) If subsection (1)(a), (b), or (c) applies, a party may exercise the rightto cancel the contract if, and only if,—(a) the parties have expressly or impliedly agreed that theperformance of the term is essential to the cancelling party; or(b) the effect of the misrepresentation or breach of the contract is,or, in the case of an anticipated breach, will be,—(i) substantially to reduce the benefit of the contract tothe cancelling party; or(ii) substantially to increase the burden of the cancellingparty under the contract; or(iii) in relation to the cancelling party, to make the benefitor burden of the contract substantially different fromthat represented or contracted for.(3) Subsection (1) is subject to the rest of this subpart, but does not limitsection 36.[112] Dee Ann stopped paying before Ron commenced proceedings. The evidencedoes suggest she repudiated the agreement. But I do not consider Ron is entitled torescind the contract. Even if Dee Ann has failed to pay in breach of a term of thecontract in terms of s 37(1)(b), that term was not expressly or impliedly an essentialterm. No details were included regarding the time of payment and how it would occur.It simply had to happen once a month. It is unlikely Ron would suffer by delay inpayment.[113] Nor does Dee Ann's failure to pay substantially reduce the benefit of thecontract to Ron or substantially increase the burden on him. He required a steadystream of income. That would arrive whenever it was paid. Some increased burdenmight follow due to cashflow difficulties caused by delay in payment. But it couldnot be said that such a burden is substantial; payment would follow. Moreover,damages would provide a suitable remedy as an effective substitute for Dee Ann'srefusal to pay (and Ron was not precluded from pursuing Dee Ann for this purpose).[114] I therefore find that there is a valid agreement, Barry is entitled to enforce thebenefit of it and Ron is not entitled to revoke the agreement.[115] However, despite the above finding, this affirmative defence cannot succeedfor reasons that I now discuss.[116] Ms Matthew does not specify whether she relies on r 15.1(1) of the High CourtRules 2016 or the inherent jurisdiction of the Court (which is preserved by r 15.1(4).Rule 15.1(1) provides:15.1 Dismissing or staying all or part of proceeding(1) The Court may strike out all or part of a pleading if it–(d) is otherwise an abuse of the process of the court.[117] Among the types of abuse of process McGechan on Procedure identifies areattempts to relitigate matters already determined, improper motive or obtaining acollateral advantage beyond what is legitimate, duplication of proceedings and aproceeding so stale that justice can no longer be done. The policy considerationswhich arise include:20(a) Courts should exercise jurisdiction on matters properly brought beforethem;(b) Freedom of access to the courts is an important right;(c) Abuse of process claims must be rigorously assessed, only allowed inclear and appropriate cases and should not be brought for tacticalreasons; and(d) Courts must be alert to misuse of their processes and be prepared toexercise the power to stay where required in the interests of justice.20 See Air National Corporate Ltd v Aiveo Holdings Ltd [2012] NZHC 2258 at [31], which adoptsthese factors from Williams v Spautzat (1992) 174 CLR 509 at 519.[118] In Hunter v Chief Constable of the West Midlands Police, Lord Diplockarticulated a general principle by which a court could exercise the power either underits rules or under its inherent jurisdiction to stay a proceeding for abuse of process:21 the inherent power which any court of justice must possess to preventmisuse of its procedure in a way which, although not inconsistent with theliteral application of its procedural rules, would nevertheless be manifestlyunfair to a party to litigation before it, or would otherwise bring theadministration of justice into disrepute among right-thinking people. Thecircumstances in which abuse of process can arise are very varied It would,in my view, be most unwise if this House were to use this occasion to sayanything that might be taken as limiting to fixed categories the kinds ofcircumstances in which the court has a duty (I disavow the word discretion)to exercise this salutary power.[119] This general principle was considered by the High Court of Australia in themajority judgment in Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd. Fourcategories of conduct were identified:22(a) Proceedings involving a deception on the court or were fictitious or asham;(b) Proceedings where the court's process was not being fairly or honestlyused and rather was being used for an improper purpose or in animproper way;(c) Proceedings which have no foundation and served no useful purpose;and(d) Multiple or successive proceedings which were either vexatious oroppressive.[120] These categories, however, were not exclusive and other proceedings might beincluded if they were "seriously and unfairly burdensome, prejudicial and damaging"21 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 (HL) at 536.22 Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43, (2009) 239 CLR 75. SeeStephen Todd "Abuse of Legal Procedure" in Stephen Todd (ed) Todd on Torts (8th ed, ThomsonReuters, Wellington, 2019) at 1068-1069.or "productive of serious and unjustified trouble and harassment."23 Another examplemight be, in certain circumstances, the manner in which pleadings are drafted.24[121] Lord Diplock's remarks and the categories identified by the High Court ofAustralia suggest a high threshold for abuse of process. "Manifest unfairness" or"bringing the administration of justice into disrepute among right-thinking people"establish a high burden. Indeed, in Williams v Spautz, the High Court of Australiastated that the onus on the party alleging abuse of process is to show the proceedingwas brought for an improper purpose. The Court described the onus as a heavy oneand the power should only be exercised in exceptional circumstances:25It is, of course, well established that the onus of satisfying the court that thereis an abuse of process lies upon the party alleging it. The onus is "a heavyone", to use the words of Scarman LJ in Goldsmith v Sperrings Ltd and thepower to grant a permanent stay is one to be exercised only in the mostexceptional circumstances.[122] The policy considerations identified in Williams v Spautz were adopted byAssociate Judge Abbott in Air National Corporate Ltd v Aiveo Holdings Ltd.26 Amongthe policy considerations are:(a) Courts should generally exercise their jurisdiction on matters properlybrought before them;(b) Freedom of access to the Courts must be preserved;(c) Vigilance is required to ensure abuse of process claims are notadvanced other than in clear and appropriate cases and are not broughtfor tactical reasons; and(d) The Courts should also be alert to misuse of process and exercise thepower to stay where necessary in the interests of justice.23 At [28].24 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR679 at [87].25 Williams v Spautz, above n 20, at 529.26 Air National Corporate Ltd v Aiveo Holdings Ltd [2012] NZHC 602 at [31].[123] Among the factors to be considered in assessing whether a proceeding has beenbrought for an improper purpose are:27(a) An improper purpose does not need to be the only purpose so long as itis the predominant one;(b) A genuine cause of action should not be precluded by a stay even if anulterior purpose can be achieved;(c) As noted above, the onus is a "heavy one" to be exercised "only in themost exceptional circumstances"; and(d) Performing an improper act is not necessary to constitute an improperpurpose but some manifestation of an intent, arising from theperformance of some act, is necessary to establish an improper purpose.[124] Ms Matthew relies on the judgment of Asher J in Nandro Homes Ltd v Datt:28I proceed, therefore, on the basis that it may be an abuse of process to bring asecond claim which covers matters which could have been raised in earlierproceedings that have been resolved, even when that earlier resolution hasbeen by settlement agreement rather than by Court orders. Here, as I havefound, the Court orders themselves cannot be construed as imposing a finalresolution on all matters.[125] Asher J concluded: "It is an abuse of process to bring proceedings which willdestroy a settlement reached in earlier proceedings. To use Lord Millett's phrase, theCourt will protect the integrity of the settlement."29[126] However, comparison with this case is to strain analogy. Asher J was dealingwith a subsequent proceeding, as he explained in the paragraphs prior to the paragraphquoted by Ms Matthew. The Judge cited the House of Lords decision in John v Gore27 At [32].28 Nandro Homes Ltd v Datt, above n 18, at [67]-[68].29 At [69].Wood & Co on the question of "whether new proceedings following a settlement is anabuse of process."30 The Judge described the conclusion in this way:31The question there was whether the existence of a settlement agreement madeit an abuse of process for further proceedings to be brought in relation to thesame subject matter by a different party. The House of Lords found afterinterpreting the settlement agreement, that it did not preclude the claim.[127] Asher J referred to Lord Bingham's assessment of abuse of process, whichemphasised the public interest in finality of litigation:32But Henderson v Henderson abuse of process, as now understood, althoughseparate and distinct from cause of action estoppel and issue estoppel, hasmuch in common with them. The underlying public interest is the same: thatthere should be finality in litigation and that a party should not be twice vexedin the same matter. This public interest is reinforced by the current emphasison efficiency and economy in the conduct of litigation, in the interests of theparties and the public as a whole. The bringing of a claim or the raising of adefence in later proceedings may, without more, amount to abuse if the Courtis satisfied (the onus being on the party alleging abuse), that the claim ordefence should have been raised in the earlier proceedings if it was to be raisedat all.[128] To summarise, abuse of process arises where finality of litigation is challenged.[129] Asher J referred to Lord Millett's focus on a similar policy consideration:33In one respect, however, the principle goes further than the strict doctrine ofres judicata or the formulation adopted by Sir James Wigram V C, for I agreethat it is capable of applying even where the first action concluded in asettlement. Here it is necessary to protect the integrity of the settlement andto prevent the defendant from being misled into believing that he wasachieving a complete settlement of the matter in dispute when an unsuspectedpart remained outstanding.[130] What is clear from these extracts and from the facts of Nandro is that the partieswere involved in proceedings, had reached a settlement and then one of the parties hadattempted to reopen the settlement. Asher J concluded this was an abuse of process.[131] Ms Matthew submits that the general principle should apply whether or not adispute had previously been litigated but this must be rejected as perverse. The policy30 At [66]. Emphasis added.31 At [66].32 At [67]. Emphasis in original.33 At [67]. Emphasis in original.consideration in protecting a settlement reached to conclude litigation is not the sameas that to protect a settlement of a dispute. Indeed, the policy consideration is theopposite because parties in those circumstances must have recourse to the courts todetermine their legal rights.[132] Ms Matthew's submission that it was the settlement agreement which made thefurther proceeding an abuse of process is not sustainable. Asher J was clear that the"background circumstances" – the earlier proceedings – were a key factor. Thesettlement agreement in Nandro arose in the context of proceedings, which werediscontinued. The comparison to Ron's relinquishment is simply not sustainable.Permitting a party to re-open disputes previously settled is not what has happenedhere. It cannot be an abuse of process for Ron to ask the Court for his rights to bedetermined and enforced.[133] The first affirmative defence must fail.Second affirmative defence: equitable estoppelIs equitable estoppel available to Barry?[134] The Court of Appeal concluded Barry holds the disputed amount subject to aresulting trust. Ron seeks to enforce that trust and recover the sum paid to Barry.Barry is subject to equitable obligations. Ron has an equitable interest in the sum butno rights in law to it. A preliminary question for resolution, in relation to Barry'saffirmative defence of equitable estoppel is whether, as a matter of principle, Ron canbe estopped from enforcing Barry's equitable obligations.[135] I first refer to the Court of Appeal judgment in Wilson Parking New ZealandLtd v Fanshawe 136 Ltd.34 The appellant parking company leased land from therespondent. The terms of the lease included a standard right of first refusal. Therespondent needed to act in such a way that this right would be engaged. The appellantindicated it would not seek to exercise the right if the respondent did so. Therespondent proceeded but the appellant subsequently attempted to exercise the right.34 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567.The respondent alleged that the appellant was estopped from doing so. The elementsrequired for estoppel were not in dispute. They were set out by the Court of Appealin the following terms:35(a) a belief or expectation by Fanshawe has been created or encouragedby words or conduct by Wilson;(b) to the extent an express representation is relied upon, it is clearly andunequivocally expressed;(c) Fanshawe reasonably relied to its detriment on the representation; and(d) it would be unconscionable for Wilson to depart from the belief orexpectation.[136] To paraphrase, then, there had to be a belief or expectation induced by the otherparty, whether expressly by words or impliedly by actions; reliance by the one whoreceived the representation; and, detriment arising from that reliance.[137] Drawing these elements together, the position is that it would beunconscionable for the party having induced the belief or expectation to depart fromit. To express this last point in slightly different terms, the appellant parking companyhad a legal right – the right of first refusal – contained in the lease. Its assurance tothe respondent that it would not exercise that right was a representation and therespondent's reliance on that representation was reasonable. The respondent suffereddetriment because having relied on the assurance, the appellant would be able toexercise its right of first refusal. The appellant was estopped from relying on its strictlegal rights because it was unconscionable, in the circumstances, for it to repudiate itsassurance.[138] Here, as explained above, Ron presently has no legal rights to the mixed fund.It is held by Barry, and has been since Ron paid the disputed amount over to him. Ronhas an equitable interest in the mixed fund as he retained, the Court of Appealconcluded, the benefit of the disputed amount. Can Ron be estopped from enforcingBarry's equitable obligations? Ordinarily it seems unlikely. Equity protects the rightsof a beneficiary against a trustee because the relationship of trust and confidence is a35 At [44].fragile one. The sanctions on trustees for failing to discharge their obligations arestern for this reason.[139] However, there is authority for the proposition that Ron may be estopped fromexercising the rights available to him in the resulting trust. In Re Vandervell's Trusts(No 2), the Court of Appeal of England and Wales held that the executors of the estateof the late Mr Vandervell, a wealthy British industrialist whose tax avoidance schemeproved a spectacular failure, could not recover dividends paid on shares held in trustfor his children.36 The House of Lords had already dealt with his estate matters ontwo prior occasions. The facts need to be reviewed because there are some strikingsimilarities to this case.[140] Mr Vandervell died in March 1967. In 1949, he had set up a trust for hischildren. The trustee was a company incorporated by Mr Vandervell for this purpose.In late 1958, he decided to endow a chair of pharmacology at the Royal College ofSurgeons. Rather than make a direct gift, he transferred a particular class of shares inhis company to the college with the intention that the company would pay dividendsto the amount required. Mr Vandervell wanted the shares back and he induced thecollege to grant an option to the trustee.[141] The option provided that the college would transfer the shares to the trustee foran agreed sum, on demand within the following five years. The manner in which thecompany would hold the shares was not, however, specified. This was the issue indispute in this particular proceeding but it does not concern us here. The reason forthese actions, which is of marginal relevance but explains the interest of theCommissioners of Revenue, was to permit the college, as a charity, to claim tax paidback and to avoid payment of a surtax on the dividends.[142] In due course, the trustee exercised the option. The trustee paid the agreed sumto the college using funds held on trust for the children. It was intended byMr Vandervell that the shares acquired by the trustee from the college would be heldon trust for his children. Dividends were paid on these shares in subsequent years andheld by the trustee for the exclusive benefit of the children.36 Re Vandervell's Trusts No 2 [1974] 1 Ch 269 (CA).[143] The significance of the option was that the revenue authorities determinedMr Vandervell was the beneficial owner of the option held by the trustee. It assessedhim as liable for certain taxes on the dividends paid to the college in consequence.These assessments were upheld by the House of Lords in an earlier proceeding.37 Itdid so in finding that while the shares were owned by the college, the option was heldby the trustee on a resulting trust for Mr Vandervell: "He had not divested himselfabsolutely of the shares".38[144] The revenue authorities separately assessed Mr Vandervell for certain taxes onthe dividends paid after the shares were transferred from the trustee. As he had, bythen, passed away, the revenue pursued the executors of his estate. They in turn issuedproceedings against the trustee for a declaration that the dividends paid to the trusteebelonged to Mr Vandervell and were not held in trust for his children.[145] There was a resulting trust in Mr Vandervell's favour (just as the Court ofAppeal has found a resulting trust in Ron's favour). Lord Denning MR found that theresulting trust came to an end when the shares were transferred from the college to thetrust and Mr Vandervell assigned his beneficial interest in the option to the trustee tohold on trust for his children. It cannot be established that Ron acted in this way here.His beneficial interest in the disputed funds was not affected by his actions after Barryclosed the account and transferred them to his solicitor's trust account.[146] However, Lord Denning went on to consider the situation if Mr Vandervell hadretained a beneficial interest. Could his executors claim against his children in thecircumstances? Lord Denning looked first at Mr Vandervell's actions when the optionwas exercised afterwards:39He himself arranged for the option to be exercised. He himself agreed to theshares being transferred to the trustee company. He himself procured hisproducts company to declare dividends on the shares and to pay them to thetrustee company for the benefit of the children. Thenceforward the trusteecompany invested the money and treated it as part of the children's settlement.37 Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 (HL).38 Re Vandervell's Trusts No 2, above n 36, at 319.39 At 321.[147] He concluded that Mr Vandervell's actions demonstrated an absolute gift to thetrustee for his children. In the circumstances, a court of equity would not permit himto claim the dividends back from the trustee as it would be "inequitable and unjust"(and his executors were "in no better position"). The Court of Appeal has found nogift by Ron to Barry so, again, Lord Denning's remarks cannot assist here.[148] However, in the further alternative, Lord Denning found there was an equitableestoppel:40His conduct was such that it would be quite inequitable for him to be allowedto enforce his strict rights (under a resulting trust) having regard to thedealings which had taken place between the parties: see Hughes vMetropolitan Railway Co (1877) 2 App.Cas. 439, 448.[149] In the circumstances I am considering, there is a resulting trust and Ron seeksto enforce his "strict rights" under that resulting trust. As a matter of principle,established by Lord Denning's remarks in Re Vandervell's Trusts, equitable estoppelis available to the trustee of a resulting trust against the beneficiary of that trust whoseeks to enforce the trustee's obligations. It is therefore necessary to consider whetherBarry can establish equitable estoppel on the terms set out by the Court of Appeal inWilson Parking and, if so, what remedy should be given.Representation evidence.[150] In my 2018 judgment, I set out in some detail the different accounts of aconversation in March 2009. According to Ron, it was arranged that he wouldpurchase shares with most of his cash and put them in Barry name as nominal ownerto facilitate the signing of share transfers during Ron's extended stays in Australia.Barry was to hold the shares on behalf of Ron. Barry would receive the shares onRon's death, because they were already in his name. Ron's evidence was that he didnot tell Barry that the money was his inheritance.[151] In contrast, Barry's evidence is that Ron described the money as an inheritance.It was a large amount of money and Ron's proposal was that he would manage it forBarry. Ron asked to borrow some of the money to buy two apartments in Australia40 At 321.and use a small amount for personal expenses. Barry's evidence is that at the time ofthis conversation, he had not seen his mother's will and did not know anything abouthis father's personal financial situation. Barry says he agreed to this arrangement. Hespoke with his wife, Lisa, after this conversation with his father and she confirmsBarry's evidence.[152] The steps taken to implement the arrangement are not relevant to myconsideration here. Nor is Ron's intention. The Court of Appeal found no intentionon his part to gift the money to Barry41 but here I am concerned with what he said toBarry, not Ron's intention. In addition, my general assessment of Ron's credibilityand reliability is relevant. The Court of Appeal noted I was entitled to make suchfindings.42 As I said in my judgment, it is plain Ron will make untrue statements tosuit his purpose at the time.43[153] It is clear from the documentary evidence that Ron thought the disputedamount was part of his wife's estate until at least early 2012. Ron's evidence of thearrangement is at odds with his statements in emails sent to Barry during 2010. I havereviewed this evidence in more detail above. Ron represented to Barry that thedisputed amount was part of Mrs Reid's estate and that Barry was entitled to it underthe terms of her will. I have, in particular, regard to the terms of Mrs Reid's will, thatBarry was clearly the only beneficiary of the will entitled to the disputed amount hadit been part of her estate. Barry says he did not know the contents of Mrs Reid's willat the time of this conversation.[154] I also note that in his (undated) October 2017 brief of evidence, Ron concedesa representation but in different terms:I have also taken into account that initially, I mistakenly believed that half ofthe funds held in our joint account at the time of my wife's death formed partof her estate, and that I communicated this to Barry 41 Reid v Castleton-Reid, above n 2, at [77].42 Reid v Castleton-Reid, above n 2, at [35].43 Reid v Castleton-Reid, above n 1, at [74].I freely admit that this mistake occurred from having had no previousexperience as an executor, and in failing to obtain immediate legal adviceabout my role with respect to my wife's estate immediately after she died.Consequently, I accept some responsibility for initially giving Barry the wrongimpression that half of the funds in the joint account were his inheritance [155] To address the substance of Ron's evidence first, I can place no reliance on theclaim that the representation extended to only half the disputed amount. As notedabove, the documentary evidence establishes Ron did not hold this view at the time ofhis conversation with Barry in March 2009 but much later, after his game of golf inlate July or early August 2010. More importantly, however, Ron admits arepresentation (of sorts).[156] I am satisfied that Ron made the representations alleged by Barry. Such arepresentation is consistent with Ron's understanding at that time that the disputedamount was part of Mrs Reid's estate. The limited representation Ron admits makinghas as its basis, knowledge which Ron says he acquired long after the event. Rontherefore did represent to Barry that the disputed amount in the share trading accountformed part of Mrs Reid's estate and would become Barry's property once Ron's lifeinterest in the funds, as Ron conceived it, had ended.[157] Evidence of subsequent events confirms my finding. First, there is theevidence about how the management arrangement operated in practice. No goodreason for adopting a structure where ownership of the funds was vested in Barry withaccess rights to Ron for the purposes of managing the acquisition and disposal ofshares has been provided by Ron. His absence in Australia for extended periods ishardly compelling, given he was able to effectively manage the share trading accountwhile there. The evidence appears to be that Ron managed the account with no inputfrom Barry. There was no need for him to transfer the funds to Barry in consequence.There may have been other reasons for doing so, such as creditor protection, but theyhave not been raised by Ron.[158] Second, the much-disputed loan documentation signed by Ron is relevantwhen it comes to the management of the share trading account. I attach less weight tothis as evidence in support of the representation but comment on it for completeness.If Barry had understood the disputed amount belonged to him, and had previouslyagreed to Ron using some of it to purchase apartments in Australia, then loandocumentation was necessary to avoid an assessment for gift duty. In suchcircumstances, Barry would have been liable for gift duty and his accountant advisedhim accordingly. Barry's evidence is that the acknowledgment of loan documentswere drafted by his solicitors and sent to him on 31 May 2010. Barry forwarded themon to his father who was in Australia. They are witnessed by Emslie, Ron's brother,who was visiting at the time.[159] Ron disputed the need for loan documents in an email to Barry a few daysearlier, on 25 May 2010, but agreed to sign them. It appears that Ron was mostconcerned that "alarmist" professional advisors had caused Barry to incur anunnecessary cost. Ron's view was that Barry could not be liable for gift duty on theamounts advanced to Ron because the IRD did not need to know how much moneyBarry had inherited or what he had done with it.[160] The email contains the description of Ron's powers under Mrs Reid's will andthe arrangements he had made in purchasing the Australian apartments. As notedearlier, he insisted that the apartments in Australia were acquired for Barry's benefit –otherwise Ron would have been in breach of his duties as executor – and this explainshis concluding comment that the loan documents were "actually contradictory". Thisis because Ron believed the money belonged to Barry under the terms of Mrs Reid'swill. This was made even clearer in another email sent to Barry on 29 May 2010,which stated: "Your grandmum left you the shop and from your mum's estate you gotthe castle, the 21/55 unit and the $1,750,000 originally lodged with James [thedisputed amount]".44 Ron executed the loan documentation because he thought thefunds belonged to Mrs Reid's estate and Barry was entitled to them. This is consistentwith the representation I have found Ron made to Barry in March 2009.44 As stated earlier at [6], the amount in Ron and Mrs Reid's joint account was $1,750,000. However,only $1,700,000 of that amount was deposited in the share trading account.Reliance evidence[161] In closing the share trading account, as his liability for tax and gift dutyincreasingly caused concern to Barry, together with contractual obligations arisingfrom the contract to purchase two apartments entered into by Ron and Mrs Reid beforeher death, which Barry took over, he relied on Ron's representations. It is not clearwhen Barry received Mrs Reid's will, or took legal advice on it, but the terms wouldonly confirm his entitlement to the disputed amount, based on Ron's representations.The money was represented by Ron to be part of Mrs Reid's estate, Barry was thebeneficiary and he understood he was receiving the money, to be managed by Ron, inconsequence. Without knowledge of the joint financial arrangements of Ron andMrs Reid, Barry's only information about the funds was that provided to him by Ron'srepresentations. That reliance was therefore reasonable.Detriment evidence[162] Detriment is a necessary feature of equitable estoppel becauseunconscionability would otherwise not arise from reliance on representations. Thedetriment Barry identifies cannot be characterised as wasted effort but is a foregoneopportunity.45 He has foregone income from paid employment for several years andhas spent money, both in consequence of believing the assets he understood he hadinherited from Mrs Reid's estate would fund his and his family's living expenses formany years. This is a situation where, as Cooke J remarked in Connor v Pukerau StoreLtd, Barry refrained from doing something (working in paid employment) and didsomething (spent money in certain ways) on account of Ron's representations.46Remedy[163] For the above reasons, the necessary elements for equitable estoppel aretherefore established.45 James Every-Palmer "Equitable Estoppel" in Andrew Butler (ed) Equity and Trusts in NewZealand (2nd ed, Thomson Reuters, Wellington, 2009) at 616-618.46 Connor v Pukerau Store Ltd [1981] 1 NZLR 384 (HC) at 386. See Every-Palmer, above n 45, at618.[164] The question which follows is the nature of the remedy available. In WilsonParking, the Court of Appeal addressed the question of an equitable remedy in asituation where the doctrine of equitable estoppel applies in the following terms:47[73] Our review of the authorities suggests that the focus of the inquiry intoan appropriate equitable remedy has moved away from the removal ofdetriment (if that term is construed in a narrow sense) to an inquiry into whatis necessary in all the circumstances to satisfy the equity arising from adeparture from the expectation engendered by the relevant assurance, promiseor conduct on the part of the defendant. An assessment of the nature and extentof the element of unconscionability forms part of the analysis.[165] My concern, therefore, is not with the detriment Barry has suffered, though thisis necessary to establish estoppel, but with the departure from the expectation Ronconveyed by his representation and conduct that the disputed amount was part ofMrs Reid's estate and Barry was entitled to it as beneficiary of her will. The Court ofAppeal further emphasised that the court takes a flexible but principled approach indeveloping a remedy.[166] Further, the remedies available can broadly be described in one of twocategories: reliance-based or expectation-based:48The former is aimed at putting the plaintiff in the position he or she wouldhave been in if the representation had not been made and relied upon. Thelatter is designed to fulfil the expectation relied upon by the plaintiff.[167] From its consideration of authorities on these points, the Court of Appealconcluded that relief depended on:49 the quality and nature of the assurances which give rise to the claimant'sexpectation; the extent and nature of the claimant's detrimental reliance on theassurances; and the need for the claimant to show that it would beunconscionable for the promisor to depart from the assurances given.[168] In general terms, where an assurance is clear and explicit, a court will be morelikely to grant expectation-based relief. Where the consequence of reliance aresignificant (that is, serious detriment arises), expectation-based relief would also be47 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 34.48 At [77].49 At [114].appropriate. However, where expectation far exceeds detriment, expectation-basedrelief is unlikely:50Where the claimant's expectation is seriously disproportionate to thedetriment suffered, the court will be unlikely to grant expectation-based relief.To do so would be to overcompensate the claimant and would be unjust to thedefendant. In such a case, the court would consider whether there may be ameans of satisfying the equity in another way.[169] However, this assessment is not a rigid calculation but a broad assessment ofall relevant circumstances.51[170] The two key considerations in this case are the nature of Ron's representationsand the detriment Barry has suffered. I am satisfied that the representations by Ronwere authoritative and compelling, particularly given the unusual arrangements for theshare trading account. This favours expectation-based relief. However, the detrimentBarry has suffered cannot be described as serious. His decision not to seek paidemployment and live on the proceeds of the property he believed he had inherited fromhis mother and had inherited from his grandmother is the most significant form ofdetriment he identifies. Some of the expenditure on his family members and homecan be characterised as the costs of raising a family and owning property.[171] I accept it is likely parts of his expenditure may not have been incurred withoutthe security of the funds he thought were part of his inheritance from his mother. Asto the apartment purchases, Barry has suffered no loss, so this cannot be seen as adetriment. This does not account for the rental income he has received either. Overall,I do not consider the nature of the detriment Barry has identified is serious and thatfavours reliance-based relief.[172] However, in the final assessment, I can only come to the conclusion thatreliance-based or expectation-based relief would, in the circumstances of this case,give rise to the same remedy. Reliance-based relief would likely leave Barry with allof the disputed amount. Ron's representation was that the disputed amount formed50 At [118].51 In Wilson Parking the Judge ordered specific performance of an agreement to convey the propertyback to the plaintiff, despite the first right of renewal in the lease. The Court of Appeal agreedthis was the appropriate remedy – a reliance-based remedy – given all the circumstances.part of Mrs Reid's estate and Barry was the residual beneficiary of her will and wasthus entitled to it. Barry relied on these representations. Alternatively, Barry'sexpectation, induced by Ron's representation, was that the disputed funds formed partof Mrs Reid's estate and he was entitled to them.[173] At [79] above, I found that in allocating the closing balance of the share tradingaccount between Ron and Barry, the payment to Dee Ann of $800,000 was not arelevant consideration in determining any entitlement Barry might have. Forcompleteness, I note that if I am wrong on this point, and Barry did pay over thatamount to Dee Ann in breach of his obligations under the resulting trust, for the samereasons Ron is also estopped from recovering it from Barry.[174] However, my findings on representation go only to the disputed amount. Theydo not include the income earned on the disputed amount. I do not consider estoppelextends to this amount for two reasons. One is that Ron's representations wereconcerned with the disputed amount alone; only that amount was described as part ofMrs Reid's estate. What would happen to the income earned by Ron's activities wasnot clear.[175] That leads to the second reason I do not consider estoppel extends to thatamount and that is Ron's capacity to appropriate funds from the share trading accountas he wished without objection by Barry. I acknowledge Ron's efforts at one point toexplain those withdrawals, which he said were used to purchase the Australianapartments, in terms of a benefit for Barry, in accordance with Ron's obligations asexecutor of Mrs Reid's estate. However, in general terms the capital sum wasrepresented as part of the estate. In contrast, the income which would be earned fromRon's activities was not addressed; there was silence. In the absence of anyrepresentation, Barry cannot establish estoppel in relation to the income earned.[176] However, the outcome cannot be a straightforward question of requiring Barryto transfer the income to Ron. This is because the share trading account was a mixedfund, comprised of the disputed amount (held by Barry on resulting trust for Ron), thesum realised from the sale of the Air New Zealand and Auckland Airport shares (whichbelonged to Barry) and the income earned. Moreover, withdrawals were made fromthe share trading account by Ron to pay Dee Ann and settle the Australian apartments,depleting the disputed amount considerably. Ron's evidence at this hearing is that theamount paid to Barry to settle the purchase of his apartment was an advance on hisshare of the mixed fund but there is no supporting evidence of this. Indeed, theevidence shows that Ron thought the disputed amount was part of Mrs Reid's estate atthe time of this transaction and so the estoppel extends to that amount for the reasonsset out above.[177] The evidence is generally unsatisfactory for the purposes of dividing theincome with any precision between Ron and Barry. Each contributed to the mixedfund which produced the income, each had different shares of the mixed fund atdifferent times and each is entitled to a share in the absence of estoppel. Given theabsence of clear evidence, a general division is necessary and I consider the profitshould be divided according to the maxim "equality is equity".52 The division of thenet income will be in equal shares to Ron and Barry.[178] Ron's consistent evidence is that the mixed fund generated income of$1,134,047 (or thereabouts). This is calculated by adding the disputed amount, Barry'sfunds and the final withdrawals and deducting all the interim withdrawals. I acceptthis is the most accurate assessment that can be made on the evidence. However, thisis the gross income earned. Or at least the gross income earned without adjusting forany imputation credits received on dividends paid on New Zealand shares, if any. Itis unclear from the evidence whether the share trading account included New Zealandshares, or was exclusively focused on Australian shares. The significance of theAustralian shares is that franking credits attached to dividends paid could not be usedto offset Barry's tax liability for that income in New Zealand. The share tradingaccount also apparently generated capital gains which were treated as Barry's income.[179] An adjustment is necessary to compensate Barry for the tax Ron says Barrypaid. There is nothing in the evidence to suggest that the sum of $1,134,047 is net ofall tax and it seems likely Barry would have incurred this expense after he closed theshare trading account. Ron's evidence, in his affidavit of 28 January 2016, is that52 Thomas v Houston Corbett and Co [1969] NZLR 151 (CA) at 171.Barry paid tax of $300,000 but that amount was to be confirmed. Barry does not giveevidence on any tax he has paid. There is no other evidence as to the amount of taxpaid. In the context of a general division of the income, I can only accept Ron'sevidence and credit this amount to Barry. Adjusting the income earned of $1,134,047by deducting $300,000 gives a final net income for division of $834,047. Barry musttherefore pay Ron $417,023.50 together with a proportion of the interest earned whilethe funds were deposited in the solicitor's trust account. The best evidence available(the trust account records) is that the interest earned in the solicitor's trust account was$1,448.89. Ron's proportion is $391.08.53[180] I conclude with a comment on Ron's evidence that Barry is not entitled to anyinterest on account of the terms of Mrs Reid's will. This evidence is adopted byMs Abdale as her submission. Mr Reid's evidence is wrong and I reject Ms Abdale'ssubmission in consequence. Ron relies on cl 9 of Mrs Reid's will, which reads:I DECLARE that as between the capital and income of my estate there shallbe no apportionment of rents interest dividends and other periodical paymentsfor the period current at my decease.[181] Mrs Reid's will confers a life interest in the castle to Dee Ann. It is standardpractice in a will which creates a life interest to include a non-apportionment clause inthese terms. As the learned authors of Wills and Successions state:54If a life interest in an asset or part or whole of an estate is left to any person orpersons, it is desirable that a provision be included in the will that there shouldbe no apportionment of income on that asset at the date of death of the will-maker and at the subsequent date of death of the life tenant. This avoids theexecutor or trustee or estate administrator having to carry out the painstakingand time consuming (and therefore expensive) process of splitting individualitems of income into what was derived during the time from thecommencement of that income period up to the date of death and from thedate of death to the finishing date of that income period. That exercise isrequired so the first portion of income can be added to the capital assets of theestate and held for the ultimate remaindermen [Barry], and the second part ofthe income can be paid to the life tenant [Dee Ann].[182] The purpose of such a clause is to avoid the difficult task of apportioningcapital and income earned (if any) on the castle following Mrs Reid's death between53 This amount is based on the percentage derived from calculating $417,023.50 as a percentage of$1,545,017.29, being the amount deposited in the solicitor's trust account.54 James Anson-Holland and others Wills and Succession (loose-leaf ed, LexisNexis) at 9.46.Dee Ann's life interest and Barry's residue. It is not a clause designed to preclude abeneficiary from receiving income earned by the estate; the beneficiaries are the onlypeople who can receive such income. In any event, on the plain words of the clause,Barry cannot be denied income earned on his share of the mixed fund.[183] In summary, Barry succeeds on his second affirmative defence of equitableestoppel but only in relation to the disputed amount. The defence does not extend toincome earned on the mixed fund. That is to be divided equally between Ron andBarry after adjusting for tax paid by Barry. Barry must paid Ron $417,414.58 (being$417,023.50 plus $391.08 being Ron's share of the interest earned).Third affirmative defence: change of position[184] Having found that an estoppel arises in Barry's favour, a complete answer toRon's claim to the disputed amount is established. However, if I am wrong on this, Iwill go on to consider the change of position defence. The relationship betweenestoppel and the change of position defences was the subject of a brief remark byTipping J in National Bank of New Zealand Ltd v Waitaki International Processing(NI) Ltd. He said:55It is clear that a defendant to a claim based on a mistaken payment may stillrely on estoppel as well as the section [94B, Judicature Act 1908]; and if anestoppel is established it will protect the defendant from the whole of theclaim, or part, according to its tenor.[185] Change of position is a broader defence which does not require representationor reliance on that representation. It is sufficient that in making a payment there is amistake (whether by the payer or receiver), the receiver alters his or her position onthe basis of the validity of the payment, and the circumstances are such that it wouldbe unjust or inequitable for all or part of the payment to be returned. Although it is abroader defence, it also opens up a much wider discretion to achieve justice betweenthe parties.55 National Bank of New Zealand Ltd v Waitaki International Processing (NI) Ltd [1999] 2 NZLR211 (CA) at 232.[186] The change of position defence exists in two forms in New Zealand. First,there is s 94B of the Judicature Act 1908, which provides:5694B Payments made under mistake of law or fact not alwaysrecoverableRelief, whether under section 94A or in equity or otherwise, in respect of anypayment made under mistake, whether of law or of fact, shall be denied whollyor in part if the person from whom relief is sought received the payment ingood faith and has so altered his position in reliance on the validity of thepayment that in the opinion of the court, having regard to all possibleimplications in respect of other persons, it is inequitable to grant relief, or togrant relief in full, as the case may be.[187] Alternatively, there is the defence recognised by the House of Lords in LipkinGorman (a firm) v Karpnale Ltd.57 Lord Goff of Chieveley stated it would be unjustto allow restitution "where an innocent defendant's position is so changed that he willsuffer an injustice if called upon to repay or to repay in full, the injustice of requiringhim so to repay outweighs the injustice of denying the plaintiff restitution."58 Thisprinciple was adopted by the Court of Appeal in National Bank of New Zealand Ltd vWaitaki International Processing (NI) Ltd.59 The Court of Appeal described thisvariously as the "equitable principle" or the "Lipkin Gorman principle". Ms Matthewcites both in her submissions but does not identify which she relies on.[188] Henry J in his judgment in Waitaki explained the relationship between the twoin this way:60In my view there is here no inconsistency or conflict between s 94B and theprinciple enunciated in Lipkin Gorman. The section requires relief to bedenied in whole or in part in certain stated circumstances. It does not say thatrelief must be given in all other circumstances; in other words the section doesnot provide an exclusive regime for denying relief to a mistaken payer.[189] He added:6156 Enacted by s 2 of the Judicature Amendment Act 1958. This provision was repealed by s 6 of theProperty Law Amendment Act 2016 on 1 March 2017 and replaced, with a minor amendment, bys 74B of the Property Law Act 2007. The Judicature Act was the provision in force at the time ofthe relevant transactions.57 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 (HL).58 At 579.59 National Bank of New Zealand Ltd v Waitaki International Processing (NI) Ltd, above n 55.60 At 219.61 At 219.The Lipkin Gorman principle can be stated as being that it is a defence to aclaim for repayment of money paid under a mistake that the defendant'sposition has so changed that it would be inequitable in all the circumstancesto require restitution in whole or in part. If that is a wider concept than s 94B,then it can sit comfortably alongside it, just as s 94B can sit with the doctrineof true estoppel. It may be that the equitable principle has now overtaken andembraces the statutory provision, which could be seen as no longer necessaryto provide an otherwise unavailable remedy. But the existence of s 94B is noreason for refusing to allow the equitable principle to operate, nor forinhibiting its development.[190] Tipping J stated the principle "operates in parallel with s 94B and irrespectiveof whether that section itself applies".62 The principle confers "largely parallel relief".[191] Thomas and Tipping JJ disagreed with Henry J on the application of thestatutory defence to the particular facts. Thomas J accepted the payment had beenreceived in good faith but concluded that Waitaki had not altered its position in relianceon the validity of the payment. Thomas J focused on the change of position required.Tipping J, in contrast, emphasised that the payment had to be valid. The alteration hadto come from the receiver genuinely thinking it was entitled to the funds.[192] Knowledge of the mistake by the receiver precluded the statutory defence.Waitaki, knowing of the mistake (and having advised the bank of its error), receivedthe payment and initially attempted to preserve the sum in anticipation of a demandfor its return. It both knew the payment was not valid and did not alter its position.Thomas J concluded that the equitable principle was available to Waitaki because it"possesses a flexibility which permits the Court to recognise that in certaincircumstances where money has been paid to another it would be unjust to allowrestitution or restitution in full."63[193] Henry J stated that the statutory defence would not be available to a wrongdoeror someone who has received a payment and acted in bad faith.64 Otherwise, balancingthe equities is an identical inquiry under either the statutory defence or the equitableprinciple.6562 At 232.63 At 228.64 See also Thomas v Houston Corbett and Co, above n 52, at 165.65 At 220. Compare McGregor J in Thomas v Houston Corbett and Co, above n 52, at 176: thestatute confers "a wide discretion to do what it seems to be just" and, at 178, the "quantum [ofrelief] is not capable of precise calculation. It is a matter of discretion on which opinion may[194] There are, therefore, two preliminary matters in relation to the statutorydefence. First, I accept Barry received the payment in good faith. He received moneyfrom Ron which he was told by Ron was part of Mrs Reid's estate. Barry was alsotold that the money would become his. Ron was to manage it in the share tradingaccount. Barry was entitled to take Ron's statements at their face value. Barry had noreason to doubt his father's statements.[195] Second, in reliance on the validity of the payment, Barry altered his position.He did this in several ways. He closed the share trading account, and transferred thefunds to his solicitor's trust account. The funds were then paid out to him. He stoppedwork and did not seek paid employment elsewhere. He spent money, including tosettle the purchase of an apartment he had previously contracted to buy and to settlethe purchase of another apartment his parents had contracted to buy. He spent othermoney on his properties and on his family. I emphasise that it is not necessary toestablish loss or detriment for the purposes of the statutory defence but only analteration to Barry's position. He did so in reliance of the validity of the payment byRon.[196] As to the Lipkin Gorman principle, there are no preliminary matters and I canmove straight to balancing the equities in the manner proposed in Waitaki and Thomas.Henry J's observation in Waitaki establishes the exercise is the same for either defence.To undertake that assessment in this case, it is useful first to consider the balance struckby the Court of Appeal in those two proceedings. Features of both are relevant to thefacts here.[197] I will start with Thomas. The third party was employed by the respondent (afirm of solicitors). The appellant was acquainted with the third party and asked himabout the investment of a sum of money. This was arranged by the third party throughthe respondent. Part of the amount invested was immediately appropriated by the thirdparty. Part was deposited with the respondent. Two transactions followed involvingdiffer to some extent. McGregor J concluded the receiver should be relieved of the liability forthe entirety of the lost money arising from the actions of a third party employed by the payer.However, he disagreed with the division proposed by North P and wanted to give greater relief tothe receiver. The judges agreed on the receiver carrying one third of the burden of the loss andthe payer carrying two-thirds, owing to the balance of equities.the appellant's bank account. An amount was requested by the third party from theappellant who paid it to him by cheque on the basis that all amounts the appellant hadpaid, with interest, would shortly be received in his bank account. A deposit arrangedby the third party, of funds belonging to the respondent, did follow. The third partyabsconded having cashed the cheque given to him by the appellant. The third partyhad fraudulently arranged the deposit, leaving the appellant with what he thought wasa return on his investment, which the respondent looked to recover.[198] Each judge undertook a balancing exercise. North P acknowledged theappellant was entitled to deal with the third party as an employee of the respondent.The Judge considered the respondent was in a better position to assess the third party'scharacter than the appellant. The lavish lifestyle the third party was said to live didnot put the appellant on notice. Indeed, the respondent's principals were more likelyto attach significance to this as he was undertaking work involving payments from thefirm's trust account. The appellant was a recently qualified hospital clinician withlittle experience of the kinds of transactions law firms undertake. North P concluded"the equities are pronouncedly in the appellant's favour".66 Turner and McGregor JJtook the similar factors into account and reached the same conclusion.[199] In Waitaki, the appellant bank had paid to the respondent firm a sum of money.The bank was in error in paying that sum and the firm had pointed this out. However,the bank insisted it was correct and paid the money over. The firm anticipated a futuredemand for the return of the money when the bank realised its error and invested it incertain securities. After a period, the investment was altered. The security wasinadequate and the money was lost. Although the Judges disagreed on the applicationof s 94B, they all undertook the same balancing exercise in reviewing the Judge'sexercise of a discretion, whether under the statute or the Lipkin Gorman principle.[200] Knowledge of the mistake was not a barrier to the defence. The money wasnot spent by Waitaki as part of its ordinary business. The security for the investmentwas inadequate (a matter of some concern to Henry and Thomas JJ), and Waitaki wasat fault in this regard, but Waitaki took steps to protect the money. The bank was66 At 165.insistent that the money should be paid to Waitaki despite the latter's protest. Thebank did not follow its own internal procedures and caused some delay in discoveringthe error. The bank was on reasonable notice of its error from Waitaki and should havefound the error sooner. Taking into account these factors, the Court of Appeal wassatisfied that the Judge was right to conclude that it would be inequitable for Waitakito have to repay more than 10 per cent of the amount received.[201] The assessment I must undertake is described in these terms by Thomas J inWaitaki:67Those factors which render either restitution, on the one hand, or retention onthe other, just or unjust, must be identified and weighed as against each other.[202] What are the relevant factors here? I will start with knowledge. Barry had noknowledge of Ron's mistake about the ownership of the funds. He was told by Ronthat the funds were part of Mrs Reid's estate. He had no reason to doubt that. Thearrangement he agreed to with Ron had unusual features but he had no reason toquestion Ron's explanations at the time the money was paid over.[203] Nor is Barry at fault. Indeed, he was an innocent party in all of these events.His family's financial arrangements were somewhat complex but it appears Barry hadlittle, if any, role in them prior to Mrs Reid's death. As the arrangements relating tothe disputed amount (especially in relation to tax and gift duty), the mortgage on thecastle, and the contract entered into by his parents to purchase two apartments, startedto unravel in the first half of 2010, Barry took steps to preserve the legacy heunderstood he had received from Mrs Reid.[204] In contrast, Ron was certainly at fault. He was the sole executor of a large andvaluable estate and apparently took little legal advice in its administration, which washaphazard.68 He thought funds which belonged to him were part of Mrs Reid's estate.He incorrectly interpreted his role as executor of Mrs Reid's will to advance his own67 National Bank of New Zealand Ltd v Waitaki International Processing (NI) Ltd, above n 55, at229.68 This is confirmed by a letter in evidence from a law firm dated 15 February 2010 dealing withMrs Reid's estate. The letter records Ron signed a waiver of independent legal advice on 1 April2009. The copy of the waiver enclosed with the letter is not in evidence.interest, in breach of his duty to the beneficiaries. He obfuscated and prevaricatedwhen asked for information, gave crude opinion as fact and eventually attempted tobully Barry into providing a portion of the income earned on the disputed amount bythreatening complaints to Police.[205] This is not, in my view, a situation where Ron, an elderly person, has beendeprived of his money by dishonest family members. There are several reasons forthis assessment. First, in my earlier judgment I acknowledged that he was intelligentand quick witted.69 That is an important consideration. Second, it is notable thatMrs Reid owned the most significant family assets in her own name and had inheritedthem from her parents. Ron did not receive these assets under the terms of her will.The family arrangements, while Mrs Reid was alive and afterwards given the terms ofher will, seem to have been specifically intended to leave Ron without assets. It isnotable, in this regard, that Ron could not make the payment to Dee Ann because hedid not have a cheque account. This was not because of any action by Barry or DeeAnn but reflected Mrs Reid's arrangements during her lifetime, including the terms ofher will. Third, it was Ron's mistake that the disputed funds formed part of Mrs Reid'sestate; Barry and Dee Ann did not have any knowledge of the situation beyond whatRon told them. Barry's efforts to understand his parents' financial arrangement (forthe purposes of determining various liabilities), in particular, is a striking feature ofthe email correspondence with Ron.[206] However, there is one key factor which favours Ron. It appears Barry has notsuffered any loss. If anything, his net position has improved. In appropriating thefunds, he acquired two Eclipse apartments, which were appreciating assets. Theevidence is not entirely satisfactory, but Barry says the two Eclipse apartments weretransferred to a company controlled by him, later sold and the money used to purchaseanother property near Glenfield. He has presumably received rental income whileowning those properties. There is no affidavit evidence as to sale price but documentswhich Ms Abdale annexes to her submissions indicate the Glenfield property sold inFebruary 2019 for $750,000.69 Reid v Castleton-Reid, above n 1, at [58].[207] Barry has enumerated his spending and given evidence that he has been out ofpaid employment for some years. I also recognise that Barry should not be penalisedfor using the disputed amount wisely. The situation should not be different becausehe did not immediately spend all the money he received.[208] In balancing these factors, I have reached the conclusion that it would beunconscionable for Barry to be required to repay the disputed amount to Ron in full.However, the competing equities cannot be satisfied without Barry sharing some ofthe benefits he has accumulated from the funds which belonged to Ron. Ron hasalready received $578,667 – the amount he withdrew from the share trading account.Barry was told to use $395,169.61 to buy his apartment.70 He is entitled to retain thatamount.[209] After closing the share trading account, Barry paid $358,338.40 plus legalexpenses of $19,500.57 to settle the contract entered into by his parents to purchasean apartment. I earlier determined (in [96] above) that Barry took title in his name andheld the property on the resulting trust for Ron, subject to his affirmative defences.The evidence indicates Ron was intending to avoid his contractual obligations (andwas taking advantage of Barry holding the disputed amount to do so). The balance isfine on this amount but I consider Barry must return to Ron the amount used to settlethis Eclipse apartment. However, Ron does not claim any of the rental income on thatapartment but, in any event, Barry is entitled to retain it. Barry is also entitled to retainany increases in value he has received in investing the funds in the property. Thatavoids penalising him for investing the money wisely and also reflects his role indischarging contractual obligations Ron was attempting to avoid.[210] I come finally to the profits from the share trading account. An adjustment fortax paid is required for the reasons set out above in [179]. Likewise, and again for thereasons set out above in [177], the net income should be divided equally in two in theamounts specified. In consequence, if I am wrong on my decision on the secondaffirmative defence of equitable estoppel, Ron would have been entitled to more of70 I have adopted this figure as it accords with the withdrawals from the share trading account. Asis apparent from this judgment, various sums which approximate this amount have been referredto by both parties.the disputed amount under this defence. That is, not only would he be entitled to$417,023.50, being a half share of the net income earned by the mixed fund plus$391.08 being his share of the interest earned while the funds were deposited in thesolicitor's trust account, but also to $358,338.40, being the purchase price of theEclipse apartment which Ron and Mrs Reid had contracted to buy. This reflects thedifference between equitable estoppel and change of position defences.Interest[211] This case commenced prior to 1 January 2018. Section 87 of the JudicatureAct therefore applies. It provides:87 Interest on debts and damages(1) In any proceedings in the High Court, the Court of Appeal, or theSupreme Court for the recovery of any debt or damages, the courtmay, if it thinks fit, order that there shall be included in the sum forwhich judgment is given interest at such rate, not exceeding theprescribed rate, as it thinks fit on the whole or any part of the debt ordamages for the whole or any part of the period between the date whenthe cause of action arose and the date of the judgment:provided that nothing in this subsection shall—(a) authorise the giving of interest upon interest; or(b) apply in relation to any debt upon which interest is payable asof right, whether by virtue of any agreement, enactment, orrule of law, or otherwise; or(c) affect the damages recoverable for the dishonour of a bill ofexchange.(3) In this section the term the prescribed rate means the rate of 7.5% perannum, or such other rate as may from time to time be prescribed forthe purposes of this section by the Governor-General by Order inCouncil.[212] From 1 July 2008 to 30 June 2011, the prescribed rate of interest was 8.4 percent, and from 1 July 2011 until the Act was repealed, the prescribed rate of interestwas five per cent. The power to award interest under this provision is discretionary.That discretion is to be exercised in the interests of justice.7171 Day v Mead [1987] 2 NZLR 443 (CA).[213] Is Ron recovering a debt or damages or looking to enforce an obligation? InWorldwide NZ LLC v NZ Venue and Event Management Ltd, the Supreme Courtadopted the approach of the House of Lords in BP Exploration Co (Libya) Ltd v Hunt(No 2) that the words "debt or damages" should be construed widely, "so that theycover any sum of money which is recoverable by one party from another, either atcommon law or in equity ".72 The Supreme Court's conclusion was that the phrase"any debt or damages" is a "a composite expression covering all proceedings where aclaim for money is made".73 Ron has made a claim for money. It therefore satisfiesthe "any debt or damages" requirement of s 87(1). Although Ron is technicallyseeking to enforce an obligation, his causes of action are framed as a claim for money.Ron wants Barry to give back the money he entrusted to him.[214] The causes of action arose when Ron demanded return of the money. That didnot occur when Ron transferred the funds to Barry. This was, the Court of Appealfound, when the resulting trust arose, but Barry held those funds with Ron's consent.Nor did it occur in 2010, when Barry closed the share trading account. Ron certainlyremonstrated with Barry about this action and demanded access to the funds. But hedid so on the basis of various mistakes. It was not until proceedings commenced thata clear demand was made for payment of the funds on a proper legal foundation.[215] While the funds were held by Barry on resulting trust for Ron from the time ofthe first transaction, and Barry was liable to repay those funds on demand by Ron, inmy view, at least for the purposes of establishing a cause of action, that demand neededto be made on a proper legal basis. It was not good enough for Ron to simply asserthis right to the funds. All of the correspondence with Barry and other family membersin 2010 and 2011 demanding some or part of the return of the funds were predicatedeither on Ron's incorrect understanding of the terms of Mrs Reid's will or on the basishe was entitled to a half share in Mrs Reid's estate. These were not a proper basis fordemanding the return of the funds. That proper legal basis did not arise until Ronreceived legal advice that the funds belonged to him as survivor. In my view, therefore,the date when the causes of action arose was the date Barry was served with the72 Worldwide NZ LLC v NZ Venue and Event Management Ltd [2014] NZSC 108, [2015] 1 NZLR 1at [25].73 At [36].proceedings.74 It contained a proper basis for the return of the funds and Barry'srefusal to pay those funds gave rise to the causes of action. That date is 15 December2015.[216] Alternatively, Ron's mistakes as to his rights to the funds caused considerabledelay in his commencing proceedings and Barry should not be liable for this periodeven if Ron was without his money. His claim to the money was mistaken and he didnot know it was his. These are exceptional circumstances which should affect theperiod of interest, though I would not characterise this as Ron sleeping on his rights;he simply did not know what his rights were and took no proper steps to identify themfor some time.75[217] As to the appropriate rate, the prescribed rate is a maximum and the Act confersa discretion on the rate of interest awarded.76 The general practice is to award theprevailing commercial rate during the relevant period.77 Interest rates have declinedconsiderably since the prescribed rate was set in July 2011 and further since theproceeding commenced in December 2015. To award the maximum rate of interestwould not be in the interests of justice in this case in consequence. The average of the90-day bank bill rate between December 2015 and August 2020 is approximately 1.76per cent. I consider interest at 2.5 per cent adequately compensates Ron for being outof his money during this period.[218] Interest at the rate of 2.5 per cent from 15 December 2015 is awarded on$417,023.50.7874 This finds some support in Tauranga Harbour Board v Clark [1971] NZLR 197 (CA), though thepolicy considerations addressed by North P and Turner J are likely very different in this case andit must be recognised that there is no fixed rule. In addition, in Wilson & Horton Ltd v Attorney-General [1997] 2 NZLR 513 (CA) at 530, the Court of Appeal observed it is usual in other typesof proceedings to delay the start of interest until proceedings are issued.75 Equiticorp Industries Group Ltd (In Statutory Management) v R (no 3) (Judgment no 51) [1996]3 NZLR 690 (HC) at 694.76 Kirk v Vallant Hooker & Partners (2000) 15 PRNZ 9 (CA) at [19].77 Wilson & Horton Ltd v Attorney-General [1997] 2 NZLR 513 (CA) at 530.78 Interest is not awarded on the (small) sum of $391.08 which is interest earned in the solicitor'strust account, as that would be an award of interest on interest.Result[219] My decision in summary is as follows:(a) Barry is not liable for the $800,000 paid to Dee Ann from the disputedamount;(b) Barry is liable under the terms of the resulting trust to repay to Ron theamounts he used to purchase his Eclipse apartment and the Eclipseapartment Ron and Mrs Reid had contracted to buy. However theliability for both is subject to his second affirmative defence on which,as relevant to this liability, Barry succeeds. See (d) below;(c) Barry's first affirmative defence of abuse of process fails;(d) Barry's second affirmative defence of equitable estoppel succeeds. Heis therefore not liable to repay the amounts used for the purchases ofthe two Eclipse apartments referred to in (b) above. This defence doesnot extend to the income earned on the mixed fund. The net income isto be shared equally between Ron and Barry. Barry must thereforerepay Ron the sum of $417,023.50 together with $391.08 being aproportion of the interest earned while the funds were deposited in thesolicitor's trust account. The total amount Barry must repay Ron is$417,414.58;(e) Having found in favour of Barry on the second affirmative defence itwas not strictly necessary to consider his third affirmative defence,change of position. However I did so in case I was wrong in finding infavour of Barry on the second affirmative defence. If I had not foundin favour of Barry on the second affirmative defence, he would havebeen required to repay more to Ron under the affirmative defence ofchange of position. In addition to the $417,414.58 referred to in (d)above, he would also have been required to repay $358,338.40 beingthe amount paid to settle the purchase of the Eclipse apartment that Ronand Mrs Reid had contracted to buy.Orders[220] I order that Barry pay to Ron the following amounts:(a) $417,414.58 being Ron's half share of the net income earned on themixed fund ($417,023.50) and a proportion of the interest earned whilethe funds were deposited in the solicitor's trust account ($391.08); and(b) Interest on $417,023.50 at the rate of 2.5 per cent from 15 December2015.Costs[221] Each party has had a measure of success. The parties may therefore considerthat costs should lie where they fall. In that case, or if the parties do not agree costsshould lie where they fall but if they are able to agree costs, then a joint memorandumshould be filed within 20 working days of the date of this judgment.[222] If the parties do not agree that costs should lie where they fall and if they arenot able to agree costs, each party may file (contemporaneously) a memorandumwithin 10 working days of the date for the joint memorandum.[223] Each party may reply to the other's memorandum within a further five workingdays.[224] Costs memoranda should not exceed five pages, excluding any attachments. Iwill determine costs on the papers.___________________________________Gordon J