Bethell and Another v Bethell

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeRanderson
Judgment Date05 September 2014
Neutral Citation[2014] NZCA 442
Docket NumberCA33/2014
Date05 September 2014

[2014] NZCA 442

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Randerson, Wild and White JJ

CA33/2014

BETWEEN
Victoria Elizabeth Bethell as Administrator of the estate of R M Bethell and Maria Gael Bethell
Appellants
and
Christine Anne Bethell
Respondent
Counsel:

S A Grant and H E McQueen for Appellant

R J Thompson for Respondent

Appeal against the granting by the High Court (HC) of an order for specific performance requiring transfer of land as provided for in a deed of family arrangement — deed of arrangement modified will — will left principal block of land to testator's son but provided that the respondent daughter was entitled to a life interest in 10 acres of land including an area known to the family as the camping ground — further provided that if subdivision could be achieved the respondent would be entitled to have the area transferred to her absolutely — deed provided that respondent could call for an allotment of up to 10 acres in the area known as the camping grounds near the main road at any time during son and daughter's joint lives if subdivision could be achieved — respondent gained subdivision consent but her brother refused to transfer the 10 acres claiming she was only entitled to the smaller area comprised in the camping ground — what was the correct approach to construing a deed of family arrangement — whether the respondent had a right to specific performance — whether one of the appellants had a prior equitable interest by virtue of a Property (Relationships) Act 1976 agreement.

The issues were: what was the correct approach to construing a deed of family arrangement; the whether the deed was to be interpreted as giving Chrissie the right to call for 10 acres including the camping ground or only the camping ground area; whether Chrissie had a right to specific performance; whether Maria had a prior equitable interest as Chrissie's interest was obtained when she was granted resource consent which was subsequent to Maria and Ross’ property agreement.

Held: The evidence in the High Court, particularly that adduced by the appellants, ranged over an unacceptably wide area. Much of it was irrelevant to the issues and reflected the bitterness of the dispute between the parties. There was also evidence of the subjective intentions of family members which the Judge rightly rejected as inadmissible for the purposes of interpreting the deed. The case graphically illustrated the risks inherent in the indiscriminate introduction of extrinsic evidence beyond the terms of the documents the interpretation of which was at issue.

The reference to 10 acres in the deed was drawn from the terms of John's will. The parties to the deed intended to retain the meaning of this phrase as it was used in the will. The reference to 10 acres in the will constituted background knowledge available to the parties at the time of entering the deed.

Both the will and the deed had to be read together. The whole purpose of the deed was to modify, clarify or confirm the terms of the will. Some provisions of the will remained while others were said to be amended or clarified by the deed.

In construing a deed of family arrangement which set out to modify the terms of a will, an approach more akin to that adopted in the construction of a will should be considered. Such an approach would (subject to any contrary intention evident from the terms of the deed) give weight to John's original intention to provide Chrissie with 10 acres of land either as an outright gift or, if subdivision consent could not be obtained, by way of a life interest.

A recent UK Supreme Court case had held that the approach to interpreting wills should be the same as that for interpreting commercial contracts ( Marley v Rawlings). Whether this case was approached on the basis of the principles applicable to will construction or by applying principles conventionally applied to the construction of commercial contracts, the background facts known to the parties at the time of the will and the deed were relevant. Prominent amongst these was the undisputed evidence that John, Ross, and Chrissie all knew that the camping ground was much less than 10 acres in area.

The phrase in the will that the interest conferred on Chrissie was to comprise ““ten (10) acres more or less together with the camp and shop buildings thereon (if any) …” meant that the 10 acres to be let to Chrissie during her lifetime at a nominal rental was to comprise a total of 10 acres (more or less) and was not confined to the smaller area the family knew as the camping ground itself. Since the key members of the family knew full well that the area of the camping ground itself was much less than 10 acres, a smaller area would have been specified if Chrissie's interest was to be limited to the camping ground itself.

Evidence relating to post contractual events did not meet the test of shared or mutual post-contract conduct in the sense identified by Tipping J in Vector Gas Ltd v Bay of Plenty Energy Ltd. The matters identified reflected the separate and opposing views of the parties as to what they agreed to, such as attempts to rely on what was said on each side at a meeting on 25 September 2005 after the dispute arose. Material of that kind was not admissible and did not assist. Nor did unilateral actions such as Ross moving the White House onto the land claimed by Chrissie.

Chrissie's entitlement under cl 6(i) was not limited to the area of the camping ground itself but extended to an allotment of up to 10 acres in that vicinity.

The equitable estate passed in a conditional contract when equity would, by injunction or otherwise, prevent the vendor from dealing with the property inconsistently with the contract of sale, i.e. inconsistently with the purchaser's contingent ownership rights (Bevan v Smith). Whether the equitable interest had passed depended on the terms of the contract itself. Equity had to act according to the nature of the contract and the practical situation of the parties.

It was plain from the express language of cl 6(i) that it was intended Chrissie would have distinct elements of choice. First, she was entitled to call for an allotment at any time so long as any subdivision approval was obtained during the joint lives of Ross and herself. Although it was unlikely that subdivision consent could have been obtained at that time, there remained the possibility that the rules might in future change and that the approval might be obtained. The clause was clearly intended to allow Chrissie to make her call against that future prospect at any time provided the subdivision consent was obtained during the joint lives of Ross and herself.

Chrissie also had a choice as to the size of the allotment. It could be any area up to a maximum of 10 acres. It was implicit that Chrissie would also have a choice about the shape of the allotment so long as it was within the vicinity of the camping grounds near the main road and provided the area was no greater than 10 acres. There was nothing in cl 6(i) to suggest that Chrissie was required to obtain Ross's consent to either the size or shape of the land she called for. Again, an approach more consistent with that adopted in interpreting a will was appropriate.

Chrissie's right to choose or elect the final shape of the 10 acres was also supported by settled principles applicable to will construction and, by analogy, to a deed of family arrangement modifying a will. The court would, if necessary, settle the boundaries of the land itself. This would be consistent with the well-established principle that the court would do its best to uphold a testator's intention and, by analogy, the intention expressed in a deed of family arrangement such as that in the present case.

Ross had both express and implied obligations under cl 6(i). As to express obligations, he was required to sign such survey plans, memorandum of transfer or other documentation “to enable [Chrissie] to receive the said area …”, subject to the local authority's approval. Ross had an implied positive obligation to facilitate the allocation and subdivision. Correspondingly, Ross had an implied negative obligation not to do anything that would impede Chrissie from securing the allotment. These implied obligations stemmed from the express terms of cl 6(i) and by analogy with the well-understood implied obligations in contracts for the sale and purchase of land. These included the implied obligations to take reasonable steps to fulfil a conditional contract.

Ross also had an implied obligation to hold sufficient land in the vicinity of the camping ground to enable Chrissie's call to be implemented when she exercised the right to do so. That obligation was part of his obligation to facilitate the allocation and subdivision of the land.

In refusing to agree to Chrissie having an interest in the land beyond the area of the camping ground itself, Ross breached his contractual obligations under the deed.

In terms of the deed, Chrissie's equitable interest arose immediately on the deed being signed, irrespective of the fact that she had not then called for the land nor identified the size and shape of the allotment. Chrissie's equitable interest was sufficient to support a caveat as recognised in 2005. It also provided a sufficient basis to enable her to apply for injunctive relief should Ross endeavour to sell the land or to grant an interest in it which would have priority over Chrissie's interests. Similarly if he took any other step that was inconsistent with her entitlement or which would impede its realisation.

There was no need for precise definition of the boundaries of the land. Within the express parameters of cl 6(i) as to maximum size and the location of the land, it was Chrissie's right to define the shape of the allotment.

By virtue of s21F Property (Relationships) Act 1976 (PRA), the agreement between Ross and Maria in 2004 was...

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