Christopher Crampton-Smith v Noeline Gail Crampton-Smith

• Jurisdiction: New Zealand
• Judge: Stevens J
• Judgment Date: 12 August 2010
• Neutral Citation: [2010] NZHC 1582
• Docket Number: CIV-2006-463-000840
• Court: High Court
• Date: 12 August 2010

Between

Christopher Crampton-Smith

Plaintiff

and

Noeline Gail Crampton-Smith

Defendant

[2010] NZHC 1582

CIV-2006-463-000840

IN THE HIGH COURT OF NEW ZEALAND

ROTORUA REGISTRY

Application for proceeds of the sale of 2 properties — parties were siblings — plaintiff alleged 2 properties were purchased on his behalf and held on trust — allegations the defendant had breached that trust or failed to account for the sale proceeds — whether the properties were the subject of an express or resulting trust.

Counsel:

J D McBride for the plaintiff

M S McKechnie for the defendant

JUDGMENT OF Stevens J

Table of Contents

	Para No
Introduction	[1]
Factual background	[5]
The pleadings	[15]
Plaintiff's case at trial	[26]
Submissions for the defendant	[29]
Applicable legal principles	[32]
Discussion
Synthesising the competing claims	[45]
Reconciling the two approaches	[50]
Proof of intention	[51]
Factual aspects
Background context	[53]
Factual findings	[58]
Result	[77]
Costs	[79]

Introduction

1 This case involves the tragic falling out between a brother and sister. In earlier times, the brother was extremely close to his sister and her late husband. The brother comforted his sister after her husband's death following an illness of three years and, among other forms of support, provided considerable financial assistance to her and one of her sons when they lived in Australia. The sister has since sold up in New Zealand and now lives in the United Kingdom with another son.

2 Prior to the sister's departure, she sold two properties which she had developed in Ngongotaha near Rotorua. The properties were situated on two subdivided lots on which the sister had constructed townhouses in 2004. The two properties were sold for a total of $511,000. The original section had been purchased as undeveloped land in the name of the sister in 1993 for $10,000 in the circumstances explained below.

3 The brother, as plaintiff, has brought a claim against the sister, as defendant, seeking judgment for the whole sum of $511,000 plus interest and costs. 1 The sole cause of action is for breach of trust alleging that the defendant has failed and/or refused to account to the plaintiff for the sale proceeds of the two properties. The

defendant has denied any liability to the plaintiff contending that she was always the beneficial owner of the two properties

4 For the reasons set out below, the plaintiff has not succeeded in establishing his claim. It follows that there must be judgment for the defendant.

Factual background

5 In September 1987, the plaintiff, who lived in Australia, visited the defendant and her husband in Rotorua. They had recently purchased a block of land at 13 Te Manga Place, Ngongotaha. The plaintiff says he spoke to the defendant about the possibility of buying land in the Rotorua area for himself, but did not pursue that possibility at the time. In April 1992, the plaintiff again visited the defendant and her family. He says that on this occasion he saw two properties, one at 3 Te Manga Place, the other next to the defendant's land and situated at 11 Te Manga Place. Both properties were unfenced and undeveloped with no buildings on them. It seems that during this visit the plaintiff and his then partner opened a joint account with Postbank into which $100 was deposited on 27 April 1992. The defendant was given drawing authority on the account.

6 In October 1992, there was a telephone discussion between the plaintiff and the defendant regarding the availability for sale of 3 Te Manga Place for a purchase price of $10,000. The plaintiff says that the property was purchased for him as an investment, although the purchase price was paid from funds provided by his partner, apparently from the estate of her late father. The funds were sent to New Zealand in December 1992 and the transaction was settled at that time. There is no dispute that the title to the property was registered in the name of the defendant.

7 A year later in October 1993, there was a further telephone discussion between the plaintiff and the defendant during which the purchase of 11 Te Manga Place (the property) was discussed. On 11 October 1993, the sum of $12,467.01 was deposited into the Postbank account. The following day the defendant withdrew $12,000 from the account. It seems that this amount was used for the purchase of the property, the title to which was again registered in the name of the defendant on 29 October 1993. The defendant contends that she is the beneficial, as well as the legal, owner of the property on the basis that the funds used for the purchase were a loan from the plaintiff.

8 The defendant's husband, a well known Rotorua lawyer named Michael Quirke, was diagnosed with cancer in 1994. The plaintiff visited the defendant and her husband several times during the course of the latter's illness. There is no dispute that the property at 3 Te Manga Place was sold in March 1995. The plaintiff says that he was contacted by the defendant to advise him of the sale for the sum of $10,000. He recalls that the defendant and her husband considered the property to have been a bad investment and saying that he was “lucky to get [his] money back”. Shortly thereafter, the sum of $10,000 from the sale was transferred into the Postbank account.

9 Importantly, the plaintiff claims that during the telephone conversation relating to the sale of 3 Te Manga Place, he became aware for the first time that the titles to both properties had been registered in the name of the defendant. He also says that the sale of 3 Te Manga Place was carried out without his permission.

10 The defendant's husband died in October 1997. Thereafter, the plaintiff supported his sister by making regular visits to see her and her family in New Zealand. Around October 2000, the defendant and her son went to live in Australia where they lived until the end of 2002. During this time, it seems that the plaintiff further supported her in numerous ways, including financially.

11 With respect to the property, the plaintiff claims that he contributed to outgoings, such as rates and other expenses, by reimbursing the defendant. In evidence, the plaintiff suggested that from time to time he had work carried out on the property for which he personally made payment. But he acknowledged that from 2000 or 2001 he ceased making any contributions towards the upkeep of the property and the payment of rates. No records were produced by the plaintiff to support any such payment to the defendant for rates or other expenses or to contractors or workers for maintenance on the property.

12 Following the return of the defendant to New Zealand, she undertook at her cost the subdivision of the property into two lots on separate titles in mid-2003. There is no dispute that the defendant then developed the subdivided lots, again at her own expense, and had a townhouse built on each. In September 2004, the plaintiff's daughter, Catherine, visited Ngongotaha. She observed that the townhouses had been constructed and that one of the townhouses was on the market for sale. She told the plaintiff about this and the plaintiff claims he telephoned the defendant to ask her why she had subdivided the property.

13 Some 14 months later, on 23 December 2005, the plaintiff lodged caveats against the titles to the two lots. This action precipitated considerable disagreement between the parties and the commencement of a litigation saga extending down to the present time. There has been a complete breakdown in family relations and it now falls to the Court to determine the issues that divide brother and sister.

14 A brief and uncontentious chronology of events after the lodgment of the caveats is as follows:

23 May 2006	Transfer of Lot 2 registered.
3 November 2006	Statement of claim filed.
18 May 2007	Sale of Lot 1.
19 June 2007	Plaintiff lodges further caveat in respect of Lot 1.
11 July 2007	First amended statement of claim issued.
5 June 2008	Court-ordered removal of caveat on Lot 1.
19 June 2008	Transfer of Lot I registered.
6 August 2008	Second amended statement of claim filed.

The pleadings

15 Because of the way in which the plaintiff cast his claim, at trial, it is important to refer to the history of the pleadings. Under a heading “factual matrix” in the statement of claim, the plaintiff first alleged that during the first half of 1993 he expressed interest to the defendant in purchasing two blocks of land in Te Manga Place. One was the block at 11 Te Manga Place, while the second was that at 3 Te Manga Place.

16 The pleading deals first with the property at 11 Te Manga Place alleging that such block was “purchased and transferred into the name of Noeline Crampton-Smith's [sic] on 6 September 1993”. The pleading does not deal with the circumstances in which the second block at 3 Te Manga Place was acquired. But it does plead that in March 1995 the defendant returned to the plaintiff the sum of $10,000 with the explanation that she had sold the block at 3 Te Manga Place which “she believed to be a bad investment”. There then follows a pleading with respect to 11 Te Manga Place:

There remained therefore as the block described in paragraph 5.1 which the defendant held in trust for the plaintiff.

17 After some less relevant allegations, the pleading continues:

• 15. It has always been the position of the Plaintiff that the subdivided sections described in paragraph 5 above were held in trust by the Defendant for the Plaintiff and were at all times the property of the Plaintiff.

• 16. It was the Plaintiff's...