Crampton-Smith v Crampton-Smith

• Jurisdiction: New Zealand
• Judge: Randerson J
• Judgment Date: 06 July 2011
• Neutral Citation: [2011] NZCA 308
• Docket Number: CA575/2010
• Court: Court of Appeal
• Date: 06 July 2011

Between

Christopher Crampton-Smith

Appellant

and

Noeline Gail Crampton-Smith

Respondent

[2011] NZCA 308

Court:

Chambers, Arnold and Randerson JJ

CA575/2010

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against High Court decision concluding no trust was established — brother had paid for land, sister was registered proprietor — land subdivided, townhouses built and then sold — brother had made no contribution to construction and claimed not to have known of construction — brother sought judgment for gross proceeds of sale on grounds the land was held in trust for him by his sister and a resulting trust was presumed — sister asserted money he paid for the land had been a loan — whether the Judge erred in conclusion no trust was established.

Counsel:

J D McBride and B J Ward for Appellant

M S McKechnie for Respondent

JUDGMENT OF THE COURT

• A The appeal is allowed.

• B The judgment in the High Court is set aside.

• C Judgment is entered against the respondent in favour of the appellant for $511,000 plus interest under s 87 of the Judicature Act 1908 at the rate of 5 per cent per annum on the sum of $214,000 from 8 October 2003 to the date of this judgment, and on the sum of $297,000 from 18 May 2007 to the date of this judgment.

• D The costs ordered in the High Court are set aside and the High Court is to determine any issue as to costs in that Court.

• E The respondent must pay costs to the appellant as for a standard appeal on a band A basis together with usual disbursements.

REASONS OF THE COURT

(Given by Randerson J)

	Table of Contents	Para No
Introduction		[1]
The facts in more detail		[8]
The evidence at trial		[20]
The judgment in the High Court		[25]
Legal principles		[35]
Did the Judge err in his conclusion that no trust was established?		[45]
What remedy should flow?		[60]
Conclusion		[76]
Result		[78]

Introduction

1 This appeal arises from an unfortunate dispute between brother and sister over land in Rotorua which the brother claims is held in trust for him by his sister. There is no dispute that the land was paid for solely by the appellant (the brother) but the title to it was registered in the name of the respondent (the sister). The brother says it was intended that the land be his and that he would be the registered owner.

2 Later, the land was subdivided into two sections. A townhouse was built on each and the properties were sold realising a total sale price of $511,000. The brother says he knew nothing of this until afterwards. He made no financial contribution to the subdivision or to the construction of the townhouses.

3 In the High Court, the brother's claim was based on a resulting trust. His case was that a resulting trust was presumed when the land was paid for by him but registered in his sister's name. There was nothing, the brother said, which justified the presumption being rebutted. He sought judgment for the gross proceeds of sale of the two sections. The sister filed a statement of defence denying there was a trust and asserting that the funds provided by the brother to purchase the land were a loan to her.

4 The brother gave evidence at the trial before Stevens J. Some members of the brother's family gave supporting evidence. However, there was a highly unusual feature of the case. The sister neither gave nor called evidence to support her assertion that the funds provided by her brother to purchase the land were a loan. Nor did her counsel put that proposition to the brother or his witnesses. Neither the brother nor his supporting witnesses were challenged on the brother's assertion that the land was intended for him as the beneficial owner. Instead, the cross — examination was aimed at peripheral matters such as amendments to the brother's pleadings from time to time and what he had spent on the property after it was purchased.

5 The Judge found that the brother was not a credible or reliable witness and that his description of the intended arrangement was inherently implausible. 1 He was not persuaded that the evidence of the brother's witnesses added any support to the brother's claim. He concluded that any presumption of a trust in favour of the brother had been rebutted and the more likely position was that the funds provided by the brother were a loan.

6 On appeal, the brother challenges the Judge's findings submitting that the Judge erred in his factual conclusions and that, in the absence of contrary evidence, there was no sound basis for the Judge to reject the brother's evidence or to conclude that the presumption of a resulting trust was rebutted. It is also submitted on the brother's behalf that the Judge ought to have drawn an adverse inference against the sister arising from her failure to give evidence.

7 Against that background, the issues for determination are:

• (a) Was the Judge in error in his conclusion that no trust was established?

• (b) If so, what remedy should flow?

The facts in more detail

8 The evidence adduced at trial was within a relatively narrow compass but the relevant events extended over a lengthy time period from 1987 when the purchase of land was first discussed until 2004 when the brother says he first became aware the townhouses had been built on the sections and that one of them was on the market for sale. At material times, the sister lived in Rotorua with her husband, the late Michael Quirke, a well-known Rotorua solicitor. The brother lived in Australia but visited his sister and her husband in Rotorua from time to time.

9 In 1987, the brother first spoke to his sister about the possibility of the brother buying property in the Rotorua area. At that time, the sister and her husband had recently purchased land at 13 Te Manga Place, Ngongotaha. The brother did not pursue that possibility at the time but, some five years later in April 1992, he visited Rotorua again. The brother gave evidence that on 25 April 1992 he viewed two sections at numbers 3 and 11 Te Manga Place with a view to investment. He said he agreed with his sister that he would provide the funds to purchase the properties and she would sign any agreement to purchase them on his behalf and would register the titles in his name. Two days later, on 27 April 1992, he opened a Postbank account in the name of himself and his then partner. A deposit of $100 was made and the sister was given full authority to operate the account.

10 In October 1992 there was a telephone discussion between the parties about the purchase of No 3 for $10,000. The purchase price was provided by the brother's partner, the funds being sent directly by money transfer to the sister in December 1992. The purchase of No 3 was completed at that time and the title registered in the sister's name. The brother said that the purchase was meant to be made on his behalf as an investment and the title registered in his name as he said was earlier agreed with his sister. He said he did not become aware until some time later that the title was registered in his sister's name. (We note there is documentary material suggesting that this property may have been purchased for $20,000 but this issue was not explored at trial.)

11 No 3 was sold in March 1995. At that time, the sister paid the sum of $10,000 into the brother's Postbank account. She also told him, according to the brother, that the purchase had been a bad investment and he was lucky to get his money back. Documentary evidence produced in the common bundle showed that No 3 was sold for $23,000 but the issue of who received the difference of $13,000 between the sale price and the amount repaid to the brother was not explored or explained at trial. The brother said he was not given any details of the sale price at that time nor given any relevant documentation of the sale.

12 The Judge found 2 that the beneficial title of No 3 remained with the brother and noted that, upon the return of the purchase price (which the Judge apparently understood was $10,000) any obligations between the parties came to an end. That conclusion is not challenged on appeal but, as we later observe, there is an apparent inconsistency between the Judge's conclusion that the brother had beneficial ownership of No 3 and his opposite conclusion in relation to the subject land at No 11.

13 From about December 1992, there were discussions between brother and sister about the purchase of No 11. On 11 October 1993, the brother deposited $12,467.01 into the Postbank account comprising the purchase price of $10,000 for the land plus an amount to cover legal costs. The following day, the sister withdrew $12,000 from the Postbank account and settled the purchase of No 11 utilising those funds. Again, the transfer of the land was registered in the sister's name. The brother says he did not know this at the time.

14 In 1994, Mr Michael Quirke was diagnosed with cancer and died some three years later in October 1997. It was during the period of his illness that No 3 was sold in March 1995 and $10,000 paid back into the brother's Postbank account. The brother's evidence was that it was at this time his sister told him for the first time that both No 3 and 11 had been registered in her name. The brother said that during several visits to New Zealand in 1996 and 1997, Mr Quirke had promised him that No 11 would be transferred to his name.

15 The brother did not lodge caveats until some ten years later in 2005 but he explained in evidence that he had repeatedly asked his sister to arrange for the transfer of the land into his name and trusted that she and Mr Quirke would do so. He did not wish to press the issue more forcefully during the period of Mr Quirke's illness.

16 After Mr Quirke's death in 1997, the brother supported his sister by making regular visits to see her and her family in New...