DKH v CAC as Administrator of the Estate of JEH Deceased

JurisdictionNew Zealand
CourtFamily Court
JudgeJudge J P Geoghegan
Judgment Date19 February 2010
Date19 February 2010
Docket NumberFAM-2008-070-000426



Under the Property (Relationships) Act 1976

CAC as Administrator of the Estate of JEH Deceased

S Scott for Applicant



These proceedings involve an application by Mr H for orders pursuant to the Property (Relationships) Act 1976 (“the Act”). There is also an application by Mr H for further and better provision under the Family Protection Act 1955.


In respect of the application under the Act. Mr H seeks orders determining the respective shares of the parties in relationship property and declaring the status and ownership of any property not being relationship property, but specifically Mr H seeks orders pursuant to s 44 of the Act setting aside various dispositions made to a trust known as the L Trust which, it is alleged, was formed during Mr H's marriage with his late wife and into which relationship property was transferred.


The broad background to the matter is that the parties were married on 23 December 1982 and lived together until Ms H's death on 24 September 2005. There were no children of the marriage, however each of the parties had children from previous relationships. Ms H had four children and Mr H had two children.


Although the proceedings have been served upon Ms H's children and a trustee of the L Trust, none of the persons served have taken any steps to oppose Mr H's application. Accordingly the matter has proceeded by way of formal proof.


It is Mr H's position that his marriage to Ms H was a happy one and one in which he worked throughout the course of the marriage and contributed all of his income and capital to the relationship. Ms H controlled the finances and Mr H deposed that he did not have any significant input into any financial decisions to an extent where he was almost completely removed from dealing with items of relationship property.


At the commencement of the parties' marriage Ms H owned a property at D Road in Tauranga.


In 1985 the parties purchased a section at H Road, Tauranga. The property was purchased at least in part by the application of the proceeds of sale of another property which Mr H had owned prior to the parties' marriage. The property at D Road was then sold and a home was built upon the H Road site. In 1995 Mr H received an inheritance of $33,000 which was applied to reduce the mortgage in respect of the property.


In 1998 the parties purchased a property at P Place. It was purchased as a rental property with borrowed funds.


In 1996 Mr and Ms H had travelled to Australia for a holiday and Mr H received serious injuries in a motor vehicle accident while on that holiday. As a result of that accident he received the sum of $193,927.88 in 1999 which was then used to reduce the mortgage on the P Place property and to acquire further property. The sum of $40,000 was spent on a world trip for the parties.


In 1999 the parties entered into an agreement to purchase a beach property at S Road, Waihi Beach. The purchase price for the property was $157,000. The purchase was financed by Mr and Ms H raising the necessary funds by way of a mortgage over their H Road property. At that time Ms H was receiving advice from her son P C in respect of tax matters. Mr H stated that he was persuaded by both Ms H and Mr C that it was appropriate to transfer the S Road property into a trust called the L Trust (“the Trust”). It would appear that this transaction was motivated by tax considerations. Mr and Ms H paid the entire purchase price of the property however the property was registered in the names of the trustees of the L Trust. It is significant for the purposes of Mr H's application that he was neither a settlor nor a trustee of the trust.


In 2002 the property at P Place was sold. Mr and Ms H received the sum of $130,971.


In 2004 the H Road property was sold. From the proceeds of sale of that property the sum of $146,817.96 was repaid in respect of the mortgage on the property. That mortgage however had been incurred for the purposes of purchasing the property at S Road which itself had remained unencumbered. Mr and Ms H received the sum of $330,555.48 which was paid into their ANZ account.


In 2003 Mr and Ms H purchased a half share in three flats in F Street, Tauranga with another relative of Ms H who held the other half share. The purchase price of $375,000 was financed with a mortgage from the ANZ Bank. The flats were sold after having been renovated and after repayment of the mortgage and renovation costs Mr and Mrs H received a sum in the order of $90,000.


In 2004 Ms H's son C purchased a property at V Street, Tauranga. It appears that the purchase was funded by a contribution from the Trust of $9583.93 with the balance being borrowed from the ANZ Bank. Mr H believes that when the property was sold in 2005 C received a payment of $100,000 while the sum of $109,000 was expended by the Trust on a property in Paeroa which was transferred to Mr C's wife.


In the meantime there had been difficulties with the S Road property with disputes between Ms H and her daughter and son-in-law as to what contributions had been made in respect of the interest on the mortgage and how the property was to be utilised. The dispute was ultimately settled by Mr and Ms Constable acquiring what was effectively Mr and Ms H's half share in the property for the sum of $261,672.78. That sum was paid to the Trust.


In 2005 Mr and Ms H purchased a property at B Street, Waihi for $153,000. It is Mr H's position that Ms H insisted that the property be registered in the name of the Trust, although the funds were paid from Mr and Ms H's bank account. Subsequent to Ms H's death, and after negotiations with Mr C, that property was transferred to Mr H.


Subsequent to Ms H's death Mr H entered into an agreement to purchase a property at C Street, Tauranga. This is the home in which Mr H currently resides. It is his evidence that given that the S Road property was being sold he had nowhere to live and was required to purchase another property. His evidence is also that he had an expectation that he would simply be able to use the S Road sale funds to purchase the C Street property. He was then required to complete the purchase in the name of the Trust because he effectively had no choice given the source of the funds from S Road and presumably the position of the trustees. Accordingly the C Street property was settled in the name of the trustees of the Trust with the settlement funds consisting of a $15,000 contribution by Mr H from his own funds with the sum of $285,360.99 being contributed by the Trust. In fact the figures referred to in Mr H's affidavit do not appear to reconcile, as the purchase price of the C Street property was $320,000. From Mr H's evidence the funds contributed by he and the Trust amounted to $300,360.99. It is accordingly unclear as to where the balance of the funds came from.


The broad position therefore is that but for the formation of the Trust Mr H would have had the benefit of $408,490.74 representing the S Road sale funds of $261,672.78 and the mortgage of $146,870.96 repaid on the sale of the H Road property which was raised in respect of the purchase of the S Road property.


It is Mr H's position that he has effectively been duped by the trustees of the Trust resulting in a position which he has no level of security in respect of his occupation of C Street as he has no control over the Trust and is not a beneficiary. This, despite the fact that it would appear that the funds for Mr and Mrs H have been used to purchase Trust property including the C Street property.


The trustees of the Trust would appear to be Mr C, the late Ms H and a Ms R H. While the Trust purports to be a charitable trust it would appear that it is not registered as such. The objectives of the Trust which are also referred to in...

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