Harvey v Beveridge [2013] NZHC 1718 (8 July 2013)

Last Updated: 6 August 2013

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-000371 [2013] NZHC 1718

BETWEEN MEGAN ANN HARVEY Plaintiff

AND IJAN BEVERIDGE Defendant

Hearing: 7 June 2013

Appearances: A R Armstrong for Plaintiff

R E Murphy and C Becker for Defendant

Judgment: 8 July 2013

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [on plaintiff ’s summary judgment application]

Introduction

[1] Mark Byrd was a loyal friend and a generous man. When his work colleague and friend, Ijan Beveridge, went to prison for eight years, Dr Byrd was a constant visitor. When Mr Beveridge was released, Dr Byrd provided him with the free use of a unit which Dr Byrd owned. But Dr Byrd did not make provision for Mr Beveridge in his will. When Dr Byrd died, his executors gave Mr Beveridge notice to vacate the unit. Mr Beveridge has caveated the title. Mr Beveridge refused to leave. He says that he is the beneficial owner of the unit.

The application

[2] The plaintiff (as executor of Dr Byrd’s estate) asks the Court to make two sets of orders by summary judgment:

HARVEY v BEVERIDGE [2013] NZHC 1718 [8 July 2013]

The possession orders

(a) That Mr Beveridge give up possession of the unit.

(b) That Mr Beveridge pay mesne profits at the rate of $350 per day from

24 January 2012 to judgment.

The caveat order

(c) That the caveat lodged by Mr Beveridge be removed.

The grounds of opposition

[3] There is no dispute as to the executor’s legal ownership of the unit. There is a single ground of opposition, namely that Mr Beveridge beneficially owned the unit by reason of a common intention constructive trust. Mr Beveridge says that the executor is not entitled to give him notice to vacate the unit. Mr Beveridge further says that, because a common intention constructive trust is an institutional trust (rather than a remedial trust), he has an interest in the unit which is caveatable.

The facts

[4] I will begin with a chronology of key events (which are relatively few) before turning to the defendant’s evidence as to statements Dr Byrd made and as to matters of common intention.

Chronology of key events

December 1991 – Dr Byrd buys the unit for his mother to occupy

1999 – Dr Byrd’s mother dies

1999 – Dr Byrd diagnosed with diabetes

3 September 1999 – Dr Byrd makes his last Will

1999-2008 – Dr Byrd makes the unit available to friends

July 2008 – Mr Beveridge leaves prison and initially occupies the unit as a non-rent-paying tenant or licensee

July 2008 to date – Mr Beveridge continues to occupy the unit

November 2008 – Dr Byrd falls and is rendered paraplegic

24 January 2012 – Dr Byrd dies

May 2012 – Mr Beveridge indicates an intention to make a testamentary promises claim

22 July 2012 – executor gives Mr Beveridge notice to vacate the unit by 7

_{October 2012}

September/November 2012 – correspondence from Mr Beveridge and his

_{solicitor asserting a trust}

What Mr Beveridge does not assert

[5] In the months following Dr Byrd’s death, Mr Beveridge and his solicitor by their correspondence with the executor’s solicitor put their focus on a testamentary promises claim. Mr Beveridge no longer pursues such a claim. A testamentary promises claim for the unit would be weak given the disproportionate reward which would be involved if Mr Beveridge were to be awarded the unit (as against a sum on account of any services).

[6] Similarly, Mr Beveridge makes no claim under other heads of constructive trust (that is other than a common intention constructive trust) or in estoppel for a remedy based on contribution to the value of the unit or by reason of other alteration of position. Any such claim would again have been weak given an absence of significant contribution. Appropriately no such claim has been pursued.

[7] Mr Beveridge’s claim based on a common intention constructive trust instead proceeds on the basis that what Mr Beveridge is really seeking to enforce is something Dr Byrd intended to gift to him.

Common intention constructive trust

The legal concept

[8] Counsel referred me to the judgment in Cossey v Bach, a case in which the parties owned their house jointly.1 In that case, Fisher J examined circumstances in which the New Zealand courts will recognise a trust as having arisen through an expressed intention. His Honour said:2

... it would seem that before an expressed intention can qualify for present purposes it must be (i) unequivocal; (ii) expressed by the partner or partners who had the power to dispose of the interest in question; and (iii) pertinent to the current circumstances. As to (i), I have previously referred to the new emphasis upon clarity of expression. Even now, I think that in principle an intention could be expressed by conduct rather than oral or written statement, but it would seem that the Courts will no longer be assiduous in searching for debatable expressions of intention.

[9] Fisher J compared the type of trust he described with another form of constructive trust based on expectations. The leading authorities in relation to constructive trusts based on expectation include Gillies v Keogh3 and Lankow v Rose4 (the latter case having been decided after Cossey v Bach).

[10] The Court held in Lankow v Rose that the applicant has to establish four factors:5

(a) Has the applicant contributed in more than a minor way to the acquisition, preservation or enhancement of the property?

(b) In all the circumstances, are the parties to be taken reasonably to have expected that the applicant would share in the property?

1 _{Cossey v Bach [1992] 3 NZLR 612 (HC).}

2 _{At 628.}

3 _{Gillies v Keogh [1989] 2 NZLR 327 (CA).}

4 _{Lankow v Rose [1995] 1 NZLR 277 (CA).}

5 At 282.

(c) The applicant’s contribution must manifestly exceed the benefits that he/she received.

(d) The applicant’s contribution need not have been in money, but there must be a causal relationship between the contribution and the acquisition, preservation or enhancement of the property.

[11] The leading New Zealand texts dealing with trusts (including constructive trusts) universally cover the type of trust in Gillies v Keogh based on reasonable expectations.6 Andrew Butler, for instance, deals with it under a heading “Assertion

made of ownership of property to which another has contributed”.7

[12] As the commentaries often indicate, constructive trusts based on reasonable expectations, pursuant to Gillies v Keogh and Lankow v Rose, very frequently have their focus upon disputes arising out of the breakdown of parties’ de facto relationships (and before that, marriages). Cases involving common intention constructive trusts have often had the same features. Progressive expansion of matrimonial and then relationship property legislation has provided a statutory basis for the Court’s adjudication in such cases.

[13] Some commentators have recognised that the concept of a constructive trust arising through an express common intention is anomalous.8 A common intention trust exists through the finding of subjective (real) intention, whereas constructive trusts have traditionally been found to exist on an objective assessment by a process of imputation (based in New Zealand, on the Gillies v Keogh line of cases, on reasonable expectation). The fact that the common intention will normally be

required to be expressed (although it may be implied by conduct) indicates a tension between the Court’s recognition of the parties’ expressed intention to change the ownership arrangements and the statutory unenforceability, under s 25 Property Law

_{Act 2007, of oral express trusts.}

6 Andrew Butler (ed), Equity & Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) at [13.2.4]; Nicky Richardson, Nevill’s Law of Trusts, Wills & Administration (11th ed, LexisNexis, Wellington, 2013) at [4.2.6]; Noel Kelly et al, Garrow and Kelly Law of Trusts and Trustees (6th ed, LexisNexis, Wellington, 2005) at [15.17]; Fisher on Matrimonial and Relationship Property, Trusts (online ed.) at [4.30] – [4.33],

7 _{Butler, above n 6, at [13.2.4].}

8 G E Dal Pont, Equity and Trusts in Australia (5th ed, Lawbook Co, Sydney, 2011) at [38.210].

The concept of a common intention constructive trust

[14] Little coverage is given in the New Zealand texts to the concept of a common intention constructive trust.9 In contrast, the leading Australian and English texts provide extensive commentary.10 In England, both the House of Lords11 and the Supreme Court12 have in recent years delivered significant judgments on the topic.

[15] Professor Nicola Peart published an article on the concept under the main heading “Contributions made on the Basis of an Express or Presumed Common Intention” and under the sub-heading “Express Common Intention”. She summarised the legal position as at 1989 as follows:13

There is consensus that where defendant facto spouses have acted in reliance on an express common intention to share the beneficial interest of the property in dispute, the court will override the legal rights of the titleholder by imposing a trust to give effect to the express intention of the parties. Such common intention may be evidenced by an oral agreement which in the absence of a written memorandum is not specifically enforceable. If the Court is satisfied that the parties applied their minds to the issue of ownership of the property and actually agreed that it was to be shared, a trust may be imposed to give effect to that agreement because equity will not allow a statute to be used as an instrument of fraud. On the other hand, equity will not assist a volunteer. So the plaintiff will have to satisfy the court that he or she proved consideration for the beneficial interest claimed. If, for example, the non-owning spouse, in reliance upon the agreement, has contributed to the purchase price or assisted indirectly in the acquisition of the property, for instance, by taking responsibility for the household expenses, the court will give effect to the agreement by imposing a trust.

(I infer that the reference to “she proved consideration” was intended to be “she provided consideration”). Professor Peart proceeded in the article to deal with cases

_{of presumed common intention leading to a resulting trust).}

9 The distinction is briefly identified and discussed in Nicola Peart (ed) Brookers Family Law –

_{Family Property (online looseleaf ed, Brookers) at [TU12.01].}

10 Dal Pont, above n 8, at [38.205] – [38.220]; W A Lee et al, Principles of the Law of Trusts (3rd ed, Lawbook Co, Sydney, 2012) at [22.4240] – [22.4350]; Hayton et al., Underhill and Hayton Law of Trusts and Trustees (17th ed, LexisNexis/Butterworths, 2006) at [35.9] – [35.51]; J Mowbray (ed) Lewin on Trusts (18th ed, Thomson, Sweet and Maxwell, London, 2008) at [9-66]

– [9-84]; Phillip H. Pettit, Equity and the Law of Trusts (12th ed, Oxford University Press,

_{Oxford, 2012) at 193 – 206.}

11 _{Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432.}

12 _{Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776.}

13 N S Peart, “A Comparative View of Property Rights in De Facto Relationships: Are we all driving in the same direction?” (1989) 7 OLR 100 at 103.

[16] The primary sources for the line of authority which Professor Peart discusses in relation to “Express Common Intention” are the judgments of the House of Lords in Gissing v Gissing14 and of the Court of Appeal (England & Wales) in Eves v Eves.15

[17] The relatively early decision of the New Zealand Court of Appeal in Gough v Fraser,16 involved parties in a de facto relationship. In finding that each party had an equitable interest in two properties held in the name of the de facto wife, Cooke J referred to Gissing v Gissing:17

I think the case is one of the kind mentioned by Lord Diplock in Gissing v Gissing [1970] UKHL 3; [1971] AC 886, 905; [1970] 2 All ER 780, 790: there is an express agreement between the parties as to their respective beneficial interests in land conveyed into the name of one of them, an agreement which itself discloses the common intention required to create a resulting, implied or constructive trust.

[18] Cooke J referred to documents signed by the de facto wife disclosing that common intention. He also referred to reliance by the de facto husband. The evidence was that the de facto husband had contributed finance to the purchases.

[19] The Court of Appeal’s decision in Gillies v Keogh18 was delivered after Professor Peart’s article. Taken together with the following decision in Lankow v Rose,19 Gillies v Keogh has led to the firm establishment in New Zealand law of a form of constructive trust based on reasonable expectations.

[20] It was in that context (albeit before Lankow v Rose was decided) that Fisher J

delivered his judgment in Cossey v Bach. His Honour referred to the paramountcy of expressed intentions, as recognised in cases such as Gough v Fraser,20 and

14 _{Gissing v Gissing [1970] UKHL 3; [1971] AC 886 (HL).}

15 _{Eves v Eves [1975] 1 WLR 1338 (CA).}

16 _{Gough v Fraser [1977] 1 NZLR 279 (CA).}

17 _{At 286.}

18 _{Gillies v Keogh, above n 3.}

19 _{Lankow v Rose, above n 4.}

20 Gough v Fraser, above n 16.

Hayward v Giordani.21 He then referred to Gillies v Keogh and to other decisions of the Court of Appeal which, his Honour observed:22

... have not effected any fundamental change to the principle that the clearly expressed and pertinent intentions of those with the disposing power in the relevant property will be treated as paramount.

The reference to the intention of only the registered proprietor (as against a common intention) is repeated through the judgment and indicates that Fisher J’s analysis does not turn on what is now referred to as a common intention constructive trust. It is clear from an earlier passage in Fisher J’s judgment that his Honour had reviewed various trust concepts including “constructive trusts derived from inferred or imputed common intentions”.23 Similarly, Mallon J, when subsequently following Cossey v Bach in SM v MH does not adopt a common intention express trust (terminology referring instead simply to an “express trust”).24

[21] Common intention constructive trusts have been recognised in subsequent

New Zealand decisions, including LG v MER.25

[22] The Courts may rely on an expressed intention to found a constructive trust. The Courts have also held themselves obliged to deny the existence of a trust inconsistent with legal ownership where the registered proprietor has consistently denied that any property interest will be created. This was the situation of the de facto wife in Gillies v Keogh who had consistently stated that the properties in which

she and her partner lived were hers.26

The ingredients of a common intention constructive trust

[23] The required ingredients of a common intention constructive trust have been little discussed academically in New Zealand. Counsel did not refer me to any

21 _{Hayward v Giordani [1983] NZLR 140 (CA).}

22 _{Cossey v Bach, above n 1, at 627.}

23 _{At 626.}

24 _{SM v MH (also known as M v H) HC New Plymouth CIV-2007-443-656, 28 October 2008.}

25 LG v MER [2010] NZFLR 1001 (HC) at [91] (affirmed on appeal, but on other grounds - see R v G; G v R [Lottery Winnings] [2011] NZCA 459, [2011] NZFLR 1040 at [83]). See also Boys v Calderwood HC Auckland CIV-2004-404-290, 14 June 2005 at [96] – [98].

26 Gillies v Keogh, above n 3. This was also adopted by Fisher J in Cossey v Bach, above n 1, at

628.

developed treatment by a New Zealand commentator of the ingredients of a common intention trust. But, as I have said, Australian and English text writers have written comprehensively in this area.

[24] Such cases as have been decided in New Zealand in relation to the concept have often turned on one particular ingredient which has been found to be absent. Even the developed discussion of Fisher J in Cossey v Bach is obiter. His Honour ultimately found in that case that there was no governing expression of intention, leading his Honour to resort to traditional proprietary principles.27

[25] Australian case law has proceeded by reference to the same English base in relation to common intention trusts, namely Gissing v Gissing and Eves v Eves.

An unequivocal common intention

[26] A focus of the review of authority by Fisher J in Cossey v Bach was in relation to the unequivocality of the intention relied upon by the claimant. Fisher J adopted the observation of Cooke P in Gillies v Keogh28 that the Courts will be now rather less ready to fashion inferred intentions from statements and conduct which are essentially equivocal.29

A common intention

[27] The authorities in relation to common intention constructive trusts are consistent – a fundamental concept of such a trust is an intention shared and evinced commonly by the parties.30

[28] Trust arguments may arise both when one party is the sole legal owner and when both parties are on the legal title. The requirement of a common intention in

_{both situations has been restated by the United Kingdom Supreme Court in Jones v}

27 _{Cossey v Bach, above n 1, at 635.}

28 _{Gillies v Keogh, above n 3, at 332.}

29 _{Cossey v Bach, above n 1, at 627.}

30 Dal Pont, above n 8, at [38.205]; Lee, above n 10, at [22.4240]; M W Bryan and V J Vann, Equity and Trusts in Australia (Cambridge University Press, Port Melbourne, 2012) at [23.9]; Lewin on Trusts, above n 10, at [9.69].

Kernott.31 For instance, in the judgment of Lord Walker and Lady Hale, (with which Lord Collins agreed) the requirement is identified in relation both to a family home in the joint name of the parties and in the name of one party only.32 The two situations are each accorded discussion, as examples of common intention constructive trusts, by Professor Pettit in the latest edition of his text Equity and the Law of Trusts.33 He discusses both Jones v Kernott34 and Stack v Dowden.35

[29] Cases in which the New Zealand courts have expressly referred in this context to the concept of common intention include (chronologically):

1992 – Cossey v Bach36

1995 - X v Y37

2010: LG v MER38

2005 – Boys v Calderwood39

2012: Clark v Clark40

[30] The concept of a trust obligation created by the unilateral intention of the legal owner – discussed by Fisher J in Cossey v Bach, and considered by Mallon J in SM v MH as a form of express trust – is by its nature fundamentally different to the common intention constructive trust invoked by Mr Beveridge in this case.

A common intention at the time of acquisition?

[31] Discussion of a common intention at the time of acquisition derives from the speech of Lord Diplock in Gissing v Gissing in which his Lordship referred to the

_{Court giving effect to a trust:}41

31 _{Jones v Kernott, above n 12.}

32 At [51] – [52] respectively. See also at [55] and [60] per Lord Collins; at [68] per Lord Kerr;

_{and at [78] per Lord Wilson.}

33 _{Pettit, above n 10, at 193 – 206.}

34 _{Jones v Kernott, above n 12.}

35 _{Stack v Dowden, above n 11.}

36 _{Cossey v Bach, above n 1, at 626.}

37 _{X v Y HC Auckland M100/95, 28 November 1995 at 16 per Penlington J.}

38 _{LG v MER, above n 25, at [91] adopting the description in Hayton, above n 10.}

39 _{Boys v Calderwood, above n 25, at [96] – [98].}

40 _{Clark v Clark [2012] NZHC 3159 at [54].}

41 Gissing v Gissing, above n 14, at 905.

... if at the time of its acquisition and transfer of the legal estate into the name of one or other of them an express agreement has been made between them...

[32] It will generally be the case that the common intention comes into existence at the time the property is acquired but that is not necessarily a requirement. Lord Bridge of Harwich in Lloyd’s Bank Plc v Rosset observed:42

The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially.

[33] Lord Neuberger in Stack v Dowden was of the view that “compelling evidence” would be required in order to show that there had been an intention to alter the beneficial interests after the acquisition of the property.43

Usual application in de facto relationship situations

[34] The vast majority of cases in which a “common intention” trust has been invoked, whether successfully or unsuccessfully, relate to de facto relationship situations. The relative scarcity of the concept in New Zealand may be closely linked to the expansion of matrimonial property legislation to de facto relationships, with the consequence that the most likely remaining area of application will be as to de facto relationships of less than three years duration. The legislative differences between New Zealand and England may also explain in part why the topic has come before the highest courts in England in recent years on a number of occasions, as in

2007 in Stack v Dowden44 and in 2011 in Jones v Kernott.45 Lord Walker and Lady

Hale commenced their judgment in the latter case by observing:46

This appeal gives the Supreme Court the opportunity to revisit the decision of the House of Lords in Stack v Dowden...That case, like this, was concerned with the determination of the beneficial interests in a house

42 _{Lloyd’s Bank Plc v Rosset [1991] 1 AC 107 (HL) at 132.}

43 Stack v Dowden, above n 11, at [138] per Lord Neuberger (dissenting as to aspects of the outcome, but not on this point). See also Lewin on Trusts, above n 10, at [9-77] and Austin v Keele (1987) 72 ALR 579 (PC) at 587.

44 _{Stack v Dowden, above n 11.}

45 _{Jones v Kernott, above n 12.}

46 At [1].

acquired in joint names by an unmarried couple who intended it to be their family home.

[35] The nature and context of de facto relationships lend themselves more easily, in the absence of common expression of intention, to inference of common intention. This is reinforced in the manner in which the relevant property may be acquired in the course of the relationship. But the cases indicate that a common intention constructive trust may be found to exist beyond personal relationships and even in commercial relationships. For instance, the Privy Council dealt with a

commercial/corporate relationship in Austin v Keele.47 The Privy Council did not

dismiss the appeal (against a judgment dismissing a claim to a beneficial half- interest in a number of properties in Sydney) on the ground that a common intention constructive trust, following Lord Diplock’s formulation of the principle in Gissing v Gissing, was unavailable to commercial relationships. Rather, their Lordships (through the judgment of Lord Oliver) found that the Courts below had been correct to conclude that such a trust was not established on the evidence.

[36] In his text, Professor Pettit breaks his discussion of common intention constructive trusts into “Shared homes” and “Cases other than cohabitants’ shared home”.48 In the latter category, he places the case of Mollo v Mollo,49 in which a divorced couple bought a home in ex-wife’s name to serve as a home for their adult sons. The beneficial interest was ordered to be shared between the former spouses pursuant to a common intention constructive trust. While the case retains domestic

features, it illustrates the application of the common intention trust outside a subsisting intimate relationship.

[37] In the summary judgment context, it is to be accepted that in an appropriate case a common intention constructive trust may arise notwithstanding the absence of

_{an intimate relationship in the nature of marriage.}

47 _{Austin v Keele, above n 43.}

48 _{Pettit, above n 10, at 193 and 205.}

49 Mollo v Mollo [2000] WTLR 227 (Ch).

An actual, subjective, intention

[38] The common intention constructive trust is, as I have said, anomalous. Whereas an otherwise uniform aspect of constructive trusts is that they arise by imputation, regardless of the parties’ actual intention, the common intention trust arises only because the parties intended it.50 As has been observed by the editors of Lee’s The Law of Trusts:51

The court is not free to impute to the parties a common intention on the basis that they would have been likely to have had that common intention if they had applied their minds to the matter of their respective interests in the item of property. Proof of a real intention on the part of the title-holder that the party seeking relief was to have a beneficial interest is needed to found the Court’s jurisdiction to prevent unconscionable reliance on legal rights.

[39] The common intention may be found in a written or oral agreement or may be inferred from the conduct of the parties.52 Such was established in the seminal judgment of Lord Diplock in Gissing v Gissing,53 where his Lordship said:

... parties to a transaction in connection with the acquisition of land may well have formed a common intention that the beneficial interest in the land shall be vested in them jointly without having used express words to communicate this intention to one another; or their recollections of the words used may be imperfect or conflicting by the time any dispute arises. In such a case - a common one where the parties are spouses whose marriage has broken down - it may be possible to infer their common intention from their conduct.

Contribution, detriment, reliance or alteration of position

[40] There are numerous examples of cases in which a common intention constructive trust has been found where the claimant has contributed either to the original acquisition or the subsequent maintenance of the property which has in the meantime been invested in the name of the other party only.

[41] In Professor Peart’s article to which I have referred, the writer referred to the plaintiff having to satisfy the Court that he or she provided consideration for the

50 _{Dal Pont, above n 8, at [38.210].}

51 _{Lee, above n 10, at [22.4280].}

52 _{At [22.4280].}

53 Gissing v Gissing, above n 14, at 906.

beneficial interests claimed.54 The source of that requirement is to be found in Lord Diplock’s speech in Gissing v Gissing. It was followed in the leading Australian decision in Allen v Snyder.55

[42] An alternative formulation is that any detriment, material disadvantage or alteration of position may suffice, particularly where it is of the kind contemplated in the common intention.56 There may be an analogy with the requirements of the

doctrine of part performance.57

[43] The authors of Lewin on Trusts in their discussion of the requirements of a

common intention trust and under the heading “The detriment” observe:58

The claimant must prove that he has acted to his detriment in the reasonable belief that by so acting he was acquiring a beneficial interest. This means that the claimant must have done something which he could not reasonably be expected to have done unless he was to have an interest in the property.

[44] The New Zealand case law does not appear to favour a requirement of detriment or the like. The list of qualifications as identified by Fisher J in Cossey v Bach do not include detriment. The omission by Fisher J of any requirement of detriment appears to have been deliberate as it followed this discussion by his Honour:59

... But I can see nothing in the recent decisions to suggest that clear agreements, and clear expressions of intention by the party or parties with the disposing power in the relevant property, will no longer prevail. Taken out of context, dicta such as that of Cooke P in Gillies at p 332 ("it is difficult to imagine a case in which a reasonable person in the shoes of the claimant would expect a benefit without having conferred anything in return") could be misinterpreted. I do not think that Cooke P meant that the absence of a contribution would be fatal even where there was a clear common intention, or the clear expression of an intention by the owner, that the claimant have an interest...

54 _{Peart, above n 13, at 103.}

55 _{Gissing v Gissing, above n 14, at 905; Allen v Snyder [1977] 2 NSWLR 685 (CA) at 691.}

56 _{See Lee, above n 10, at [22.4280]; Peter W Young, Clyde Croft and Megan Louise Smith, On}

Equity (Lawbook Co, Sydney, 2009) at [6.740]; John McGhee (ed) Snell’s Equity (32nd ed, Sweet and Maxwell, London, 2010) at [24-054]; Bryan and Vann, above n 30, at [23.11]; Hayton, above n 10, at [35.29]; Lewin on Trusts, above n 10, at [9-70].

57 _{Lee, above n 10, at [22.4300].}

58 _{Lewin on Trusts, above n 10, at [9-70]. See also McGhee, above n 56, at [24-041] and [24-054].}

59 Cossey v Bach, above n 1, at 627-628.

There is, of course, nothing inconsistent between the primacy of expressed intentions on the one hand and modern formulations based upon reasonable expectations, constructive trusts, unjust enrichment, or estoppel on the other. The latter all require that the claimant has made sacrifices and/or contributions in reliance upon the reasonable expectation of an interest in the property. No such expectation could reasonably be created if there had first been an unequivocal agreement or expression of intention to the contrary by the party or parties with the disposing power in the property. Conversely, original owners cannot have a reasonable expectation that they will retain the whole of a property if they have clearly agreed to confer half upon their partners or otherwise expressed an intention to that effect.

[45] In SM v MH Mallon J referred to trusts arising from an unequivocal expressed intention (by words or conduct). After referring to a number of authorities, her Honour observed:60

As is said in Cossey v Bach (at p 689), reference is usually made to “common intention” because in many cases both parties will have some disposing power over the resources which were pooled in order to acquire the property. As is also said in Cossey v Bach, in cases of express trust (based on an unequivocal express intention) the absence of contributions is not fatal. The trust is created by the clear expression of the intention. (See also N Richardson, Nevill’s Law of Trusts, Wills and Administration (9ed

2004) at 1.3.2.)

[46] Later in the judgment in SM v MH, Mallon J, in introducing her discussion of what Ms M had contributed, began her discussion by observing:61

Although contributions are not necessarily required to create a trust by

express intention ...

[47] Counsel did not refer me to any New Zealand academic commentary with a focus, as in the case of the Australian and English texts, upon whether there is a requirement in relation to common intention trusts for detriment, contribution or the like.

[48] The discussion of Mallon J in SM v MH appears to proceed on the basis of a distinction between “constructive trusts”, used to refer to the type of claim in Lankow v Rose, and “express trusts” used to describe the concept of a trust arising by

_{way of an express, common intention (which may be evidenced by unequivocal}

60 _{SM v MH, above n 24, at [44].}

61 At [55].

words or conduct).62 Mallon J’s use of the concept of “express trust” has attached to it the difficulty that the concept usually referred to as an express trust, unless in writing, is unenforceable under s 25 Property Law Act. It is unclear whether Mallon J, if she had treated the express common intention trust as a form of constructive trust, would have applied the same conclusion as to an absence of contributions not being fatal. (It is trite that in relation to express trusts strictly so called, there is no requirement for consideration or contribution moving from the beneficiary). I favour the view, consistently adopted in other Commonwealth jurisdictions and in New Zealand by Professor Peart in her classification of these trusts, that the express common intention trust is a form of constructive trust.

[49] Authorities in England and Australia recognise a requirement of detriment. I am inclined to the conclusion that such authorities appropriately recognise that, in the absence of such, the unconscionability or fraud on the statute which justifies the Court’s upholding of constructive trusts will be absent. If something in the nature of detriment is not required, it is arguable that the Court would be unjustifiably enforcing an express trust which was not documented in writing.

[50] That said, I am compelled to accept that the state of New Zealand law in relation to any requirement of detriment as to a common intention constructive trust is not settled. The discussions in Cossey v Bach and in SM v MH appear to be against the requirement of detriment at least in some circumstances. There is sufficient differentiation of the approach taken in Commonwealth jurisdictions to various forms of constructive trust that I accept that the law in New Zealand may settle in a different way to that adopted, for instance, in Australia and England.

[51] In this summary judgment context, therefore, it is inappropriate that I treat contribution, detriment or conduct in reliance as a necessary ingredient of a common

_{intention constructive trust.}

62 At [43].

Unconscionability

[52] If the common intention expressed by the parties were found to constitute an express trust, such would be unenforceable (unless in writing) by reason of what was traditionally the Statute of Frauds, now represented by s 25 Property Law Act 2007.

[53] As the authors of Lee’s The Law of Trusts record :63

That difficulty [caused by an expressed Trust not being in writing] may disappear if the element of unconscionability attracts the maxim that the Statute of Frauds is not to be used as an instrument of fraud.

[54] The authors then refer to the New South Wales decision in Allen v Snyder.

They then observe:64

Courts have taken advantage of the provision in the Statute of Frauds exempting resulting and constructive trusts from the requirement of written evidence. Any objection that a common intention in some cases would involve a promise to confer an interest in land and that it might thus be in the nature of an agreement of the kind which the Statute of Frauds renders unenforceable in the absence of a note or memorandum in writing is overcome by the requirement that the intended beneficiary must sustain a material detriment being analogous to part performance.

[55] In Allen v Snyder, Glass JA concluded that because the common intention trust is based upon actual intention (expressed or inferred) then notions of justice become irrelevant. His Honour would therefore not have categorised the common intention trust as a constructive trust as it is commonly characterised, preferring to categorise it as an express trust. That approach has been subjected to criticism.

Dennis Ong in Trusts Law in Australia notes:65

Because the avoidance of detriment to the induced claimant is the reason for giving him the commonly intended beneficial interest, it was erroneous of Glass JA to assert that in the creation of this species of trust “notions of justice are irrelevant”. Far from being irrelevant, notions of justice constitute the very foundation of this species of trust.

63 _{Lee, above n 10, at [22.4300].}

64 _{At [22.4300].}

65 Dennis Ong, Trusts Law in Australia (4th ed, The Federation Press, Sydney, 2012) at 598.

_{A common intention pertinent to the current circumstances}

[56] In Cossey v Bach, Fisher J identified as one of the qualifying requirements of a trust based on intention that the intention be pertinent to the current circumstances.66 The facts of Allen v Snyder illustrate the requirement – in that case, the woman had established a common intention that she should have a beneficial half-interest in the property on marriage and a beneficial interest in the whole property upon the death of the man, but had not established that she should have the beneficial half-interest in the property while the parties lived together outside marriage.67

The appropriate remedy

[57] In L G v M E R, Wild J, in the High Court, found that the facts gave rise to a constructive trust in favour of the claimant.68 His Honour then considered the appropriate remedy. He said:69

...The authors of Underhill and Hayton Law of Trusts and Trustees (ibid at [35.49]), consider that the appropriate remedy should be similar to that which would be granted if the claim were in equitable estoppel. The appropriate remedy in a case of equitable estoppel “has been described as

‘the minimum equity to do justice’, as ‘that which is necessary to cure the unconscionable conduct: nothing more, nothing less’, and as requiring

‘proportionality between the remedy and the detriment.’ The quotation is from James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed)

Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington,

2009) at [19.6.2(1)] ...

[58] The passage relied upon by Wild J from Underhill and Hayton follows earlier paragraphs under the heading “Size of share”. 70 The discussion in that part of the text draws a distinction between two types of case. The first is a case in which a specific interest (such as a half or quarter share) is promised in response for a “quid pro quo common intention”. The second is a case in which a more vague fair share is promised. The authors of Underhill and Hayton refer to authorities indicating that, in the former case, equity will almost as of course impose a constructive trust so as

_{to provide the exact promised remedy. The Court, in that situation, will depart from}

66 _{Cossey v Bach, above n 1, at 631.}

67 _{Allen v Snyder, above n 55, at 685.}

68 _{L G v M E R, above n 25, at [92].}

69 _{At [93].}

70 Hayton, above n 10, at [35.39] – [35.47].

the agreement only if there is a very good reason for doing so, such as where the claimant’s agreed contributions may not have subsequently been as substantial as expected by the parties. In the second situation (the “more vague fair share” situation), the Court will find the appropriate remedy on a proportionality basis as discussed by Wild J in LG v MER.

Summary of the principles

Elements of a common intention constructive trust

[59] I summarise my conclusions as to the elements of a common intention constructive trust –

There must have been an intention common to the claimant and the legal

_{owner which was unequivocally expressed by words or conduct.}

It follows that the common intention must have been an actual, subjective, intention albeit found “objectively” by the Court to exist on

_{the evidence.}

The common intention is usually required to have existed at the time of acquisition but may exceptionally have come into existence after the

_{acquisition of the property.}

Such a trust will most often arise in relation to de facto relationships but

_{may be found in other, non-intimate, relationships.}

The settled legal position in England and Australia is that the claimant must have acted in reliance upon the common intention or must have significantly altered his or her position in reliance upon the common

_{intention, but the law in New Zealand is unsettled on this point.}

The current circumstances must be the circumstances to which the parties intended their common intention to apply.

Remedies differ as between a constructive trust based on expectations and one based on common intention – in the former the remedy is strictly proportionate to reasonable expectations based upon contribution; in the latter, the Court fulfils the common intention of the parties notwithstanding that the intended rights may be disproportionate to

_{contribution.}

Application of the principles

[60] I find Mr Beveridge to have an arguable claim in relation to the following elements of a common intention constructive trust.

An unequivocal common intention

[61] The central evidence relied on by Mr Beveridge begins with what he says as to Dr Byrd’s repeated statements in relation to the unit that (or to the effect that) “It is yours.”

[62] Mr Beveridge says that such a statement was made and repeated by Dr Byrd in response to Mr Beveridge’s request for permission to do things to the unit, such as putting up shelving and installing power points.

[63] Ms Murphy submitted that the implication, if not the direct meaning, of Dr Byrd’s quote is that Dr Byrd regarded the units as now being beneficially owned by Mr Beveridge.

[64] Mr Beveridge’s evidence is that he initially, in response to Dr Byrd’s quote “it is yours” approach continued to seek Dr Byrd’s approval for work on the unit but that, within a period of months, accepted Dr Byrd’s position. He said that he therefore ceased acting asking Dr Byrd for such permission.

[65] Ms Murphy noted that Dr Byrd, for his part, had not thereafter made any statements withdrawing the previous indications that the unit was Mr Beveridge’s. She notes Mr Beveridge’s evidence that Dr Byrd’s conduct after the unit suffered damage in the Christchurch earthquakes was that:

Following the Canterbury Earthquakes ... Mark took no proprietorial interest in damage to the property and I organised all of the insurance claims to do with the property.

[66] Ms Murphy draws the distinction to be observed in Mr Beveridge’s evidence between the way in which Dr Byrd dealt with the unit and the way in which he dealt with a Suzuki car, both of which he had provided to Mr Beveridge. Dr Byrd, in Mr Beveridge’s evidence, expressly lent the car to Mr Beveridge. Mr Beveridge deposed:

The car always remained in Mark’s name. Mark said to me that he wanted me to sell it for him and that I could keep one half of the money and he would keep the other half. Mark was very explicit about the terms on which I used the car. I did try to sell the car but it was very old and I could not find anyone willing to purchase it. I returned the car to Mark’s house following his death.

[67] Ms Murphy relies also on evidence as to Dr Byrd’s conduct after he was rendered paraplegic in 2008. Mr Beveridge deposes that, after Dr Byrd had spent a period of over a year at the Spinal Unit and other facilities, he (Mr Beveridge) began planning for Dr Byrd’s return home. He says that because Dr Byrd was now wheelchair-bound, Dr Byrd’s own home was unsuitable unless it was significantly modified. Mr Beveridge says that the unit, on the other hand, was suitable for a wheelchair. The two of them discussed potential accommodation. Mr Beveridge says that when the flat adjacent to the unit came up for sale, Dr Byrd asked Mr Beveridge how he would feel if Dr Byrd moved into the next flat and became a neighbour. Mr Beveridge says that Dr Byrd did not suggest in any way that he would want the flat himself.

[68] Dr Byrd left no documentary evidence of his intentions in relation to the unit. Dead, he is unable to speak for his estate, either in confirmation or denial of what Mr Beveridge has said.

[69] Mr Armstrong, for the executor, has therefore had to rely largely on a critique of what Mr Beveridge has said and partly on evidence of some matters given by the executor herself and by the advisory trustee under the Will.

[70] Mr Armstrong first focussed on the “it is yours” evidence. He submits that such a reference does not mean Dr Byrd was expressing an intention or wish that the unit should belong beneficially to Mr Beveridge. Rather, he submitted, it was simply an expression that meant that it was Mr Beveridge’s home (or flat) for the time being. It was no more than an expression meaning Mr Beveridge had exclusive occupation of it.

[71] Mr Armstrong sought to reinforce this submission by reference to the evidence of the executor, who had lived in the unit for seven years from 1999 to

2007 as a tenant, paying rent approximately 40 per cent below market. She deposed that Dr Byrd would say things such as “it’s your flat” and “you can do what you like with it”. The executor deposes that she knew that Dr Byrd did not mean he was giving her the unit, merely that she was living in the unit and so it was to be her home. Mr Armstrong submitted that the evidence showed that Dr Byrd used the same terminology about the flat to both Mr Beveridge and the executor.

[72] In his submissions, Mr Armstrong did not place emphasis upon somewhat similar evidence given by the advisory trustee. She had also been a close friend to Dr Byrd. She deposed as to arrangements of what she was aware when Mr Beveridge was living at the flat. Dr Byrd, she says, was happy to allow Mr Beveridge “free reign”. Dr Byrd would “simply have left Mr Beveridge to get on with it”. She then states:

It doesn’t surprise that he made statements such as ‘do as you choose’ and

‘it’s your place’. In my view, knowing Mark as well as I did, in no way can those statements be interpreted as an indication that he intended the flat to

belong to Mr Beveridge.

[73] The advisory trustee refers to Dr Byrd as a person who would have shut down conversation and fobbed Mr Beveridge off with “something he wanted to hear”.

Discussion

[74] Even on the plaintiff’s evidence, it is apparent that Dr Byrd may well have said such things as “it is yours” to Mr Beveridge.

[75] I recognise that as a statement of Dr Byrd’s intention, such a statement on its own would be equivocal, being at least as referable to a right of occupation as to a gifting of beneficial entitlement. But Mr Beveridge’s case does not rest solely on the “it is yours” statements. For Mr Beveridge, Ms Murphy points to the following:

(a) Additional statements accompanying “it is yours” including “do whatever you want, I don’t want to know”. Perhaps more significantly, Mr Beveridge deposes that Dr Byrd said the “darned place is going to be yours so why the hell would I want any money ... now, stop asking.”

While the latter statement might suggest to a lawyer a testamentary (rather than an inter vivos) intention to transfer, I accept Ms Murphy’s suggestion that the significance to be given to the latter statement (if proved) must be for a trial Judge in light of all evidence surrounding Dr Byrd’s and Mr Beveridge’s interactions. A trial Judge might find that the apparently future-looking nature of the latter statement on its face in fact carried for these two men a statement about present beneficial interest. At the least, I cannot in a summary context, rule out such a finding. The evidence of how the executor and the advisory trustee interpreted, or would have interpreted Dr Byrd’s statements cannot be determinative of how the statements made to Mr Beveridge were to be understood between those two individuals.

(b) Mr Beveridge, at trial, will be entitled to prove and to argue as relevant at least some of the following:

(i) Dr Byrd’s respect of Mr Beveridge’s right to alter the unit, in relation to such matters such as electrical socket (although either on its own or in context, the Court may find such acts to be equivocal);

(ii) Dr Byrd’s permitting Mr Beveridge to pay no rent in the

period from 2008 to Dr Byrd’s death may be contrasted with

the requirement upon the executor on her occupation from

1999 to 2007 to pay a rent (albeit discounted) in the way a mere tenant does;

(iii) Dr Byrd’s treatment of the car, over which Dr Byrd asserted the rights to control matters such as the decision as to proceeds of sale if it was sold, to be contrasted with the absence of any similarly stated expectation on Dr Byrd’s part that a sale of the unit would lead to a division (or retention by Dr Byrd) of proceeds;

(iv) The absence of any indication by Dr Byrd that he was considering his possible discharge to live in the unit (as against his unsuitable home) might reinforce the appearance of an intention that Mr Beveridge now had the unit for himself (although the executor’s evidence as to the unsuitability of the unit also, if explored at trial, might find this aspect of Mr Beveridge’s argument to be uncompelling);

(v) After the Christchurch earthquakes, Mr Beveridge says that Dr Byrd took no proprietorial interest in the unit and left Mr Beveridge to undertake all steps in relation to insurance issues.

[76] It is possible that at trial Dr Byrd’s expressed intention as construed against this broader background will be found to evidence an unequivocal intention that Mr Beveridge should have the beneficial interest in the unit both in Dr Byrd’s lifetime and thereafter.

A common intention

[77] Given that the unit was owned by Dr Byrd, the preponderance of Mr Beveridge’s evidence was focussed on what Dr Byrd had said and done. Having dealt with that evidence, Mr Beveridge said simply in relation to his own intentions –

During this period, I too formed the intention that I was the beneficial owner of the property. The transfer of the property was not recorded in writing. I am aware that Mark did not like formalities or beurocracy.

[78] Mr Beveridge had also referred to the incident in which Dr Byrd had responded to the possibility of Mr Beveridge paying contributing outgoings, by directing Mr Beveridge to “stop asking”. Although Mr Beveridge does not expressly record that he did at that point stop asking Dr Byrd about such matters, there is an implication that Mr Beveridge eventually accepted that position.

[79] In these circumstances there is material on which a trial Court could find that an intention expressed by Dr Byrd as to Mr Beveridge’s beneficial ownership was common to the parties, through Mr Beveridge having by his conduct evinced an intention to accept Dr Byrd’s intentions.

[80] It therefore matters not in this context whether there is room for a Cossey v Bach71 type of unilateral intention in this case. Although Mr Beveridge’s case was expressly argued upon the basis of a common intention constructive trust, it is conceivable, having regard to both Cossey v Bach72 and Clark v Clark,73 that an argument may be mounted based on Dr Byrd’s unilateral conduct and statements.

Timing of the common intention

[81] The authorities to which I have referred leave open the possibility that an owner’s intention may be communicated at a time after acquisition of the subject property. Therefore, the prior acquisition of the property by Dr Byrd leaves open Mr Beveridge’s entitlement to a beneficial interest in the property.

An actual, subjective, intention

[82] There is nothing in the evidence as I have reviewed it to require the Court to impute that intention in this case. The evidence has been focussed on the subjective

_{intentions of the parties.}

71 _{Cossey v Bach, above n 1.}

72 _{At 612.}

73 Clark v Clark, above n 40.

Contribution, detriment, reliance or alteration position/unconscionability

[83] As I have explained, I view the state of the law in New Zealand in relation to any requirement of detriment as to a common intention constructive trust as not settled. If, as indicated by Fisher J in Cossey v Bach74 and by Mallon J in SM v MH,75 contribution is not necessarily required to create a trust by express intention, the lack of any alteration of position by Mr Beveridge in this case is not necessarily

fatal to success at trial. The Court at trial may have to embark upon a broader consideration as to whether there would be unconscionability if the executor is free to deal with the property as an asset of the estate.

Common intention pertinent to the current circumstances

[84] If Mr Beveridge succeeds in establishing the existence of a common intention constructive trust, then on the facts of this case the common intention will be pertinent in the circumstances now existing (Dr Byrd having died, with the question being whether the unit belongs to his estate or belongs in equity to Mr Beveridge). If on the other hand, the intention which Mr Beveridge can establish on the evidence is limited to an intention that Mr Beveridge would have the right of occupation only, then the common intention trust as thus found would not be pertinent so as to establish a right to have the title transferred.

The appropriate remedy

[85] The appropriate remedy must be viewed as a matter for trial. If the common intention constructive trust is proved, it will be within the range of discretion available to the Court to effect a legal transfer of the property. In recognising that, I am not to be taken as ruling out the possibility that the executor may advance a compelling argument based on the windfall aspect of the trust as asserted by

_{Mr Beveridge.}

74 _{Cossey v Bach, above n 1.}

75 SM v MH, above n 24.

Conclusion

[86] Upon a review of the elements of a common intention constructive trust, I do not find any element which Mr Beveridge must establish to be indisputably missing on the evidence available at summary judgment.

[87] In these circumstances, the executor as plaintiff has failed to establish that

Mr Beveridge has no defence to the claim for possession and mesne profits.

[88] Equally, in the caveat lapsing jurisdiction, Mr Beveridge as caveator has established a reasonably arguable case for the interest he claims by way of beneficiary of a constructive trust. The interest asserted by Mr Beveridge is by way of an institutional constructive trust and is therefore capable of sustaining a caveat.76

Costs

[89] On a plaintiff’s unsuccessful summary judgment application, the usual order (pursuant to the Court of Appeal’s approach in NZI Bank Ltd v Philpott)77 is that costs are reserved. Having regard to the mixed nature of the application before the Court, my present view is that such a reservation of costs should occur in relation to the entire interlocutory application. If the parties disagree on that, the issue will be dealt with on memoranda received and then on the papers.

Orders

[90] I order –

i. The plaintiff’s application dated 21 February 2013 is dismissed.

2. The defendant is to file and serve his statement of defence within 10 working days.
   
3. Counsel are to confer and are to file within fifteen working days a joint memorandum as to any agreed orders and as to proposed
   

76 _{Philipiah v Ministry of Health HC Auckland M1038-IM01, 5 February 2002 at [23](c).}

77 NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).

timetabling in relation to the future conduct of this proceeding and the associated proceeding Beveridge v Harvey (CIV 2013-409-000405).

iv. I adjourn the proceeding to a case management conference at 9.30 am

31 July 2013 by telephone (Associate Judge Osborne). v. The costs of the plaintiff ’s application are reserved.

Associate Judge Osborne

Solicitors:

Young Hunter Lawyers, Christchurch

Geddes Maciaszek, Christchurch