Burt v Yiannakis [2014] NZHC 1488 (30 June 2014)

Last Updated: 16 July 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-003251 [2014] NZHC 1488

BETWEEN	DEANNE MARGARET BURT Plaintiff
AND	YIANNOS YIANNAKIS Defendant

Hearing:	6 June 2014
Appearances:	R J MacDonald and C D Boell for the Plaintiff E M Eggleston for the Defendant
Judgment:	30 June 2014

_{JUDGMENT OF GILBERT J}

This judgment is delivered by me on 30 June 2014 at 4.30pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

BURT v YIANNAKIS [2014] NZHC 1488 [30 June 2014]

Introduction

[1] The parties to this proceeding, both of whom are resident in New Zealand, are in dispute over the division of property acquired during the course of their relationship, including real estate in England. They lived together in a de facto relationship in England from 2001 to 2007 when they moved to New Zealand. They married in February 2008 and separated in June 2012. During the course of their relationship, five properties were acquired in the United Kingdom. The first three of these properties were purchased in Mr Yiannakis’ sole name. One of these properties has now been sold. The remaining two properties in England are held in the joint names of the parties.

[2] Mr Yiannakis initiated Family Court proceedings under the Property (Relationships) Act 1976. Orders for division of relationship property are sought in these proceedings, including orders relating to real estate acquired by the parties in New Zealand. These proceedings have been transferred to this court.

[3] Ms Burt commenced the present proceeding advancing various claims in relation to the properties in England:

(a) First cause of action – Ms Burt seeks an account of rent and other income received by Mr Yiannakis in relation to the two properties acquired in England in the parties’ joint names. (Tower Terrace and Alexandra Road).

(b) Second cause of action – Ms Burt claims that a property at Ecclesbourne Close is held by Mr Yiannakis on a constructive trust for the parties in equal shares, or in such shares as the Court shall determine. Ms Burt seeks a declaration to this effect, equitable compensation and an accounting for rent and other income received in relation to the property from the time it was acquired in June 2002.

(c) Third cause of action – Ms Burt claims a similar interest and seeks similar relief based on an alleged constructive trust in respect of a

property at Willingdon Road that was purchased in Mr Yiannakis’ sole

name in August 2004.

(d) Fourth cause of action – Ms Burt seeks similar relief on the basis of an alleged constructive trust in relation to the property at Oxford Gardens where the parties lived from 2001 to 2006. This property was purchased by Mr Yiannakis prior to the relationship.

(e) Fifth cause of action – Ms Burt claims that in June 2013, after the parties had separated, Mr Yiannakis purchased another property in England (Avondale Road) with funds drawn from joint accounts in New Zealand and the United Kingdom. On that basis, she claims that there is a resulting trust and that the property is beneficially owned by the parties equally.

(f) Sixth cause of action – this claim, based on an alleged constructive trust in relation to the Avondale Road property, is pursued in the alternative to the fifth cause of action.

[4] Mr Yiannakis has filed a counterclaim seeking equitable relief in relation to the properties in England held in the joint names of the parties (Tower Terrace and Alexandra Road). He claims that Ms Burt holds her half share in these properties on a constructive trust for him. Alternatively, he seeks relief in relation to these properties based on an alleged resulting trust.

[5] These claims and counterclaims, together with the proceeding transferred from the Family Court seeking a division of property covered by the Act, are scheduled to be heard in the week commencing 4 August 2014.

[6] Despite pursuing his own claims for equitable relief in relation to the properties in England, Mr Yiannakis now applies to strike out all of Ms Burt’s claims on the basis that they are precluded by s 4 of the Property (Relationships) Act. This section relevantly provides:

4 Act a code

(1) This Act applies instead of the rules and presumptions of the common law and of equity to the extent that they apply—

(a) to transactions between spouses or partners in respect of property; and

(b) in cases for which this Act provides, to transactions—

(i) between both spouses or partners and third persons;

and

(ii) between either spouse or partner and third persons. (2) Subsection (1) does not apply where this Act expressly provides to

the contrary (such as in subsection (5)).

(3) Without limiting the generality of subsection (1),—

(a) the presumption of advancement does not apply between husband and wife:

(b) the presumption of resulting trust does not apply between spouses, civil union partners, or de facto partners:

(c) the presumption that the use of a wife’s income by her husband with her consent during the marriage is a gift does not apply between husband and wife.

(4) Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them or any other person, the question must be decided as if it had been raised in proceedings under this Act.

(5) This section does not apply if the de facto partners have lived in a de facto relationship for less than 3 years.

[7] Mr Eggleston submits that Ms Burt’s equitable claims are barred by s 4(1) of the Act because they all relate to transactions between the parties in respect of property which is defined in s 2 as including real property. He contends that the properties in England come within this definition.

[8] Section 7(1) makes clear that the Act applies only to immovable property situated in New Zealand. Mr Eggleston submits that this means that Ms Burt’s claims in relation to the properties in England can only be pursued in the United Kingdom.

[9] Although not referred to in the strike-out application, Mr Eggleston argues in the alternative that remedies are available under ss 7, 8(1)(c), 18B and 44 of the Act in relation to the circumstances giving rise to Ms Burt’s first, fifth and sixth causes of action, relating to Tower Terrace, Alexandra Road and Avondale Road. For that reason, Mr Eggleston argues that these causes of action duplicate the claims under the Act and should therefore be struck out as an abuse of process.

[10] I note that no issue of forum non conveniens has been raised in this case.

Strike out principles

[11] The principles to be applied on an application to strike out a claim or cause of action are well settled. The jurisdiction is to be exercised sparingly, and only in clear cases. Save in exceptional circumstances, the pleaded facts are assumed to be true. It is inappropriate to strike out a claim unless the Court is certain that it cannot succeed.

Analysis

[12] The sharing regime under the Act does not apply to foreign immovables unless the parties agree in writing that it is to apply.¹ Section 4(1) of the Act does not displace the parties’ rights in relation to foreign immovables. These rights continue but must be determined in accordance with the lex situs. Cooke J confirmed this in Walker v Walker:²

The Act thus does not purport to apply to immovables situated elsewhere. This harmonises with the well-known general rule that all questions concerning rights over immovables are governed by the lex situs (8 Halsbury’s Laws of England (4^th ed) para 651). The New Zealand legislature has understandably not set out to regulate foreign shares in immovables. That is left to the law of the country concerned.

[13] A New Zealand court does not have jurisdiction to determine the title to, or right to possession of, immovable property situated outside of New Zealand.³

_{However, this does not prevent the Court from exercising jurisdiction in relation to}

¹ _{Property (Relationships) Act 1976, ss 7 and 7A.}

² _{Walker v Walker [1983] NZLR 560 (CA) at 566.}

³ British South Africa Co v Compania de Moçambique [1893] AC 602 (HL).

claims between persons within the jurisdiction concerning personal obligations arising out of contract, trust, fraud or other unconscionable conduct. This was confirmed by Richardson J in Walker:⁴

In general an English Court has no jurisdiction, at law to determine the title or the right to possession of immovable property situated outside England; but this does not preclude the Court from exercising a jurisdiction where there is a personal obligation or equity between the parties arising out of contract or trust or from fraud or other unconscionable conduct (8 Halsbury’s Laws of England (4^th ed) paras 639 and 641; Dicey & Morris on the Conflict of Laws (10^th ed, 1980) rule 77 and pp 538-548).

[14] In Birch v Birch, Paterson J considered that a New Zealand court has jurisdiction to determine a claim that a party had dealt inequitably with a foreign immovable: ⁵

Courts of equity have always exercised jurisdiction in personam in relation to foreign land against persons locally within the jurisdiction of the Court in cases of contract, fraud and trust. If there exists some personal obligation between the parties arising out of a fiduciary relationship, implied contract or other conduct which, in view of the Court of equity in this country, would be unconscionable, a Court does have jurisdiction even if legal rights of ownership to a foreign immovable or the sale proceeds are governed by the lex situs. [...] The in personam jurisdiction extends to those cases where one party has inequitably dealt with a foreign immovable – see 8(1) Halsbury’s Laws of England (4^th ed) at para 920. In determining whether there is an equity, the Court considers the question against local and not foreign law.

[15] Ms Burt’s claims arguably do not concern title to, or rights to possession of, the properties in England. Her claims are based on alleged breach of trust giving rise to personal obligations to account or pay equitable compensation. Because the parties are both resident in New Zealand, it is at least arguable that this court has jurisdiction to determine these claims.

[16] To the extent that the income from these properties, in respect of which Ms Burt seeks an account, is represented at the time of the hearing by movable property, or immovable property in New Zealand, it will fall for division under the Act. However, it is not clear that any such income has found its way into such property and Mr Yiannakis does not allege this in his statement of defence. For the

_{purposes of this strike-out application, it must be assumed that this has not occurred.}

⁴ _{At 573.}

⁵ Birch v Birch [2001] 3 NZLR 413 (HC) at [50].

[17] The last two causes of action relate to the purchase by Mr Yiannakis of the Avondale Road property using funds allegedly drawn from the parties’ joint accounts. It is possible that relief is available under the Act in relation to the facts which give rise to these causes of action. However, in the present circumstances, this is a matter that should be determined by the trial judge after hearing all of the evidence.

[18] Counsel have been unable to provide any authority where the precise issues arising in this application have been determined. The law cannot necessarily be regarded as settled and this is a further reason why the issues should be determined at trial with the benefit of full argument based on the evidence.

[19] It is quite unsatisfactory for this strike-out application to have been brought at such a late stage, almost on the eve of trial. Mr Yiannakis has not abandoned his counterclaims and they will therefore have to be determined at trial in any event. It is logical that Ms Burt’s claims should also be determined at the same time, based on the evidence. If Ms Burt’s claims are struck out at this stage, she may be forced to appeal against this decision with the prospect that the matter would then be remitted to this court for determination following a further trial. That would cause unnecessary cost, inconvenience and delay.

[20] For all of these reasons, it seems to me that all matters should be determined at trial after hearing all of the evidence rather than in the context of this strike-out application.

Result

[21] The application to strike out Ms Burt’s claims is dismissed.

_{[22] Costs are reserved.}

M A Gilbert J