Carroll v Bates [2018] NZHC 2463 (20 September 2018)

Last Updated: 27 September 2018

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-485-000550 [2018] NZHC 2463

IN THE MATTER	of the Will of the late Joseph Reid Bates and the Estates of the late Joseph Reid Bates and Noeline Atholie Bates
BETWEEN	VIVIENNE MAREE CARROLL Plaintiff
AND	MITCHELL REID BATES AND VIVIENNE MAREE CARROLL First Defendants
AND	MITCHELL REID BATES AND VIVIENNE MAREE CARROLL Second Defendants
AND	MITCHELL REID BATES, VIVIENNE MAREE CARROLL AND MICHAEL DAVID RIDLEY HANNA Third Defendants

Hearing:	23 July 2018
Appearances:	W Palmer and P Moran for Plaintiff A J F Wilding for the unborn grandchildren and great grandchildren
Judgment:	20 September 2018

JUDGMENT OF DUNNINGHAM J

[1] The late Joseph Reid Bates and his wife Noeline had three children: Mitchell, Greg and Vivienne. They also had a successful family business, Bates Joinery Limited (BJL).

CARROLL v BATES [2018] NZHC 2463 [20 September 2018]

[2] Mr Bates took some care with his business succession planning. He supported his son, Mitchell, to establish Bates Aluminium Limited (BAL) in 1976, and ownership of that company was effectively transferred to Mitchell and his wife in April 2003. His other son, Greg, was a part owner of BJL. BJL was transferred to a new company, Bates Joinery (2008) Limited in 2008, and Mr Bates’ shares in that were transferred to Greg that year.

[3] Vivienne Carroll, the plaintiff, says that in recognition of the assets that her two brothers had received in their lifetimes, her parents decided she should have the former family home at 8 Shearer Avenue, Christchurch, upon their death. In 2008, her mother, Mrs Bates gave her the keys to the Shearer Avenue property, and since that date, she has treated it as her property.

[4] However, the representations she says were made by her parents to that effect were not carried out in either her mother’s or her father’s wills.

[5] The issue before the Court is whether the plaintiff can satisfy this Court that she has a legal right to have the Shearer Avenue property transferred to her, notwithstanding her parents’ failure to gift this property to her in their respective wills.

The pleaded claims

[6] Vivienne frames her claim for the property to be vested in her in three alternative ways.

[7] First, she seeks perfection of an imperfect inter vivos gift. She says that in 2008, her mother, Mrs Bates made an unconditional inter vivos gift of the Shearer Avenue property to her, which her mother expressed through oral statements made to them and by handing over the keys to her. This gift was made by Mrs Bates, both as to her half interest in the property and on behalf of Mr Bates as to his half interest in the property, in furtherance of the previously expressed intentions of Mr Bates. However, Mr and Mrs Bates did not effect a transfer of the title of the Shearer Avenue property to Vivienne, meaning the gift was not perfected.
[8] Vivienne asserts that, in reliance on the gift being made by Mrs Bates in 2008, she has expended considerable money and labour on the property and Mrs Bates was aware of that, and approved it occurring.

[9] The remedy sought is that the gift be perfected through an order that the fee simple estate in the freehold of Shearer Avenue be transferred to Vivienne as the sole owner.

[10] The next cause of action seeks, in the alternative, a declaration that the property is held on remedial constructive trust for her. She says that her parents considered that the provision of the Shearer Avenue property would compensate her for the financial support they had given to Greg and Mitchell during their lifetimes.

[11] In reliance on the unequivocal representation made by Mrs Bates that the property belonged to her, which was supported indirectly by prior statements made by Mr Bates, Vivienne has expended considerable money and labour on the property in the intervening years. She says Mrs Bates was aware of, and approved, that expenditure on the property and the receipt of rental income by Vivienne from the property, as were her brothers, one of whom held power of attorney for Mr Bates. As a result, it would be unconscionable for Mr and Mrs Bates’ trustees on behalf of the late Mr and Mrs Bates, to deny Vivienne’s beneficial interest in the Shearer Avenue property.

[12] The relief sought is a declaration that the property is held on a remedial constructive trust by Mr and Mrs Bates’ trustees for the sole beneficial ownership of Vivienne, and an order that the fee simple estate in the freehold of the Shearer Avenue property be transferred to Vivienne as sole owner.

[13] The third cause of action asserts proprietary estoppel. It relies on the same pleaded facts as the other two causes of action and asserts that in those circumstances it would be unconscionable for Mr and Mrs Bates’ trustees to renege on the representations made to the family and others by Mr and Mrs Bates.
[14] The relief sought is, again, an order that the fee simple estate in the Shearer Avenue property is transferred to Vivienne as the sole owner.

[15] A further cause of action alleging that Mr Bates did not have testamentary capacity sufficient to validate the will he made in 2004 was abandoned prior to the hearing. Nevertheless, for reasons that will become apparent, Mr Bates’ deteriorating mental health is relevant to the factual circumstances that give rise to the pleaded claims.

Formal proof

[16] Unusually, this claim comes before me as a formal proof hearing. Service has been effected on a wide range of potentially interested parties.

[17] The first and second named defendants are the current trustees and executors of the relevant wills of the late Mr and Mrs Bates respectively. The third defendants are the trustees and executors of the earlier will of Mr Bates dated 7 November 1988 but, as the testamentary capacity claim has been abandoned, they are no longer affected by this litigation.

[18] In addition to the defendants, the parties who have been served are:

(a) Tanya Catherine Bates, the widow of the late Greg Bates and beneficiary of his estate;

(b) Mitchell Bates in his personal capacity;

(c) the three children of Vivienne Carroll and, where relevant, their spouses;

(d) the two children of Mitchell Bates and, where relevant, their spouses;

(e) the husband of Vivienne Carroll; and

(f) the wife of Mitchell Bates.
[19] The Court also directed that James Wilding of Christchurch, barrister, be appointed to represent any further unborn grandchildren or great grandchildren of the late Mr Bates.

[20] No statements of defence were filed within the required timeframe nor did any of the parties who were served seek to be heard on the application so, in due course, the plaintiff sought that the matter be listed for a formal proof hearing.

[21] The Court was greatly assisted by Mr Wilding’s submissions on the various claims. As he noted, the stance he should take on behalf of those interests he was appointed to represent was not clear cut, as he had to take account of a wide range of factors. These included:

(a) all of the relief sought would affect those he represented in different ways, although the claim to have the Shearer Avenue property vest in the plaintiff (through whatever legal mechanism) would have a particular adverse effect on them;

(b) no family members having opposed, it would be unusual for the generations whose interests he represented (even if born) to do so;

(c) when considering the stance to take, family comity and honour are often important;

(d) considerations of time and cost were also important in the context of what was understood to be a modest estate; and

(e) his paramount duty to the Court.

[22] In the event, what Mr Wilding has done is to abide the decision of the Court, but to raise relevant issues that had not yet been addressed by the plaintiff’s submissions. This included drawing my attention to legal or factual difficulties with some aspects of the claims, and providing further commentary and case law that was thought to be relevant.

Was there an imperfect inter vivos gift that can now be perfected?

Evidence of the gift

[23] Vivienne and others gave evidence of Mr and Mrs Bates’ intention to give the Shearer Avenue property to her. This culminated in her mother, who was in a rest home at the time, handing over the keys to the property to her and saying that it now belonged to Vivienne. Vivienne explains in her evidence that when the keys to the property were given to her in 2008, it had been empty for approximately two years.

[24] She said that her parents had initially intended that the property would pass to her upon their deaths. However, even as early as 1998, her father was having difficulty managing the Shearer Avenue property because of the onset of Alzheimer’s disease. The property became run down. Her father failed to collect rent from the tenants for two years and the property went uninsured for a period. After the tenants had vacated the property in around 1998, her parents moved back into it. By 2001, Mr Bates was assessed as having moderate to severe dementia and, by 2006, he moved into Admatha’s Residential Care Home on a permanent fulltime basis. He remained there until his death in 2011.

[25] The property remained empty from 2006 until the keys were handed over to Vivienne by her mother. At the time she says her mother told her that she was impressed with Vivienne’s management of a rental property that Vivienne owned with her husband in Browns Road in Christchurch, and her mother told her that she wanted her to have and make use of the Shearer Avenue property as a rental property.

[26] Vivienne and her husband say they then put considerable time and money into the Shearer Avenue property. At the time the property was very run down after many years of neglect. They took over all aspects of its management, including paying the rates and insurance. They re-carpeted the house and put locks on the internal bedroom doors so it could be promoted as a “rent by the room” property. They also painted, carpeted and tidied up the sleepout, fixed rotten flooring in the bathroom and laundry, replaced gutters and spouting, replaced two boundary fences and did work on the garden. They employed a woman, Linda Burgess, to assist with housework and gardening at both this and their other rental property.
[27] Vivienne says her mother was regularly updated on how she and her husband were running the property and her mother said she was happy with the work Vivienne had done and was pleased that she was able to make something of the property.

[28] Although the “gift” was initiated by Mrs Bates, Vivienne says that Mr Bates, too, had spoken of his intention to gift the Shearer Avenue property to her, although those intentions were communicated to her indirectly rather than directly. Prior to her father succumbing to dementia and entering fulltime care in 2006, Vivienne says her two brothers told her that their father had said that the property would be given to her upon their death.

[29] This stated intention to give Vivienne the Shearer Avenue property was reinforced by evidence from several witnesses, including David James, a family friend; Joyce Bates, the plaintiff’s aunt; Tanya Bates, the widow of the plaintiff’s deceased brother Gregory Bates; and the Bates family’s accountant, Michael Hanna.

[30] Vivienne says that she never asked her mother to formalise the gift or arrange for the transfer of the title to the Shearer Avenue property to her name because she believed there would be no issue with effecting the transfer of the property following her parents’ deaths. This was based on the widely held understanding by her and others that her parents intended that the property would pass to her.

[31] Her mother then passed away on 28 May 2009 and, under her will of 9 March 2004, the plaintiff and her two brothers, Greg and Mitchell, were trustees and executors of the estate. However, it was Vivienne and her husband who handled all dealings with EQC regarding the property and who continued to maintain and administer the property without any assistance from other family members.

[32] Greg held Mr Bates’ enduring power of attorney and the evidence is he exercised this from February 2006 onwards when Mr Bates went into fulltime residential care. In 2011, when Greg was diagnosed with terminal oesophageal cancer, Greg decided to implement some of the provisions of Mr Bates’ will before Greg’s death. He calculated the total value of the assets held by his father, and deducted anticipated living expenses for the balance of his father’s expected life, before paying
each of the three siblings one quarter of the remaining amount. Significantly, the calculations excluded the value of the Shearer Avenue property.

[33] Her father then passed away on 4 December 2011 and her brother Greg passed away six months later. It is common ground that the wills of the late Mr and Mrs Bates did not make specific provision as to what should happen with the Shearer Avenue property. They both simply divided their respective estates (after the expiration of a life interest in the principal residence to the surviving spouse) into four equal parts for the three children and for the grandchildren.

[34] Vivienne says that it was only after the death of their brother, Greg, in 2012 that Mitchell asserted an interest in the property. She attributes this to the fact that Mitchell expected he would inherit BJL upon Greg’s death given the close association between BJL and Mitchell’s company, BAL, but that did not eventuate. Some family tension was apparent according to Vivienne over Mitchell’s stance, as other family members were of the view that Mitchell had had a “change of position” over whether the Shearer Avenue property should be the plaintiff’s.

[35] Whatever Mitchell’s motivation, he refused to sign a deed of family arrangement which would have seen the Shearer Avenue property transferred wholly to Vivienne. Furthermore, as a result of the dispute over the status of the property, the respective estates have not been fully distributed.

[36] In those circumstances, Vivienne asserts that the evidence establishes that Mrs Bates made an unconditional inter vivos gift of the property to her in June 2008 and that this was made on behalf of both Mrs Bates and Mr Bates (as to his half share). Vivienne seeks that the Court make an order perfecting the gift by transferring the fee simple estate in the freehold of the Shearer Avenue property to her.

Discussion

[37] A gift is the gratuitous, unconditional transfer of property to another by a living donor, with the intention that the gifted property not revert to the donor.¹ It requires

¹ Laws of New Zealand Part 1 Gifts Inter Vivos: (1) Introduction to Gifts Inter Vivos at [1].

the donor to have done everything in his or her power to effect the transfer of the property to the donee. However, in order to transfer a legal interest in land, the registered proprietor of that land must execute a transfer instrument in the prescribed form, whether a paper transfer instrument,² or an e-dealing authorisation allowing an electronic instrument to be registered,³ and deliver that to the recipient of the gift in order for the donee to obtain a registered legal interest in the land. There could also be other documents required, such as a discharge of a mortgage. It is clear neither of these were provided to the plaintiff, and the gift had not been perfected.

[38] Importantly, equity will not usually come to the aid of a volunteer, if a gift is imperfect. As the authors Hinde McMorland and Sim of Land Law in New Zealand state:⁴

If a donor intends to make a gift to a donee, and the transfer of the property is for any reason ineffective or incomplete, the Court will not construe the uncompleted gift as a declaration of trust for the intended donee. If any act remains to be done by the donor to complete the gift, and the donor’s conduct falls short of estoppel, the Court will not compel the donor to do that act and the gift remains incomplete and fails.

[39] Vivienne submits that there are cases where the Court has intervened to perfect an imperfect gift, and a donee can require the donor, or his or her representatives, to perfect an imperfect gift of land where:

(a) the donor has given the donee possession of land and intimated to the donee that the land has been given; and

(b) the donee later expends money on improvements to the land with the donor’s assent.

[40] The plaintiff refers to Thomas v Thomas, where Gresson J held that, while equity will not assist a volunteer, “there can be circumstances in which an uncompleted gift of land can be binding”.⁵ In that case, a husband had orally abandoned the

² Land Transfer Act 1952, s 157.

³ Although that may be insufficient as such an authority could always be revoked.

4. Hinde McMorland and Sim Land Law in New Zealand (online looseleaf ed, LexisNexis) at [9.004].

⁵ Thomas v Thomas [1956] NZLR 785 (SC) at 793.

matrimonial home to his wife and left her in exclusive possession, and she had covered all outgoings from the date of his departure, including mortgage and repair costs. The Court held that in those circumstances:⁶

...this case amounts to an unconditional gift of land followed by possession and expenditure on the land pursuant to the gift and in the belief that the donee was the owner of the land, the donor standing by and allowing such expenditure to be made. Although the gift was verbal only, it gives the donee a right in equity to call upon the donor to complete the imperfect gift.

[41] The husband was therefore ordered to execute a proper transfer of the property from the joint names of himself and his wife into the name of the wife alone.

[42] However, the application in Thomas v Thomas proceeded under s 19 of the Married Women’s Property Act 1952 which enabled the Court to make “such order ... as ... it thinks fit”. In that case, the Court felt able to order the transfer without being caught by the technicalities of whether this was an incomplete gift. The Court held that the sections allowed the Court to make “an authoritative declaration as to the respective beneficial interests of the parties in a property ... when the title is ... in the name of the one or the other or in both their names”.⁷

[43] Similarly, under s 21N(3) of the Property (Relationships) Act 1976, the author of Garrow and Fenton’s Law of Personal Property in New Zealand states that:⁸

regardless of any rule of law “a gift between spouses or partners may be made orally or in writing, and does not need to be made by deed or by delivery”. The normal rules as to the making of a gift do not apply between spouses and partners.

[44] Given the statutory context in which Thomas v Thomas was decided I would be reluctant to treat it as authority for perfecting an incomplete gift of realty in a context other than between spouses or de facto partners. To the extent it relies on a representation to the donee, and subsequent expenditure by the donee in reliance on those representations, I consider that is better dealt with under the claim of proprietary estoppel, which is discussed further below.

⁶ At 794.

⁷ At 792-793.

8. Roger Fenton Garrow and Fenton’s Law of Personal Property in New Zealand (7^th ed, LexisNexis, Wellington, 2010) at 4.8.

[45] I was also referred to Strong v Bird, which involved the release of a debt rather than the gift of land.⁹ Although the release of a debt required a seal, which was not provided, a gift was declared and the intention remained as at the death of the donor. The passing of the debt to the donee as sole executor was therefore treated as a legal transfer. The issue is whether that principle could be applied to a gift of land. In that regard, Mr Wilding pointed out that in In re James, Farwell J applied Strong v Bird to realty where the donee was one of two executors of an estate.¹⁰ The donee had been given the property orally along with the title deeds to the property. Farwell J held “the defendant by her appointment as one of the administratrices has got the legal estate vested in her and she needs no assistance from equity to complete her title”, and that title to the property had to be recognised and no steps could be taken to recover it from her.¹¹ However, the reasoning in that case has not met with universal approval.¹² Furthermore, that case did not address the circumstances where a property might be left to more than one executor and trustee appointed by will and when that will requires them to hold the property for others, as in this case. I therefore do not consider it assists the plaintiff in this case.

[46] Other cases discussed at the hearing included Baillie v Baillie¹³ and Sen v Headley.¹⁴ However, both those cases can be distinguished from the present circumstances as, in each one, the donee had been provided with signed transfers or title deeds to the land in question.

[47] In re Hume, Ex parte Official Assignee, the Court held that two sons had a right to compel their father to transfer a piece of land to them after he had promised to transfer the land to them.¹⁵ In that case, in reliance on their father’s promise, the sons had taken possession of the land, built a house on the land, paid the outgoings and undertook considerable labour improving the land. The Court held that the reliance and expenditure by the sons on the land amounted to ex post facto consideration, turning the voluntary promise into an enforceable contract.

⁹ Strong v Bird (1874) LR 18 Eq 315 (Ch).

¹⁰ In re James [1935] Ch 449.

¹¹ At 451.

¹² See for example In re Gonin, decd. [1979] Ch 16 at 34-35.

¹³ Baillie v Baillie (1986) 2 NZCPR 429 (HC).

¹⁴ Sen v Headley [1991] Ch 425.

¹⁵ In re Hume, Ex parte Official Assignee [1909] NZGazLawRp 163; (1909) 28 NZLR 793 (SC).

[48] However, that case, too, can be readily distinguished. The sons were not seeking perfection of an imperfect gift as the father had already transferred the land to them. The question was whether the transfer was void, given the father’s subsequent bankruptcy.

[49] In my view, none of the authorities referred to assisted in the present case. The circumstances here were far more complex. Clearly parting with possession and keys was insufficient to comply with the formal requirements for gifting land.¹⁶ I also accept that it is unclear on what basis Mrs Bates could give a property when it was not hers alone to give when, at the time, Mr Bates’ son Gregory was his attorney, not Mrs Bates. In all the circumstances, I am not satisfied that the law would allow perfection of what was clearly an imperfect gift of land without an equitable basis for doing so, based on subsequent events. I therefore turn to consider the alternate claims which assert either a constructive trust or proprietary estoppel.

Should a remedial constructive trust be recognised?

[50] The next cause of action asserts that the circumstances warrant the Court ordering that the trustees of the estate hold the Shearer Avenue property on remedial constructive trust for the sole beneficial interest of Vivienne. While the terms “constructive trust” and “remedial constructive trust” are used interchangeably by Vivienne in her pleadings, it is apprehended that what is sought is a remedial constructive trust.

[51] A remedial constructive trust is not dependent on a person intending to create a trust. It is created by order of the Court.¹⁷ As was explained by Glazebrook J in Commonwealth Reserves I v Chodar, such a trust could arise in two circumstances, either as a result of unconscionability, or as a result of unjust enrichment.¹⁸ Referring to the decision in Fortex Group Ltd v MacIntosh, she noted that the jurisdiction to recognise such a trust in New Zealand was not entirely settled though it had, at least, “a foot in the door”.¹⁹ She then proceeded on the basis that there was jurisdiction to

¹⁶ Under s 24 of the Property Law Act 2007 or under the Land Transfer Act.

¹⁷ Fortex Group Ltd v MacIntosh [1998] 3 NZLR 171 (CA) at 173.

¹⁸ Commonwealth Reserves I v Chodar [2001] 2 NZLR 374 (HC).

¹⁹ At [40].

impose a remedial constructive trust but that care needed to be taken when exercising the discretion to do so, saying:²⁰

It is apparent that a remedial constructive trust is potentially available as a remedy in cases of unconscionability and unjust enrichment. It is not inevitable that one will be awarded.

[52] In exercising the discretion to impose a remedial constructive trust she noted the following:

[47] Reliability and certainty are primary considerations of any system of property rights, and the unprovoked alteration of those rights is to be avoided where possible. This is all the more true in a commercial rather than a domestic context. The Court must carefully examine the reasons why other forms of relief are inadequate, the interests of any third parties and the other circumstances of the case, and consider whether proprietary relief can be justified.

[53] Both Mr Wilding and Mr Palmer referred me to the decision in Stratulatos v Stratulatos, where both proprietary estoppel and the remedy of a constructive trust were considered. Underlying each was the consideration of unconscionability, with McGechan J observing that:²¹

... I have little doubt that the tide is running strongly in favour of the simple and overt imposition of a constructive trust when such is necessary to do justice...

[54] In Stratulatos, the plaintiff and her husband (the son of the defendant) were given sole occupancy of the property and encouraged to renovate it as if it were their own, although it remained in the defendant’s name. The son later died and his mother, the defendant, refused to transfer the title of the property to his widow who by then had remarried. The ensuing proceedings alleged that the defendant had encouraged the couple “in the belief that she would, if and when called upon, transfer the title of the property to them”.²²

²⁰ At [46].

²¹ Stratulatos v Stratulatos [1988] NZHC 467; [1988] 2 NZLR 424 (HC) at 436.

²² At 427.

[55] In those circumstances, the Court stated that the relief available “is that which is necessary to cure the underlying unconscionability”.²³ The effort and expense the plaintiff had put into the property was far beyond routine maintenance or a gesture of appreciation of the right to occupy the house, but the Court also held that the mother had only ever intended to transfer the title into the name of her son. In the circumstances, McGechan J held the plaintiff should be regarded as having been the beneficial owner of a share in the property proportionate to her contribution to the property, which he calculated as being 25 per cent. She was awarded a monetary sum equivalent to the value of that interest.

[56] Counsel for Vivienne also referred to Fitness v Berridge, where Barker J ordered a constructive trust in favour of a wife as to her husband’s half share in the property after he abandoned her and left in her exclusive possession of a property.²⁴ In that case the wife obtained sole beneficial ownership of the property. However, in my view, as I have already discussed, transfers of property effected by the Court in the context of relationship property cases do not necessarily have wider application.

[57] Having regard to Stratulatos and the application of the principles of a remedial constructive trust in that case, I accept it would be unconscionable for the beneficiaries of the wills of the late Mr and Mrs Bates in this case to benefit from an increase in the value of the house resulting from Vivienne’s efforts. However, I also accept, as Mr Wilding argued, that that argument does not necessarily extend to a right to retain the entire property. Furthermore, account may need to be taken of the rental benefit derived by the plaintiff.

[58] In my view, the third cause of action pursued by the plaintiff is perhaps the most suited to her claim.

Should the property be transferred to the plaintiff by reason of proprietary estoppel?

[59] Allied to the concept of a remedial constructive trust is the plaintiff’s third cause of action relying on proprietary estoppel. In this case, Vivienne claims that the

²³ At 438.

²⁴ Fitness v Berridge (1986) 4 NZFLR 243 (HC).

estates are estopped from denying her interest in the property on the grounds that her rights to the property are based on:

(a) a representation or an assurance being made to her;

(b) reliance on it by her; and

(c) detriment to her as a consequence of reasonable reliance.

[60] Vivienne submits that the words and actions of the late Mrs Bates reasonably conveyed to her that the Shearer Avenue property belonged to her and she relied on that by investing time and money on the property as if it was her own.

[61] That reliance was also fostered by Mr Bates and, until Mitchell had second thoughts, by her two brothers. For example, the plaintiff says that after her mother had given her the keys and she had taken possession of the property, her brothers, Mitchell and Greg, told her that their late father had said that she would inherit the property. The widow of the plaintiff’s brother, Greg, said that Greg had told her:

... many times, over the years we were together, that it was common knowledge in the family that Vivienne was to get the Shearer Avenue Property as Reid and Noeline had stated this. He told me that they felt giving the Shearer Avenue Property to Vivienne was a way of making things (financially) fair for all their children because he (Greg) and Mitchell had both been helped to a considerable extent by Reid into their own businesses, respectively BJL and BAL.

[62] She went on to note that:

The Bates family have always been strong on principle. Both parents grew up in an era where a handshake was enough to secure any contract and it went without saying that for family this was even more pertinent. Thus, I never questioned why such an important state of financial affairs was not written into the wills of Reid and Noeline.

[63] Similarly, the family’s accountant, Mr Hanna, said that he had discussed with Greg that the former family home at 8 Shearer Avenue, Christchurch would be passed to their sister, Vivienne. He said “I had no reason to doubt what Greg told me. Greg was a fair-minded person whom I respected”.
[64] Furthermore, when Greg arranged in 2011 to distribute part of his father’s assets in advance of his death, in his capacity as his father’s attorney, he did so excluding the Shearer Avenue property and the siblings accepted those calculations at the time.

[65] As Mr Palmer, for the plaintiff, submits, while the late Mr Bates’ representations as to the gift of his interest in the property were not made directly to her, his words “effectively amounted to family lore” and all family members allowed her to treat the Shearer Avenue property as if it were her own. In particular, he submits:

(a) There is strong and undisputed evidence that the late Mr and Mrs Bates represented to the family that Vivienne would receive the Shearer Avenue property. These representations did not waiver over time.

(b) In the case of the late Mrs Bates they were also made directly to Vivienne.

(c) In the case of the late Mr Bates they were not made directly to Vivienne, but were made to his wife and sons. This occurred in a context in which family honour was important and good relations appeared to exist. There is no evidence that the family members were asked to keep the representations secret.

(d) In a family context such as the present it is natural that the late Mr Bates would anticipate that his wife and sons, at the appropriate time, would communicate his intention to Vivienne. However, by the time that he and Mrs Bates could no longer realistically maintain or use the property, his health had deteriorated to such an extent he could not communicate it directly.
(e) By communicating his intention to the late Greg Bates, whom he had appointed as his power of attorney, he had communicated it to someone who was armed by him with power to effect his intention at or after the point of incapacity.

(f) In these circumstances, the late Mr Bates must have known that Vivienne would have been made aware of his intention at some point in time.

(g) Viewed objectively, it was reasonable for Vivienne to rely on the representations of the late Mrs Bates directly and the late Mr Bates indirectly. She did so, and it is highly unlikely that she would have devoted the time, money and effort she did to the property, had she not understood it was intended to be hers. Importantly, he says no-one in the family intervened to disabuse her of her understanding that the property in due course would be transferred to her.

[66] Both counsel referred me to Thorner v Major for a recent statement of the law on proprietary estoppel.²⁵ In that case, it was held that proprietary estoppel applied to enable the transfer of a farm to the deceased’s first cousin once removed, who had toiled on the farm over many years on an expectation or understanding encouraged by his cousin that the farm would be left to him. Lord Walker of Gestingthorpe observed that there was no comprehensive definition of proprietary estoppel, but said:²⁶

Nevertheless most scholars agree that the doctrine is based on three main elements, although they express them in slightly different terms: a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance.

[67] He went on to say that the representation or assurance did not have to be precise but must be “clear enough” in the context.²⁷ Assessed objectively, the representations in that case, which allowed the claimant to commit to a life of “hard and unrelenting physical work” in the expectation that the farm he was working on would be inherited

²⁵ Thorner v Major [2009] UKHL 18.

²⁶ At [29].

²⁷ At [56].

by him, would have been taken seriously and relied upon.²⁸ The intention of the representor was not relevant. Rather, it was what the words and actions would reasonably have conveyed to the claimant.

[68] Applying these principles, it is clear that the doctrine of proprietary estoppel can be used to complete what would otherwise be an imperfect gift. This principle emerged in Dillwyn v Llewelyn.²⁹

[69] In Dillwyn v Llewelyn, a father placed his son in possession of land. He also provided his son with a signed memorandum saying he and his wife wished him to build a dwelling house on certain lands they owned. The plaintiff then built and occupied a residence on the grounds and undertook other works but the legal estate was never conveyed to him before his father died. The Court noted that the son had expended £14,000 on the property during the lifetime of the father with the father’s “assent and approbation”. While the mother was willing that the son should be regarded as the absolute owner of the land, this was contested by the other children.

[70] In such circumstances, Lord Westbury, the Lord Chancellor, stated the law as follows:

A voluntary agreement will not be completed or assisted by a Court of Equity, in cases of mere gift. If anything be wanting to complete the title of the donee, a Court of Equity will not assist him in obtaining it; for a mere donee can have no right to claim more than he has received. But the subsequent acts of the donor may give the donee that right or ground of claim which he did not acquire from the original gift. Thus ... if A. puts B. in possession of a piece of land, and tells him, “I give it to you that you may build a house on it”, and

B. on the strength of that promise, with the knowledge of A., expends a large sum of money in building a house accordingly, I cannot doubt that the donee acquires a right from the subsequent transaction to call on the donor to perform that contract and complete the imperfect donation which was made.

[71] The principle in Dillwyn v Llewelyn has been confirmed in the intervening century. In Inwards v Baker, Lord Denning MR stated that where a father had allowed his son to build a bungalow on his father’s land and had expended money in doing so in the expectation of being allowed to remain there, that “the Court will not allow that

²⁸ At [59].

²⁹ Dillwyn and Llewelyn [1862] EngR 908; (1862) 4 De G F & J 517.

expectation to be defeated where it would be inequitable so to do”.³⁰ He went on to say that the plaintiffs, the successors in title of the father, were also bound by this equity saying:³¹

It is an equity well recognised in law. It arises from the expenditure of money by a person in actual occupation of land when he is led to believe that, as the result of that expenditure, he will be allowed to remain there. It is for the court to say in what way the equity can be satisfied.

[72] The doctrine of proprietary estoppel was also discussed in some detail in the case of Stratulatos referred to above, where McGechan J noted that the traditional “five probanda” laid down by Fry J in Willmott v Barber³² for the existence of a proprietary estoppel had given way towards “a more general approach based simply upon “unconscionability””, although saying it is “difficult to see how the doctrine could apply unless at least the defendant has “created or encourage a belief or expectation”, and the plaintiff has “relied on that belief or expectation””.³³

[73] In Stratulatos, McGechan J was satisfied that a proprietary estoppel was made out, although it was not a case where the defendant was required to transfer the whole of the property to the plaintiff, as her statement of willingness to convey the property was on the assumption that her son would have survived her and would have inherited the house on her death which had not occurred.

[74] However, it is clear that the remedy will be what is required to reflect the representations given, and to remedy any unconscionability. In other words, the doctrine of proprietary estoppel can be applied so as to enable a property to be transferred where there has been a representation or assurance made to the plaintiff, reliance on it by the plaintiff and detriment to the plaintiff as a consequence of reasonable reliance. The remedy is discretionary and can respond to the particular circumstances of the case.

³⁰ Inwards v Baker [1965] EWCA Civ 4; [1965] 2 QB 29 at 37.

³¹ At 37.

³² Willmott v Barber (1880) 15 ChD 96 at 105-106.

³³ Stratulatos v Stratulatos, above n 21, at 435-436.

[75] Importantly, the focus is not necessarily on what was intended by the representor, but what, in all the circumstances, the representations would have reasonably conveyed to the plaintiff.

[76] Applying those principles to the present facts, I consider there were clear representations by Mrs Bates directly to Vivienne, particularly in 2008 when she handed over possession of the property to Vivienne, allowing her to treat it as her own. I also consider that Mr Bates made representations to the same effect to family members and a key adviser to the family, their accountant Mr Hanna, before he became incapacitated. Those representations were reinforced by Greg as Mr Bates’ power of attorney. It was the combined effect of those representations that allowed Vivienne to proceed with confidence to treat the property as her own and to invest time and money in improving it to maximise its use as a rental property. I am satisfied she would not have done this had she not been encouraged, both actively and passively by all members of the family, including, importantly, her brother Mitchell, in that belief. Had that not been the case her evidence is that she would never have invested the time and money into the Shearer Avenue property if she had not thought it was hers. I am satisfied, therefore, that there were both appropriate representations to her by both Mr and Mrs Bates and reasonable reliance by her on those representations. That only leaves the issue of the appropriate remedy.

[77] Vivienne seeks vesting of the entire interest in 8 Shearer Avenue in her. This is not a case where there is a complicating factor, such as in Stratulatos, where it was expected the property would actually go to the plaintiff’s husband, (who had predeceased the plaintiff in that case). Instead, the representations were always that Vivienne would be the sole owner of the property, with the rationale for that being that her two brothers had been financially assisted by their parents during their lifetimes, and this was required to achieve some balance between the siblings.

[78] I take account, too, that this is not a case where there is a context of commercial interest where certainty of property rights should prevail. Rather, relief is sought in a family context where I consider there is more flexibility to ensure that the wishes of those family members now deceased are carried out without unnecessary legal hurdles being placed in their way.
[79] Accordingly, I am satisfied that the relief sought by the plaintiff should be granted in reliance on the doctrine of proprietary estoppel.

[80] While the plaintiff sought, as a first step, that the half share of 8 Shearer Avenue currently held in the names of Vivienne, Mitchell and Greg as executors first be transferred to Vivienne and Mitchell as executors before any further transfer, to formalise the position as a consequence of Greg’s death, I do not consider this is necessary. The interest can be transferred as a consequence of this order of the Court and accordingly, the need to regularise the position first, so that the surviving trustees can all effect the transfer, is not required.

[81] Accordingly, I order:

(a) the fee simple estate in freehold of the property located at 8 Shearer Avenue, Christchurch, being Lot 23 Deposited Plan 18985 comprised and described in computer freehold register CB761/53 currently held in the names of:

(i) the late Gregory Mathew Bates as an executor, along with Mitchell Reid Bates and Vivienne Maree Carroll also as executors, of the estate of the late Noeline Atholie Bates (the late Mrs Bates) as to a half share; and

(ii) in the name of Mitchell Reid Bates and Vivienne Maree Carroll as executors of the estate of the late Joseph Reid Bates (the late Mr Bates) as to a half share;

shall be vested in the plaintiff, Vivienne Maree Carroll, as the sole owner in her personal capacity as at the date of this order;

(b) the estates of the late Mr Bates and the late Mrs Bates are jointly severally liable to pay and shall pay the actual and reasonable costs of this proceeding, including the plaintiff’s costs and those of Mr Wilding; and
(c) the plaintiff has leave to apply further as to implementation of the orders made in this proceeding providing such application is made prior to 1 February 2019.

Solicitors:

Buddle Findlay, Christchurch

A J F Wilding, Barrister, Christchurch