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Young v Young [2020] NZHC 3054 (19 November 2020)

Last Updated: 4 December 2020

JUDGMENT OF GORDON J

This judgment was delivered by me on 19 November 2020 at 2.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

YOUNG v YOUNG [2020] NZHC 3054 [19 November 2020]

Introduction

• [1] There are two separate, but related, proceedings before the Court. The issue at the heart of the case is whether a son, who is a registered proprietor of a residential property along with his mother, has a beneficial interest in that property.

• [2] The plaintiff in proceeding CIV-2019-404-1079 (the property proceeding) Ella Young, lives at 85 Mead Street, Avondale, Auckland (the property). The title to the property records Mrs Young and her son, Shane Young (Shane)¹ as the registered owners of the property. They are joint tenants. It is Mrs Young’s position that she is the beneficial owner of all of the property. She says that the half-interest registered in Shane’s name is held by him on a resulting trust for her.

• [3] She seeks an order under s 339(1)(b) of the Property Law Act 2007 (PLA) vesting the entire property in her.

• [4] Mrs Young also seeks an order under s 142 of the Land Transfer Act 2017 for removal of the Notice of Claim registered by Jina Kim, the second defendant, against the property.

• [5] Shane supports his mother’s case.

• [6] Ms Kim is Shane’s former wife. Her position is that Shane is both the legal and beneficial owner of a half-share in the property.

• [7] The proceeding in CIV-2019-404-2029 is brought by Ms Kim under the Property (Relationships) Act 1976 (PRA) (the relationship property proceeding). It was transferred to this Court from the Family Court. Ms Kim claims that Shane’s half-share in the property is relationship property and should be divided equally between the two of them. Mrs Young and Shane defend that proceeding.

1. I will use Shane Young’s Christian name rather than referring to him as Mr Young to avoid any confusion with his father, Ronald Young, who is also mentioned in the judgment.

Background

Property purchases

• [8] Mrs Young is now aged 80. She is a widow. She married her late husband, Ronald Young (Ronald), in 1958. Shane, the only child of the marriage, was born in 1973.

• [9] Mrs Young and Ronald bought their first home at 54 Burnley Terrace, Mt Eden, Auckland (Burnley Terrace) in 1974 with their savings from paid employment and with the assistance of mortgage funding. The home was first registered in Ronald’s name and then transferred into their joint names under the Joint Family Homes Act 1964.

• [10] Mrs Young and Ronald sold the home at Burnley Terrace in 1988 for $140,000. Mrs Young says she and her husband worked hard in the intervening years to pay off the mortgage.

• [11] Using the funds from the sale of Burnley Terrace, Mrs Young and Ronald bought a property at 105 Canal Road, Avondale (Canal Road) for $130,000. They did not need mortgage finance for the purchase. The sale proceeds from Burnley Terrace were sufficient to meet the purchase price. After they moved into Canal Road, Mrs Young and Ronald found the house required significant maintenance. In order to carry out remedial work, Mrs Young and Ronald obtained a mortgage, first with United Building Society and then Housing Corporation of New Zealand.

• [12] Ronald was diagnosed with terminal cancer while they were living at Canal Road. Following the diagnosis, the couple decided to sell Canal Road. They found it costly to maintain and it still had a number of defects which needed to be remedied. As well, a home of the size of Canal Road was no longer needed. Shane was not living with his parents. He was living and working up north.

• [13] In September 1993, Mrs Young and Ronald sold Canal Road for $110,000.
• [14] That same month, Mrs Young and Ronald bought the property at 85 Mead Street, Avondale, for $104,000. Although it was a smaller property, as a consequence of taking out the two mortgages, and the need for repayment on sale, Mrs Young and Ronald’s equity in Canal Road was not sufficient to meet the purchase price of the property. The purchase was therefore in part funded from the sale of Canal Road and in part by way of a mortgage from the ASB bank in the sum of $40,651.07.

• [15] Mrs Young says that in order to obtain the mortgage funding for the purchase of the property, as she and her husband were both beneficiaries by then, the ASB bank would not lend to them unless one of the registered proprietors listed on the title was working 40 hours a week. In her statement of defence, Ms Kim accepts that in the circumstances of Mrs Young and her late husband, normal commercial practice would have been for the ASB to require a joint application by Ronald, Mrs Young and Shane; for Shane to have joint and several liability for the advance made by the ASB, and for Shane to be a registered proprietor of the property.

• [16] Mrs Young says that at that time they approached Shane, who was still up north and working full time, and asked him to go onto the title with them so she and Ronald could get the mortgage funding for the purchase of the property. Shane agreed. Shane did not make any cash contribution towards the purchase of the property. Mrs Young says there was no intention that Shane would have any beneficial interest in the property.

• [17] It is not known whether there was any written agreement regarding the beneficial ownership of the property. The solicitor who acted for Mrs Young and Ronald on the purchase has passed away and his files cannot be located.

• [18] Mrs Young says she and Ronald lived in the property and accepted full responsibility for paying the mortgage and all outgoings, including rates and insurances associated with the property. They did not on any occasion ask Shane to assist with mortgage payments or for any outgoings on the property.

• [19] Ronald died on 2 July 1998. In his will Ronald left all of his estate to his wife. Mrs Young’s evidence was that at the date of Ronald’s death, he and Mrs Young were

the only ones living at the property. Shane says he came back to Auckland before his father died and began to live permanently at the property after his father’s death.

• [20] After Ronald’s death Mrs Young continued to make all payments on the property, including mortgage payments, rates and insurances. She sought assistance from WINZ to meet the mortgage payments after Ronald’s death. Shane did not assist with any mortgage payments nor did he make any payments for rates or insurance. The mortgage was repaid by Mrs Young on 22 December 1999.

• [21] When Shane began living permanently at the property after Ronald’s death, he initially paid some rent to his mother. Subsequently, in substitution for rent, he helped his mother with maintenance around the house in return for accommodation.

• [22] Shane supported his mother’s evidence. He said he made no cash contributions towards the purchase of the property, he did not live at the property at the time of its acquisition, nor did he make any payments towards the property. His inclusion on the title was simply to help his parents satisfy the ASB’s loan criteria. In his oral evidence he said he thought he was acting more as a guarantor because he was in stable employment.

• [23] Mrs Young and Shane both say that even after Shane came to live at the property he still considered it belonged to his mother.

• [24] On Ronald’s death title devolved to Mrs Young and Shane as survivors. There was a joint application by Mrs Young and Shane for transmission by survivorship dated 29 November 1999. This document formed a significant part of Ms Lim’s case that Shane has both a legal and beneficial interest in half the property. I will return to the document later in this judgment.

• [25] At the time of signing the application for transmission of the property to Mrs Young and Shane, there was still an amount owed to the ASB Bank secured by the mortgage. The outstanding balance was repaid the following month.

Marriage of Shane and Ms Kim

• [26] After a 10 month visit to New Zealand some time prior to 2000, Ms Kim came back to New Zealand in 2004. She met Shane in New Zealand that year. They did not live together before their marriage which took place in June 2006 in South Korea. In January 2007, after returning to New Zealand, they came to live with Mrs Young at the property. They lived there until they separated in February 2012. During that time they travelled back to South Korea on occasion. Shane estimates they would have lived in South Korea for about a total of two years between January 2007 and February 2012. Ms Kim did not agree with this estimate. But she agrees that each time they went to South Korea it was for a period of around one or two months. She says they went there at least four times, approximately every 18 months.

• [27] They do agree that on all the occasions they went to South Korea, the property remained their place of domicile. They were only ever visiting South Korea and did not go there to stay permanently. They agree that on one occasion they lived in South Korea for around 10 to 11 months.

• [28] It is not disputed that Shane and Ms Kim did not make any rental or board payments to Mrs Young while they were living in the property. They did make some payments towards the internet and power. They also undertook some renovations. Mrs Young says they were never finished and Shane agrees.

• [29] In February 2018, Ms Kim filed the relationship property proceeding in the Family Court. As noted, in that proceeding she claims Shane’s half share in the property is relationship property. She seeks half of that half-share. Given her interest in the property, Mrs Young was joined as a party to the relationship property proceeding, pursuant to s 37 of the PRA.

• [30] In order to protect her interest in the property, Mrs Young also filed the property proceeding in the High Court seeking the orders and declarations referred to above.

Issues

• [31] The following issues arise:

(a) Is Shane’s legal interest in the property held subject to a resulting trust in favour of Mrs Young?;

(b) If so, should the Court:

(i) make an order against Shane, that the legal title to the property be transferred into Mrs Young’s sole name; and

(ii) make an order against Ms Kim that the Notice of Claim registered against the title to the property by Ms Kim be removed?

(c) If Shane does not hold his legal interest in the property on a resulting trust how should that interest be divided between Shane and Ms Kim?

• [32] In the property proceeding, Ms Kim does not plead that, in the event the Court were to find Shane holds his interest in the property on a resulting trust for his mother (in other words that Mrs Young has the entire beneficial interest), a constructive trust arises in favour of Shane and Ms Kim based on their contributions to the property. In his oral submissions Mr Rowe, for Ms Kim, confirmed she does not advance that argument.

• [33] The parties agree that if I were to determine that Shane holds his share of the property on a resulting trust for his mother then:

(a) that disposes of Ms Kim’s claim for half of Shane’s share in the property. (The Court will still need to make some orders regarding separate property. The terms of those orders are agreed between Ms Kim and Shane); and

(b) there is no opposition to the Court making the orders under s 339(1)(b) of the PLA against Shane and ordering that Ms Kim’s Notice of Claim on the title of the property be removed.

Submissions

• [34] Although Ms Evans, for Mrs Young, refers to the presumption of a resulting trust, her submissions focus on the actual intention of the parties. She emphasises the fact that Mrs Young and Ronald provided all the funds for the purchase of the property and that Shane did not make any financial contribution to the purchase.

• [35] She submits that Shane held title to the property initially on a resulting trust for both his parents and, following the death of his father, on a resulting trust for his mother.

• [36] Mr Snedden, for Shane, refers to Shane’s evidence that he did not, at the time of purchase, and does not now consider he has an interest in the property. The joint application for transmission (which I will come to) is not an indication of a contrary intention, nor does it support the counter presumption of advancement.

• [37] Mr Rowe, for Ms Kim, says there is a statutory presumption that, as Shane has a legal interest, he also has an equitable interest. This presumption, which he also says is rebuttable, is set out in s 47 of the Land Transfer Act 2017.² He submits that it cannot be said that Mrs Young and Ronald made the sole contribution to the acquisition of the property simply because they provided the cash for its purchase. He says Shane also contributed to the purchase by accepting liability under the mortgage.

• [38] Mr Rowe further submits that the joint application for transmission of the property rebuts the presumption of a resulting trust and supports the counter presumption of advancement on the balance of probabilities. He says the joint declaration in the application confirms Mrs Young understood and accepted that Shane was both the legal and beneficial owner of a half share in the property.

² Formerly Land Transfer Act 1952, s 61.

Legal principles

• [39] Shane’s legal interest is indefeasible.³ The register does not record any equitable obligation to which Shane is subject. But remedies in personam remain available despite the protections afforded to registered proprietors by the Land Transfer Act 1952. As Lord Wilberforce said in Frazer v Walker:⁴

... their Lordships have accepted the general principle, that registration under the Land Transfer Act 1952 confers upon a registered proprietor a title to the interest in respect of which he is registered which is ... immune from adverse claims, other than those specifically excepted. In doing so they wish to make clear that this principle in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or in equity, for such relief as a Court acting in personam may grant.

• [40] The legal principles regarding a resulting trust which arises in response to a presumed intention of the transferor or settlor of property are well settled.⁵ In Potter v Potter, the Court of Appeal summarised the principles in this way:⁶

• [14] In the present context the essence of a resulting trust is that a person providing or contributing to the purchase price of property conveyed partly or wholly into the name of another retains a beneficial interest in the property to the extent of his or her contribution if there is nothing to indicate that he or she intended to confer the beneficial interest on the legal transferee: see, for example, Bateman Television Limited (in liquidation) v Bateman and Thomas [1971] NZLR 453 (CA) and Efstratiou v Glantschnig [1972] NZLR 594 (CA). The settlor must have expressed no intention to dispose of his or her beneficial interest. To fill the vacuum, the law presumes an intention to retain the beneficial interest which the settlor has never effectively alienated. The trust “results” from the lack of effective disposition to another.

• [15] A refinement to that principle is that where the settlor transfers the legal title to property for an express purpose, the transferee receives it subject to a trust for the attainment of that primary purpose. If, for whatever reason, effect can not be given to the primary purpose effect must be given to the contingent secondary purpose of restoring the property to the settlor. The general principles are set out in Barclays Bank Limited v Quistclose Investments Limited [1970] AC 567; Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137; and Cossey v Bach [1992] 3 NZLR 612.

3. Land Transfer Act 1952, ss 35, 41 and 62. The presumption Mr Rowe identifies in relation to s 47 of the Land Transfer Act 2017 is that of joint tenancy in the absence of words of severance which would create a tenancy in common. That provision does not affect the status of any equitable interests in the land.

⁴ Frazer v Walker [1967] NZLR 1069 (PC) at 1078.

5. Charles Rickett and Jessica Palmer “Proprietary remedies” in Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Brookers, Wellington, 2011) 423 at 439-440.

⁶ Potter v Potter [2003] NZCA 103; [2003] 3 NZLR 145 (CA) at [14]- [16].

• [16] In either case the rationale is that notwithstanding the disposition of legal title, the settlor has retained the beneficial interest throughout, in the former case without qualification, and in the latter subject to the contingency that it would be superseded by fresh beneficial interests if and when the stated primary purpose were attained.

• [41] In the leading case of Crampton-Smith v Crampton-Smith,⁷ the Court of Appeal referred⁸ to the well-known statement by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council of the two types of resulting trusts:⁹

... (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ... (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest ...

• [42] In New Zealand, a resulting trust remains the orthodox response when a party has contributed to the purchase price of a property which is then registered in the name (or names) of another (or others).¹⁰ In Crampton-Smith, the Court of Appeal stated that where the presumption applies it is generally regarded as having dispositive effect unless the presumption is rebutted.¹¹ The presumption may be rebutted either by the counter-presumption of advancement or by direct evidence of an intention to make an outright transfer. In either case the presumption of a resulting trust would be rebutted.¹² The burden lies on the opposing party to adduce evidence to rebut the presumption.¹³

• [43] The key issue is what was intended at the time of the transaction.

⁷ Crampton-Smith v Crampton-Smith [2011] NZCA 308, [2012] NZLR 5.

⁸ At [35].

9. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669 (HL) at 708.

¹⁰ Hemu Trade Company Limited v Le [2018] NZHC 982 at [60] citing Jessica Palmer “Resulting Trusts” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thompson Reuters, Wellington, 2009) 307 at [12.3.1]. See also the Court of Appeal’s recent discussion of the key principles of a resulting trust in Chang v Lee [2017] NZCA 308, [2017] NZAR 1223 at [18]- [21].

¹¹ At [37] and [39].

¹² Crampton-Smith v Crampton-Smith, above n 7, at [40].

¹³ At [42] referring to William Swadling “Explaining Resulting Trusts” (2008) 124 LQR 72 at 74.

• [44] Finally, the Court of Appeal stated in Crampton-Smith that where there is evidence of an actual intention to create a trust, then there is generally no need to rely on any presumed intention and vice versa. But in a case where the presumed intention coincides with the actual intention of the party contributing the funds, then each may be considered as supporting the other.¹⁴

Discussion

• [45] This case is somewhat different from the more common situation where a party whose name is not on the title argues that a resulting trust arises by virtue of their financial contribution to the acquisition of the property and that is resisted by the person who has legal title. In this case, Shane agrees with his mother that he has no beneficial interest and that he holds his half share on trust for her. Both Mrs Young and Shane say that this intention existed at the time of the acquisition of the property. In other words, it is not a recent construct to avoid legal liability in the relationship property proceeding.

• [46] It is not disputed that Mrs Young and Ronald provided the cash contribution for the purchase of the property and that Shane did not make any cash contribution. If the cash contribution is the only contribution taken into account, there is a presumption of a resulting trust arising at the time of acquisition in favour of Mrs Young and Ronald.

• [47] However, as noted above, along with his parents, Shane signed the ASB mortgage documents and in doing so assumed mortgage liability. As also noted above, Mr Rowe submits that assumption of mortgage liability by Shane constitutes a direct financial contribution to the purchase price. If that were the case Mrs Young, Ronald and Shane would each hold a beneficial interest calculated in relation to the cash contribution and their respective contributions by way of their mortgage liability.

• [48] Mr Rowe relies on the judgment of Davidson J in Mamat v Mamat.¹⁵ As far as I am aware that is the only judgment in this jurisdiction which has considered the

¹⁴ At [44].

¹⁵ Mamat v Mamat [2018] NZHC 639.

issue. In coming to his decision Davidson J noted the absence of any New Zealand judicial or other commentary¹⁶ but referred to Equity and Trusts in Australia¹⁷ which discussed the judgment of Calverly v Green.¹⁸ Davidson J applied the reasoning in that case and took into account the shared mortgage liability as creating a beneficial interest.

• [49] It is not necessary in this case to consider whether to follow Davidson J or not. That is because I am satisfied on the evidence that there was no intention to confer a beneficial interest in the property on Shane and a resulting trust arose in favour of Mrs Young and Ronald at the time of acquisition of the property. My reasons are as follows:

(a) The entire cash contribution for the purchase of the property was provided by Mrs Young and Ronald. That cash contribution was derived from the sales of previous homes owned by them. They built up the equity in those other properties from their savings;

(b) Shane did not assume any mortgage liability for the loans secured against the previous property owned by Mrs Young and Ronald (Canal Road);

(c) Shane’s assumption of mortgage liability for the purchase of the property arose from ASB’s requirement, because Mrs Young and Ronald were both beneficiaries, that a person in full time employment assume liability together with Mrs Young and Ronald;

(d) That requirement resulted in Shane being registered on the title of the property;

(e) The arrangement proceeded on the basis that Mrs Young and Ronald would have full responsibility for repaying the mortgage and all other costs, including insurance and rates associated with the property;

¹⁶ At [117].

¹⁷ GE Dal Pont Equity and Trusts in Australia (7th ed, Thomson Reuters, Sydney, 2019) at [26.85].

¹⁸ Calverley v Green [1984] HCA 81; (1984) 155 CLR 242.

(f) Following Ronald’s death, Mrs Young continued to accept full responsibility for repaying the mortgage as well as the rates and insurances. She sought assistance from WINZ to make those payments;

(g) When Mr Young began living with his mother permanently in the property he did not contribute to any of those payments. I consider that if the intention had been that Shane have a beneficial interest in the property, it would be somewhat unusual for him to stand by when his mother was struggling to make the mortgage payments after his father’s death, when he was living in the property;

(h) The absence of any intention at the time of acquisition that Shane have a beneficial interest in the property is also consistent with the fact that he did not assist his mother with rates, insurance and other property associated costs; and

(i) When he returned to live at the property with his mother, Shane initially paid rent to his mother. That is inconsistent with his having a beneficial ownership interest in the property.

• [50] Having found there was no intention at the time of acquisition of the property that Shane would have a beneficial interest, it follows that I accept the evidence of Mrs Young and Shane is not contrived so as to deprive Ms Kim of her claimed interest in the property.

• [51] Mrs Young’s answer to questions put to her on that issue had a degree of logic to them. It was put to her that it was only once she had been told by Shane that Ms Kim was making a claim against the property that she decided she would assert she owned the full interest in the house because she had never said it before.

• [52] She asked rhetorically who was she going to tell. Mr Rowe again put it to Mrs Young that it was not until 2017 after Ms Kim and Shane had separated that she made an assertion that she was the owner of the entirety of the property. Again

Mrs Young’s response was logical. She asked why should she. As far as she knew “I didn’t have to worry about my house”.

• [53] I do not consider any of the matters raised by Mr Rowe, contradict the intention that Shane would not have a beneficial interest. I address each of those matters in turn.

• [54] First there is the joint application for transmission by survivorship signed by Mrs Young and Shane. Mr Rowe submits that this is “crucial evidence in this case”.

• [55] The transmission to Mrs Young and Shane following Ronald’s death was registered under the now repealed Land Transfer Act 1952. The application for transmission by survivorship is a standard form document. It was a joint application signed by both Mrs Young and Shane and was dated 29 November 1999. They each say they have no memory of signing the document. I accept their evidence on that issue.

• [56] Ronald’s death certificate is attached to the document. It then records, as part of the standard form, that the deceased and “we” (Mrs Young and Shane) were registered as the proprietors as joint tenants and not tenants in common of the property.

• [57] Mr Rowe places great weight on cls 4 and 5 in the standard form which then follow. I also add cl 6 for completeness. Those clauses read:

4. The said deceased and ourselves were so registered as proprietors of the said estate(s) or interest(s) in our own right and except as above or hereafter set forth free from all trusts or equities whatsoever.

5. Except as above or hereafter set forth no person holds or is entitled to any share or interest at law or in equity affecting the said estate(s) and interest(s) of which the said deceased and ourselves were so registered as proprietors.

6. That we verily believe we are entitled by virtue by survivorship of the said deceased to be registered as proprietor(s) of the said estate(s) and interest(s).

• [58] In cross-examination Mr Rowe put to Mrs Young that the document meant that Shane was acquiring or getting the total ownership of a half share of the property. She responded, “Well, when I signed that wasn’t in my mind”.
• [59] Notwithstanding that evidence, Mr Rowe submits that those clauses recognise that Shane was not only the holder of a legal interest but had a beneficial interest in his half share as well. He submits the clauses are clearly to be read as stating that Shane did not hold his legal share on a resulting trust.

• [60] I do not read the clauses in that way. They are to be read in the light of ss 122(2) and 123(2) of the Land Transfer Act 1952. The former provided:

Every such application shall accurately define the estate or interest claimed by the applicant, and shall state, so far as is within the knowledge of the applicant, the nature of every estate or interest held by any other person at law or in equity affecting the same, and that he verily believes himself to be entitled to the estate or interest in respect of which he applies to be registered as proprietor ...

• [61] Section s 123(2) provided:

The person so registered as proprietor shall hold the estate or interest transmitted subject to all equities affecting the same, but for the purpose of dealing therewith shall be deemed to be the absolute proprietor thereof.

• [62] Both Mrs Young and Shane correctly stated their legal interest. As this was a joint declaration, cl 5 refers to the interest of any person other than Mrs Young and Shane. Section 123(2) makes it clear that Shane’s interest continues to be held subject to “all equities affecting the same”. In other words it preserves the resulting trust.

• [63] The document does not indicate an intention on the part of Shane and Mrs Young that Shane would have a beneficial interest either at the time of the acquisition of the property or when the document was signed. As to advancement, the intention of the parties, as I have found, at the time of acquisition provides a counter to any presumption of advancement. The transmission document does not alter that position.

• [64] For completeness, I add that at the time the transmission document was signed on 29 November 1999, Mrs Young had still not paid off the mortgage. There was no evidence that the ASB had indicated a willingness to have Shane’s name removed from the title. In that case, the requirement that a person who was working 40 hours a week be liable under the mortgage presumably still applied.
• [65] The next matter raised by Mr Rowe is what Shane allegedly said about his ownership of the property to Ms Kim.

• [66] In her affidavit sworn 15 February 2018, Ms Kim says that prior to coming to New Zealand, Shane told her he was a half owner of the property and that his mother owned the other half. Shane made it clear to her they would live in the property with his mother. That statement was put to Shane and he said he did not recall saying that he was the owner of the property. He said he would have referred to it as “Mum and Dad’s” or, after his father passed away, “Mum’s”.

• [67] Under cross-examination Ms Kim’s evidence on this issue was much less clear cut than the way it is expressed in her affidavit and was somewhat contradictory. She said she thought there was a conversation that occurred prior to the conversation that took place in Korea. She said: “I didn’t really search or ask who’s owns this place. Just naturally in my mind I kind of knew he owned that so I just recall that our conversation went that way”. She then said she knew Shane’s personality, “He wouldn’t really tell me like this stuff like, oh this is my house, he wouldn’t do that yeah”. She said there must be some reason that she found out.

• [68] But then, contradicting herself, Ms Kim said that in the early stages of their relationship, and given he was an adult living with his mother, she questioned him on the ownership of the house by asking “Do you live with your mother? So is this your house or you mum’s house?”. Her evidence was that he responded his name “is on the house”. She said at that point she did not ask anything further because if somebody’s name is on the house then that means he owns it.

• [69] In the face of Ms Kim’s contradictory evidence, namely that is not something Shane would say and then that he did say his name “is on the house”, and given Shane had no recollection of a such a statement, I cannot make a finding that Shane told Ms Kim he owned half the house and that his mother owned the other half. Even if I were to accept that those comments had been made by Shane, they would have been of limited assistance. The Court’s task is to determine the equitable interests as at the date of acquisition of the property in 1993.
• [70] Next Mr Rowe relies on improvements made to the property after Shane and Ms Kim returned from Korea at the beginning of 2007. Shane says they decided to live with his mother in her home on their return so they could save money by not paying rent. This would allow the two of them to have money to travel back to South Korea each year to visit Ms Kim’s family. Shane says that when they started living at the property Ms Kim did not like its condition and wanted to make some changes and do some updating so that she would feel comfortable living in the property. He said his mother wanted them to feel welcome and agreed to those changes.

• [71] Ms Kim and Shane initially lived in a tent on the property while they carried out those renovations. Mrs Young agreed under cross-examination that the work carried out by Shane and Ms Kim included removing unwanted items, cleaning out rubbish, stripping wallpaper off walls, painting the doors and the windows, replacing the vinyl floor, painting the exterior of the house and roof, replacing the deck and fence, insulating the floor and walls, renovating the bathroom, kitchen and lounge. Shane and Ms Kim replaced some furniture items too.

• [72] It was also not in dispute that those improvements were funded with part of the

$13,000 Ms Kim’s parents had given them towards their new life in New Zealand. The balance Ms Kim and Shane used for living expenses for three months until Ms Kim started work in paid employment in April. It was also not in dispute that Shane and Ms Kim took out a joint loan of $10,000 to cover costs.

• [73] Ms Kim says she considered their work enhanced the equity she and Shane had in the house. Shane’s evidence, however, was that this work was in lieu of any rental payments.

• [74] There was no real contribution by way of other payments that might be made by an owner. Ms Kim and Shane made only limited contributions to the phone/internet and power. Mrs Young said this lasted for about one year and then they stopped. She said then she paid the bills herself. She also continued to pay for the gas and all other expenses on the home including utilities, rates and insurances. Mrs Young’s evidence as to the limited payment towards the phone/internet and power is supported by reference to Ms Kim’s bank statements which show the automatic payment for

Mercury Energy and for Telstra Clear being loaded in June 2009. The bank statements then show that there was in fact only one automatic payment to Mercury Energy which was in June, and two to Telstra Clear, one in June and one the following month in July 2009.

• [75] Even if I were to accept Ms Kim’s statement that she saw this renovation work as adding to the value of the property, it does not necessarily follow that Shane considered he had a present interest in the property and that he had communicated that to her. It might equally reflect his expectation that he would inherit the property on his mother’s death. In responding to questions under cross-examination regarding the assumption of mortgage liability at the time of purchase, it was put to him that he knew he would get the property in the long run. His response was that he did not need to sign anything to do that. Being the only son, he said he would likely inherit the property regardless of whether any documents were signed.

• [76] I therefore do not consider the evidence of renovations to the property point against the parties’ intention at the time the property was acquired that Shane would not have a beneficial interest.

• [77] Finally Mr Rowe refers to Shane subletting a bedroom in the house. Mrs Young agreed he did and that Shane retained the money from the two students concerned. Shane likewise accepted he sublet the room. He said it was after his separation from Ms Kim. He said he did so because the room was empty and it put some money towards the house. While this is arguably consistent with a person having an ownership interest in the property, I do not consider that, on its own, it is of sufficient weight to undermine all of the evidence pointing the other way.

• [78] For all the above reasons, I conclude that Shane’s legal interest in the property is held subject to a resulting trust in favour of Mrs Young.

• [79] There is no opposition by Shane to his mother’s application under the PLA that the legal title be transferred into his mother’s sole name. Because of my decision on the resulting trust, Ms Kim does not have an interest in this issue. I will therefore make an order by consent.
• [80] Mr Rowe accepted that if I were to find, as I have done, that Shane’s legal interest is held subject to a resulting trust for his mother, then Shane’s interest is not relationship property. There is then no basis for Ms Kim’s Notice of Claim to remain registered against the title to the property. I will order that the Notice of Claim be removed.

Relationship property proceeding

• [81] In the event I am wrong in my decision on Mrs Young’s property proceeding, I will briefly consider the relationship property proceeding.

• [82] If it were decided that Shane holds both the legal and beneficial interest in half the property there is no issue between Shane and Ms Kim that the property is relationship property.¹⁹ As was said by Duffy J in Hau v Hau:²⁰
  • [11] ... Section 25(3) permits the Court to make orders or declarations relating to the status, ownership, vesting or possession of any specific property as the Court considers just. As a preliminary step to making orders or declarations under ss 25(1) and (3), the Court must first classify the subject property as relationship property in accordance with the definitions given in s 8 of the PRA. Section 33 provides the Court with ancillary powers to give better effect to orders made under s 25. Those powers include the power in s 33(3)(e) to order the partition or vesting of any property.

• [12] Accordingly, the PRA provides a pathway in the case of inter vivos separations for spouse A to seek orders recognising that property which spouse B co-owns with a third party is nonetheless spouse B’s relationship property in which spouse A has an interest.

• [83] The parties are also agreed that the value to be adopted for the property is

$700,000 in accordance with a valuation dated 20 September 2017. Under s 2G(1) of the PRA, the date on which the value of property is to be determined is the date of the hearing by the Court of first instance (in this case the High Court). However, under s 2G(2) the Court has a discretion to decide that the value of the property is to be determined as at another date. Having regard to the agreement of the parties I would have exercised my discretion to adopt the figure of $700,000 in accordance with the valuation from a registered valuer. Shane’s interest is therefore $350,000. Half that interest is $175,000.

¹⁹ Section 8(1)(a).

²⁰ Hau v Hau [2018] NZHC 881, [2018] NZFLR 464 at [11]- [12].

• [84] Mr Snedden submits that this is a case where the Court might consider unequal sharing under s 13 of the PRA. He refers to the following factors: Shane’s contribution of a half share and substantial equity enabled Shane and Ms Kim to jointly borrow

$10,000; it comprises nearly the entire pool of relationship property; the income of both parties enabled them to meet loan repayments; the labour and efforts of both parties contributed to the improvements to the property; both parties were able to save and travel due to rent free accommodation in the property; and both parties are likely to have made non-financial contributions of equal value.

• [85] Mr Snedden refers to two examples where the Court ordered unequal sharing. First, in P v P,²¹ the Family Court Judge found the division should be 70:30 in the husband’s favour. The Judge applied s 13 to a relationship that extended over 10 years with one child (twice as long as the relationship in this case) and the Judge noted neither the family home nor the investment property was the product of the parties’ mutual effort within the marriage.

• [86] The second case is Yu v Zhang,²² where the Family Court Judge applied s 13 on a 65:35 basis given the significant disparity in contributions. The case involved a five-year marriage with one child where advances of $874,000 were made by Mr Zhang’s parents. The Judge referred to s 18(1)(d), noting the acquisition or creation of relationship property was exclusively the result of the contribution made by the respondent from his family.

• [87] Whether extraordinary circumstances exist for the purposes of unequal sharing under s 13 of the PRA is a factual question and whether they are repugnant to justice is a value judgment.²³ Ultimately, the Court must ask itself: is this case so out of the ordinary that an equal division is something the Court simply cannot countenance?²⁴

• [88] The fact that money has been acquired by inheritance or gift and devoted to the family home is not of itself inherently extraordinary.²⁵ In de Malmanche v de

²¹ P v P (2002) 22 FRNZ 380 (FC).

²² Yu v Zhang [2018] NZFC 6121.

²³ Kidd v Russell [2018] NZHC 3032, [2018] NZFLR 841 at [27].

²⁴ Castle v Castle [1977] 2 NZLR 97 (HC) at 102; Martin v Martin [1979] 1 NZLR 97 (CA) at 102.

²⁵ Family Law Service (NZ) (online ed, LexisNexis) at [7.366.07].

Malmanche,²⁶ Priestley J observed there is nothing extraordinary in itself about bringing a family home into a relationship. Such circumstances exist in many New Zealand relationships.²⁷

• [89] In this case the marriage was for five years. The relationship was somewhat longer but because of the parties’ religious beliefs they did not live together before their marriage. On their return from their wedding in Korea, Shane and Ms Kim began living in the property and carried out improvements. There was nothing unusual in the marriage. Both spouses worked, both made contributions to the expenses and both made other contributions to the household. Ms Kim used part of the $13,000 provided by her parents for improvements to the property.²⁸

• [90] I do not consider the very high threshold has been met justifying unequal sharing of the family home. There are insufficient grounds to find extraordinary circumstances that make it repugnant to justice for the family home to be divided equally.

• [91] However, had I decided the case on this basis, I would have carefully considered the ancillary powers of the Court under s 33. Mrs Young is elderly and the evidence suggests she would struggle to cope with the financial consequences of the sale of the property. There may have been a case for postponement of vesting under s 33(3)(d) or an order for the payment of a sum of money ($175,000) by Shane to Ms Kim. However, I do not take those matters any further given the decision I have made in the property proceeding.

Result and orders

• [92] Shane’s legal interest in the property at 85 Mead Street, Avondale, Auckland is held subject to a resulting trust in favour of Mrs Young. In consequence, I make the following orders:

²⁶ de Malmanche v de Malmanche [2002] 2 NZLR 838 (HC).

²⁷ At [133].

²⁸ There was a lack of clarity about the precise sum used as the evidence given was that the sum of

$13,000 was used both for improvements and for living expenses for a period of three months.

(a) Under s 339 of the Property Law Act 2007 (by consent), the legal title to 85 Mead Street, Avondale, Auckland (being Lot 17 DP 50560, record of title identifier NA1A/900) is transferred into the sole name of Ella Victoria Young; and

(b) Under s 142 of the Land Transfer Act 2017, the Notice of Claim registered against the title to 85 Mead Street, Avondale, Auckland (document 10856905.1) by Ms Kim is to be immediately removed.

• [93] As a consequence, Ms Kim’s application under the PRA brought in the Family Court and transferred to this court is dismissed save for the following:

(a) Order by consent under s 33(3)(c) vesting in Shane and Ms Kim those items in the attached schedule recorded in the columns under their names as separate property.

Costs

• [94] I did not hear from the parties on costs. Costs are therefore reserved. If the parties are able to agree costs a joint memorandum should be filed within 20 working days of the date of this judgment. If costs cannot be agreed then Mrs Young is to file and serve her memorandum within five working days of the date for the joint memorandum. Shane and Ms Kim may each respond within a further five working days by filing and serving a memorandum.

• [95] Memoranda should not exceed four pages, excluding any attachments. I will determine costs on the papers.

Gordon J