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85 Taitokerau MB 2

IN THE MĀORI LAND COURT OF NEW ZEALAND

TAITOKERAU DISTRICT

A20110002286

UNDER

Section 18(1)(a), Te Ture Whenua Maori Act

1993

IN THE MATTER OF

An application for determination of ownership

of a dwelling situated on MOTATAU 2

SECTION 49A4F

BETWEEN

JOSEPH TIPENE

Applicant

AND

TANIA TIPENE

Respondent

Hearing:

10 October 2011 (20 Taitokerau MB 214-220)

13 March 2012 (39 Taitokerau MB 173-177)

11 May 2012 (40 Taitokerau MB 183-184)

12 November 2012 (51 Taitokerau MB 173-195)

9 May 2013 (59 Taitokerau MB 151-179)

20 August 2013 (66 Taitokerau MB 178-180)

12 December 2013 (76 Taitokerau MB 146-171)

(Heard at Whangarei)

Appearances:

Mr W Coutts, Counsel for the Applicant

Mr D Shanahan, Counsel for the Respondent

Judgment:

19 August 2014

RESERVED JUDGMENT OF JUDGE M J DOOGAN

Copies to: Mr W Coutts, Thomson Wilson Law, PO Box 1042, Whangārei, [email protected] Mr D Shanahan, PO Box 1801, Whangārei, [email protected]

85 Taitokerau MB 3

Introduction

[1] This decision relates to an application by Joseph Tipene (“the applicant”) to

determine ownership of the dwelling known as “the Old Home” situated on Motatau 2

section 49A4F.

[2] Tania and Gary Tipene had lived in the Old Home for approximately 24 years and

have raised five children there. The Old Home was originally inhabited by Gary’s

grandparents. In 1984 the Old Home was in a dilapidated state and Gary’s father (Toeke

Tipene) invited Gary and Tania to do the Old Home up and move in. Gary, Tania, and

extended whānau spent approximately three years renovating it to a standard suitable for

occupation. They moved into the home late in 1987.

[3] Gary died suddenly at home on 1 February 2011. Gary and Tania’s two youngest

children (aged eight and eleven years) were living with them in the house at this time.

[4] Two weeks later Gary’s older brother, Joseph, commenced this application to

determine ownership of the house. Two weeks after that on 26 February 2011, Tania was

told she would be required to pay rent of $50 per week for the right to occupy the house.

[5] Tania left the house approximately four months later in protest at the rental policy.

[6] Tania subsequently filed a notice of intention to appear to oppose Joseph’s

application. Tania says:1

The Trust imposed rent which was unfavourable to me as they did not consider

compensation or recognition for the renovations or that I still had two dependent

children. Rather than face eviction I left with my two children in mid-June this

year.

[7] Tania provided detailed corroborating information as to improvements made to the

dwelling and the circumstances leading up to her decision to move out. She concludes

with the following:2

The three months I have been out of my house has been very hard. I miss my

husband terribly. I cannot reach to touch anything that was his to calm me. All my

1 Tania Kathleen Tipene, notice of intention to appear (3 October 2011).

2 ibid at [51]

85 Taitokerau MB 4

children are unsettled and feel the same need as me. This letter is not an angry

vendetta, nor is it a sob story to the Court, but an honest abridged account of our

lives building a home and whānau to live in it.

Background

[8] The Old Home is one of two dwellings situated on Motatau 2 Section 49A4F.

Motatau 2 Section 49A4F is Māori freehold land and is approximately 12.3516 hectares.

Motatau 2 Section 49A4F was created by partition order on 2 March 1953.3 The original

owners were Peeni Henare and Matire Maraea. At the time the partition order was made a

further order was made under s 163(a) of the vesting the block in Peeni Henare and Matire

Maraea for the lives of them both jointly and then to the survivor for life with remainder to

Ngarora Mariana Peeni Henare as to the house and 1 acres and access thereto and in

Ngarora Mariana Peeni Henare as to the balance.4 Ngarora was succeeded to by Toeke

Tipene the father of Gary Tipene. Toeke Tipene owned 96.66 of the 100 shares. He died

in 1986.

[9] Gary’s brothers Joseph and Ray Tipene were appointed joint executors of the will.

Joseph and Ray held the land interests as executors until February 2004 when the lands

were vested in equal shares in the eight surviving children of Toeke Tipene.5 Those

interests were transferred shortly thereafter into the Tipene o Te Waerenga Whānau Trust

(“the Trust”). Each of the eight siblings were appointed as trustees for the whānau trust.6

The Old Home

[10] While Gary’s whanau had undertaken some work on the dwelling in the 1970’s, it

was dilapidated and not fit for occupation when Toeke Tipene invited Gary and Tania to

renovate the house and occupy it.

[11] Gary and Tania with the assistance of extended whānau made extensive repairs to

the Old Home. When Gary and Tania commenced renovations in 1984 the house had no

water, no electricity, no ablution facilities or laundry. Prior to moving in, in their spare

time and with the help of Tania’s father and brothers, work was done to the exterior walls

3 27 Bay of Islands MB 114-115 (27 BI 114-115).

4 27 Bay of Islands MB 116 (27 BI 116).

5 10 Whangārei Registrar MB 53 (10 RGTO 53).

6 99 Whangārei MB 155 (99 WH 155).

85 Taitokerau MB 5

and floors and piles. A number of windows were replaced, kitchen cupboards installed,

beams in the ceilings for the kitchen and lounge were added and ceiling panels installed.

Water was connected to the house by an alkaline hose from a puna. In 1987, when Gary

and Tania first moved into the house they used a small gas stove to cook on. Candles and a

Tilley lamp were used for lighting purposes. They also used a toilet located in the other

dwelling on the block until an outhouse was established.

[12] After Tania and Gary moved in, further extensive renovations were carried out

including painting, plastering, fencing, roading around the drive, installation of a flush

toilet, septic tank, fire place and concrete block, and rewiring and installation of a new

switchboard. An extension to the Old Home added a new bathroom including a hot water

cylinder, basin, interior walls and lining. A carport was erected and a range of other work

was carried out to the exterior of the house and surrounds.

[13] At no stage was there any suggestion that by Toeke Tipene that Tania and Gary

would be required to pay rent. For at least 18 of the 24 years they were in occupation,

Gary and Tania paid the rates for the block.

Tipene o Te Waerenga Whanau Trust

[14] The Trust was established On 21 April 2004 the application was bought by Joseph

Tipene who at that time stated: 7

There are 2 dwellings on the block. My brother Gary occupies one and

the other is a whanau papakainga.

[15] On 18 October 2004, the Court granted Joseph Tipene an occupation order with

respect to an area of 2000m² as a site for a dwelling on Motatau Sec 49A4F.8 The location

of the proposed dwelling was, in general terms, across the drive from the house Gary and

Tania were occupying and in an area known as “the Old Orchard”. No house has been

built on that site and the occupation order was cancelled by consent in 2012.

7 99 Whangārei MB 155 (99 WH 155).

8 100 Whangārei MB 269 (100 WH 269).

85 Taitokerau MB 6

The Trust’s Rental Policy

[16] Approximately two weeks after Gary’s tangi Tania was told that the Trust would be

implementing the new policy of charging rental, and providing she complied, she was

welcome to stay. Why the trustees felt they needed to do this so soon after Gary’s death is

difficult to understand. It was an abrupt way to treat a grieving widow.

[17] Minutes from the whānau trust meetings in February and March 2011, shortly after

Gary’s death, shed some light on what the trustees were trying to achieve. Minutes for the

meeting of 26 February 2011 record that the Old Home occupancy is now to be under the

same rental basis as the farm house.9 All income earners are now to pay either $7.00 per

night or $50.00 per week. The minutes record that in the case of Tania who is a more

permanent occupier, she would pay $50.00 per week with the support of her income

earning offspring. A table of contributions is included which records monthly

contributions from all of Gary’s seven siblings (other than Des) of $40.00 per month (Des

contributing $20.00 per month as he only has one offspring and makes a significant

contribution by physically assisting with the maintenance of the block). Tania Tipene’s

whānau is to contribute $200.00 monthly “not on monthly contribution basis but under

tenancy agreement scheme”.

[18] The minutes of that meeting also record a response from the secretary (Joseph

Tipene) to a question as to why policies, rules and procedures had suddenly become a big

focus. The secretary is recorded as explaining that due to naivety, ignorance and the older

members of the Trust being too involved in making their way in the Pākehā world, there

was no leadership and nothing in place to direct management strategies. Coupled with

affection for Gary and his family there was no desire to impose one’s will on his efforts to

achieve and there was an honest attempt to respect the privacy of the family and to play a

supportive role rather than impose rules and policies that Gary was not inclined to want to

follow anyway. “However it is past the time to reflect on what should have been and start

managing the estate in a proper businesslike manner – it may be the Pākehā way but it

works.”10

9 see Evidence of Tania Tipene (23 September 2011) Appendix at 22.1.

10 ibid at 2.

85 Taitokerau MB 7

[19] In a written statement to Trust circulated prior to its meeting of 26 March 2011, the

secretary again records that he has not wasted time clarifying the position of the Trust and

its direction going forward. Joseph Tipene notes that there had been a lack of leadership

and direction for which he takes some responsibility as eldest in the family. He goes on to

note that it is imperative that:11

we all realise that we are legally under a whānau trust which was by deed of a

Māori Land Court order formed in 2004 records for which all trustee families

received but unfortunately most did not take seriously. Again, I take full

responsibility for not enforcing policies and rules as enforced under the Court order

of the Māori Land Court at that time. However, all is not lost – if we all play by the

rules from here on, it should be, as the saying goes, ‘a piece of cake’. Trust me. I

want Gary’s family to feel comfortable living in the old home for as long as they

want to – with due regard to the policies and rules laid down by the Trust.

[20] The following is taken from a document described as “Talking Points for Meeting 7

June 2011”. It appears to have been drafted by the Trust secretary, Joseph Tipene.12

OLD HOME RENTAL ISSUE: We appreciate Tania’s concerns regarding rent,

since the family have become used to occupying the home at minimal cost. And

because of Gary’s individualistic ways, his health issues, and the fact that he

contributed well in certain aspects, including a percentage of the upgrade of the old

home, fencing, water reticulation and cattle management, we felt we couldn’t

impose on him the extra financial burden, since he took over rates payments of

$1000 per year. The fact remains however, that all members of the Toeke Tipene

family have contributed equally as much, including financial input to the farm’s

management and welfare since dad passed on, and they don’t even enjoy the

benefits of living here. Now that the property is operated under a Trust, it is even

more essential that we operate legally under the Order of the Māori Land Court. If

in fact Tania refuses to pay rent as directed by the Trust, there is one other option

for her and that is to re-continue paying the rates, pay the house insurance, and all

upkeep and maintenance aspects, including repairs and improvements, that will

cost more than the $50 a week imposition. The last resort, of course, is an eviction

order by the Trust and we don’t want to do that unless it becomes an absolute

necessity.

Procedural history

[21] The application was filed on 14 February 2011. The applicant sought determination

of the ownership of two dwellings on Motatau 2 Section 49A4F. In documents filed in

support of the application, the applicant records that Gary had recently passed away and

that the Trust had decided at a meeting following his death:13

11

Evidence of Tania Tipene (23 September 2011).Appendix 20.1. 12

Evidence of Tania Tipene (23 September 2011) Appendix 21.3. 13

see Letter filed in support of Application dated 14 February 2011.

85 Taitokerau MB 8

…to advise his family that the continued occupancy of the old home was assured,

but because the homes are an integral part of the estate, the Trust wishes to make

application for full ownership, in order that no person or persons may assume

ownership, and that financial policy as laid down by the Trust as regards rent is

retained.

[22] The matter came before Judge Ambler on 20 October 2011.14

The parties agreed to

hold a meeting and the matter was adjourned to February 2012. The matter came before

Judge Ambler again on 13 March 2012. The parties had not been able to resolve the issues

and a further adjournment was granted and the matter was set down for a settlement

conference to be held on 11 May 2012.15

[23] The settlement conference was unsuccessful. On 11 May 2012 Judge Ambler

issued a minute recording that fact. The trustees were directed to hold a general meeting of

beneficiaries to address the vacancy in trusteeship occasioned by the death of Gary. The

application to determine ownership of the old home was referred to another Judge.16

[24] On 12 November 2012 the matter came before Deputy Chief Judge Fox who further

adjourned the matter for three months in order to call for a valuation. Both parties were

invited to seek appointment of legal counsel (costs to be met from the special aid fund).

Judge Fox indicated that she would seek from the valuer an indication of the rental value of

the house at the time Tania and Gary first moved in and then at the time Tania vacated.

The indication given by Deputy Chief Judge Fox was that following receipt of the valuers’

report, a calculation would be done offsetting the notional value of the rental against the

expenditure by Gary and Tania on the house including apportionment with respect to any

monies expended for the payment rates.17

[25] As a result of those directions, Thompson Wilson Solicitors in Whangarei were

appointed to represent the trustees18

and Mr David Shanahan was appointed to represent

Tania Tipene. Mr David Chester of Northland Valuers was appointed to provide a

valuation report. His report is dated 31 January 2013.

14

30 Taitokerau MB 214 (30 TTK 214). 15




Wayne Coutts and Mr McGhee.

85 Taitokerau MB 9

[26] The matter was then referred to me. I convened a teleconference on 14 March 2013

and set the matter down for a hearing in Whangarei on 9 May 2013.19

During the course of

that hearing, the outline of a possible agreement emerged. The parties required more time

to discuss details and the matter was adjourned to the August sitting of the Court in

Whangarei. All counsel were then directed to advise the Court as to progress at least two

weeks prior to that hearing.

[27] Counsel for the trustees advised the Court by letter dated 13 August 2013 that a

potential agreement which might allow for resumption of occupation of the Old Home by

one of Tania’s children could not be advanced because an alternative source of funding to

carry out some remedial works on the house could not be found. The matter would need to

go to a full hearing.

[28] A hearing took place on 12 December 2013.20

Unfortunately the minutes for that

hearing were delayed and not released until early April 2014. By a further minute dated 7

April 2014, I advised the parties that I would issue this decision as soon as possible.21

Submissions for the Trust

[29] Mr Coutts for the trustees argued that the application should be dealt with first by

analysis of the valuation and then consideration of any additional matters that ought to be

taken into account.

[30] Mr Coutts submitted that taking into the fact that Gary and his family moved into

the Home in 1987, carried out work on the Old Home between 1984 and 1987 to make it

habitable and vacated the property in June 2011 the calculations on the valuation are: 22

Value of Home as at June 2011 $55,000.00

Less value of Home as at 1984 $8,000.00

$47,000.00

Notional rental of $40.00 per week from 1987 to 2011

(24 years at $2080.00 pa) $49,920.00

19



See 76 Taitokerau MB 103 (76 TTK 103). At the time I estimated that a decision would issue in late

May or early June. 22

Submissions on behalf of applicant (12 December 2013) at [5]-[8].

85 Taitokerau MB 10

($2,920.00)

These calculations have been made strictly in accordance with the

methodology envisaged by Deputy Chief Judge Fox at the hearing

of 12 November 2012 and show that “on face value” Gary is

indebted to the Trust in the sum of $2,920.00.

[31] Mr Coutts argued that by adopting an opening value based on a lower value at 1984

(rather than the 1987 value) and by adopting the lowest notional weekly rental he had erred

in favour of Gary and Tania. Mr Coutts also submitted that it was not necessary to

determine in detail the extent or cost of the work undertaken by Gary and Tania during

their occupation because that was captured in the valuation of the property as at June 2011.

That value is said to reflect in depreciated terms the cost of the improvements paid for by

Gary between 1984 and 2011.

[32] Mr Coutts further argued that the Court ought not to put any weight on the repairs

paid for out of the Housing New Zealand suspensory loan as this required no out of pocket

expenses by Gary and Tania and the value of that expenditure was reflected in the value of

the home as at June 2011.

[33] On the basis that rates are universally accepted as a revenue charge against an

occupier, Mr Coutts submits that those payments should lie where they fall. Mr Coutts

also notes that the rental assessment in respect of the home makes no allowance for the fact

that during much of the occupation Gary and Tania were able to use the whole of the land

on which the home is situated.

[34] In summary, Mr Coutts submitted that Gary and Tania would not be entitled to

compensation in respect of repairs and maintenance on the home and that the Court should

make an order under s 18(1)(a) of the Act that the home runs with Motatau 2 Section

49A4F and accordingly is the property of the Trust.

Submissions for Tania Tipene

[35] Mr Shanahan submitted that Mrs Tipene had indicated that she wanted the Old

Home back for her children and if that was not possible then she wanted recognition in the

form of compensation for the improvements to the Old Home done by herself, her late

husband, her children and her whānau. Mr Shanahan pointed to the Court’s jurisdiction

85 Taitokerau MB 11

under s 18(1)(a) which includes claims at law or in equity as to any right title, estate or

interest in any Māori freehold land. On that basis Mr Shanahan submits the Court has

jurisdiction to consider Mrs Tipene’s claim for compensation and to apply general

principles of constructive trust and/or unjust enrichment.

[36] Mr Shanahan also relied on the valuation but approached calculation of

compensation on the basis that the Court has a broader jurisdiction to award an amount to

reflect the contributions made by Mrs Tipene and her late husband which would represent

the benefit accruing to the whānau trust which would otherwise constitute unjust

enrichment.

[37] Mr Shanahan points to developments in the law in relation to constructive trust

principles and submits that notwithstanding the absence of any lease, licence to occupy or

other formal arrangement relating to her occupation of the old home, those principles

would allow the Court to award compensation for what has clearly been contributions by

her and her family to the “acquisition, preservation or enhancement” of the Trust assets.

[38] Mr Shanahan submits that the work, money and improvements made by Mrs Tipene

and her late husband over 26 years placed the Trust in a situation where it has been

unjustly enriched at the expense of Mrs Tipene. Restitution for such improvements should

be ordered by the Court by way of a compensatory payment to Mrs Tipene and her

children.

[39] Mr Shanahan points to extensive evidence of the nature of the work undertaken and

relying on the valuation evidence submits that taking the market value of the property as at

June 2011 ($55,000) and then deducting the market value of the original dwelling as at

1984 ($8,000), the Court should consider making a payment of the difference to Mrs

Tipene ($47,000). To that should be added a further sum of $5,000 representing a modest

contribution on account of her lost use of capital which has been applied towards

preservation, enhancement and improvement of the old home (including payment of rates

as well as maintenance and repair of the farm land).

[40] From this amount Mr Shanahan submits that it is not appropriate to deduct any

amount on account of rent. Mr Shanahan points to evidence of a family arrangement

85 Taitokerau MB 12

which included sharing of the stock grazed on the property and the invitation to Gary from

his father to come home and make good the old home for himself and his family. Mr

Shanahan submits that Mrs Tipene is prepared to give up her previous expectations of a

right of occupation or ownership of the old home based on the statements of Gary’s father.

The Court should however take this into account when considering what is appropriate

because any indication that rental would be imposed on her and her late husband and

children for continued occupation of the home was never considered. It would also be

inconsistent with the spirit of the invitation made by Gary’s late father. Had rent been

imposed at the outset the circumstances today would likely be significantly different. To

now retrospectively impose a rental charge would be to second guess the intentions of all

parties.

Issue

[41] The issue in this case is whether Tania Tipene has an equitable interest in the Old

Home that the Court can and should provide for under s 18(1)(a) of the Act.

Law

[42] Section 18(1)(a) of the Act provides the Court with the jurisdiction:

To hear and determine any claim, whether at law or in equity, to the ownership or

possession of Māori freehold land, or to any right, title, estate, or interest in any

such land or in the proceeds of the alienation of any such right, title, estate or

interest.

[43] Tania Tipene is not an owner in Motatau 2 Section 49 A4F. Ordinarily her children

would be entitled to succeed to Gary’s shares and Tania would be entitled to a life interest

however in this instance the shares in Motatau 2 Section 49A4F are vested in the Trust.

Gary and Tania’s children are beneficiaries of the trust.23

[44] There is no occupation order with respect to both dwellings on the block.

Therefore ownership of the dwelling run with the land and are now the property of the

23

I note for completeness that for succession purposes a beneficial interest in Māori freehold land is

deemed to include the interest of the freehold owner in “all buildings and other fixtures attached to the

land, and all things growing on the land” Te Ture Whenua Māori Act, s 99(2).

85 Taitokerau MB 13

Tipene o Te Waerenga Whānau Trust. It is well established that in circumstances such as

this it is the trustees who have the power to decide what happens on the land.24

[45] The Trust order grant powers to the trustees to permit occupation by descendants

(of Gary’s parents). This includes power to reserve or provide for one or more of the

descendants to personally occupy defined parts of the land, to permit erection of dwellings

and to lease or license to any descendant at a reduced rent.25

Gary and Tania’s occupation

predates the formation of the Trust and has never been the subject of a legal instrument

such as a lease or occupation order.

[46] In Stock v Morris Judge Ambler reviewed the case law in which the question of the

rights of a non-owner to an order under s 18(1)(a) had arisen.26

Judge Ambler notes that

s 18(1)(a) enables the Court to “do equity” in relation to Māori freehold land and while the

kaupapa of the Act promotes the interest of owners “the Court cannot allow the actions of

owners to cause injustice to non-owners.”27

Judge Ambler identified the following

principles: 28

There is no bar to the Court making a s 18(1)(a) order in favour of a non-owner.

However, an order vesting interests in the land or a right to possession of the land

(or part of it) in favour of a non-owner will likely offend the kaupapa and

provisions of the Act. Although in Grace the Court of Appeal did not completely

rule out that possibility. Where the Court concludes that a non-owner is entitled to

equitable relief, the Court will in the first place look to awarding monetary

compensation. If monetary compensation is inappropriate, the Court may award

ownership of the house if it can be removed from the land. The Court will take into

account the non-owner’s free occupation of the land as a factor. Ultimately, each

case depends on its own facts.

Constructive Trust principles

[47] Mr Shanahan argued that this was an appropriate case for the imposition of a

constructive trust which would recognise the contributions that Tania, Gary and whānau

had made to the dwelling.

24

Eriwata v Trustees of Waitara SD Section 6 and 91 Land Trust (2005) 15 Aotea Appellate MB 192 (15

WGAP 192). 25

99 Whangārei MB 155 (99 WH 155). 26

Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121). 27

ibid at [65]. 28

ibid at [70].

85 Taitokerau MB 14

[48] In Stratulatos v Statulatos a constructive trust was applied in similar circumstances.

In that case a mother gave a house to her son upon his marriage. The son and his wife took

possession and spent considerable money renovating and improving the property. They

paid rates and insurance and prior to the marriage had also made some mortgage

repayments. The son died intestate and the mother who had reclaimed legal ownership of

the property sought to evict the wife. The wife claimed proprietary estoppel and a

constructive trust in respect of the renovations and improvements.29

[49] In considering whether or not a constructive trust arose, McGechan J approached

the question in the following way: 30

Standing in the shoes of the plaintiff as claimant (both as successor to Spiros and in

the plaintiffs own right), would a reasonable person have understood that their

efforts would result in an interest in the property? The answer must be “yes”. It was

a major upgrading of the property over a considerable period of time, and

significant personal effort and expense. It went far beyond routine maintenance, or

a gesture of appreciation for a right to occupy. The plaintiff’s family assisted in a

way which would not have been forthcoming unless it was known that the plaintiff

herself would gain benefit. Testing the situation by converse, would it have been

reasonable to suppose they expected no rights in the property? Testing the question

more generally, why else would they undertake this major task? The answers are

obvious. If no interests in the property was to be gained, I have no doubt this young

couple would have put their money and efforts into obtaining a first home

elsewhere without cloudy title.

[50] Justice McGechan concluded that there was no difficulty finding either proprietary

estoppel or a constructive trust. The learned judge took into account the fact that the house

was the traditional home of the Stratulatos family and that it would offend conscience to

convey that home (or a share of it) to a former wife. At the same time restricting the wife’s

recovery to a mere reimbursement of expenditure and effort would also offend conscience.

The Court concluded that awarding a fractional interest in the property was the appropriate

approach, which once paid out would mean that the former wife must vacate the property.

Against that interest in the property there should be an appropriate allowance for use and

occupation by the wife of the mother’s remaining interest. Justice McGechan noted: 31

In conscience, I consider some leeway should be given the plaintiff over the period

immediately following Spiros’s death before any such contra is imposed. She was a

widow recently and unexpectedly bereaved. One would not ordinarily increase her

grief by immediate demand she pay rent to stay in the family home.

29

Stratulatos v Statulatos [1988] 2 NZLR 424 per McGechan J. 30

ibid at 437. 31

ibid at 440.

85 Taitokerau MB 15

[51] A period of one year following her husband’s death was considered appropriate

before any rental should be imposed against the plaintiff’s interest.

[52] Mr Shanahan referred me to the decision of the Court of Appeal in Lankow v

Rose.32

[53] In that case the Court of Appeal awarded a de facto partner a beneficial interest in a

property legally owned by her former partner. The Court did so by imposing a constructive

trust.

Equity cannot alter or interfere with the defendant’s legal estate. However, on the

premise that the defendant is acting unconscionably by denying the claimant a

beneficial interest, equity treats the defendant as a constructive trustee for the legal

estate to the extent of the claimants assessed interest. By this means equity requires

the defendant to account to the claimant for her interest.33

[54] The Court of Appeal identified four features which if demonstrated would mean it

would be unconscionable for the legal owner to deny the claimant an interest. In these

circumstances, the Court would intervene to impose a constructive trust. A claimant must

show: 34

a) Contributions, direct or indirect, to the property in question;

b) The expectation of an interest therein;

c) That such expectation is a reasonable one;

d) That the defendant would reasonably expect to yield the claimant an

interest.

[55] I now consider the application of these principles to the circumstances of this case.

I do so aware that the land on which the Old Home sits is taonga tuku iho and that the

whānau arrangements at the heart of this case also need to be considered in the context of

the tikanga within which they arose.

32

Lankow v Rose CA 176/93, 2 December 1994. 33

ibid at 8. 34

Ibid at 8-9

85 Taitokerau MB 16

Discussion

[56] In this case there is uncontroverted evidence that Gary and Tania were invited by

Gary’s father to restore the old home to be a home for them and their young family (Tania

was pregnant with her first child at that time). Tania’s father (Wii Niha) provided a letter

of support in which he records a conversation that took place between Gary and his father

in the following terms: 35

In 1984 when Tania was hapu with her first tamariki Belinda, Tania and Gary and

my wife Minnie May (now deceased) and I were at home when Joseph (Toeke)

Tipene visited. His conversation was matter of fact and quite direct to his son. “Kei

hoki mai ki te kāinga whakatikatika i te whare, whai whare mā koe me tō whānau”.

[57] No one disputes Toeke Tipene’s right to make that offer. Tania and Gary accepted

the invitation and carried out very substantial improvements to the dwelling to make it

habitable before moving in late in 1987. Although Toeke Tipene died in 1986 there was no

evidence that any of Gary’s siblings ever took issue with his right to reside in the dwelling

or ever expected that he and Tania would pay rent. The evidence points to a common

understanding between Gary’s father, Gary, Tania and Gary’s siblings that in return for

restoring, maintaining and meeting the outgoings in respect of the old home, Gary and

Tania would be entitled to live there for so long as they wished. For some 24 years until

Gary’s untimely death, this was how the arrangement worked, with no apparent issue.

[58] Since the formation of the Trust in 2004 and up until the time of Gary’s death in

2011, there was no evidence of any discussion or demand from the trustees to Gary and

whānau that they commence paying rent. The evidence suggests that any such approach

was avoided because it was assumed that Gary would oppose.

[59] Whilst there are some similarities with the facts in the Stratulatos case there are

some distinguishing features. Toeke Tipene was prompted to invite Gary and Tania to

restore the old home in recognition of their need for a home. Gary had returned from the

South Island and Gary and Tania were living with Tania’s parents in a caravan on their

property. It was a practical gesture of aroha and manaakitanga to his son and his son’s

partner. Tania’s whānau then pitched in and assisted with both labour and expense in

making the home habitable. The evidence does not suggest a contract-like expectation of

35

Letter of support from Wii Niha (17 September 2011).

85 Taitokerau MB 17

financial return or capital gain in return for funds and labour expended. Tania and Gary

would have been aware of the significance of the old home to Gary’s whānau. They were

being offered the opportunity to restore it and live in it because Gary’s father recognised

their need at the time. What Tania and Gary would have reasonably expected nonetheless

is security of tenure given their investment of time and resources to maintain and improve

the house. It became their family home as envisaged by Gary’s father. They were still

raising their children there when Gary died.

[60] The implicit understanding appears to have been that in return for their investment

in restoring and maintaining the old home, Gary and Tania would be entitled to a life

interest (or something similar). In practical terms and applying the questions posed by

Justice McGechan in Stratulatos v Stratulatos, would Gary and Tania have undertaken

such a major investment of time and energy in restoring the home and then occupying it

over a number of years if they thought they would have no interest in it, at least while they

had dependent children at home? It is clear to me that the answer would be ‘no’.

Findings

[61] I am satisfied that this is an appropriate case for the imposition of a constructive

trust.

[62] Applying the tests formulated by the Court of Appeal in Lankow v Rose:

a) I am satisfied that Tania and her whānau made contributions direct and

indirect to the Old Home. These contributions were substantial and not

just in the character of ongoing maintenance. Neither were they simply

a token of appreciation for the right to occupy. Over a considerable

period Gary, Tania and extended whānau restored, renovated and

improved the Old Home. They literally made it into their family home.

b) I am satisfied that Tania had an expectation of an interest in the Old

Home such that she, Gary and their children would (at least), be entitled

to remain in the Old Home rent free while they chose to make it their

family home and they still had dependent children living with them.

85 Taitokerau MB 18

c) I am satisfied that such an expectation is reasonable. It is consistent

with the nature of the invitation extended to Gary and Tania by Gary’s

father and the way the arrangement worked for 24 years.

d) I am satisfied that the trustees can and should reasonably expect to

recognise an interest of this kind. Some of their statements come close

to saying as much. The key point of difference is the wish on the part

of the trustees to change the nature of the arrangement to one under

which Tania would pay a weekly rental for the right of ongoing

occupation. The assumption appears to have been that this was fair

because other members of Gary’s whānau had been contributing just as

much over the years. That is wrong insofar as it relates to the Old

Home. Gary and Tania assumed the burden of restoring and maintaining

the house. Almost entirely through their endeavours a rundown,

uninhabitable structure valued in 1984 at $8,000 is now a trust asset

with a 2011 value of $55,000. It would be unconscionable for the Trust

to have the benefit of that asset without properly acknowledging an

interest in favour of Tania and her children.

What Orders Are Appropriate?

[63] In Lankow v Rose Justice Tipping observed that a constructive trust can be given

practical effect by such means as the justice of the case requires.36

The most common

means are either a vesting order or an order for payment of the assessed value of the

beneficial interest. A vesting order is not sought in this instance. I note for completeness

that I share the reservations expressed by Judge Ambler in the Stock v Morris case as to

whether or not a non-owner can be granted a right of possession under s 18(1)(a).37

[64] This is not a case where it would be practical to consider removing the house in lieu

of monetary compensation. I also note that Tania is no longer seeking an ownership

interest in the house but is instead seeking remedies by way of a right of occupation for her

36

Lankow v Rose CA 176/93, 2 December 1994 at 8. 37

Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [72].

85 Taitokerau MB 19

children or monetary compensation in recognition of the improvements made to the

dwelling.

[65] How the constructive trust ought to be executed in this case requires consideration

of what the justice of the case requires. In this particular case it seems to me that a

constructive trust would best be given practical effect by an award of monetary

compensation. If Tania wishes to consider a possible resumption of occupation by one of

her children it may be possible to negotiate that in lieu of compensation. That will be a

matter for the parties to consider in light of this judgment.

[66] As to the amount of compensation, I do not think that simply adopting the 1984 and

2011 values and then imposing a deduction to represent a notional rental represent’s a fair

response to the nature of the arrangement. I also think there is force in Mr Shanahan’s

submission that to approach it on this basis would result in a degree of unjust enrichment to

the Trust. On the other hand, neither am I persuaded by Mr Shanahan’s submission that I

should simply accord to Tania and Gary the full benefit of the capital gain between 1984

and 2011 (plus additional compensation) with no deductions. That would be akin to

recognising ownership per se, which I don’t think was inherent in the nature of the

arrangement.

[67] I accept the force of Mr Coutts’ submission that it is neither possible nor necessary

to determine in detail the extent or cost of particular works undertaken by Gary and Tania

during their occupation because such value is in depreciated terms captured in the value of

the property as at June 2011. I also accept that the value of the works paid for by the

Housing Corporation loan (said to be approximately $27,000) should not be regarded as a

direct financial contribution by Gary and Tania personally. Providing they complied with

the terms of the suspensory loan it did not represent an out of pocket expense. I do not

have any detailed evidence concerning the Housing Corporation suspensory loan or the

works that were funded by it. I note this simply to highlight the difficulty of quantifying a

beneficial interest strictly in accordance with the methodology envisaged by Deputy Chief

Judge Fox. I also note that on the basis of Mr Coutts’ calculations, Gary and Tania would

not be entitled to compensation at all. Given the relatively modest value of the house as at

June 2011, the application of even a low notional rental for the entire period 1987-2011 has

85 Taitokerau MB 20

the effect of overtaking the capital gain on the property during the period of Gary and

Tania’s occupation. I do not consider this to be a fair outcome either.

[68] Having carefully considered the evidence and the submissions on behalf of the

parties, I have concluded that a different approach is required. I consider the true nature of

the arrangement was that in return for renovating and maintaining the old home, Tania and

Gary would be entitled to use it rent free as their family home so long as they needed it

(presumably at least until their dependent children had left home). They had for most of

their time in occupation met the rates payments; they had helped maintain the farm and had

raised calves for both their own and the wider whānau’s benefit. In broad terms, this was

the basis on which they occupied the Old Home for some 24 years. What was

compromised by the unilateral imposition of a rental policy so soon after Gary’s death was

the continuity of tenure on existing terms that Gary and Tania were in good conscience

entitled to.

[69] When Tania left the Old Home in June 2011, her youngest child, then aged eight,

and an elder child, then aged 11, were living at the house with her. It is not unreasonable

to suppose that but for Gary’s untimely death and the subsequent introduction of the rental

policy by the Trust, the family would have remained in the home for at least another eight

to ten years (all other things being equal).

[70] It is possible to calculate an approximate value on that entitlement. For the

purposes of this calculation, I will assume a middle figure of nine years and calculate the

occupancy right on a per annum basis as follows:

Rental at $50.00 per week (a figure nominated by the trustees in 2011) $2600 per

year times nine years equals $23,400.

Less rates approximately $1200 per annum times nine equals $10,800.

Less other miscellaneous outgoings such as insurance, routine maintenance allow

$500 per annum times nine equals $4500.

Total $6300.

[71] There will be an order that Tania is entitled to compensation in the sum of $6,300,

plus interest (of $2,147.60 - see paragraph 73 below). The total sum of $8,447.60 is to be

paid within three months from the date of judgment. This is so as to provide time for the

85 Taitokerau MB 21

Trust to arrange payment and also for Tania if she chooses to do so, to negotiate with the

Trust to see if agreement can be reached as to whether that amount could be satisfied by

way of a right to occupy in lieu of payment (assessed at the rate of $50.00 per week up to

the maximum value of $8,447.60).

[72] The trust claims ownership of the Old Home and is entitled to an order under s

18(1)(a) determining it to be the owner. But that is subject to the equities in favour of

Tania. Tania is entitled to compensation applying constructive trust principles. I therefore

propose to make the s 18(1)(a) order conditional upon payment of compensation and

interest to Tania Tipene in the sum of $8,447.60.

[73] In addition to the conditional s 18(1)(a) order I will also make an order in favour of

Tania by of a judgment debt against the Trust in the sum of $6,300. That order will also be

pursuant to s 18(1)(a). Interest will be payable on the debt at the rate of 11% per annum

from 15 June 2011 to today’s date pursuant to s 24B of the Act. There will also be a

charging order pursuant to s 82 charging Tania’s interests in Motatau Section 49A4F and

the Old Home with the total judgment debt.

Orders

[74] I make the following orders under Te Ture Whenua Māori Act 1993:

(a) Section 18(1)(a) determining the Tipene o Te Waerenga Whanau Trust to be

the owner of the house known as the Old Home situated on Motatau 2

Section 49A4F; and

(b) Sections 18(1)(a) and 24B determining that Tania Tipene is entitled to a

judgment sum of $6,300 against the Tipene o Te Waerenga Whanau Trust

together with interest at the rate of 11% per annum from 15 June 2011 to

today’s date being $2,147.60 giving a total judgment debt of $8,447.60; and

(c) Section 73 the order in paragraph (a) is conditional on the Tipene o Te

Waerenga Whanau Trust within three months paying the judgment debt to

Tania Tipene (or at Tania’s election reaching agreement with her that all or

85 Taitokerau MB 22

some of the judgment debt may be satisfied by granting Tania or her

nominee the right to occupy the Old Home on the same terms and

conditions that applied whilst Gary Tipene was alive, assessed at a value of

$50 per week (up to a total value of $8,447.60); and

(d) Sections 37(3) and 82 by way of charging order charging Tania Tipene’s

interests in Motatau 2 Section 49A4F and the Old Home with the judgment

debt of $8,447.60.

Pronounced in open Court at Whangarei at 5pm on Tuesday the 19th

day of August 2014.

M J Doogan

JUDGE

in the mĀori land court of new zealand taitokerau … · 2016-05-12 · 1 tania kathleen tipene,...

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