//
you're reading...
constructive trusts, General, Relationship Property, Trusts

You can run, but you can’t hide

Relationships end.  Sometimes badly.  Few amongst us can remember what we saw in the other.  Usually we move on.  Bruises are dusted.  The property is divided up, each thinks the other got more than they should have.    Some of us are made of stronger stuff.  Relationship property assets under the control of a single party to the relationship are transferred beyond the former partner’s reach. Court orders are made.  No big iggy.  All the money is gone- bankrupt me if you like, you won’t get it.  A game of blink is played culminating in the bankruptcy of one party.

Hopeless?  Maybe not.

Let’s take a step back to where all that money was before it disappeared.  If the party who held it can be identified – the cause of action and result can be as follows:

  • argument – the money was held on trust for the relationship partners
  • when the monies paid to that person as trustee for its beneficial owners (the relationship partners) was paid out to only one of the partners a breach of trust ensued
  • a claim is made for the amount ordered to be paid by the Family Court, as compensation for the breach of trust plus costs

Court proceedings follow.  The trustee, perhaps regretting what she has done at her son’s behest, pays the amount ordered by the Family Court, but no costs or interest.  An admission.  However, as noted by the High Court:

“In written submissions reliance was placed on the existence of a constructive trust on the principles appearing in Commonwealth Reserves et ors v Chodar et ors  HC Auckland CP73-50/00, 25 September 2000 and  Official Assignee v Sanctuary Propvest Ltd HC Auckland CIV-2009-404-0852, 11 June 2009. I would have been prepared to find Kathleen was a constructive trustee, but an alternative analysis based on an implied trust may also be available. Similarly, although not pleaded, the case could, in my view, have been advanced on a knowing receipt/assistance basis.”

So what of the interest and costs?  See [37]:

“To my mind the liability for interest follows inevitably from the admission of the cause of action … Absent the breach of trust there was a fund from which all such claims were recoverable. Absent liability for accrued interest,[the plaintiff] would not be made whole.”

Interest of $92,250.29 was ordered.  Costs of $46,982.50 were also sought.  These were on a 2B basis so likely reflected about 2/3 of actual costs.

A sad and sorry business.  Costs and interest are alarmingly close to the original amount ordered by the Family Court.

The cost of delay.

However, the case is also a reminder that trust findings can offer a remedy in the face of seemingly hopeless obstruction and dissipation of trust assets even in the absence of any formal settlement.

References:

  • Pool v Edgars [2016] NZHC 240
  • Commonwealth Reserves et ors v Chodar et ors  HC Auckland CP73-50/00, 25 September 2000
  • Official Assignee v Sanctuary Propvest Ltd

 

 

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: