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General

Put a ring on it

Beyoncé instructs in Single Ladies (Put a Ring On It) the importance of not relying on assumptions or expectations.  The same might be said in Sutherland v Lane, the background of which is set out at [1] of the judgment as follows:

“Michelle Sutherland had a close relationship with her uncle by marriage, the late David Wayde Carson. He gave her financial and emotional support when her marriage broke up and purchased her family’s beach house in his own name. He died, leaving an estate of $17 million. He bequeathed Ms Sutherland $500,000, named her as a discretionary beneficiary under a trust that inherited his residuary estate, and instructed his trustees that she should receive at least $25,000 annually, trust assets permitting. He did not, however, leave the beach house to Ms Sutherland. She claims he purchased it on her behalf and it was always intended for her.”

The trustees did not agree.  See Balancing philanthropy and moral duty regarding other claims relating to Mr Carson’s estate.

Mr Carson purchased a holiday home at market value, that had the subject of a relationship property matter between Ms Sutherland and a former husband.  The judgment notes that the purchase by Mr Carson allowed a sum of money equal to Ms Sutherland’s equity in the property to be paid to her.  Ms Sutherland now argues that either the purchase price was given to her.

The following passages from the judgment set the scene for the court’s analysis of matters:

[73] It is noteworthy that Mr Buchanan’s file notes at the time of Mr Carson’s acquisition of the Property make no mention of either a gift or a trust, nor the need for a subsequent transfer of the Property to Ms Sutherland. Furthermore, it might be thought that, had Ms Sutherland been so concerned about Mr Lauder not knowing she had any interest in the Property, it would have been put into a trust.

[74] Mr Carson acted consistently with his owning the Property. He paid the rates. He can be taken to have turned his mind to the legal ownership of the Property at the time or times Ms Sutherland offered to pay the rates on the Property. As Ms Sutherland herself acknowledged, payment of rates is an obligation of the owner of property. The fact Mr Carson declined to insure the Property because he did not believe in insurance is a strong indication that he saw risk and ownership of the Property remaining with him personally.

[75] At no time did Mr Carson take any steps to transfer legal ownership of the Property to Ms Sutherland. Nor did he establish a trust in respect of it.

Ms Sutherland argued that the court should take a benevolent approach to her claim and enforce what she claimed was Mr Carson’s promise.   The court did not agree, observing that to make a voluntary settlement the donor “must do everything necessary to transfer the property to the donee so that the settlement of the property on the donee is binding.”

The court considered the analogous case of Harvey v Beveridge where disappointment also followed.  See Common intention constructive trust deconstructed.

As noted at [89] “Although Mr Carson, by his words and actions, made it clear Ms Sutherland could use the Property whenever she wanted, he took no steps whatsoever to transfer the legal title into her name. As discussed later in this decision, any unconscionability was also more than adequately compensated by the provision he made for her in the Will and the Trust.”

The court was not satisfied that there was a trust in favour of the property for the benefit of Ms Sutherland, nor could she point to any detriment other than the loss of a holiday home that she believed would be hers.  Further any element of unconscionability was offset through the $500,000 bequest in Mr Carson’s will.

References:

  • Sutherland v Lane [2020] NZHC 721

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