SUSAN MARIE HEAZLEWOOD Appellant JUDGMENT OF THE COURT
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1 IN THE COURT OF APPEAL OF NEW ZEALAND CA499/2014 [2014] NZCA 550 BETWEEN AND SUSAN MARIE HEAZLEWOOD Appellant JOIE DE VIVRE CANTERBURY LTD Respondent Hearing: 23 October 2014 Court: Counsel: Judgment: Miller, Heath and Dobson JJ A M Corry for Appellant J E Bayley for Respondent 17 November 2014 at 2.15 pm JUDGMENT OF THE COURT A A stay of execution of the High Court judgment in Heazlewood v Joie de Vivre Canterbury Ltd NZHC [2014] 2125 is granted, on the condition that the appellant apply forthwith for urgency for the hearing of her substantive appeal. B A stay of execution is ordered in respect of the costs decisions made against the present appellant in [2014] NZHC 2125 and [2014] NZHC C Leave is reserved to the parties to apply to vary the terms of the orders made, should further circumstances warrant such application. HEAZLEWOOD v JOIE DE VIVRE CANTERBURY LTD CA499/2014 [2014] NZCA 550 [17 November 2014]
2 REASONS OF THE COURT (Given by Dobson J) [1] On 23 October 2014, the Court heard an application on behalf of the appellant to stay orders made in a judgment delivered in the High Court at Christchurch by Associate Judge Osborne on 4 September The effect of that judgment was to lapse caveat , which the appellant (Mrs Heazlewood) had registered to claim an interest in the relevant land under s 42 of the Property (Relationships) Act 1976 (the Act). [2] In a separate judgment on 10 September 2014, the Associate Judge also declined an application Mrs Heazlewood brought for a stay of the effect of his 4 September 2014 judgment. 2 The Associate Judge ordered costs against Mrs Heazlewood in respect of both decisions. [3] After hearing counsel, the Court granted Mrs Heazlewood s application for a stay of the effect of the Associate Judge s decisions, on condition that she promptly progress her substantive appeal against the Associate Judge s decision. 3 We now provide reasons for those orders. [4] Mr and Mrs Heazlewood were parties to a long-term marriage, during which they raised six children together. Throughout their marriage, they engaged in business as property developers. On Mrs Heazlewood s perception, her extensive involvement was always at Mr Heazlewood s direction. [5] Mr Heazlewood has utilised an extensive network of trusts and companies to carry out his diverse property development businesses. [6] Subsequent to their separation in April 2013, Mrs Heazlewood pursued claims under the Act. In her affidavit in support of the present appeal, she deposed that the properties involved in Mr Heazlewood s various ventures were placed in ownership structures designed by Mr Heazlewood to ensure that she cannot claim Heazlewood v Joie de Vivre Canterbury Ltd [2014] NZHC 2125 [High Court caveat decision]. Heazlewood v Joie de Vivre Canterbury Ltd [2014] NZHC Heazlewood v Joie de Vivre Canterbury Ltd [2014] NZCA 515.
3 any rights. She deposed that he had frequently told her that all assets were in trust so that she could not touch them, and that if she left him, she would get nothing. [7] For the purposes of her proceedings, Mrs Heazlewood lodged notices of interest under s 42 of the Act against titles for land in Canterbury owned by two companies whose assets and activities she claims can be linked to Mr Heazlewood sufficiently to enable her to make out that he has a beneficial interest in those properties. Arguably, it could follow that any interest of Mr Heazlewood s in the properties that she is able to make out constituted relationship property, thereby giving her the basis for a claim against his interest in the land. [8] The respondent, Joie de Vivre Canterbury Ltd (JDV) is the registered owner of the first of those blocks of land. The first notice of interest concerns that land. The second notice related to land registered in the name of Memorial Avenue Investments Ltd. In a contemporaneous judgment, Associate Judge Osborne dismissed Mrs Heazlewood s claim that the notice of interest in respect of that property not lapse, but that decision is not the subject of appeal. 4 [9] The relevant land was acquired by JDV in At that time, JDV was acting as trustee for the Robinsons Bay Trust (RBT). That trust had been settled in 1996 and the beneficiaries include Mr and Mrs Heazlewood and their children. In July 2012, JDV agreed to sell the land to another trustee company, which would hold the land for a further trust called the Boulder Trust. The transfer could not be registered until the JDV land was subdivided, which had not occurred when Mrs Heazlewood registered her notice of interest. The sale was on terms that the full consideration was advanced by JDV to the purchasing trust, with the whole amount being repayable on demand and free of interest. [10] The Boulder Trust had been settled by Mr Heazlewood in July He apparently retains the entitlement to appoint beneficiaries to that trust and, for the time being, the beneficiaries are those who are beneficiaries of a further trust, the Ozone Trust. The present discretionary beneficiaries of the Ozone Trust include Mr Heazlewood s children and grandchildren, but not Mr or Mrs Heazlewood. 4 Heazlewood v Memorial Avenue Investments Ltd [2014] NZHC 2126.
4 [11] Before the Associate Judge, Ms Corry for Mrs Heazlewood contended that Mr Heazlewood arguably enjoyed the beneficial interest in the JDV land by virtue of a constructive trust. That was said to arise by virtue of his overall control of a web of companies and trusts, and the retention of the power to appoint trustees, as well as the power to alter the beneficiaries of various trusts. [12] The Associate Judge accurately analysed the extent of the distance between Mr Heazlewood and the legal structures involved in the ownership of JDV s land. On the tests for imputing a constructive trust, the Associate Judge did not consider there to be an arguable case that Mr Heazlewood had made a contribution to the property. 5 Nor was he persuaded that Mr Heazlewood could have a reasonable expectation of obtaining a beneficial interest from the JDV land. 6 [13] The Associate Judge acknowledged that Mrs Heazlewood s notice of claim contended that Mr Heazlewood had a requisite interest in the property on a number of other alternative bases including an express or implied trust or common intention trust, or that Mr Heazlewood was the beneficial owner of the land irrespective of the ownership structure. Understandably the judgment did not deal with those alternatives, as Ms Corry did not advance argument in relation to them. [14] In that context, the Associate Judge was satisfied that Mrs Heazlewood could not make out that Mr Heazlewood arguably had a beneficial interest in JDV s land. [15] However, in canvassing the scope of substantive arguments for her appeal, Ms Corry put to us the prospect of making out an interest on one or more of these various bases. In addition, she foreshadowed a claim that funding for many of the trusts and companies in Mr Heazlewood s current structures had been derived from the National Investment Trust, which she characterised as an important component of Mr Heazlewood s structures throughout the 1990s. That trust had been settled during a period in which Mr Heazlewood was bankrupt, in September 1990, and Ms Corry foreshadowed arguments that it was either a sham, or at best an illusory trust. 5 6 High Court caveat decision, above n 1, at [64]. At [65].
5 [16] The law on what is required for a claimant in Mrs Heazlewood s position to make out a sufficient interest enjoyed by someone in Mr Heazlewood s position, for the purposes of claims under the Act, is not well-settled. 7 Given the prevalence of resort to complex webs of trusts and companies, it may well be that a broader inquiry than whether a beneficial interest can be attributed by application of one or more settled principles of trust law is appropriate to respond to the merits of claims brought under the Act in such circumstances. [17] The substantive appeal from the Associate Judge s decision will be allocated to the Permanent Court. We express no view on the merits of Mrs Heazlewood s claim, beyond observing that the complexity of the arrangements that appear to have been deployed by Mr Heazlewood in this case make it an appropriate one in which to reflect on the breadth of the test for recognising a requisite beneficial interest. [18] We accordingly respectfully differ from the Associate Judge in recognising that Mrs Heazlewood has a sufficiently arguable claim to an interest in JDV s land for the notice of interest to remain registered against the title to JDV s land pending a prompt resolution of her substantive appeal. [19] Mr Bayley sought to emphasise the potential prejudice to those legally responsible for the cost of work undertaken on JDV s property on instructions from the Boulder Trust, which has assumed responsibility for development of the site. The current trustee of that trust is LNV Trustees Ltd, a trustee company of the Christchurch solicitors firm, Lane Neave. On the state of the evidence before us, we were not persuaded that the inability to register a transfer of the property from JDV to the Boulder Trust will cause any substantial prejudice. Mr Bayley did not dissuade us from the clear impression that all the relevant entities are under Mr Heazlewood s ultimate control. It is a fair inference that the resources he would be able to procure to enable the Boulder Trust to carry out the work involved are also likely to be available to JDV. 7 Law Commission Review of the Law of Trusts (NZLC R130, 2013) at [3.26] and the observations of Glazebrook J in Official Assignee v Wilson [2007] NZCA 122, [2008] 3 NZLR 45 at [128] [129].
6 [20] The remaining rationale for the transfer from JDV to Boulder Trust was portrayed as an attempt to facilitate a more advantageous tax treatment of the property development activity. We are not persuaded that a consideration of that type ought to count against continuation of Mrs Heazlewood s notice of claim. [21] For those reasons, we ordered a stay of execution of the High Court judgment, pending determination of the substantive appeal. We imposed a condition that Mrs Heazlewood pursue a hearing for the substantive appeal as a matter of urgency. [22] We also reserved leave to the parties to make application to vary the orders, in the event that changed circumstances warrant a revisiting of the adverse consequences of the notice of claim remaining registered against the title to JDV s land. [23] We have also stayed execution of the costs orders made against Mrs Heazlewood by the Associate Judge. Costs on the application for stay are reserved. Solicitors: Godfreys Law, Christchurch for Appellant Rhodes & Co, Christchurch for Respondent
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