Cohabitees Property-sharing agreement — Appellant financing purchase of property — Intention to form family trust — Sale of property — Whether respondent entitled to half share — Appeal dismissed
The appellant and respondent lived together but were not married. They decided to purchase a property together as their family home. They signed a property-sharing agreement on legal advice that provided, inter alia, that the appellant would finance the purchase and the property would be settled upon a family trust. The agreement provided that: (i) neither party could claim a share in the income of the other; (ii) certain specified assets were to be the separate property of the appellant; and (iii) certain specified assets were to be the separate property of the respondent. The parties also agreed that household chattels and items of property that they acquired as a couple after the date of the agreement would be jointly owned. They moved into the property but, in the event, the intended lease for joint lives did not proceed, and the family trust was never established. The relationship subsequently ended and the appellant left the property.
The appellant brought an action seeking to exclude the respondent from any share in the net proceeds of sale of the property. The New Zealand Court of Appeal upheld the decision of the court of first instance that the respondent was entitled to a half-share in the property. The appellant appealed to the Privy Council, arguing that the respondent’s beneficial half share was subject to defeasance in the event that the parties’ intentions regarding the property, as expressed in the agreement, were not fully carried out. The breakdown of the relationship had frustrated those intentions, thereby terminating the respondent’s beneficial interest and transferring her interest transferred to whomsoever had provided the purchase money.
Held: The appeal was dismissed.
The defeasance condition was implied and the test was whether the respondent, at the time the agreement was signed, had agreed that such an implied condition corresponded to her intentions. That test had only to be stated to be seen to fail.
The property, once purchased, was held by the parties as tenants in common in equal shares, both in law and beneficially. The entire purchase price was to be provided by the appellant, who intended to establish a family trust for the benefit of the couple and their children. The property, subject to a lease to them for their joint lives, was to be transferred to the trust. In return for the interests that she was to receive under the agreement, the respondent was to give up all domestic property claims against the appellant that she might otherwise have had. That was a clear, understandable and sensible arrangement. The breakdown of their relationship led to the frustration of their intentions in respect of the joint lease and the transfer to the family trust. However, that was not a reason to put into reverse those parts of the agreement that had been implemented.
Colin Carruthers QC and Chris Sygrove appeared for the appellant; Warren Templeton represented the respondent. All three counsel are of the New Zealand Bar.
Eileen O’Grady, barrister
