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Selena Neighbours v Brian Stutt [2016] NZDC 4025

Published 31 July 2016

Constructive trust — resulting trust — express trust — unconscionability — unjust enrichment — Lankow v Rose [1995] 1 NZLR 277 (CA) — Fortex Group Ltd (in receivership) v McIntosh Cox & Forde [1998] 3 NZLR 171 (CA) at 173 and 180 — Gormack v Scott. Judgment was made in favour of the plaintiff for $137,845. 65. The defendant had obtained money and property from the plaintiff over the course of their extra-marital relationship. The defendant had persuaded the plaintiff to become an escort and led her to believe he would in effect act as her banker when she gave him money to look after. At times the plaintiff was particularly vulnerable as she was undergoing treatment for cancer. The issue was whether the plaintiff’s money or property was held in any form of trust. A trust may be express, constructive or resulting: A) An express trust is one which is deliberately established and which the trustee deliberately accepts. It requires the coincidental satisfaction of certainty of intention, certainty of subject matter and certainty of object. B) A constructive trust arises by operation of law and possibly through the Courts remedial discretion; it is not directly dependent on the intention of the parties. Constructive trusts usually arise in the context of de-facto or filial relationships but can be wider than that. Lankow sets out that for a constructive trust to come into existence the plaintiff must have contributed in a more than minor way to the acquisition, preservation, or enhancement of the defendant’s assets, whether directly or indirectly; and that in the all the circumstances, the parties must be taken reasonably to expect that the plaintiff would share in them as a result. With regard to Fortex and Gormack a remedial constructive trust may be triggered by unjust enrichment and unconscionability.C) A resulting trust is said to give effect to the presumed intentions of the parties. In general terms it might be said that “resulting trusts align with the concept of unjust enrichment”. First cause of action: The Judge opined that $47,089, (half of the plaintiff’s earnings from the period she worked as an escort) which the defendant had obtained on the express understanding that he would hold the money for the plaintiff and repay it on her request, was held under either express or constructive trust. It was viewed that this could be an express trust because there was “certainty of intention” that the defendant would act as the plaintiff’s banker; “certainty of subject matter” that she would pay over half her earnings to him to safeguard; and “certainty of object” that he would repay it when asked. Failing that, there was a constructive trust because the defendant had been unjustly enriched by the plaintiff and it would be unconscionable not to order a repayment of her earnings. Second cause: $45,000 was found to have been given to the defendant by the plaintiff in trust (either constructive or resulting) over a period of 2 months in 2010. It was not a loan, a gift or a repayment of a loan. It was money that the defendant demanded that unjustifiably enriched him. Third cause: $26,756.65 (credit card debt of defendant paid by plaintiff) had a constructive trust over it. The money had been obtained by the defendant due to the dominance he exerted over the plaintiff. Fourth cause: the plaintiff was not entitled to be reimbursed $5,000 after she felt personally obliged to pay off one of the defendant’s personal loans. The defendant did not ask her to make this payment; he simply refused to pay it himself. There was no evidence of a meeting of the minds between the defendant and plaintiff that he would pay her back for paying off his loan.

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