Lankow V Rose

Lankow v Rose, CA176/93, 2 December 1994 (1994)
[1995] 1 NZLR 277, [1995] NZFLR 1, (1994) 12 FRNZ 682, 1994 WL 16455073
KeyCite Yellow Flag - Negative Treatment

Distinguished by Zhang v Zhao , HC, 24 May 2013
CA176/93, 2 December 1994

Court of Appeal
Lankow v Rose
CA176/93
Cooke P, Gault J, Hardie Boys J, McKay J, Tipping J
Synopsis
Unsuccessful appeal from HC judgment awarding R half share in home and certain chattels following breakup of 10 year
de facto relationship; R worked throughout relationship and did significant non-remunerated work for L's company; R filed
a cross-appeal relating to her interest in L's other property; held, to be awarded a beneficial interest in property owned in
law by the other partner necessary to show direct or indirect contributions to the specific property; expectation of an interest;
expectation reasonable and that the defendant should reasonably expect to yield the claimant an interest; no reason why indirect
contributions should not qualify; arithmetical precision will generally be unobtainable and unnecessary; analogy of matrimonial
property regime not appropriate; difference between motive and expectation discussed; R made contributions and had reasonable
expectations of an interest; any reasonable person in L's position would have expected to yield an interest; cross-appeal allowed
Classifications (1)
[1] Family law
Legislation Considered
Matrimonial Property Act 1976
Legal Representatives
W V Gazley for appellant; H A Cull and J F Moss for respondent
Opinion
Cooke P:
This is an appeal from a judgment of Ellis J delivered on 27 July 1993 whereby, after the break-up of a de facto union of 10 years,
the Judge awarded the claimant partner, Ms Rose, a half share in the home and in certain residual chattels. In a straightforward
and clear judgment, the Judge took as the starting point the principle of reasonable expectations stated in Gillies v Keogh [1989]
2 NZLR 327; (1989) 5 FRNZ 490 (CA) and other cases; and he attached weight to the facts that the claimant had put “her all”
into the relationship and had made significant contributions, both direct and indirect, to the property held in the man's name.
The facts and the authorities are reviewed in the judgments of the other members of this Court. Having had occasion in previous
cases to discuss the law of New Zealand in this field at some length, I will not add to the discussion on the present occasion,
apart from the following observations.
Learned counsel for the appellant in his opening argument subjected much of what is said in Gillies v Keogh to an attack which
might have been wounding but for the hyperbole of its language. Phrases such as “meaningless leguleian judicial activism”,
although synthetic, have an entertainment quality which robs them of all sting. Further examples may be dispensed with. When
one comes to the serious business of judgment, what it is more important to record is counsel's theme in his reply: “All we ask
is that you will apply the evidence to the principles of Gillies v Keogh … ”
© Thomson Reuters. 1
My colleagues have done as much in their judgments, with insights which I would not seek to augment. Legislation has not
been enacted in New Zealand about property interests after the end of apparently stable de facto unions. It is a controversial
field. Parliamentary caution is understandable. Without any such legislation — and possibly even with it, in cases of facts which
Parliament could not be reasonably expected to cover — the Courts have to do their best to achieve justice with the available
judicial instruments. These include the recognition or imposition of constructive trusts. In many cases, the case now under
appeal being one, High Court Judges have achieved workable and wise solutions.
There is necessarily some uncertainty. How could it be otherwise when human relationships are so variable? Legislation laying
down some more hard-and-fast approach might be desirable, not only theoretically but in practice. If any such change is under
consideration, however, a point to be borne in mind is that the present New Zealand case law represents an attempt to ensure
justice while recognising that there is a basic difference between legal marriage and de facto union. In contemporary society it
may be questionable whether, ideally, any law can aim at more.
For these reasons I concur in the orders to be proposed by Tipping J.
HARDIE BOYS J:
The appellant, Mr Lankow, and the respondent, Ms Rose, lived together in a de facto union for 10 years. In that time, Mr
Lankow's financial position improved quite dramatically. At the beginning, his indebtedness more or less equalled the value of
his assets, apart from a life insurance policy. At the end, his net worth was some $650,000. At the beginning, Ms Rose brought
with her cash of $2,300, a car worth $3,000, and some furniture and personal effects. She worked throughout the relationship,
earning a net amount of the order of $150,000, and she received $24,000 from a matrimonial property settlement. At the end,
she had a car worth $22,000, some $5,000 in savings, and some chattels. When she brought these proceedings to establish a
beneficial interest in Mr Lankow's assets, she was met with the response that she was entitled to nothing, and that $7,500, which
Mr Lankow had in the meantime paid to her, should be repaid to him. On this appeal from the judgment of Ellis J awarding
her a one-half interest in what had been the home and in various chattels (with credit to be given for the $7,500), the same
contention is made: that she is entitled to nothing.
Such a contention would have prevailed once upon a time. But in my opinion it is not tenable on the facts of this case, and in
the light of the development in recent times of what has always been a fundamental principle of equity, that a person will not
be permitted to assert strict legal rights in an unconscionable manner: see for example the speech of Lord Diplock in Gissing
v Gissing [1971] AC 886, 905, the judgment of McMullin J in Pasi v Kamana [1986] 1 NZLR 603; (1986) 2 FRNZ 120; 4
NZFLR 417, at p 607; p 124; pp 421-422, and that of Cooke P in Gillies v Keogh [1989] 2 NZLR 327; (1989) 5 FRNZ 490,
at p 331; p 493.
The means usually adopted to thwart unconscionable behaviour has been the imposition of a constructive trust, although in
Canada a monetary award may be available where a constructive trust is not: Peter v Beblow [1993] 1 SCR 980; (1993) 101
DLR (4th) 621. Constructive trust is a remedy. The cause of action giving rise to it varies. Canadian jurisprudence rests on
the concept of unjust enrichment: Pettkus v Becker (1980) 117 DLR (3d) 257; Sorochan v Sorochan (1986) 29 DLR (4th) 1;
Australian directly on unconscionable conduct: Baumgartner v Baumgartner (1987) 1 Fam LR 915; 164 CLR 137; and English
on inferred common intention, although a trend towards dealing with the problem by resort to proprietary estoppel may be
discerned: Grant v Edwards [1986] Ch 638; [1986] 2 All Er 426, Lloyds Bank plc v Rosset [1990] 1 All ER 1111, Hammond
v Mitchell [1992] 2 All ER 109. In New Zealand the exact basis is not yet finally settled. In Gillies v Keogh at p 344; p 506
Richardson J favoured the estoppel approach, while Cooke P saw at the heart of all approaches the concept of the reasonable
expectations of the parties, and found it unnecessary in that case to go beyond that as the appropriate basis for the Court's
determination. He maintained this view in Phillips v Phillips [1993] 3 NZLR 159; (1993) 10 FRNZ 110; [1993] NZFLR 321
(CA), where at pp 167-168; p 119; p 330 he spoke of “recognition of the principle that the history of a de facto union and the
conduct of the parties may give rise to reasonable expectations of property interests to which equity will give effect by way of
constructive trust”. Both Casey and Bisson JJ in Gillies v Keogh seem to have adopted the same approach as the President: see
pp 348; p 510, p 352; pp 514-515. Richardson J made it clear in his judgment at p 347; p 509 that he did not necessarily mean
an estoppel arising from actual encouragement of belief, for he said:
“But where there is a de facto relationship of substantial duration in which, as in marriage, the parties contribute to
their lives together in their different and agreed ways, through financial contributions and through other services, and
family assets are acquired or improved for the purposes of that relationship, but with title to an item of property being
taken or retained in the name of one alone for reasons not inconsistent with a sharing of property, those circumstances,
without more, may lead to the ready inference that contributions made in those circumstances were made in reliance
on an expectation of sharing and constitute a detriment to the other party.”
If there is a difference between the various approaches, it is not significant for the purposes of the present case, nor is it necessary
to define the cause of action, although doubtless it might be otherwise if monetary compensation were sought in a case where
a constructive trust could not be established, for example in a claim for domestic services alone. It is, however, important
that whatever the legal rubric there should be clear criteria for the imposition of constructive trusts in the area of de facto
relationships. These will necessarily involve a value judgment, but there is nothing unusual about that.
The essential requirements I see to be twofold: that the plaintiff contributed in more than a minor way to the acquisition,
preservation, or enhancement of the defendant's assets, whether directly or indirectly; and that in all the circumstances the
parties must be taken reasonably to have expected that the plaintiff would share in them as a result. Both statements need some
amplification. In the first place, by contributions to assets one is not referring to those contributions to a common household that
are adequately compensated by the benefits the relationship itself confers. The contribution must manifestly exceed the benefits.
Putting it in conventional estoppel terms, the plaintiff's contributions must have been to his or her detriment; or in Canadian
terms they must have resulted by the end of the relationship in the enrichment of one to the juristically unjustified deprivation
of the other. Further, the contributions need not be in money; they may be in services or in any other respect. But there must
be a causal relationship between the contributions and the acquisition, preservation, or enhancement of the defendant's assets
for, as a claim to a constructive trust is a proprietary claim, a claim to an interest in property, the contributions must have been
made to assets — not necessarily to particular assets, but certainly to the defendant's assets in general. The contributions may
then be recognised by the imposition of a trust over a particular asset or particular assets, which may in turn be quantified or
satisfied by a monetary award.
It is also to be remembered that it is of the nature of intimate human relationships that the parties will give little if any conscious
thought to financial outcomes should the relationship fail; and of course while it lasts they are usually of no concern and minimal
relevance. Thus I respectfully agree with the observation of Richardson J in Gillies v Keogh, quoted above, that from the
ordinary circumstances of a shared life the requisite expectation properly can, and will, be inferred. To displace the inference,
some particular feature must be demonstrated, as it was in Gillies v Keogh, where one party made it clear to the other at all
times that she was asserting the property was hers and hers alone: see p 340; p 502.
The foregoing can all, I think, be distilled from Gillies v Keogh and other decisions of this Court and of the Supreme Court of
Canada. (I leave aside the respects in which the majority judgment in Peter v Beblow, delivered by McLachlin J, had regard to
the Court's ability, on the unjust enrichment basis, to award monetary compensation where the grounds for a constructive trust
had not been made out: see p 650. Whether in those circumstances monetary compensation is available in New Zealand is still
to be decided, although as I have mentioned there is no difficulty in giving effect to the trust by a monetary award, as was done
in Nash v Nash (1994) 12 FRNZ 446; [1994] NZFLR 921 (CA).
In the course of his submissions, Mr Gazley subjected not only the judgment appealed against but also Gillies v Keogh to the
most intemperate criticism. He generally took issue with the way in which the law has developed both here and in Canada. But
he concluded by exhorting the Court to decide this case on the basis of the principles laid down in Gillies v Keogh. That we
must do. There is no reason to turn the clock back.
Ellis J held that Ms Rose had put her “all” into the relationship. It is clear from her evidence, which the Judge accepted, that
on her side at least the commitment was total. For reasons which will be apparent when I come to discuss it in a little more
detail, the quality of the relationship and of Ms Rose's contributions was such as to lead to the inference that they were made in
reliance on an expectation of sharing in the assets that were being accumulated. Her evidence was that “through our relationship
my expectation was that our joint assets were just that, ‘joint’, and that I was entitled to a share”. As Mr Gazley said, such an
assertion is easily made after the event, but in this case it is entirely credible and reasonable. Mr Gazley sought to undermine
it in cross-examination by referring to another passage from her evidence: “All my efforts on behalf of Geoff and the company
were done by me with the idea of saving both the company and Geoff money”. Counsel asked: “Then they weren't done with
the idea of gaining yourself an interest in his property?” She replied: “Not at all.” Mr Gazley seized on this answer and made
of it one of the principal features of his case.
There is an essential difference between motive and expectation. The constructive trust is not a reward only for the calculating.
Ms Rose's answer is not at all surprising. Indeed it would have been surprising had she said anything else. The answer says
nothing as to any expectation she might have had as to the eventual outcome of her efforts. Moreover, it must be put in the
context of the whole of the evidence, which is perhaps encapsulated in this passage in re-examination:
“Can you think over that 10 year period of time whether there is anything that Mr Lankow drew to your attention about
sharing within a de facto relationship?
Um, do you mean the fact that I wouldn't share?
Yes.
He never ever said I wouldn't share in the property, it was always called our house, our things, he used to often comment
to people about how he wouldn't be where he was today if it wasn't for my help, he told people how we lived on my
income for the first year. I was completely confident that he would be reasonable, that this wouldn't happen. I never
had any worries at all. I was so sure he recognised I had a claim. Everything was ours, 10 years of living together and
doing things together.”
I therefore have no hesitation in rejecting the submission that Ms Rose by her own evidence demonstrated that she had no
expectations.
Mr Gazley saw confirmation “that the parties had positively declined to entertain inter vivos sharing by either to the property of
the other” in the fact that in 1981 and again in 1987 they had each made wills, drafted and typed by Ms Rose, leaving the whole
of their estates to the other, except that in Mr Lankow's case there were modest legacies to his children. The point seemed to
be that each party had treated his or her assets as entirely their own, instead of, for example, referring to “my interest in” the
assets. I see no substance whatever in the point. If anything, I would regard the wills as confirmatory of Ms Rose's claim; but
I think it more appropriate to regard them as neutral in the overall assessment of the case.
Prior to their living together, Mr Lankow had been living in one of two flats he owned at 6 Taieri Cres. The other was let. He
had been fending for himself since his separation from his wife. He owned the adjoining vacant section at 8 Taieri Cres, and
two-thirds of the shares in Concrete Placements Ltd. In 1986, 6 years after their relationship commenced, a house was built
on the vacant section at a cost of $150,000 and that was their home until they parted 4 years later. The flat in which they had
lived was let.
At the commencement of the relationship, the company, which provided Mr Lankow with his employment and his income,
apart from rent from the flat, was suffering what he described as a cash flow problem of serious concern. A substantial second
mortgage over the property secured the company's bank indebtedness and, with the first mortgage, reached a total not far short
of its value. There were other debts as well, and, as already mentioned, his asset position was close to nil. He was being pressed
by creditors, and was faced with a matrimonial property claim by his wife. He managed to keep the creditors at bay; and in
1981 he was able to settle his wife's claim by a payment of $10,000, of which $5,000 was the proceeds of surrender of his life
policy and $3,500 was paid by Ms Rose, in order, she said, to avoid the sale of property.
It was some time before the company's problems were surmounted but obviously Mr Lankow's position had improved
sufficiently by 1986 to enable the new house to be built and the necessary mortgage of $50,000 to be raised. In about March
1988 Mr Lankow sold his shares in the company, along with a number of company assets which he had taken out of it, for
$270,000. After repaying the mortgage on the house and other liabilities he was left with some $180,000 and a BMW motorcar.
Mr Lankow's assets at the time of separation, in addition to the car and other chattels, were the flats, valued at $185,000, the
house, valued at $260,000, and cash of $180,000 or thereabouts. His liabilities had all been discharged.
The evidence which the Judge accepted was that Ms Rose had contributed in a variety of ways. There was the inevitable conflict
of evidence as to the extent of the contributions, but the Judge preferred Ms Rose's evidence to that of Mr Lankow and, despite
Mr Gazley's criticisms of his reasons, he was clearly entitled to do so. The account that follows is therefore largely taken from
her evidence.
From the outset, she administered the tenancy of first the one flat and then both flats. She did secretarial work for Mr Lankow,
organising his personal accounts and records. When the company was in difficulty, she dealt with the many telephone calls that
came for him. More significantly, until his shares were sold she did a great deal of secretarial and administrative work, and also
simple legal work, for the company. Some of the latter involved dealing with creditors, some pursuing debtors, as well as a
variety of other matters. She was throughout employed as a legal secretary by Mr Lankow's and his company's solicitors, and
did much of the work in the office, but mostly out of office hours, at lunch-time, in the evening, and at weekends. The firm did
not charge for her services. Her intention, she said, was to save him and the company legal fees.
In and about the home, she tended the gardens at both properties, and assisted with general maintenance such as painting. She
shared in the planning of the new home and bought many items of furnishing and equipment for it. She generally attended to the
housework, the washing, the ironing, and the cooking, often for dinner guests; although after Mr Lankow's retirement following
the sale of the business he took over some of the cooking and housework, while she continued to work.
Ms Rose kept her own financial records carefully, hence she was able to depose to earnings, already mentioned. She accepted
responsibility for general household expenses apart from one year in which Mr Lankow contributed $100 a week, and at least
three-quarters of her earnings were used in that way. I have already mentioned the money she gave Mr Lankow to assist him with
his matrimonial property settlement. Her own matrimonial property settlement yielded $24,000, of which in 1984 she advanced
$10,000 to the company at a commercial interest rate. It was repaid the following year and formed part of a total of either
$22,000 or $29,000 (the difference was not resolved) which she contributed to the new house: $7,000 towards subcontractors'
costs, the balance to furnishings. Both parties had motor vehicles which from time to time they replaced with more expensive
models. Mr Lankow provided $20,500 towards Ms Rose's vehicles, she $24,500, together with the trade-in value of the car she
had brought with her. Until 1984 Ms Rose's car was mostly used as the family car.
Ms Rose's financial outlay during the relationship totalled some $180,000 (her first car, her initial cash, her matrimonial property
settlement, and her wages). She took away $5,000 in cash and a car which had cost $32,000. Thus $147,000 or so had been used
for their joint purposes. Mr Lankow produced very little financial information, and no comparison can therefore be made in this
respect. There is, however, the comparison between his asset position at the beginning and then at the end of the relationship,
demonstrating a quite dramatic recovery.
Mr Gazley submitted that the evidence did not show any appreciable contribution by Ms Rose to this recovery. In particular,
he contended that the legal and secretarial work was done by her for her employer and that she was paid by the employer for
doing it; the fact that the firm chose not to charge for the work was for reasons that had nothing to do with her, but were matters
between the partners and Mr Lankow. The submission was based largely on the evidence given at the time by one of the partners,
but a fair reading of that evidence does not support it. It is probably true that to the extent that Ms Rose did legal work, the files
were the firm's files. But the solicitor made it clear that the firm treated all that Ms Rose did for Mr Lankow and the company as
personal to her. This was because she was extremely efficient and conscientious and would work extended hours for the firm,
and also because she made up for any time spent in office hours on personal matters. It is clear that had the firm been asked
to do the work Ms Rose did, it would have been charged for. That it was not, the solicitor said, “was as much as anything a
recognition of Ms Rose's special position within the firm”: “she gave so much of herself [in] her usual duties for the firm”. On
the basis of this evidence, the Judge was quite entitled to find a personal contribution by Ms Rose in this respect. She said it
was of the order of “thousands and thousands of dollars”. The Judge did not attempt to qualify it but described it as substantial.
Ms Rose's contributions were thus in money, in domestic services, and in secretarial and semi-legal services. The Judge's
assessment that she had put her “all” into the relationship was amply justified, not only by the evidence of Ms Rose herself,
but also by that of the solicitor, of a neighbour, and of friends.
It is necessary next to consider the submission that these contributions were amply repaid by the benefits Ms Rose derived
from the relationship. She was provided with a home, and substantial assistance with the acquisition of motor vehicles. They
had several holidays overseas, mostly, although not entirely, paid for by Mr Lankow. Their standard of living was obviously a
comfortable one. Yet much of the lifestyle Ms Rose enjoyed was simply an expression of the affection and the companionship of
the relationship. The payments for the cars are in a different category, but home, home comforts, and holidays, even expensive
holidays, are no more than the manifestations of shared lives. Put in terms of compensation for contributions, I would hold that
these matters balanced out Ms Rose's contributions in ordinary domestic services, but are not to be regarded as compensating
her for the contributions she made in other respects.
This is not a case to which one can apply Lord Simon's avian observation, quoted in Peter v Beblow at p 647: “The cock-bird
can feather his nest precisely because he is not required to spend most of his time sitting on it.” Ms Rose's contributions were
more extensive and more direct than the care of the home. In a very real sense they assisted Mr Lankow to accumulate the
assets which he now has. From a different perspective than the present, he himself acknowledged that to two witnesses. One,
whose evidence the Judge approached with circumspection, but none the less accepted, said that comments Mr Lankow made
in 1982 and 1983 indicated that but for Ms Rose he would have been “broke”. It is these contributions that in my judgment
justify the imposition of a constructive trust.
Ellis J approached the matter on an asset-by-asset basis, holding that the reasonable expectations test was satisfied in relation
to the house and chattels, but not in relation to the flats and Mr Lankow's interest in his business; or, more accurately, in the
proceeds of its disposal. He also saw an analogy with the regime under the Matrimonial Property Act 1976 whereby spouses
generally share equally in the matrimonial home and the family chattels. This, the Judge said, “underlies and reinforces any
reasonable expectation of parties in de facto relationships of substantial duration and anticipated indefinite duration”. I make
two comments.
An asset-by-asset approach may be appropriate in many cases. For example, it may often only be to the home that any
contribution is made. In the present case, the contributions were on a broader front, and to treat them as contributions to the
home risks misunderstanding. Thus the submission here was that the contributions to the home could not justify a 50 percent
award, for the section had been purchased before the couple began to cohabit, the house was built only 4 years before they
parted, and by far the greater direct contribution to its cost was made by the husband. Where, as here, there are contributions to
assets generally, the Court should assess them, compare them with the contributions of the other party to the assets generally,
and then determine an appropriate award. That can then be given effect by the imposition of a trust on an appropriate asset,
which may often, but need not necessarily be the home.
Further, and with respect to Ellis J, I am unhappy with any analogy with the Matrimonial Property Act. One danger of the analogy
is that the Court will tend to look to contributions to the relationship in the way that under the Act it must look to contributions
to the marriage partnership; whereas for a constructive trust the Court must look to contributions to assets. Furthermore, the
constructive trust remedy must reflect relative contributions, so that there is no room for the kind of presumption of equality
that the Act provides. And finally, I would not regard it as a reasonable expectation that de facto couples should share in assets
in the same way that married couples do. If the distinction between the two categories is to become one of form only, that is
a revolutionary step which in my view only Parliament can take.
The ultimate question in this case is whether a half interest in the home and chattels represents a just and proper assessment of
Ms Rose's contributions to Mr Lankow's assets, bearing in mind the money he provided for her motorcars. It is not possible to
compare Mr Lankow's contributions, for he did not see fit to inform the Court of any detail. No doubt the great improvement in
the company's fortunes was to a considerable extent the result of his own efforts; but one cannot escape the fact that it occurred
after Ms Rose's advent. She made out a case for an award and the Judge had to do the best he could with the material available
to him. I am not persuaded that he was wrong, and would therefore dismiss the appeal. On it and the cross-appeal I would make
the orders proposed by Tipping J.
GAULT J:
Mr Gazley for the appellant pressed to have this matter determined in accordance with the decision of this Court in Gillies
v Keogh [1989] 2 NZLR 327; (1989) 5 FRNZ 490. His first argument was that, as in that case, in this case the respondent
understood that she was not entitled to an interest in the appellant's property. He relied primarily on answers given by her
to questions put in cross-examination beginning with the question and answer at p 126 of the Judge's notes of evidence and
reiterated subsequently:
“Q. Is it correct, that as you say at page 8 of your brief, All my efforts on behalf of Geoff and the company were done
by me with the idea of saving both the company and Geoff money?
A. Yes
Q. Then they weren't done with the idea of gaining yourself an interest in his property?
A. Not at all.”
Reference to p 8 of the respondent's brief of evidence discloses that the context was of work done by the respondent during
the relationship for the appellant's company, Concrete Placements Ltd. Ellis J rejected the respondent's claim to an interest in
the proceeds of the sale of the appellant's shares in that company and so, contrary to the submission, may well have taken into
account this particular evidence.
The Judge did hold the respondent entitled to a half interest in the house, property the parties shared from 1985 when the house
was built on the land which had been owned by the appellant since before their relationship commenced. Mr Gazley attacked
this. His argument was that the respondent's evidence of having done what she did “to save Geoff and the company money”, “for
our joint benefit”, and by way of contribution to their relationship, demonstrated an understanding that she was not doing it to
gain an interest in the house property. This seems to confuse immediate purpose with recognition of anticipated consequences.
I am not satisfied that on her evidence as a whole the Judge should have adopted the interpretation of her evidence contended
for by Mr Gazley.
I do not accept that the making of mutual wills by the parties casts the inference that the respondent well knew that she would
acquire no interest in any of the appellant's property until after his death. I incline to the view that the wills are at least an
indication of the commitment of the parties to the relationship and even tend to support the respondent's claim, resting as it
does in part on the pooling of their resources.
The arguments directed to the application of the principles for determining and quantifying any property interests of a de facto
marriage partner as identified in Gillies v Keogh have been dealt with in the judgment of Tipping J, which I have read in draft,
and I am content to express my agreement with his reasons. There was evidence which the Judge was entitled to accept from
which reasonable expectations of an interest in the house property could be found. The Judge was entitled to fix that interest at
one-half — indeed the quantification in the event that entitlement was established was not challenged.
I merely add the particular comment that I find quite untenable the submission that the respondent's contributions during the
relationship were equalled or exceeded by the benefits she received in the form of board and lodgings and lifestyle. I am satisfied
that the benefits will be brought into balance with her contributions by including a share in the property in which the parties
made their home.
An unusual feature of this appeal was that although he pressed the Court to apply Gillies v Keogh, Mr Gazley criticised, without
moderation, that decision, and particularly the formulation of criteria for determining property interests in the judgment of
Cooke P (and also in his subsequent judgment in Phillips v Phillips [1993] 3 NZLR 159; (1993) 10 FRNZ 110; [1993] NZFLR
321). Mr Gazley did not himself undertake any extensive analysis of the authorities, choosing rather to rely on a single High
Court judgment in Daly v Gilbert [1993] 3 NZLR 731. That was a judgment which involved a straightforward application of the
ratio decidendi of Gillies v Keogh but then focused primarily on restitution for unjust enrichment. We were not presented with
any detailed formulation of the appellant's present case in terms of the principles of unjust enrichment. Indeed the only cases
cited from Canada, where the principles of unjust enrichment have been employed in the division of the property of de facto
unions, rested on authorities (eg Kshywieski v Kunka (1986) 50 RFL (2d) 421) said in the recent judgment of the majority of the
Supreme Court of Canada in Peter v Beblow [1993] 1 SCR 980; (1993) 101 DLR (4th) 621, 647 nolonger to have application
to this field under the law of Canada.
So although having been urged to apply Gillies v Keogh, we were also invited, I apprehend, to review and reject the objectively
determined reasonable expectations approach to the division of property between de facto partners. In my view, properly applied,
it is soundly based and provides a satisfactory test for the general run of claims in this developing area. It draws upon and
encompasses the principal features of the various approaches canvassed in the authorities in Commonwealth jurisdictions. It
bears close similarity to the common intentions approach followed in England (Pettit v Pettit [1970] AC 777, Gissing v Gissing
[1971] AC 886, Maharaj v Chand [1986] 3 All ER 107 (PC), Lloyds Bank plc v Rosset [1990] 1 All ER 1111) while avoiding
the artificiality of inferring common intention when the parties may not have turned their minds to the issue. In that respect the
reasonable expectations approach resembles that of imputed intention favoured by the minority in the House of Lords in Pettit
and Gissing. Had that prevailed it may have avoided the “detailed time consuming and laborious” process for trial Judges in
England referred to by Waite J in Hammond v Mitchell [1992] 2 All ER 109, 112.
The main criticism of the approaches based on imputed common intention and reasonable expectations is that of vagueness and
the potential for idiosyncratic assessment. This seems to have been a principal reason for the House of Lords rejecting the earlier
entirely discretionary approach championed by Lord Denning in such cases as Hine v Hine [1962] 1 WLR 1124. I consider
this criticism is overstated, and recent cases have identified factors relevant to the determination of whether it is appropriate
to infer intention or find reasonable expectations. Those factors are substantially the same under the various approaches that
have been employed in dealing with cases in this field.
The common intention approach seems very close to, if not merely a particular application of, proprietary estoppel (see Grant v
Edwards [1986] 2 All ER 426, 439 per Browne-Wilkinson VC). The same may be said of the reasonable expectations approach.
Just how close is indicated by the reference in the judgment of Richardson J in Gillies v Keogh (p 346; p 508) to the element
of estoppel of encouragement of a belief or expectation. The principles of proprietary estoppel have not proved unworkable for
uncertainty as to the basis on which encouragement of an expectation should be determined in particular cases.
The approach favoured in the High Court of Australia in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v
Baumgartner (1987) 1 Fam LR 915; 164 CLR 137, rests on unconscionable insistence upon legal rights. That necessarily requires
in application determination of when insistence on legal rights is to be seen as unconscionable. In itself the unconscionability
approach does not provide any clear answer and is equally open to the objection of vagueness for cases of de facto property
claims. The majority in Baumgartner (p 149) drawing on the judgment of Deane J (with whom Mason J agreed) in Muschinski
v Dodds applied:
“the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour
which fails when the contributions have been made in circumstances in which it is not intended that the other parties
should enjoy them.”
That principle seems necessarily to incorporate intention, or at least expectation, even though the judgment seems to perceive this
as the underlying principle for imposing a constructive trust “regardless of actual or presumed intention or agreement”. Toohey
J (p 153) compared the principles of unjust enrichment and concluded that they would inevitably bring about the same result.
In Peter v Beblow, which was decided by the Supreme Court of Canada after Gillies v Keogh, the majority judgment delivered
by McLachlin J, in reviewing the three elements of unjust enrichment — an enrichment, a corresponding deprivation, and
absence of any juristic reason for the enrichment — said of the third (p 645) “in every case, the fundamental concern is the
legitimate expectation of the parties”. That too might be said therefore to be open to the same criticism as the other approaches.
The test of the reasonable expectations of the parties determined objectively captures the principal elements of the other
approaches, each of which is firmly based in principle. On analysis, the differences between them are such that they will be
material only in unusual cases. Each of the approaches has been criticised. There will be circumstances in which one may be
easier to apply or lead to a fairer result than another. The criteria for determining expectations and those for determining whether
a common intention is to be inferred (or imputed), whether there has been a representation by words or conduct giving rise to
a belief or expectation, whether to insist on legal rights to particular property is unconscionable, and whether there has been
unjust enrichment, generally will be the same. It is difficult to categorise those of any one approach as generally less vague
than the others. There have been enough cases in the various jurisdictions now to provide guidance as to the relevant factors
to be taken into account.
For my part, if I were to choose between the various approaches, I would be inclined to favour that of the Supreme Court of
Canada as expounded in Peter v Beblow. I see it as both principled and flexible. It would cover cases beyond those in which
there is a claim for relief by way of constructive trust in respect of particular property — eg where one partner has maintained
the other during a period of study. It seems better able to encompass gradual enrichment over a lengthy period of contributions
with less focus on the time of acquisition of property. It might also have application in cases where there has been enrichment
even though there was a clear understanding that a proprietary interest in particular property would not be obtained.
In appropriate cases, however, the other approaches will provide a more direct route to a proprietary interest by way of
constructive trust, and, as was said in Gillies v Keogh, they do not necessarily exclude a claim for monetary relief or in respect
of property acquired before the commencement of the relationship.
However, it is not necessary to choose between the various approaches. To adopt one as providing a workable means of dealing
with the increasing number of cases in this area is not to reject the others. In any case it will be open to a claimant to formulate
a case on any of the bases so far employed. They will include claims based on contract, express, implied, or resulting trusts,
common intention, unconscionability, estoppel, and unjust enrichment. It will, however, be quite unnecessary to plead all of
them in all cases.
The decision in the present case equally could have been reached on the basis of estoppel, unjust enrichment, inferred common
intention, or unconscionability.
In essence, Mr Gazley's argument was for a return to a position in which no person could be deprived of legal title to property
upon a claim by a former partner except by contract, express, implied, or resulting trust, or (perhaps) proprietary estoppel. It is
because such a position gave rise to injustice that the Courts in various jurisdictions have developed the law so as to provide
remedies for parties disadvantaged on the termination of de facto unions. In my view, such developments have been appropriate
responses to social circumstances and attitudes. I have not been persuaded that we should turn back.
I would dismiss the appeal and allow the cross-appeal on the terms proposed by Tipping J.
McKAY J:
I have had the advantage of reading in draft the judgment of Tipping J. I find myself in complete agreement with his reasoning,
and I agree with the orders which he proposes.
Mr Gazley asked that this Court give a judgment based on the evidence and on the principles of Gillies v Keogh [1989] 2 NZLR
327; (1989) 5 FRNZ 490. Those principles and the basis from which they derive have been set out in the judgment of Tipping
J. The claimant must show a direct or indirect contribution to the property in question, an expectation of an interest, and that the
circumstances are such that it is reasonable for the claimant to have an expectation of an interest and for the respondent to expect
there to be such an interest. The test of reasonableness relates to the expectation of an interest in the property, not to the extent of
the particular interest claimed. In this case, Ms Rose said that she expected not only a half share in the home and chattels, but also
a cash sum of $70,000 in recognition of her contribution to Mr Lankow's business. Whether or not those particular expectations
were reasonable, it is sufficient that it was reasonable for her to have an expectation of some interest in the property in question.
The quantification of the appropriate interest is for the Court, and is made on the basis of the respective contributions.
Mr Gazley relied heavily on Ms Rose's acknowledgement in cross-examination that her motive in contributing as she did was
to help Mr Lankow and to contribute to their joint benefit, and she made this effort voluntarily. Motive and expectation are not
the same thing. Nor does a voluntary effort exclude the expectation of an interest. Ms Rose made her contribution to enhance
their joint fortunes, and she did work for his business to help keep the company afloat. These facts are in no way inconsistent
with her having a reasonable expectation that she would have some interest in the property accumulated during the period of
their relationship. It was not necessary for her to prove an express bargain by which he agreed she should have an interest. It
was sufficient that the parties were living in a relationship of mutual dependence and mutual assistance in which she made the
contribution which she did, and he accepted it, and nothing was said to exclude the obvious inference.
Mr Gazley relied on the Judge's findings that “it would have been impossible for them both to have had the quality of life
and achieve the financial success and stability without the wholehearted efforts of both”, and that until Ms Rose learned of Mr
Lankow's attachment to another woman at the end of 1989 or early in 1990 “the parties treated each other with generosity”. Mr
Gazley suggested that she had received the value of her contributions in the lifestyle she had enjoyed. There may well be de
facto relationships where such a proposition could be advanced, but this is not such a case. The parties had lived on her income
for the first year or so of the relationship. Her earnings in this period and subsequently, and her other efforts including her unpaid
work for Mr Lankow's company, did more than contribute to their quality of life. They contributed also to the rebuilding of
the business from its somewhat parlous condition when the relationship commenced, and to the building up of the substantial
assets which stood in Mr Lankow's name at the end of the 10 year period.
The Matrimonial Property Act 1976 has no application to de facto relationships. It is, however, part of the background of modern
law and modern social attitudes by which people are influenced. The fact that spouses are entitled generally to share equally in
the matrimonial home and family chattels, and in other property accumulated during the marriage, inevitably has an influence
on the expectations which the parties to a de facto relationship may have. It also has an influence on society's attitude to what is
reasonable in a de facto situation. Such attitudes reinforce the credibility of Ms Rose's statement as to her belief, and they affect
what it would be reasonable for the parties to expect in a particular situation. I do not think the Judge meant any more than
this when he said that the Act, by emphasising equality of interest and title in the matrimonial home and chattels, “underlies
and reinforces any reasonable expectation of parties in de facto relationships of substantial duration and anticipated indefinite
duration such as was this one, again viewed objectively in 1985”.
The Judge, who had the advantage of hearing and seeing the witnesses, was not impressed with the evidence of Mr Lankow. He
preferred and accepted the evidence of Ms Rose and her witnesses where there was any variance. He said there was no doubt Mr
Lankow had been able to turn the company round so that it recovered and prospered, and Mr Lankow was able to sell his two-
thirds interest to the other shareholder for a substantial sum. That recovery was in the period during which Ms Rose claimed
that by her work and efforts she had relieved the financial pressures on Mr Lankow both professionally and domestically, and
thus enabled him to devote his efforts to achieving new prosperity. There was evidence that Mr Lankow had acknowledged
that he would not be where he was but for her help, and that they had lived on her wages during the first year or so of the
relationship. He told others that he had made a will in her favour, and generally conveyed what was no doubt his intention at
the time that the relationship was to be an enduring one.
In this situation it would have been surprising indeed if Ms Rose had not had the expectation of an interest in the property
accumulated in his name, with the assistance of her efforts. Her claim that she did have such an expectation is entirely credible,
and entirely reasonable. Mr Lankow should reasonably have expected that she would have such an interest. The Judge was
accordingly correct in finding a constructive trust established, entitling her to a half share in the home and in the shared chattels.
I agree with Tipping J that these findings should be translated into more precise orders by this Court, in order to achieve finality,
and I agree with the orders which he proposes.
TIPPING J
Introduction
Terence Geoffrey Lankow appeals from the judgment of Ellis J which awarded Suzanne Margaret Rose a half share in
the property at 8 Taieri Cres, Lower Hutt. The parties lived together in a de facto relationship for 10 years. When the
relationship came to an end Ms Rose, on various causes of action, claimed a share not only in the property mentioned,
which had been their home, but also in other assets owned by Mr Lankow. The Judge declined to award her any
interest in the other assets but decided that she was entitled to a half share in the former home.
Mr Lankow contends that Ms Rose was not entitled to an interest in any of his property. Ms Rose filed a precautionary
cross-appeal saying that if this Court reduces or eliminates the interest which the Judge awarded her in 8 Taieri Cres,
she should have an interest in some or all of Mr Lankow's other property. She also raised several other points involving
valuation, chattels, and costs. There was no alternative submission on behalf of Mr Lankow that if Ms Rose was
entitled to an interest in 8 Taieri Cres it should have been assessed at less than half. The case raises questions about
the basis upon which interests in property should be determined when a de facto relationship ends, and how such
interests should be assessed.
Background in summary
The relationship of the parties commenced in 1980. They lived together as a man and wife from February of that year
until February 1990. They had both been married and ther previous unions had only recently come to an end. When
they started living together Ms Rose was 26 and Mr Lankow was 44. He owned two flats at 6 Taieri Cres. They made
their first home in one of these flats, the other being let.
In 1980 Mr Lankow's assets comprised the two flats, a vacant adjoining section at 8 Taieri Cres, two vehicles, some
furniture, and his shares in a company called Concrete Placements Ltd. His indebtedness almost equated the value
of his assets. He therefore had no net wealth at the start of their relationship. Ms Rose had cash savings of a little
over $2,000 plus a modest car and miscellaneous items of furniture and personal effects. She worked throughout their
relationship as a secretary/legal executive for a firm of solicitors in Lower Hutt who also acted for Mr Lankow and
his company. Indeed it was through one of the partners in the firm that they met.
She produced detailed evidence of her income and expenditure during their time together. This material had been
extracted from her bank statements and cheque butts and other sources. In stark contrast, Mr Lankow produced
virtually no documentary evidence of his financial affairs. He chose to keep this information from the Court and to
require the Court to act only on what Ms Rose could produce, but he must live with the legitimate consequences of
his stance. The Judge was entitled to draw reasonable inferences from the evidence which was produced.
In 1980 the company in which Mr Lankow had a two-thirds shareholding was in a poor financial state. Ms Rose
satisfied Ellis J that she had done a lot of unremunerated work for the company's benefit, and had played a significant
part administratively in improving the company's fortunes. Mr Lankow, in this and other areas of the case, attempted
to show that Ms Rose had exaggerated what she had done and its significance. The Judge preferred the evidence of
Ms Rose on all matters of difference and, in my judgment, he was fully entitled to do so. I say that having considered
counsels' submissions and having perused the transcript of evidence and all the passages to which we were referred. In
addition to helping in the company's affairs in the ways described by Ellis J, Ms Rose assisted with the administration
of the tenancies of the flats, initially the front flat and then both.
In 1985 the parties built a house on the section at 8 Taieri Cres. This house became their home. It cost about $150,000.
Mr Lankow provided the section. Ms Rose contributed in a direct financial way to the project. She paid subcontractors
$7,000 from her savings and she was able to identify payments of a further $22,000 or thereabouts for furnishings
and other contents. The evidence did not establish with any precision where the rest of the money came from. That
lack of precision derived substantially from Mr Lankow's unwillingness or inability to produce records. The Judge
concluded that a large part of the total sum required was generated from the company and perhaps the rent on the
front flat. It appears the rent had been used to service the outgoings on the flats. The degree of surplus was not clear.
Unclear also was the amount of Mr Lankow's regular drawings from the company and what he did with that money.
In the first year or so of the relationship it seems that the parties lived substantially on Ms Rose's income. Thereafter,
all her surplus income was used for family purposes. Mr Lankow said he made weekly drawings from the company of
$175. It was not clear whether he was drawing that amount from the start. The weekly amount increased subsequently
but when and to what figure was not apparent. In any event, the use by the household of Ms Rose's income, above what
she required for her immediate personal needs, clearly freed Mr Lankow to accumulate money through the company
and the flat. He may well have been able to accumulate money without Ms Rose's assistance but it is a reasonable
inference that he was able to accumulate distinctly more with her assistance.
It is also to be noted that early in their relationship Ms Rose gave Mr Lankow $3,500 to help him effect a favourable
matrimonial property settlement with his wife. When Ms Rose's matrimonial property settlement was received from
her husband she applied everything to their joint benefit. Mr Lankow's divorce became final in 1981 and hers in 1983.
There were never any plans for marriage. Ms Rose believed that marriage may well have occurred if they had had
children; but Mr Lankow asserted that he never had any wish for either children or marriage. In 1988 Mr Lankow
disposed of his shareholding in the company to the other shareholder. Again the precise details were not volunteered
by Mr Lankow, they being unknown to Ms Rose. It is sufficient to say that Mr Lankow received a net figure, after
repaying indebtedness, of at least $180,000.
Throughout their relationship the parties enjoyed a good lifestyle and standard of living. They had a number of
overseas holidays together. In both 1981 and 1987 they made wills leaving all their property to each other, save,
in Mr Lankow's case, for small legacies to his children. Ms Rose was able to produce witnesses who spoke of her
dedication to the relationship and of Mr Lankow's comments in happier times that he could not have achieved what
he had without her support and assistance.
The Judge summed up this aspect by saying it would have been impossible for them both to have had the quality of
life and achieved the financial success and stability which they had “without the wholehearted efforts of them both”.
In other words the Judge was saying, and the evidence fully supports it, that they both worked hard in what was seen
at the time as a marriage partnership in all but legal form. In their several ways they each contributed fully to what
they achieved together.
At the end of the relationship Ms Rose took with her an inexpensive car, some chattels, and approximately $5,000 in
cash. This was money which she had saved for another overseas trip. In the event, it was not she who accompanied Mr
Lankow. By contrast, Mr Lankow had unencumbered flats worth $185,000, the house at 8 Taieri Cres worth $260,000,
cash of approximately $180,000, a car, and some chattels. In summary, her assets were worth about $30,000 and his
about $625,000. The Judge's conclusions on this aspect were not effectively challenged.
It can fairly be said that the parties derived broadly equal benefits from the money consumed during the relationship
and which is not represented in any asset. Of the money which was earned and was represented in assets at the end
of the relationship, Mr Lankow owned by far the greater share; a statement which is still valid, albeit not to the same
extent, after the Judge's order is taken into account.
Legal questions
At the end of de facto relationships disputes over property can arise, as they have in this case. In the absence of statutory
intervention, the Courts have been required to devise solutions by developing existing principles. The challenge has
been to combine flexibility with principle and reasonable certainty. The equitable concept of constructive trust has
been at the heart of the developments in this area.
The Canadian Courts have used notions of unjust enrichment to underpin the imposition of a constructive trust: see
Pettkus v Becker (1981) 117 DLR (3d) 257, Sorachan v Sorachan (1986) 29 DLR (4th) 1, and Peter v Beblow [1993]
1 SCR 980; (1993) 101 DLR (4th) 621. In Australia, the underpinning has come from notions of unconscionable
conduct: see Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 1 Fam LR 915; 164
CLR 137. In New Zealand, we have founded the imposition of a constructive trust mainly on the notion of reasonable
expectations: see Gillies v Keogh [1989] 2 NZLR 327; (1989) 5 FRNZ 490 (CA) and Phillips v Phillips [1993] 3
NZLR 159; (1993) 10 FRNZ 110; [1993] NZFLR 321 (CA).
All these approaches are in a sense interrelated. This is shown by the fact that in Canada the concept of reasonable
expectations is a necessary ingredient of unjust enrichment. In Australia, the unjustness of the enrichment has been
seen as leading to the proposition that to deny an interest to the claimant would amount to unconscionable conduct
on the part of the party attempting to do so. The various roads which have been identified have different signposts
but, as I ventured to suggest in Partridge v Moller (1990) 6 FRNZ 147, 153, they all lead to Rome.
English jurisprudence appears still to be concerned with notions of express or imputed intention or understanding: see
Lloyds Bank plc v Rossett [1991] 1 AC 107; [1990] 1 All ER 1111 (HL), Grant v Edwards [1986] Ch 638; 2 All ER
426, and Hammond v Mitchell [1992] 2 All ER 109 per Waite J at pp 118, 119. That approach, essentially contractual
or quasi-contractual, is in my view unnecessarily artificial. It is better to acknowledge openly that a constructive trust
is being imposed in equity without the consent, express, implied, or imputed, of the constructive trustee. The trust is
imposed because equity will not allow the legal owner to deny the claimant a beneficial interest.
Mr Gazley, in his closing submissions, accepted that Gillies v Keogh represented the law in New Zealand. His plea
was that this Court should apply the law, as so stated, to the facts according to his client's perception of them. I do not
propose at this point to make detailed citations from Gillies v Keogh or Phillips v Phillips. I will in a moment state
what I regard as the essential conclusions to be derived from those two authorities.
In the usual case in this field the legal title belongs to one only of the former de facto partners. That partner, the
defendant, seeks to retain not only the legal title but the whole beneficial interest. The other partner, the claimant,
seeks a beneficial interest in the property in recognition of what she has done during the relationship. Putting it another
way, the claimant seeks a beneficial interest in return for her contributions in and to the former relationship.
However, in my judgment it is not enough for the claimant to show a contribution to the relationship. In order to
be awarded a beneficial interest in property owned in law by the defendant, the claimant must first show some
contribution, direct or indirect, to the property at issue. A contribution to the relationship will not qualify unless it is
also, as will often be the case, a contribution to that property. This is not as restrictive an approach as it may appear.
I will return to the ambit of qualifying contributions a little later.
The second thing the claimant must establish is that she expected an interest in the property. If, for any reason, she
had no such expectation, a constructive trust cannot be imposed in her favour. Thirdly, the claimant must show that
her expectation of an interest was reasonable in the circumstances. The fourth step is for the claimant to show that
the defendant should reasonably expect to yield her an interest. The fact that the defendant is not willing to yield an
interest or did not expect to have to do so is no bar to her claim if he should reasonably expect to do so. In that respect
the Court stands as his conscience.
The imposition of a constructive trust in such circumstances can be seen as a development of the concepts of resulting
trust and proprietary estoppel. A resulting trust arises when property is owned at law by one person and another person
has provided all or some of the consideration for its acquisition. Traditionally a resulting trust did not arise when one
person improved the property of another: see the speech of Lord Reid in Pettit v Pettit [1970] AC 777, 794B. The
reason why the person with the legal title is required to yield a beneficial interest to the claimant is that equity will
not allow the owner of the legal estate to deny the claimant a beneficial interest. In equity, the conscience of the legal
owner is required to acknowledge the other party's beneficial interest in the property. A refusal to do so is regarded
as unconscionable conduct on the part of the legal owner justifying the intervention of equity.
This, in my judgment, is the most convincing rationale for the intervention of equity in this field. Equity cannot alter
or interfere with the defendant's legal estate. However, on the premise that the defendant is acting unconscionably by
denying the claimant a beneficial interest, equity treats the defendant as a constructive trustee of the legal estate to
the extent of the claimant's assessed interest. By this means equity requires the defendant to account to the claimant
for her interest.
The constructive trust so imposed can be executed, ie put into practical effect, by such means as the justice of the
case requires. The two most likely means are either a vesting order or an order for the payment to the claimant of the
assessed value of her beneficial interest. I do not myself regard it as necessary to classify such a payment as equitable
damages or equitable compensation. I regard the payment as the means whereby the constructive trustee is required
to implement the trust. The payment satisfies the trust.
Before discussing further the question of contributions, I summarise what the de facto claimant must show:
(1) Contributions, direct or indirect, to the property in question;

(2) The expectation of an interest therein;
(3) That such expectation is a reasonable one;
(4) That the defendant should reasonably expect to yield the claimant an interest.
If the claimant can demonstrate each of these four points, equity will regard as unconscionable the defendant's denial
of the claimant's interest, and will impose a constructive trust accordingly.
Contributions
Clearly a direct financial contribution to the acquisition of property will qualify. This appeared to be all that Mr Gazley
would allow. He submitted that indirect contributions should not qualify. I cannot see why not. There may be greater
difficulties of proof and assessment when the contributions are indirect but, once established, they are as real as direct
contributions. At the simplest level one partner might have paid for all the groceries with the other servicing and
reducing the mortgage. That is an indirect contribution by the former, no less real than if the roles were reversed.
I would allow as a contribution any payment or service by the claimant which either:
(1) Of itself assists in the acquisition, improvement or maintenance of the property or its value; or
(2) By its provision helps the other party acquire, improve, or maintain the property or its value.
To make a rigid cut-off at direct contributions, as Mr Gazley suggested, is to ignore the realities of life and to put an
unreal premium on the way de facto partners allocate responsibilities, financial and otherwise, in their relationship.
On this basis it can be seen that contributions in the home may qualify as contributions to the home. Further than that
it is not necessary to go in this case, except to say that, although they were not put at the forefront of her case, Ms
Rose did make contributions in the home which deserved consideration as contributions to it.
Quantification
There seems to be a view in some quarters that once qualifying contributions have been shown which justify some
interest, the amount of that interest is at large and is to be determined according to broad notions of justice with a
greater or lesser degree of analogy with the matrimonial property regime which applies to legal marriages. Any such
approach is, in my judgment, erroneous. It ignores the fundamental difference between a legal marriage and a de
facto marriage. Broadly speaking, in the case of a legal marriage the Matrimonial Property Act 1976 requires equal
division unless the spouse resisting equality can show grounds for a different division. Under the Act, the status of
wife or husband gives each spouse a presumptive half share.
In the case of a de facto union, the claimant does not start from a presumptive half share but rather from nothing.
A de facto claimant must demonstrate first a case for an interest, and then what that interest should be. The interest
must broadly reflect the contributions. Arithmetical precision will generally be unattainable and is in any event
not necessary. The Court must, however, do its best to reflect in the assessed shares the value of the claimant's
contributions. That value will represent, if uncompensated, the amount of the unjust enrichment accruing to the
defendant, which in turn is the amount of the claimant's sacrifice.
The contributions must be judged from a proprietary point of view. By contrast with the Matrimonial Property Act
regime, the focus in de facto cases is on contributions to property not contributions to the partnership: of course
contributions to the partnership will often also be contributions to property. In the end the Court must assess as closely
as reasonably possible what weight the claimant's contributions have had against the contributions of the defendant
in the acquisition, improvement, or maintenance of the property or its value.
Grounds of appeal
Mr Gazley advanced five grounds of appeal. I shall consider each in turn. There was a degree of overlap and repetition
in the submissions in support of each ground which I shall endeavour to eliminate to the extent possible while doing
justice to the points raised.
Ground 1
As presented this read: “On the Gillies v Keogh … ‘element of certainty’, [Ms Rose] understood that she was not
to receive an interest or monetary right by way of constructive trust.” This submission focused upon the judgment
of Cooke P in Gillies v Keogh at p 330; p 492. His Honour described the following proposition as one element of
certainty in the evolution of the New Zealand law of constructive trusts:
“Put shortly it is that an interest or monetary right by way of constructive trust or otherwise cannot arise if a
reasonable person in the claimant's position would have understood that he or she was not to receive one.”
Mr Gazley attempted to draw further support from the judgment of Richardson J but I do not think it necessary to go
into that area. If valid, the point must succeed however expressed.
The proposition is inherent in step 2 of my earlier analysis. The claimant must show she expected an interest in the
property in question. Obviously if she did not in fact expect an interest she will fall at this hurdle. At this stage of
his submissions, and indeed in many other places, Mr Gazley placed great weight on an answer given by Ms Rose
in cross-examination.
In her brief of evidence, Ms Rose had said that all her efforts on behalf of Mr Lankow and the company had been done
by her with the idea of saving both the company and him money. She confirmed that under cross-examination. She
was then asked: “then they were not done with the idea of gaining yourself an interest in his property?” To that she
answered: “Not at all.” In re-examination Ms Rose said that she did certain work for Mr Lankow and the company
to save him money and to keep the company afloat. Mr Gazley argued that this evidence demonstrated that Ms Rose
had no expectation of an interest in any of Mr Lankow's property.
There is a confusion of concepts here. Ms Rose was saying what her motivation was. It does not follow from her stated
motivation that she had no expectation of an interest. In many other parts of her evidence Ms Rose stated quite clearly
and directly that she did expect an interest and why that was. I am wholly unable to accept Mr Gazley's submission that
she knew and accepted that her services, personal or financial, were not to give her any lifetime interest or monetary
right in Mr Lankow's property.
The reference which I have just made to a lifetime interest leads on to Mr Gazley's next submission, which was based
on the terms of the wills which the parties had made. Mr Lankow made two wills during the relationship leaving
practically all his property to Ms Rose, and Ms Rose made two similar wills leaving everything to him. Mr Gazley
argued that this state of affairs represented an acknowledgement by Ms Rose that she had no interest in his property
other than upon Mr Lankow's death.
Various submissions concerning the way in which the wills were or might otherwise have been drawn were made. I
find myself unpersuaded by this line of argument. If anything the fact that the parties made mutual wills gives strength
to Ms Rose's evidence that she thought she was acquiring an interest during his lifetime. It does so because it supports
the acknowledgement implicit in the wills of a moral obligation each to the other. The wills made by Mr Lankow can
be viewed as the testamentary fulfilment of an existing obligation. The inference which Mr Gazley asked the Court
to draw from the wills is, in my judgment, unnatural and unconvincing.
I have borne in mind all the other matters which Mr Gazley urged in support of this ground of appeal but am unable to
accept the proposition that Ms Rose understood and acknowledged she was not to receive an interest or monetary right.
Ground 2
This ground was framed as follows: “The totality of Ellis J's award to [Ms Rose] was an unallowable Property Act
1976‘analogy’ of equality of interest and title in the matrimonial home and chattels.” In his judgment the Judge said:
“I think too, the analogy within the Matrimonial Property Act 1976 regime emphasising equality of interest
and title in the matrimonial home and chattels. [sic] This underlies and reinforces any reasonable expectation
of parties in de facto relationships of substantial duration and anticipated indefinite duration such as this
one, again viewed objectively, in 1985. Nor do I think does anything that happened between 1985 and 1990
displace this reasonable expectation.”
With respect, the syntax of this passage is not easy. I think Ellis J was here picking up the observation of Cooke P in
Gillies v Keogh at p 334; p 496 when he referred to the contracting-out provisions of the Matrimonial Property Act as
providing an analogy especially important in the circumstances of Gillies v Keogh. This was, of course, a reference
to evidence in that case demonstrating an acknowledgement by the claimant that no interest should exist. If Ellis J
had automatically or mechanically awarded Ms Rose 50 percent by analogy with the Matrimonial Property Act then
I would have regarded him as having erred in principle. I do not, however, read his judgment in that sense.
What the Judge was doing was to treat the analogy as relevant to Ms Rose's expectations. Her belief that as a de
facto spouse she was entitled to a half share does not, of course, of itself give her any entitlement to a half share.
Her belief is, however, relevant at step 2 of my earlier analysis in that it is evidence supporting the fact that she held
an expectation of an interest.
Any analogy to be derived from the Matrimonial Property Act 1976 is more problematical when it comes to step 3 of
the analysis or to the assessment of the amount of the interest. In those areas care must be taken not to give de facto
partners rights enjoyed by legally married partners simply by analogy. The nature and quality of the contributions
may, of course, lead to the same result without reference to any such analogy.
Mr Gazley submitted that the Judge had adopted a “self serving feminist assumption” that at the end of any de facto
association there was to be automatic equal division of the home and chattels. It was suggested that the Judge had
simply adopted such an approach on the say-so of Ms Rose. That, in my judgment, is an untenable proposition for
which there is no foundation on any reading of the judgment.
Ground 3
This ground was expressed in the following way: “based on the criteria of Cooke P in Gillies v Keogh no award
could be made to [Ms Rose].” What Mr Gazley meant by this submission, as I understood it, was that Ms Rose had
no reasonable expectation of any interest in Mr Lankow's property. Mr Gazley said he confessed to ignorance of
“reasonable expectations” being at any time a principle of equity. He suggested that the concept enjoyed the same
lack of substance as proved to be the case with Charles Dickens' Great Expectations. The only relevance of the work
of that great author to this case is that it was written at a time when Mr Gazley's reactionary submissions may have
found greater favour.
In elaborating his proposition Mr Gazley returned to the subject of the wills and suggested they showed that Ms Rose
could not reasonably have expected a lifetime interest, and further that it was not reasonable to expect Mr Lankow to
acknowledge one. Counsel revisited the passage in Ms Rose's cross-examination referred to earlier. He rightly picked
up a reference in the judgment of Cooke P in Gillies v Keogh at p 335; p 497 to the law of constructive trusts being
concerned with contributions to assets rather than to relationships. I have already addressed that topic.
It was submitted that Ms Rose's expectations during the relationship were “no more than the lifestyle they gave her”.
If this submission was meant to suggest that she received out of the relationship by lifestyle the full value of what she
put in, I regret I am unable to agree. Mr Gazley next made the point that half the span of the relationship had elapsed
before the home was built on the section at 8 Taieri Cres. If anything, this point assists Ms Rose. It is not the case that
she came to the relationship after Mr Lankow had already built the property which became their home. If that had
been so she could not have contributed to its acquisition. The very fact that the parties had been living together and
pooling their resources for 5 years before the house was built lends credence to Ms Rose's contention that her income
and the work she did contributed indirectly to the funds which were available for the construction project.
Mr Gazley came next to the suggestion that the cash which Ms Rose directly contributed could and should be regarded
as having been used to acquire chattels rather than realty. He relied on a question put to Ms Rose by the Judge: “Q. Mr
Gazley is suggesting all your money went into the chattels side of things not the realty side of things what do you say
to that yes or no? A. Yes.” That answer, at face value, obviously provides some support for Mr Gazley's submission.
The answer, however, must be viewed in the light of all the evidence. It cannot literally be true because Ms Rose
clearly paid some $7,000 on account of subcontractors whose work must have involved realty rather than chattels.
In any event, in this sort of case the often difficult distinction between chattels and fixtures and realty in the sense of
bricks and mortar is technical and unconvincing. If, analytically, some of Ms Rose's money did go to purchase items
which, strictly, should be regarded as chattels, the likelihood is that her expenditure allowed Mr Lankow's money to
be used for the acquisition of things which became realty. Mr Lankow can hardly run a subtle argument such as this
while at the same time declining to produce any records pertaining to the building contract and associated expenditure.
Mr Gazley went so far as to submit, in reliance on Cooke P's reference to sacrifice in Gillies v Keogh, that Ms Rose
had not demonstrated any sacrifice or detriment. The simple answer to this proposition, in my view, is that it must be
a reasonable inference that her financial position at the end of the relationship would have been much better if she had
simply kept her surplus moneys separate and used them for the acquisition of assets in her name. In addition, there
was obvious sacrifice on her part by doing a lot of work for Mr Lankow and his company on an unremunerated basis.
The proposition that she was paid by her employers, the Lower Hutt solicitors, for doing this work is unconvincing
in the light of the fact that the evidence clearly shows that most, if not all, of the work in question was done out of
ordinary office hours and in her own time.
Ground 4
This ground was expressed as: “based on the criteria of Richardson J in Gillies v Keogh no award could be made
to the Respondent.” The arguments under this head represented a rehearsal of the earlier arguments but from the
perspective of Richardson J's analysis in Gillies v Keogh. That analysis was based on the concept of estoppel. I have
not adopted that analysis in this judgment and in any event the points made are effectively dealt with and answered in
what I have written in relation to the third ground of appeal. I could not detect any factually new point which needs
separate consideration.
Ground 5
This ground was framed in the following way: “contributions relied on by Ellis J did not, and do not, qualify as
such: and his Honour failed to consider grounds advanced for their disqualification”. In developing this argument,
Mr Gazley founded on a passage in the judgment of Ellis J in which he held that Ms Rose had put her all into the
relationship and very directly into the maintenance and increase in value and productivity of Mr Lankow's assets, in
particular the business, and perhaps less significantly the flats. The Judge held that no one could doubt her efforts
were directed to improving their financial position and reducing his and his company's debts and indebtedness. He
said that the betterment was obvious over the period of the relationship to 1988 when the business was sold and Mr
Lankow retired. His Honour indicated that this in no way belittled Mr Lankow's own efforts and ability. He continued:
“I am satisfied that as at the time the house was being built and furnished in 1985, the parties were building
‘their home’ and any reasonable detached assessment would have immediately recognised that. The cash
contribution by Ms Rose of $22,000.00 (or $29,000.00) roughly equates with the provision of the section by
Mr Lankow. The balance is effort and cash from the company business or the flat. The sum of $150,000.00
was estimated as the total and in my view Ms Rose would be justified in thinking she was responsible for
producing a substantial share of what must have been surplus funds, bearing in mind she had used all her
income for joint purposes, by which I do not mean she did not spend on herself, nor that Mr Lankow did
not spend on himself.”
The reference in the passage above to $150,000 was, of course, a reference to the total cost of the building project. It
is a figure not far removed from the total of Ms Rose's after tax income during the period of the relationship, although
that is simply a coincidence.
Mr Gazley subjected the Judge's conclusions to a number of criticisms, both substantive and semantic. He revisited
the proposition that Ms Rose's financial contributions to the house project should be viewed as having been solely
to chattels. He made the bold submission that the reality was that it was not “our” or “their” house. He asserted on
behalf of Mr Lankow that the house was none other than his and his alone. That may be what Mr Lankow would like
to think, but such a conclusion cannot possibly stand with the facts viewed against the correct legal principles.
As part of his submissions on this branch of the case, Mr Gazley invited the Court to take the view that a constructive
trust should arise only on contributions to property that are established by evidence as in fact made (directly or
indirectly) to that property. It is to be noted here that Mr Gazley appeared to be resiling from his proposition that
indirect contributions do not qualify. The submission continued that by reason of Ms Rose's inability to establish her
contributions as being to assets the appeal should be allowed. It is my view that Ellis J was perfectly correct in coming
to the conclusion that Ms Rose had established that her contributions were both directly and indirectly to the asset
represented by the home at 8 Taieri Cres.
Mr Gazley's next point was that the work done by Ms Rose in relation to Concrete Placements Ltd had been done for
the company and not for Mr Lankow personally. In a strict sense, that proposition is correct. It is, however, an unreal
one in this field. By doing the work for the company on an unremunerated basis Ms Rose was undoubtedly increasing
the shareholders' funds. Mr Lankow was entitled to two-thirds of those funds. He received the direct benefit of the
shareholders' funds when he sold his shares. Admittedly the money produced by the sale of the shares did not go into
the building project because the house had at that stage been built for 3 years.
However, the work which Ms Rose did, as well as improving shareholders' funds, must obviously have assisted the
company's cash flow, and it was on this basis, so one can infer, that surplus funds were able to be built up in the
company so as to assist with building of the house. It is worth stating again that the Court was left to draw inferences
from the information which Ms Rose was able to produce to the Court. If Mr Lankow wanted the Court to be put in
possession of direct evidence he could have produced the appropriate records himself.
The next point was an allied one. It was suggested that the work done for Mr Lankow and the company should not
be regarded as having been done by Ms Rose but rather by the firm of solicitors whose employee she was. The work
was not billed by the solicitors for the simple and obvious reason that it was done by Ms Rose in her own time. The
partner in the firm who gave evidence understandably said that he would have been personally embarrassed to have
charged for the work because of the special position of Mr Lankow with the firm via Ms Rose. The idea that Ms Rose
should not get any personal credit for the work which she did in these circumstances has neither justice nor logic
to commend it. The same comment can be made about the related proposition that Ms Rose was really being paid a
second time for what she had done because she had already been paid her wages by the firm of solicitors.
Both on this branch of the case and elsewhere, Mr Gazley submitted that Ms Rose should be regarded as a volunteer
and that equity does not assist volunteers. A volunteer for the purposes of the equitable rule is a person in whose
favour an imperfect, ie uncompleted, gift has been made. Equity will not compel the perfection or completion of the
gift. To classify Ms Rose in this case as a donee under an imperfect gift is untenable. Mr Gazley's submission seeks
to use a doctrine of equity out of context and in an unreal manner.
As a concluding summary on this branch of the case, Mr Gazley submitted that Ms Rose had received fair
compensation for what she had done because she had received board and lodging from Mr Lankow, the advantages
of a home, and a more than generous lifestyle. No reasonable person could view the situation during or at the end of
their relationship in that light, and I find the submission quite unconvincing.
This case
I propose now briefly to apply what I regard as the correct legal criteria to the facts of this case. This exercise is rather
more analytical than the approach taken by Ellis J, but in substance covers the same ground. First, I am satisfied that
Ms Rose made contributions, direct and indirect, to the property at 8 Taieri Cres and its value. Secondly, I am satisfied
that Ms Rose expected an interest in that property in return for her contributions. It would have been extraordinary
on the evidence if she had not had such an expectation.
Thirdly, I am satisfied that her expectation of an interest was reasonable; it was an expectation which any reasonable
person in her circumstances would have held. Fourthly, I am satisfied that any reasonable person in Mr Lankow's
circumstances ought to have expected to yield Ms Rose an interest. His conscience should lead him to that conclusion.
His unwillingness to acknowledge or allow her an interest represents unconscionable conduct on his part justifying
the intervention of equity and the imposition of a constructive trust.
Quantum
I noted earlier that there was no submission from Mr Lankow that if Ms Rose was entitled to an interest, the half share
awarded was too much. Nevertheless, I will address the point. The first thing to say is that this Court will not lightly
interfere with a discretionary assessment of this kind if proper principles have been applied. I do not consider Ellis
J erred in principle. The only possible argument on that score relates to the suggested analogy with the Matrimonial
Property Act 1976. I have already stated my conclusion on that aspect.
The Judge was left to draw conclusions and inferences from the evidence, both generally and on the financial front.
Ms Rose produced all the evidence she could. It was a matter of assessing the comparative weight of all relevant
contributions, both from Ms Rose and from Mr Lankow. She asserted a broadly equal contribution and backed up her
assertion with all the evidence that was available to her. Mr Lankow chose to produce nothing more. In my judgment,
the conclusion of equality as regards the house and chattels was fully open to the Judge on the evidence before him.
He declined to award Ms Rose any interest in the other assets, taking the view, no doubt, that the weight of her
contributions as a whole could be traced to the former home and were best reflected by an award in respect thereof.
The Judge expressly recognised Mr Lankow's contribution of the section, but regarded it as matched by certain direct
monetary contributions made by Ms Rose which he identified. From there on I am quite unable to say that the Judge's
conclusion of equality was, on the material before me, plainly wrong. Only if that could be said should this Court
intervene. I am also bound to say that if I had been making the initial assessment, I think it probable that I too would
have come to the same conclusion for equality in respect of the house as did the Judge.
Chattels
The Judge dealt with this subject by ruling that each party was entitled to have those chattels which each brought
to the relationship in 1980, if they still existed and could be identified. I understand neither side complains about
that, nor about the Judge's direction that each party was entitled to his or her own chattels of personal use including
sporting equipment. The Judge then directed that certain other chattels on two lists, one list representing chattels in
the possession of Ms Rose and the other chattels in the possession of Mr Lankow, were to be equally divided. He
granted leave to apply if more precision was needed. I understand this has posed problems.
The simplest solution, and it is favoured at least by Ms Rose, is for the various chattels to become the property of the
party in whose possession they now are with a monetary adjustment to achieve equality. That is the approach which
I would take to this issue. The total value of all the chattels in this category is in round figures, $32,500. Those in Ms
Rose's possession are worth $2,500. Her half of the total is $16,250. By retaining those chattels in her possession she
receives value of $2,500. Therefore $13,750 is the sum which Mr Lankow must pay her on the basis that he keeps
as his those chattels in his possession.
Implementation of division
The Judge did not make any formal orders by way of implementation. No doubt he hoped that the parties would be
able to cooperate at least to this extent. He declared that Ms Rose was entitled to a half share in 8 Taieri Cres. Its value
in February 1990 was $260,000. The Judge inadvertently included a later figure in the body of his judgment. He also
said that Ms Rose was entitled to interest, which he was inclined to fix at 10 percent “in terms of the Judicature Act”.
The Judicature Act rate is actually 11 percent, but for present purposes I consider that 10 percent is appropriate.
In view of the difficulties which have arisen between the parties, and to avoid further cost and delay, I think it best if
this Court makes precise orders as suggested by Ms Rose's cross-appeal. There was not and could not be any serious
argument about the mechanics.
Formal orders
I would therefore dismiss Mr Lankow's appeal and allow Ms Rose's cross-appeal, but only on those points relating
to the actual implementation of the division. On that basis I would vacate paras 1 and 2 of the judgment in the High
Court and direct that, in substitution, judgment be entered for Ms Rose there as follows:
(1) In full satisfaction of her claims against his property Mr Lankow is to pay Ms Rose forthwith:
(i) The sum of $130,000, being half the value of 8 Taieri Cres as at February 1990.
(ii) Interest on that sum from 1 March 1990 to the date of delivery of this judgment at 10
percent per annum.
(iii) The sum of $13,750 by way of equality in respect of chattels on the basis set out in
this judgment.
(iv) Interest on that sum from 1 March 1990 to the date of delivery of this judgment at 10
percent per annum.
(2) For costs in the High Court Mr Lankow is to pay Ms Rose the sum of $10,000 plus disbursements and
witnesses expenses to be settled by the Registrar of the High Court.
Paragraphs 3, 4, 5, and 6 of the judgment in the High Court will stand. For costs in this Court I would award Ms Rose
the sum of $7,500 plus disbursements to be settled by the Registrar of this Court.
Appeal dismissed; cross-appeal allowed on points relating to actual implementation

of property division
Reported by C M Olesen
All Citations
CA176/93, 2 December 1994, [1995] 1 NZLR 277, [1995] NZFLR 1, (1994) 12 FRNZ 682, 1994 WL 16455073
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Lankow V Rose

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Lankow V Rose

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Lankow v Rose, CA176/93, 2 December 1994 (1994)

KeyCite Yellow Flag - Negative Treatment

CA176/93, 2 December 1994

[1] Family law

For these reasons I concur in the orders to be proposed by Tipping J.

Um, do you mean the fact that I wouldn't share?

(1) Contributions, direct or indirect, to the property in question;

Appeal dismissed; cross-appeal allowed on points relating to actual implementation

End of Document © 2023 Thomson Reuters.

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