After Richard McNaughtons’ parents purchased his Masterton property, he turned around and claimed they held in trust for him profits of some $350,000 generated by its redevelopment. A convoluted legal dispute followed, hinging in part on whether Richard’s former wife would make a relationship property claim over the profits.
The High Court ruled Richard was bound by an agreement reached with his parents at a judicial settlement conference settling the dispute and he could not use arguments about the manner in which his former wife was asked for her views to derail his previously agreed settlement.
Jim and Janet McNaughton were faced with a full-court press from son Richard alleging fraud, mistake, and misrepresentation, amidst other claims, following their purchase and later sale of a property in Pownall Street, Masterton.
They thought Pownall Street was theirs, having bought out their son. He was to later claim they held the property as trustees and had to account for profits from their onwards sale.
A full court hearing was deferred, with all parties attending a judicial conference chaired by Associate judge Lester. His notes of the meeting recorded their agreement that an independent accountant determine after-tax profits accruing following sale of Pownall Street with the after-tax balance to be divided sixty per cent to Richard, forty per cent to his parents. Potential tax liability was a live issue.
Also recorded in the Judge’s notes was a proviso that this agreement was conditional on Richard’s former wife agreeing that she would not bring a relationship property claim against Jim’s and Janet’s forty per cent share of Pownall Street profits.
It was not plain sailing from there.
Richard subsequently told the appointed tax accountant to stop investigating the tax position and went back to court challenging the earlier 60:40 agreement. Richard said the agreement was cancelled.
He said the proviso requiring clearance from his former wife had not been satisfied.
Richard objected to his parents’ lawyer contacting his former wife’s lawyer, getting acknowledgement there would be no claim against Richard’s parents. Richard said it was for him to make contact and seek agreement.
Back in the High Court, Associate judge Skelton said there was no express term at the judicial conference mandating that it was for Richard personally to make the approach. It could not be implied that it was Richard’s job alone; all that was necessary was that one of the warring parties, or their lawyer, make contact and get approval.
The 60:40 agreement remained in place, requiring completion of the tax report before final distribution of Pownall Street sale proceeds.
McNaughton v. McNaughton – High Court (9.04.24)
24.086