Advanced Design and Build Limited v Porter - [2021] NZHC 2889

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000823

[2021] NZHC 2889

UNDER the Land Transfer Act 2017

BETWEEN

ADVANCED DESIGN AND BUILD LIMITED

Applicant

AND

ANDREW ROBIN PORTER, MELISSA CAROL PORTER and KNOBLOCH

TRUSTEES NUMBER 8 LIMITED

Respondents

Hearing: 6 September 2021

Appearances:

L Turner for the Applicant

N G Lawrence for the Respondents

Judgment:

28 October 2021

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 28 October 2021 at 4.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Martin Fine Business Law, Hamilton Whaley Garnett, Auckland

R J Hollyman QC, Auckland

ADVANCED DESIGN AND BUILD LTD v PORTER [2021] NZHC 2889 [28 October 2021]

Introduction

[1] This is an application to sustain a caveat registered against 29 Roseneath Road, Karaka (Roseneath Road).1 The property is owned by Melissa and Andrew Porter, and Knobloch Trustees Number 8 Ltd (together, the Trust). The applicant caveator is a design and build construction company, Advanced Design and Build Ltd (ADBL).

[2] ADBL was engaged to build a residential dwelling at Roseneath Road for the Trust. Construction reached practical completion, and the Porters now live in the dwelling. However, the Trust has not paid a sum which ADBL says is owing under the building contract. ADBL has responded by lodging a caveat, claiming an interest in Roseneath Road in the following terms:2
Pursuant to an agreement to mortgage dated the 31st day of March 2017 in respect of the land contained in the above certificate of title and made between Andrew Robin Porter and Melissa Carol Porter on behalf of the registered proprietors, as mortgagor and the abovenamed caveator as mortgagee.

[3]The issues to be determined are accordingly:

(a)Does ADBL have a reasonably arguable interest in Roseneath Road to sustain a caveat? The basis for the caveat is ADBL’s claimed interest in the property pursuant to an agreement to mortgage, said to be contained within the contract between the parties. Whether the contract does in fact represent a caveatable agreement to mortgage is the crux of this application.

(b)If ADBL has a reasonably arguable interest in Roseneath Road, should the Court exercise its residual discretion to remove the caveat?

(c)If ADBL’s caveat is sustained, should this be subject to conditions?

[4] An application to sustain a caveat is determined on a summary basis in which the Court has regard to the following principles:3

1      Pursuant to s 142(3) of the Land Transfer Act 2017.
2      Caveat 11256527.1 registered on 12 October 2018.
3      Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813. See also Philpott v Noble Investments Ltd [2015] NZCA 342.

(a)The applicant caveator bears the onus of presenting a reasonably arguable case that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively.

(b)An order for a caveat’s lapse…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 2889
Decision Date: 28 October 2021

CaseChat Overview and Summary

Advanced Design and Build Limited (ADBL) has brought an application to sustain a caveat it registered against a property at 29 Roseneath Road, Karaka, owned by the Trust and the Porters. The Trust and the Porters oppose the application. The court must decide whether ADBL has a reasonably arguable interest in the property sufficient to support the caveat, and if so, whether the court should exercise its residual discretion to remove the caveat. The court must also determine if the caveat should be subject to any conditions if sustained.

The court found that ADBL has a reasonably arguable interest in the property based on an agreement to mortgage contained in the building contract between the parties. The contract provided that the Trust would grant ADBL a registrable mortgage over the property to secure payment of all monies payable under the contract. The court held that the agreement to mortgage was unconditional and arose immediately upon execution of the contract. The court rejected the Trust's submissions that the agreement was conditional or that the amount owed must be undisputed.

The court declined to exercise its residual discretion to remove the caveat, finding that there was still a practical advantage for ADBL in maintaining the caveat given the ongoing dispute over the amount owed. The court ordered that the caveat be sustained on the condition that the parties resolve the dispute by arbitration.

The final orders were that the caveat would not lapse pending further order of the court, the parties must appoint an arbitrator within 15 working days to determine the disputed issues, and ADBL's costs of the application would be paid by the Trust. The court reserved leave for ADBL to seek top-up costs if it established an entitlement to costs under the contract.

Orders