Angurala v Fernandes
[2021] NZHC 1309
•4 June 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-525
[2021] NZHC 1309
BETWEEN KEEMATI LAL ANGURALA and MANPREET KAUR ANGURALA
ApplicantsAND
EUGENE DARRYL FERNANDES
Respondent
Hearing: 27 April 2021 Appearances:
R Parmenter for the Applicants A Kashyap for the Respondent
Judgment:
4 June 2021
JUDGMENT OF HINTON J
This judgment was delivered by me on 4 June 2021 at 11:00 am pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/Counsel:
R O Parmenter, Barrister, Auckland Graham & Co, Solicitors, Auckland
Aaron Kashyap, Barrister & Solicitor, Auckland
ANGURALA & Anor v FERNANDES [2021] NZHC 1309 [4 June 2021]
[1] The applicants Keemati and Manpreet Angurala (the Anguralas) apply under s 142 of the Land Transfer Act 2017 for an order removing a caveat lodged by the respondent, Eugene Fernandes, against a property owned by the Anguralas at 1518 Dominion Road, Mt Roskill.
Background
[2]The facts are short but unusual.
[3] By agreement dated 9 March 2021 (the first agreement) the Anguralas agreed to sell their Dominion Road property to a Mr Singh, subject to conditions, for
$1,600,000.00. The relevant conditions were that the sale was subject to Mr Singh’s satisfaction with due diligence and also obtaining finance by Friday 12 March 2021. That agreement records Harcourts as agent on the sale.
[4] At about 5:07 pm on Friday 12 March, Mr Singh’s lawyer emailed the Anguralas twice asking for an extension of time to fulfil the conditions. The Anguralas did not respond. They said on advice from their lawyers they were thinking about it.
[5] That evening Ms Rebello, a real estate agent at Barfoot and Thompson, secured an offer from Ms Fernandes of $1,535,000.00. Ms Fernandes knew that there was a prior agreement but thought based on Ms Rebello’s advice that it was not going to go ahead. At about 9:30 pm Ms Rebello visited the Anguralas. The Anguralas say that Ms Rebello told them the first agreement was at an end because the conditions had not been satisfied. They say she produced the unconditional offer and they asked to consult a lawyer but Ms Rebello was insistent they sign the second agreement. They then signed the second agreement at the price of $1,535,000.00. Ms Fernandes paid the two tranches of $100,000.00 required by way of deposit.
[6] The second agreement records Barfoot and Thompson as the agent on the sale but it seems Ms Rebello did not have a listing agreement at the time. She arranged for the Anguralas to sign a listing agreement the next day. Ms Fernandes says she thought Ms Rebello was acting as agent for the Anguralas and the Anguralas do not say otherwise. I note that Ms Rebello seems to to have been very familiar with the terms of the first agreement though it was not through her agency.
[7] On Saturday 13 March 2021 at 5:23 pm Mr Singh’s solicitor sent an email advising Mr Singh had satisfied the conditions and stating that the first agreement had been made unconditional.
[8]Mr Angurala says they had taken no steps to end the first agreement.
[9] On 17 March 2021, Ms Fernandes was told by Ms Rebello that there were issues over cancelling the first agreement. Ms Fernandes lodged the caveat the following day, claiming an interest as purchaser of the land under the second agreement.
[10] The Anguralas then filed this application to remove Ms Fernandes’ caveat in order to comply with a settlement notice from Mr Singh.
[11] Ms Fernandes says she and her husband wanted to develop the property and considered it held good potential. She contends that the Anguralas had profited by at least $535,000.00 after a little more than a year of ownership and that she expected to gain “far greater than $300,000.00 from purchasing the property under the agreement and advancing development of the same”.
Submissions
[12] Unusually, there is no application or evidence from Mr Singh, the purchaser under the first agreement. Rather, the Anguralas advance the application on the basis they accept (whether rightly or not) that Mr Singh’s agreement was still on foot at the time he declared it unconditional.
[13] As a result of clauses 9.10(5) and 9.10(6) of the first agreement Mr Singh did not have to declare the agreement unconditional on Friday 12 March. Those sub- clauses provide:
(5) If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement, the purchaser shall be entitled to the immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the other arising from this agreement or its termination.
(6) At any time before this agreement is avoided, the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.
[14]In addition clause 1.4(1) provides that all notices must be served in writing.
[15] Mr Parmenter for the Anguralas says there was no act of avoidance (which could be by either the Anguralas or Mr Singh) and that Mr Singh has done nothing to disqualify himself.
[16] Significantly Mr Parmenter also acknowledges that Ms Fernandes has a reasonably arguable case to support her caveat.
[17] However, he submits that Mr Singh’s claim to the title is first in time and there is no act or omission by Mr Singh to subordinate his equitable interest in the land to that of Ms Fernandes. Mr Parmenter submits that Mr Singh’s interest should prevail as, in general, a later equitable interest cannot prevail over an earlier interest if the holder of the later interest had notice of the earlier one at the time the later one was acquired. Ms Fernandes knew a previous agreement existed, but thought (mistakenly) it had lapsed. Mr Parmenter submits that Ms Fernandes was put on notice of the existence of the possible rights of another and should have made further inquiries. She should not have just relied on Ms Rebello’s advice. Mr Parmenter submits that the Anguralas will have to settle with Mr Singh over Ms Fernandes, so it is equitable that Ms Fernandes’ caveat is removed.
[18] Mr Parmenter suggests I could if necessary, order that a sum of money be held in lieu of the caveat and says this would be at most $65,000.00 being the difference between the two purchase prices.
[19] Mr Parmenter relies on the Court of Appeal decision in Stewart v Kaipara Consultants Ltd in support of his argument.1
[20] Mr Kashyap, counsel for Ms Fernandes, opposes the application to remove the caveat. He submits that the Anguralas have the onus of proving why the caveat should
1 Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55 (CA).
be removed. He says Ms Fernandes is a bona fide purchaser under the second agreement and may seek specific performance. He asks that the Court refuse the application to remove on the basis that removing the caveat will unduly prejudice Ms Fernandes’ claim to the property. He says if the sale to Mr Singh goes ahead it would defeat all rights and interests Ms Fernandes has and her ability to seek specific performance. Mr Kashyup submits there is an obvious and practical advantage to maintaining the caveat.
[21] Mr Kashyap also says that if I decide to remove the caveat, the amount held should not be limited to $65,000.00, but should be $300,000.00 given the rising housing market and the fact that Ms Fernandes intends to develop the property and anticipates a significant profit. Neither party has provided any valuation evidence as such.
Discussion
[22] The Court will only remove a caveat where it is satisfied that removal will not prejudice the legitimate interests of the caveator.2 In Botany Land Development Ltd v Auckland Council, the Court of Appeal summarised when a caveat should be removed by the courts in the following way: 3
(a)the onus is on the caveator to demonstrate that it holds an interest in the land which is sufficient to support a caveat;
(b)the caveator must put before the court a reasonably arguable case to support the interest it claims;
(c)an order for the removal of a caveat will only be made if it is clear there was no valid ground for lodging it, or alternatively, that there was a valid ground that has since ceased to exist; and
(d)there is a residual discretion, once a reasonably arguable case has been established, as to whether to make an order removing the caveat. This
2 Pacific Homes Ltd v Consolidated Joineries Ltd [1996] 2 NZLR 652.
3 [2014] NZCA 61, at [24].
will be exercised cautiously where there is no practical advantage to maintaining the caveat.
[23] To successfully defend the caveat, the caveator only needs to show there is a serious issue to be tried, they do not need to prove they have the interest claimed.4
[24] Where there are competing equitable priorities, the basic rule as Mr Parmenter submits is that the person who is first in time has the stronger claim. But the first in time can lose their priority if their conduct is such as to arm the other party with the power of going into the world under false colours.5
[25] Here, Mr Parmenter has accepted, as he sensibly must on the presently known facts, that Ms Fernandes has a reasonably arguable case for her caveat.
[26] The issue is whether I should exercise the residual discretion to order removal nonetheless. As noted, that discretion is to be exercised cautiously where there is no practical advantage to maintaining the caveat.
[27] In Stewart v Kaipara Consultants Ltd, Blanchard J writing for the Court of Appeal, upheld removal of a caveat where the caveator was a purchaser in default, had no personal attachment to the land, and was unable to settle unless they found an assignee.6 Significantly, there was also evidence from the purchaser’s own valuer as to the realistic potential loss. The caveat was removed in exchange for deposit of a sum approximating that potential loss.
[28] The position here is obviously factually different. Ms Fernandes is not in default and she has not placed a limit on her own loss other than to assert it would be at least $300,000.00.7
[29] However there is some parallel. I accept that on the face of it Mr Singh would appear to have clear priority and there is little if any likelihood of Ms Fernandes
4 National Bank of NZ v Gun City Wellington Ltd HC Christchurch M36/94 22 April 1994, at 4.
5 Australian Guarantee Corporation (NZ) Ltd v CFC Commercial Finance Ltd [1995] 1 NZLR 129, at 138.
6 Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55 (CA).
7 It would be difficult to argue she has any personal attachment to the property.
succeeding in an application for specific performance. The Anguralas have expressly stated that they had taken no steps to avoid the agreement and the available documents are consistent with there having been no such act. There would need in any event to have been written notice and I am quite sure if there had been, the solicitors for the Anguralas and Mr Parmenter as counsel would not remain silent about it.
[30] It is clear that Mr Singh will not have taken any steps to avoid the first agreement – that would run completely counter to his solicitor’s email confirming the agreement was unconditional. Again the Anguralas and their legal representatives would know of any such notice and could not advance the firm proposition that there has been none. There is also no evidence or suggestion of any disentitling conduct on Mr Singh’s part that might cause him to lose priority. There was no time for that.
[31] I am also satisfied that, although I do not have valuation evidence as the Court did in Stewart, I arguably have better evidence than that, in the form of two sale and purchase agreements with different parties within a matter of days and at very similar sale prices. On the face of those agreements Ms Fernandes may have lost approximately $65,000.00 if the value is the price Mr Singh was prepared to pay. While the loss may be greater, that is highly speculative. There is nothing to stop Ms Fernandes purchasing other properties to develop, which would mitigate her asserted likely loss of development profits. Further, if ultimately damages are awarded in a greater sum, Ms Fernandes’ evidence as to the Anguralas’ property dealings and their profit on this property alone, suggests they are people of means. I do think it appropriate however to round the figure of $65,000.00 up a little.
[32] I have decided in all the circumstances there is no practical advantage to maintaining the caveat and it is appropriate to exercise my discretion to remove it, subject to the sum of $80.000.00 being held by the solicitors for the Anguralas on interest-bearing deposit pending final resolution of the dispute between the parties or Court order.
[33] I ask Mr Parmenter to submit appropriate orders for sealing. In addition to the above I consider the caveat should only be removed to enable the transfer to Mr Singh to be registered. Otherwise it should remain.
[34]Costs on this application are reserved.
Hinton J
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