Bary v AB Contracting Nelson Limited - [2022] NZHC 1404

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2021-442-42

[2022] NZHC 1404

UNDER section 143 of the Land Transfer Act 2017

IN THE MATTER

of an application to sustain a caveat

BETWEEN

DAVID BARY

Applicant

AND

AB CONTRACTING NELSON LIMITED

Respondent

Hearing: 25 May 2022

Appearances:

G Pearson and M Byczkow for Applicant K Hymers for Respondent

Judgment:

17 June 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1] This is an application by David Bary for an order pursuant to s 143 of the Land Transfer Act 2017 sustaining a caveat registered by him over a property in Nelson, the registered owner of which is the respondent, AB Contracting Ltd (formerly AB & KB Investments Ltd). The shareholder and director of AB Contracting is Aron Bary, David Bary’s brother.

[2] To obtain such an order the caveator must be able to establish a reasonably arguable claim to a proprietary interest in the property of a type identified in s 138 of the Land Transfer Act. Materially, pursuant to s 138(1)(b), a person may lodge a caveat against dealings on the basis that he or she has a beneficial estate or interest in

BARY v AB CONTRACTING NELSON LIMITED [2022] NZHC 1404 [17 June 2022]

the land under an express, implied, resulting, or constructive trust. The purpose of a caveat against dealings is to protect the caveator’s claimed interest. In Philpott v Noble Investments Ltd, the Court of Appeal summarised the principles governing applications such as the present:1

(a)the onus is on the applicant to demonstrate an interest in the land that is sufficient to support the caveat, but this need not be established definitively;

(b)it is enough if the applicant is able to establish a reasonably arguable case in support of the interest;

(c)the summary process involved is not suited to the determination of disputed questions of fact;

(d)an order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be sustained — either because there was no valid ground for lodging it in the first place, or because such a ground no longer exists;2 and

(e)even when an applicant can discharge the burden, the Court retains discretion to order that the caveat lapse. This discretion is exercised cautiously. The Court must be satisfied that the caveator’s legitimate interest will not be prejudiced.3

Background

[3] As long ago as 1994, the property that is the subject of David’s caveat, then bare land at 30 Maire Street in Nelson, was purchased by David and Aron. On the evidence, it is clear that they purchased it on the basis that they were in partnership as

1 Philpott v Noble Investments Ltd [2015] NZCA 342; see also Melco Property Holdings (NZ) 2012 Ltd v Hall [2021] NZCA 184 at [19] and [36]; cited in Wallace v Studio New Zealand Ltd [2021] NZCA 392.
2 Sims v Lowe [1988] 1 NZLR 656 (CA)…

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: [2022] NZHC 1404
Decision Date: 17 June 2022

CaseChat Overview and Summary

David Bary lodged a caveat over a property owned by AB Contracting Nelson Limited, a company of which Aron Bary, David's brother, is a shareholder and director. David contends that he has a beneficial interest in the property by virtue of an arrangement with Aron to develop and sell the property as a partnership. AB Contracting contends that the property was transferred to Aron by virtue of a partnership agreement and that, as Aron was a director of the company, AB Contracting is a bona fide purchaser for value without notice of any equitable claim David may have. The court had to determine whether David could sustain his caveat based on a reasonably arguable claim to a proprietary interest in the property. The court found that it was reasonably arguable that Aron did not have authority to transfer the property to himself, that David's interest, if any, was not defeated by the subsequent sale to AB Contracting, and that there was no ex post facto agreement between David and Aron. The court also found that it was not clear whether David had waived his proprietary interest in the property by agreeing to let Aron assume full responsibility for the development. The court ordered that the caveat not lapse until the substantive issue is determined in court and that David commence substantive proceedings within 20 working days of the judgment.

Orders