Bethell v Bethell
[2013] NZHC 3492
•20 December 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-001797 [2013] NZHC 3492
BETWEEN CHRISTINE ANNE BETHELL (formerly
CHRISTINE RICKARD) Plaintiff
ANDVICTORIA ELIZABETH BETHELL Defendant/First Counterclaim Plaintiff
MARIA GAEL BETHELL Second Counterclaim Plaintiff
Hearing: 2-6 September 2013
Appearances: R J Thompson for Plaintiff
S A Grant for Defendants
Judgment: 20 December 2013
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 20 December 2013 at 10.30 am
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date………………………..
BETHELL v BETHELL [2013] NZHC 3492 [20 December 2013]
Introduction
[1] A sister claims to have acquired an equitable interest in land owned by her brother, who died in 2008. The brother’s first wife asserts an equitable interest over part of the same land. Both the first wife and the brother’s widow deny the sister’s claim and say that, even if the interest exists, it should not be enforced because too much time has passed and doing so would result in hardship to them.
[2] The family concerned is the Bethell family, which settled in Te Henga, also known as Bethells Beach, on Auckland’s West Coast in the 1860s. The area is known for its wild, unspoilt landscape and good surf. In the 1890s John Neale Bethell acquired several blocks of land, including a block of mostly steep, bush-clad coastal land which came to be known within the family as the principal block.
[3] Mr Bethell’s grandson, John Bethell (John),1 inherited several blocks of land at Bethells Beach, including the principal block. John and his wife, Shirley, had a son, Ross Bethell (Ross) and three daughters, Christine Bethell (Chrissie), Trudy Bethell and Margaret Parkes (Margaret). On his death in 1985 John bequeathed the principal block to Ross. By then, following the sub-division and compulsory acquisition of parts of the principal block over the years, there were two relatively flat areas left; approximately four acres known within the family as the camping ground and, immediately behind that, a further approximately six acres known within the family as the clay patch. The dispute concerns these two areas.
[4] John’s legacy to Ross was subject to Chrissie receiving either a life interest in or, if subdivision could be achieved, a transfer of “ten (10) acres more or less together with the camp and shop buildings thereon (if any)”. Problems with the will led to a deed of family arrangement. Under the deed Ross agreed that Chrissie could call for an allotment of “up to 10 acres in the area known as the camping grounds near the main road” and have that land transferred to her, provided that local authority consent was obtained while they were both alive.
[5] Chrissie claims that in 1991 she called for ten acres comprising the camping ground and the clay patch (the ten acres), thereby acquiring an equitable interest in
the land. However, she did not take any formal steps to enforce the interest until
1 Throughout the trial parties were referred to by their first names and I do likewise.
2005. By then Ross had purported to confer a life estate in the clay patch on his former wife, Maria Bethell (Maria). She now lives in a house on the clay patch which is known within the family as the white house.
[6] Chrissie obtained Council consent for the subdivision of the ten acres while
Ross was still alive but he refused to transfer the land to her. Ross died intestate in
2008. His widow, Vicky Bethell (Vicky) is the administrator of the estate. She lives on the principal block with her and Ross’ young daughter. The two sons that Ross had with Maria spend time at both Vicky’s house and the white house.
[7] Access to Vicky’s and Maria’s homes is over the camping ground. In addition, Vicky relies on the use of the camping ground as one of the few means of income available from the land.
The issues
[8] Chrissie alleges that under the deed Ross was required to transfer the ten acres to her. She seeks specific performance of that obligation or damages in lieu and, in addition, an enquiry into damages for the loss of use and enjoyment of the land. Vicky denies the existence of the claimed interest either at all or before 2006 and says that Chrissie’s failure to take steps to enforce her interest earlier should deprive her of the right to specific performance now. She counterclaims for a declaration that Chrissie has no interest in the ten acres or alternatively that her interest is limited to the camping ground area.
[9] The issues that arise from Chrissie’s claim for specific performance are:
(a) What were Chrissie’s rights under the deed?
(b)Did Chrissie acquire an interest in the ten acres capable of being enforced by specific performance and, if so, when?
(c) Was Ross in breach of his obligations under the deed? (d) Are damages an adequate remedy?
(e) Is Chrissie’s interest defeated by laches?
(f) Would an order for specific performance cause hardship to Vicky that would justify refusing the relief sought and ordering damages in lieu?
(g)Is Chrissie entitled to damages in addition to specific performance for loss of use and enjoyment of the ten acres?
[10] Maria sues as a counterclaim plaintiff, seeking declarations that she has a life estate in the white house and the quarter acre around it with right of way access over the camping ground. She seeks a declaration that if Chrissie has any interest in the land that interest is subject to Maria’s interest. The issues that arise are:
(a) Does Maria have an equitable interest in the white house and surrounding land?
(b)If Chrissie and Maria have competing equitable interests, which should take priority?
(c) If Chrissie’s interest prevails should Chrissie compensate Maria for
work done on the white house between 2010 and 2013?
[11] Chrissie asserts in her second cause of action that if she does not have an equitable interest enforceable by specific performance then Ross held the ten acres on a resulting or constructive trust for her and seeks an order that Vicky convey the land to her and account for the profits received from the use of the land during the period of the trust.
[12] Alternatively, in the third cause of action, Chrissie asserts that she is still entitled to a life interest in the ten acres pursuant to John’s will.
[13] Finally, Vicky seeks a declaration that, pursuant to the Administration Act
1969, the principal block, including the camping ground and the clay patch, vests in
her to the extent of one third and in Ross’ children to the extent of two thirds.
The land, John’s will and the deed of family arrangement
The principal block, the camping ground and the clay patch
[14] Originally, the principal block comprised about 850 acres/344 hectares. It included several acres of flattish land running along Bethells Road. In the 1960s John subdivided approximately 25 acres of this land and sold it. That area is known within the family as the McKay subdivision. Later he subdivided and sold approximately 298 acres (the back block) to Ross. Some reserve land was compulsorily acquired. By 1985 the principal block comprised approximately 825
acres/212 hectares.2
[15] Although the principal block had been farmed earlier in the 20th century, efforts by John and Ross to obtain consent to undertake farming and forestry operations were always met with strong resistance from local conservation groups and from the local councils (Waitemata Council and later Waitakere City Council). These battles took a significant toll on both men and on their families. However, John was determined that the principal block would be kept within the family and regarded bequeathing the land to Ross as the best means of achieving that. Ross was similarly determined to keep the block intact and in the family.
[16] The camping ground acquired its name because John had hoped to be able to establish a commercial camping ground and shop there. It is not in dispute that Chrissie has a special connection with this area because of the amount of time she spent working with her mother in a makeshift shop from a caravan parked near the beach and, later, on the area known as the camping ground. The camping ground is the only convenient access to the rest of the principal block, including to Vicky’s and Maria’s houses. The area known as the clay patch is so called because clay was taken from this area for use in the McKay subdivision. The clay patch area has
spectacular views to the west overlooking Bethells Beach.
2 The precise areas were not clear from the evidence due, in part, to inconsistencies in the certificates of title following the various subdivisions. However, nothing turns on this.
John’s will
[17] Apart from bequests of chattels and forgiveness of debt owed by Ross, John endeavoured to leave some land to each of his children whilst ensuring that the principal block remained largely intact and went to Ross.
[18] Under the will Ross was to inherit the principal block subject to provision for Chrissie of a block described only as “ten (10) acres more or less together with the camp shop buildings thereon (if any)”. Trudy received the homestead, which stood on a separate title. Trudy and Margaret were each to receive five acres from land to be subdivided behind the McKay subdivision. Margaret inherited John’s interest in sections that he and his brother, Francis Bethell, owned in another part of Bethells Beach.
[19] The provision made for Chrissie in relation to the ten acres had two limbs. Under clause 7 Chrissie was to receive a life interest in the area described. Clause 8, however, provided that if consent to subdivide that area could be obtained Chrissie could take it outright. If that happened cl 7 would have no effect. However, cl 10 provided for a different distribution if consent to subdivide was not obtained within three months of probate.
[20] The relevant provisions of the will were:
6. I GIVE DEVISE AND BEQUEATH my farm property comprising
815 acres more or less to my son ROSS McKAY BETHELL free of all duties SUBJECT TO the tenancy created in Clause 7 hereof and the provisions of Clause 8 hereof and SUBJECT TO all royalties/monies from the sale of pines after all expenses taken such royalties/monies to be for such of them my children as survive me and if more than one tenants in common in equal shares for so long as my son ROSS McKAY BETHELL owns the property.
7.SUBJECT TO Clause 8 hereof I DIRECT that a portion of the land contained in the farm property referred to in Clause 6 hereof and comprising ten (10) acres more or less together with the camp and shop buildings thereon (if any) is to be and is hereby let to my daughter CHRISTINE ANNE BETHELL during her lifetime at an annual rental of ONE DOLLAR ($1.00) to the end that my son ROSS McKAY BETHELL shall take the bequest contained in Clause 6 SUBJECT TO the life tenancy granted herein.
8.I DIRECT that the area of land behind the McKAY sub-division be divided so that the following areas are transferred to the person named hereunder:-
(a) Ten acres to my daughter CHRISTINE ANNE BETHELL being the same land referred to in Clause 7 herein and if so sub-divided of my main block Clause 7 need no longer have any effect.
(b) Five acres for my daughter MARGARET ELAINE PARKES.
(c) Five acres for my daughter TRUDY JEAN BETHELL.
9.I GIVE DEVISE AND BEQUEATH my 2.5 acres (Lot 5), remaining sub-divided sections and sections held jointly with my brother FRANCIS PETER BETHELL unto my trustees UPON TRUST to sell the same and from the proceeds thereof to pay my just debts funeral and testamentary expenses and all duties payable in respect of my dutiable estate (both actual and notional) and to stand possessed of the residue for such of my children, MARGARET ELAINE PARKES, ROSS McKAY BETHELL, TRUDY JEAN BETHELL and CHRISTINE ANNE BETHELL as survive me and if more than one as tenants in common in equal shares.
10.If after a period of three months from the Grant of Probate in my Estate approvals for the sub-division in Clause 8 herein have not been given whether or not the Executors have lodged applications or even instructed a surveyor or approached the Council then I DIRECT my land property be distributed as follows:-
(a) to my son ROSS McKAY BETHELL my farm property comprising 815 acres absolutely.
(b) to my daughter TRUDY JEAN BETHELL my home property pursuant to Clause 5 herein
(c) to my daughter CHRISTINE ANNE BETHELL my 2.5 acres (Lot 5) and half the sale proceeds from the sale of my remaining sub-division sections.
(d) to my daughter MARGARET ELAINE PARKES my interest in sections held jointly with my brother FRANCIS PETER BETHELL and the other half of the sale proceeds from the sale of my remaining sub-division sections.
(emphasis added)
[21] Within a few months of John’s death in December 1985 John’s solicitor, who was also an executor and trustee under the will, advised that there were two problems. First, some assets (cash, insurance policies and a tractor) had been omitted from the will. Secondly, a legal opinion had concluded that cl 9 would stand
whether or not the subdivision contemplated in cl 10 proceeded. This was not what the executors thought was the intended effect of cl 9. The result would be a disproportionate legacy to Ross compared to his sisters because he would receive both the principal block and a quarter share in the other property that John had owned.
The deed of family arrangement
[22] A deed of family arrangement was proposed as the best means of resolving these problems. Negotiating the terms of the deed took some time, partly because Chrissie was living in England at the time. It was not finally executed until 1987.
[23] The deed recorded, amongst other things, that:
… it is the express wish of all the Beneficiaries that the Testator’s testamentary wishes be altered or modified as set out herein in place of the provisions of the said Will and Probate.
(emphasis added)
[24] The deed relevantly provided that:
1.THAT the Trustees are hereby directed to administer the Estate of the Testator in terms of the aforesaid Will as amended herein in place of the said Will dated the 15th day of October 1985 (annexed “A”) and the Trustees hereby agree to act in accordance with these directions.
…
3.THAT the bequests set out in clause 3 of the said Will shall remain as set out therein.
4.THAT the forgiveness set out in clause 4 of the Will shall remain as set out therein.
5.THAT the bequest set out in clause 5 of the said Will shall remain as set out therein.
6. THAT the said Will shall be amended/clarified as set out herein:
(i) That the said ROSS McKAY BETHELL shall receive the principal farm property more particularly described in Certificate of Title
6B/653 subject to the said CHRISTINE ANNE RICKARD being entitled to call for, at any time, an allotment up to 10 acres in the area known as the camping grounds near the main road and the said
ROSS McKAY BETHELL shall sign such survey plans,
Memorandum of Transfer or other documentation to enable the said CHRISTINE ANNE RICKARD to receive the said area, subject to the local authority’s approval provided that such approval can be obtained at any time during the period of the joint lives of the said ROSS and CHRISTINE.
(emphasis added)
[25] The remaining parts of the deed, which are not contentious, conferred on Chrissie the two-and-a-half acre block known as Lot 5 and on Chrissie and Margaret each a half interest in the remaining subdivision sections (Lots 29, 30, 34, 35 and
38). Margaret also received John’s interest in the Tasman View Road subdivision that he had owned jointly with his brother. Cash resources were to be split between the three sisters after settlement of outstanding estate costs and payment of an amount owing to John’s brother. It was also agreed that if Ross were to transfer the principal block other than to his sisters during his lifetime then he would pay each of them $31,500.
What were Chrissie’s rights under the deed?
[26] The deed did not specify the exact area or boundaries of the land that Chrissie was entitled to call for. The first issue is whether Chrissie could call for ten acres (effectively the camping ground and clay patch) or whether she could only call for the camping ground, which was approximately four acres i.e. did the parties mean ten acres including but not limited to the camping ground or did they mean the camping ground only, provided that no more than ten acres was sought? Ms Grant, for both Vicky and Maria, argued that since all parties were agreed on what was meant by “camping ground” the meaning of cl 6(i) could be determined from the wording alone. However, I consider that recourse to extrinsic evidence is necessary.
Construing the deed
[27] The deed is to be interpreted according to the accepted principles governing contractual interpretation, namely the well known principles described by Lord
Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society3
3 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at
912-913 (HL).
and adopted in New Zealand in Vector Gas Ltd v Bay of Plenty Energy Ltd:4 the interpretation of a commercial agreement is the ascertainment of the meaning it would convey to a reasonable person who had all the background knowledge that would reasonably have been available to the parties in the situation in which they were at the time of the contract. The language used is generally given its natural and ordinary meaning. However, the background facts may suggest that the language used does not accurately reflect the intention of the parties.
[28] Before I discuss the interpretation of the deed against the relevant factual matrix, I note that issues of admissibility arise in relation to some of the evidence relied on. There was a good deal of evidence about how the deed came into existence and of statements made afterwards. Some of that evidence is properly viewed as pre-contractual negotiations and declarations of subjective intent. It is well established that such evidence is not admissible as part of the “factual matrix”. However, other evidence falls into the category of objective evidence of the facts and circumstances surrounding negotiations that is admissible for the reasons discussed
by Tipping J in Vector:5
[27] … Some of the difficulties in this area may derive from the concept of “prior negotiations” being employed in a more or less expansive way. Sometimes the concept seems to be used as if it encompassed all conduct and circumstances associated with negotiations towards the formation of a contract. It is necessary, however, to distinguish between the subjective content of negotiations; that is, how the parties were thinking, their individual intentions and the stance they were taking at different stages of the negotiating process, on the one hand, and, on the other, evidence derived from the negotiations which shows objectively the meaning the parties intended their words to convey. Such evidence includes the circumstances in which the contract was entered into, and any objectively apparent consensus as to the meaning operating between parties.
[28] The vice in admitting subjective evidence of negotiations is that doing so would be inconsistent with the objective basis on which interpretation issues are resolved. As already seen, evidence of a party’s subjective intention is not relevant to an objective resolution of interpretation issues. Although the common law takes the view that it is only the final written contract which records the ultimate consensus of the parties, the way that consensus is expressed may be based on an agreement as to meaning reached during negotiations.
4 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [61].
5 Vector Gas at [27] – [29].
[29] There is no problem with objective evidence directed to the context, factual or linguistic, in which the negotiations were taking place. That kind of evidence can properly inform an objective approach to meaning. Whereas evidence of the subjective content of negotiations is inadmissible on account of its irrelevance, evidence of facts, circumstances and conduct attending the negotiations is admissible if it is capable of shedding objective light on meaning.
[29] Tipping J went on to say that, in his view, there was no logical reason why this same approach should not also apply to subsequent conduct.6 Referring to his earlier comments in Wholesale Distributors Ltd v Gibbons Holdings Ltd that post- contractual conduct should be admissible if shared or mutual and capable of providing objective guidance as to intended meaning,7 Tipping J observed that his conclusions in Gibbons had been a way of “emphasising the need to exclude evidence which demonstrated only a party’s subjective intention or understanding as to meaning” but that:8
I now consider that the approach I am taking in these present reasons is a simpler and clearer articulation of the appropriate principle but one which still preserves the essential line between subjectivity and objectivity of approach.
[31] … the key point is that extrinsic evidence is admissible if it tends to establish a fact or circumstance capable of demonstrating objectively what meaning both or all parties intended their words to bear …
[30] I therefore proceed on the basis that evidence of pre-contractual negotiations is inadmissible and statements of subjective intent made either before or after the deed was executed are inadmissible in the search for the parties’ intentions. However, objective evidence of the facts and circumstances surrounding the negotiations may be considered. With a few exceptions I do not consider this distinction specifically in my consideration of the evidence.
What does “ten acres in the area known as the camping ground” mean?
[31] On its face the area referred to in clause 6(i) would be limited to the camping
ground because, when used as a preposition in relation to a place, “in” means
6 At [30] – [31].
7 Wholesale Distributors Ltd v Gibbons Holdings Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at
[52] – [53].
8 Vector Gas, above n 4, at [30] and [31].
“within the limits or bounds of”.9 But this interpretation is put in doubt once it is known that the camping ground is much less than ten acres and even more so when one considers the background to the deed.
[32] The reference to ten acres in the deed was clearly drawn from the terms of John’s will; the legal advice regarding the deed consistently used the same phrase “ten acres” and there was never any suggestion that the reference to ten acres should be revisited. I am satisfied that the parties to the deed intended to retain the meaning of this phrase as it was used in the will. This means that the phrase as it was used in the will constitutes background knowledge available to the parties at the time of entering the deed.
[33] The will took the phrase from a draft will prepared for John in 1982. That is the earliest use of the phrase; another draft will, prepared in 1980, made no mention of Chrissie having any interest in the principal block. The key to how the expression “ten acres” came to be included in John’s 1982 draft will, the executed will and, later, the deed, is a family meeting held in 1980. The differences between the draft wills strongly suggest that John’s testamentary plans changed following that meeting.
[34] Chrissie gave evidence that after her mother died in 1980, John called a family meeting to discuss what would happen to the land on John’s death. Her evidence, which was not seriously challenged, was that:
… At that stage Margaret was married and was the only one of us in a permanent relationship. Dad said he wanted Trudy to have his and Mum’s home which was on a separate title and that he wanted Margaret and Trudy to receive in addition a five acre block each. He said he wanted Ross to get nearly all of the Principal block. He said he had in mind for me a ten acre block at the camping ground area which formed part of the Principal block. I said I wanted to ensure it included the clay patch area which Dad agreed to. He said we’d go for a walk together after the meeting over the area he had in mind for me.
Dad and I then walked over the land which he said he had in mind for me to inherit. We walked up to the clay patch area and sat on that very spot and looked back over the area we were discussing. I said I was keen to build a house right there on the clay patch with its magnificent views over the beach and out to the Tasman Sea. Dad said it was what he wanted me to have and
9 Oxford University Press “in, preparation. 1” (September 2013) OFD online < only could it provide me with a way to make an income by way of either the camping ground and/or shop but it also had the house site on the clay patch …
[35] Trudy gave evidence confirming this account and also said that, although John did not discuss his wishes for his estate again, he did speak two or three times “about the clay patch being the area for Chrissie to build her family home on and that the camping ground area was also for her business for the shop and the camping ground”. It is notable that John had long sought to use the camping ground for commercial purposes and it was well-suited to that, being on the flat and close to the beach. It was not, however, particularly well-suited as a residential house site because it had no view, whereas the clay patch had spectacular views.
[36] There was also evidence from a long-time friend of John’s, Alan Towler, of John telling him that “I’ve got a ten acre block for Chrissie.” He could not recall where on the property John was referring to but was clear about it being ten acres. He was told that at least three times over the years.
[37] This evidence is not irrelevant subjective evidence of intention; John’s intentions are not in issue in relation to the deed. It is a hearsay statement by John, admissible to show what the parties understood by the reference in John’s will to “10 acres” when they carried that expression through into the deed.
[38] I find, further, that when John made the reported references to ten acres, he knew very well how much ten acres was and that the camping ground was much less than that. John had worked on the land his whole life. He had undertaken subdivisions in the area, worked with surveyors for that purpose, and dealt with the Council in relation to them. I do not accept that John was confused about how big the camping ground was.
[39] I am also satisfied that Ross, who had worked on and managed the land with his father since 1980, knew that the camping ground was less than ten acres. It is likely that Chrissie and Trudy also knew; Trudy gave evidence of John teaching them to measure land by pacing it out. I did not hear from Margaret and so cannot make any finding regarding the extent of her knowledge.
[40] After Davenports had identified the potential difficulties in John’s will and advised that a deed of family arrangement was desirable, an effort was made to secure the Council’s consent to subdivide the principal block in order to fulfil the intentions evident in the will. Maria gave evidence that there was a meeting between Ross, Trudy, Margaret and a Council planner to discuss that possibility. Subsequently, Davenports wrote to the Waitemata City Council advising that it had instructions from the four beneficiaries to apply for a specified departure to allow the subdivision to proceed.
[41] In April 1986, the executors under John’s will applied for planning consent “to enable the Estate to subdivide off part of the property described herein, three separate Titles, namely one 10 acre block and two 5 acre blocks. Such blocks are to be divided on that part of the property generally shown in red on the attached Plan”. The plan (the original of which is no longer available) showed a very general area which appears to take in both the camping ground, clay patch and an area immediately behind the McKay subdivision. The significance of this evidence is not the plan, but the fact that the application, made at the request of all four beneficiaries, specifically sought three titles, including one for a ten acre block.
[42] At about the same time, Ross wrote to Chrissie who was still living in England. His letter contained a proposal for the distribution of the estate. I do not take into account that part of the letter which I consider to be inadmissible for present purposes. However, he concluded with the observation that his proposal was what he believed John intended “if the 5 and 10 acre subdivision could not go ahead (clause 8)”, this description being consistent with the application made by the executors for consent to subdivide.
[43] There are two pieces of evidence that are inconsistent with the parties intending to grant Chrissie a right to call for ten acres. First, Maria described a day in 1985 when she worked with John and Ross planting trees along the border between the camping ground and the clay patch areas. They were working on the flat, which would have been on the camping ground site, and she heard John say that he was putting the trees in to define “Chrissie’s block”. Although Maria took him to be referring to the camping ground as being Chrissie’s block she agreed in cross-
examination that John could equally have been referring to defining the clay patch area. Ms Grant pointed out that neither interpretation was consistent with Chrissie being entitled to ten acres.
[44] Notwithstanding these two pieces of evidence the overwhelming weight of the evidence is that the parties intended to confer on Chrissie rights in respect of an area of ten acres that took in the camping ground and the clay patch. The family meeting and subsequent changes to John’s will, the fact that Ross, Chrissie and Trudy knew what ten acres was, the fact that the camping ground was not ten acres and the beneficiaries’ application for the subdivision of a ten acre block all lead me to this conclusion.
[45] Ms Grant argued that if the plain meaning of the words was not applied to limit the land subject to the deed to the camping ground then the proper approach was to disregard the reference to ten acres as being a falsa demonstratio. She relied on the Privy Council in Watcham v Attorney-General of the Government of East Africa Protectorate.10 That case concerned the conveyance of property by reference to a certificate which gave the area in question as being 66.75 acres or thereabouts but included a description by reference to physical features which would have produced an area of 160 acres. The Privy Council held that, on the facts, the boundaries shown could not be accurate because that would involve others having
interests in part of the property. It concluded that, in those circumstances, the area noted on the title had to be the correct guide and the description of the boundaries a falsa demonstratio.
[46] I do not see that this case has direct application to the present facts. Contrary to Watcham, the apparently inconsistent parts of the description, “ten acres” and “in the area known as the camping ground” are capable of being reconciled by reference to the extrinsic evidence.
Did Chrissie acquire an interest enforceable by specific performance and, if so, when?
Specific performance
10 Watcham v Attorney-General of the Government of East Africa Protectorate [1919] AC 533.
[47] The existence of an equitable interest in land is usually determined by whether the interest asserted is capable of being enforced by specific performance.11
Specific performance is a discretionary remedy, though the discretion is to be exercised in accordance with the well-established principles described by Tipping J in Attorney-General for England and Wales v R:12
At common law only contractual obligations involving the payment of a sum of money were regarded as specifically enforceable. The enforcement of other obligations was available only in equity and was thus discretionary and subject to equitable considerations. As has often been said, specific performance is normally granted when damages or other financial relief would be inadequate. Put conversely, specific performance will not ordinarily be granted in cases where financial relief constitutes an adequate remedy … In parallel with this approach is the fact that specific performance and restraint by injunction are discretionary remedies, not available as of right … It is important, however, to note the discretion involved is a judicial discretion and must be exercised in a principled way ...
[48] In the case of conditional contracts (which might be regarded as analogous to the right conferred by the deed), the position, historically, was that no equitable interest passed until the condition was either fulfilled or waived because specific performance was not available until that point.13 However, in Bevin v Smith the Court of Appeal considered the anomalies produced by this principle and concluded that an equitable interest in land did pass under a conditional contract of the kind they were considering,14 even though specific performance of the contract in the
strict sense was not available:15
We agree with the recent Australian authorities to the effect that the equitable estate passes when equity will, by injunction or otherwise, prevent the vendor from dealing with the property inconsistently with the contract of sale, i.e. inconsistently with the purchaser’s contingent ownership rights. It will be sufficient if the Court will order specific performance of the contract subject to the contingency. As McMorland points out (para 10.03) the purchaser’s estate will remain contingent pending fulfilment or waiver of the condition. The interest will cease if the contract were avoided for failure of the condition, in the same way as the interest may come to an end in several other situations; upon cancellation for breach; or upon non-payment of the purchase price.
11 An equitable interest also requires consideration and this was an issue at the outset of the case but Ms Grant advised during closing that the point was not being pursued.
12 Attorney-General for England and Wales v R [2002] 2 NZLR 91 (CA) at [94].
13 See the discussion in Bevin v Smith [1994] 3 NZLR 648 (CA) at 660 citing re Rudge [1949] NZLR 752 (SC).
14 A contract for sale and purchase conditional on obtaining consent under the Land Settlement
Promotion and Land Acquisition Act 1952.
15 Bevin v Smith, above n 13, at 665.
We stress that whether the equitable interest has passed will always depend on the terms of the contract itself. There will be some conditional contracts, particularly those subject to true conditions of precedent, where the parties cannot be regarded as intending that equitable title will pass to the purchaser until the condition is waived or fulfilled. In the event it must be remembered by saying the equitable title has passed, equity is doing no more than recognising that the purchaser must have acquired rights which should be protected in an appropriate manner. The sui generis nature of the trust arising under a contract for the sale and purchase of land has long been recognised (see e.g. Wall v Bright (1820) 1 JAC&W 494, 499). In the end equity must act according to the nature of the contract and the practical situation of the parties.
(emphasis added)
Was Chrissie required to have consent to subdivide before she could call for the land?
[49] Although Chrissie had the right to call for the ten acres upon execution of the deed, it could not be known how much of the ten acres she would seek until she made her call. Indeed, given that she was then married and living in England it was possible that she would not call for it at all. For this reason, no equitable interest could arise until she had made her election.
[50] Ms Grant submitted that Chrissie could only exercise her right under the deed by calling for the amount of land to which she was entitled in a manner that allowed the area being called for to be ascertained.16 I agree with that. She submitted, further, that the requirement for Council approval was a condition precedent and it was for Chrissie herself to obtain approval for the subdivision before she could call upon Ross, specifying the area being called for and requiring him to sign the necessary documentation. As a result, the earliest Chrissie could have obtained an equitable interest was in May 2007, after the Council had consented to the
subdivision. This I do not accept.
[51] Clause 6(i) was an attempt to give effect to John’s wish that Chrissie have the “ten acres”, recognising that, whilst subdivision was not possible then, the Council’s position might change in the future. Implementing John’s wish was sufficiently important that the siblings allowed for the possibility that subdivision might not be
achieved for many years; Chrissie was only 27 and Ross 32 when the deed was
16 Savill v Bethell [1902] 2 Ch 523 at 530-531.
executed. They could both have expected to live for several more decades yet it was agreed that Chrissie would have the prospect of obtaining title to the land up until one of them died.
[52] Ms Grant argued that if the deed allowed Chrissie to acquire an equitable interest by merely calling for the land the result could be that the land would be “tied up” until either Chrissie or Ross died even though consent might never be obtained to subdivide it. For this reason Chrissie could only exercise her right to call for the land and thereby acquire an interest in it once she actually had Council consent to subdivide. However, the deed did not limit when or how a call might be made. I consider that Chrissie was entitled to make her call before the Council had approved a subdivision.
[53] First, the conjunctive “and” between Chrissie’s rights and Ross’ obligations in clause 6(i) mean that the words relating to local authority approval qualify only Ross’ obligations, not Chrissie’s rights. Secondly, this interpretation is consistent with the requirements for subdivision that then existed; Mr Thompson, for Chrissie, pointed out that in 1987 the relevant provisions of the Local Government Act 1974 referred only to the owner of land being able to apply for consent to sub-divide.17
This would have meant that only Ross could have applied for consent to sub-divide.
The Town and Country Planning Act 197718 and its regulations19 were silent on the point; in the event the issue arose, the position would likely be treated consistently with the Local Government Act. That changed under the Resource Management Act
1991, which permitted a non-owner to apply. The deed must, however, be interpreted on the basis that when it was executed the parties knew (or are presumed to have known) that only Ross could have sought the Council’s approval for subdivision.
[54] In these circumstances it cannot have been intended that Chrissie’s right to call for the ten acres would be dependent on her first obtaining approval. The parties to the deed are to be taken to have intended that Chrissie could make her call at any
time, provided that she did so in terms that would enable Ross to identify the area to
17 Local Government Act 1974, ss 271, 275 and 276.
18 Town and Country Planning Act 1977, ss 65 and 74.
19 Town and Country Planning Regulation 37.
be subdivided and that from that point she would acquire an equitable interest in the land she had called for.
[55] The obligation to seek approval lay with Ross. Since there was no time required for Ross to obtain consent, his obligation is to be implied as being one to take reasonable steps within a reasonable period to obtain the consent.20 And it is for this reason that there was never any danger of the kind envisaged by Ms Grant; since Ross had control over the situation the land would not be “tied up” as a result of Chrissie’s equitable interest any longer than he allowed it to be.
When did Chrissie call for the land?
[56] There is no dispute that when the Council approved the survey plan for subdivision in May 2007 the land Chrissie was seeking was sufficiently identified. But Chrissie asserts that she made earlier calls that were sufficient to give rise to an equitable interest because she specified the land she wanted as being “ten acres” and both she and Ross knew what that area was, even though the exact boundaries were not identified.
[57] Chrissie said in evidence that she asked Ross “for my ten acres” at a homecoming party in 1991 but that he rebuffed her, indicating that he either would not or could not give her any land. At that stage his concern appeared to be that the camping ground was his only means of access to the front part of the principal block, to which she responded that she did not need the whole road frontage and he could continue to access the principal block over the campground. Chrissie said that she repeated this request several times during the 1990s and early 2000s. According to Chrissie it was not until much later, perhaps as late as 2005, that Ross began to express the view that the deed only related to the camping ground area.
[58] Chrissie did not raise this issue in front of Maria because she regarded the whole issue as one that concerned only the family. Maria said that Ross had never mentioned to her that Chrissie had asked for her land and she believed that it is
something that he would have told her if it had happened. I am not satisfied that
20 Steele v Serepisos [2006] NZSC 67, [2007] 1 NZLR 1.
Ross would, in fact, have mentioned it. It was clear that Ross found this issue difficult to talk about. Managing the land and dealing with the Council was a significant stress for Ross and Maria. Ultimately, it was the cause of their separating. The fact that Ross did not mention Chrissie’s claim to Maria does not mean that it had not been made.
[59] Chrissie talked about the problem to Trudy, who referred in her evidence to discussions with Chrissie “through the 1990s” from which she knew that Chrissie had asked for the land and Ross had refused it. She said that she had been present on occasions when Chrissie had raised the issue with Ross. And Trudy told a close family friend, Renai Dawson. I was influenced by Ms Dawson’s evidence. She said that well before 2005 she had seen both the will and the deed and was aware of Chrissie’s claim. She related a brief conversation she had with Ross in 1999, when Ross and Maria moved the white house onto the clay patch area to rent out. Ms Dawson was there because Trudy had asked her to help clean the house. Ms Dawson said that she had been surprised at the location of the house and specifically asked Ross about the choice of location because it was within the area that she had understood had been bequeathed to Chrissie. Ross replied that it had been done in such a way that it could be relocated to another site.
[60] By late 2004/early 2005 Ross was in discussion with the Council regarding a conservation covenant over the principal block in exchange for a payment. He told Trudy about the negotiations and she told Chrissie. This appears to have prompted Chrissie to take more forceful steps. She rang Ross to ask that he negotiate the subdivision of the ten acre block as part of his negotiations. Ross declined, fearing that this would jeopardise the level of the payment he would receive for the covenant.
[61] In May 2005 Chrissie asked Ms Dawson if she would mediate between her and Ross. There was a meeting at Ms Dawson’s house with Ms Dawson, Ross and Vicky. That was unsuccessful. In June 2005 Chrissie lodged a caveat over the principal block. Following negotiations with Ross, the caveat was replaced with one limited to an approximately ten acre area defined by reference to a plan prepared by surveyors Cato Bolam. This area took in the camping ground and the clay patch.
[62] There was another meeting in September 2005, this time at Trudy’s house and attended by Chrissie, Trudy, Ross and Ms Dawson. There was a suggestion that Margaret was there too, though neither Chrissie nor Trudy recalled that. Chrissie and Ross both made notes of the meeting which are reasonably consistent. In particular, Ross maintained that his obligation was only to transfer the camping ground which was five to six acres and it was not possible to transfer that area in any event because it represented his only legal access. Ross recorded that he was prepared to “cut off 1/2 of the bottom paddock” either by way of subdivision or lease.
[63] In May 2007 the Waitakere City Council approved a subdivision that would result in the area comprising the camping ground and the clay patch becoming Lot 1. It was 4.047 hectares, or ten acres. The balance of the principal block would become Lot 2. Access to the principal block would be preserved by way of a right-of-way over Lot 1. The resource consent application was enabling only; the consent would run with the land and it was for the landowner as to whether the consent was implemented within the five year lapse period imposed. Following an extension, the resource consent now expires in May 2014.
[64] Looking at all the evidence I am satisfied that Chrissie did call for her land orally in 1991 and that she repeated that call several times over subsequent years, including in 2005 when she lodged the first caveat, in 2006 when she lodged the second caveat and in 2007 when she obtained consent to subdivide.
Which of these calls was effective to create an equitable interest?
[65] Self-evidently, the subject of an equitable interest must be capable of being identified, either in the contract itself or by way of construction of the contract against the relevant factual background. Ms Grant submitted that until at least 2006
Chrissie herself did not know the exact area that she was asking for and therefore could not have acquired any interest in the land until that point.
[66] Ms Grant pointed to the fact that Chrissie caveated the title of the principal
block in 2005 without limitation and, following a request from Ross’ solicitors for a
plan delineating the exact area in question, wrote to Davenports requesting a copy of the plan that had originally accompanied the 1986 application for consent to subdivide. A little later Chrissie’s solicitors produced a basic plan which they described as “an informed guess”. Ms Grant suggested that this evidence showed that any call made prior to a formal plan being produced in 2006 could not have adequately identified the land being sought and therefore could not constitute a valid
call under the deed.21
[67] Had this issue been one arising between parties at arms’ length then Chrissie’s oral requests would not have identified the land with sufficient particularity, nor would the 2005 caveat. But these parties were not at arms’ length. The area that Chrissie was calling for fell to be identified in the context of the family arrangement and the family’s knowledge of the land. The situation is somewhat analogous to the situation in Scarfe v Adams, which concerned the conveyance of
apartments in a converted coach house.22 The deed of transfer described the land
being conveyed by reference to a plan which was inadequate to show the site boundaries of the parcels of land sold. In a dispute between the purchasers of adjoining flats as to where the boundary between them lay, the Court of Appeal found that the deed of transfer was “uncertain, contradictory and ambiguous on the definition of boundaries”.23 However, extrinsic evidence and, in particular, the auction particulars provided to the parties on the day of the auction enabled the Court to make a finding as to what the parties had intended to be transferred.
[68] When considered in the context of the family arrangements Chrissie’s early demand was, in my view, sufficient to identify the land that she was seeking to enable Ross to effect a transfer to her, provided of course that the Council consented. First, although it is not disputed that Chrissie had specifically sought the camping ground, I find that she also made it expressly known that the she was calling for the clay patch as well. This is what Chrissie said in her evidence and it was corroborated by Vicky’s evidence that in mid-2005 she overheard a telephone
conversation between Ross and Chrissie in which Ross referred to the clay patch as
21 e.g. Perpetual Trustees WA Ltd (as Executor of the Estate of Eleanour Anne Seward (Deceased)
v Riverwest Pty Ltd [2004] WASC 781.
22 Scarfe v Adams [1981] 1 All ER 843 (CA).
23 At p849.
not being a good place to build a house and asking Chrissie why she would choose that area to build.
[69] Secondly, I find that from the earliest stage Chrissie’s request was consistently couched as one for the ten acres. This could only have meant that Chrissie was seeking both the camping ground and the clay patch, which together comprised approximately ten acres. If Chrissie had made a call for less than ten acres then the boundaries would not have been sufficiently clear as the family would not have known which part of the known ten acres she was calling for.
[70] Thirdly, the area that Chrissie wanted was known to Ross in sufficient detail for him to have sought Council consent for a subdivision of it. This knowledge came partly from Davenports’ 1986 application and partly from Ross’ own knowledge of the land. The Davenports’ application had sought consent to subdivide two five acre sections and one ten acre section. The plan submitted with that application was not a survey plan. It did not purport to identify boundaries for any of the proposed lots, including the ten acre block, but for those who knew the land there could have been no doubt as to what the boundaries of the ten acre block would be because three of the boundaries were already determined by existing features.
[71] Bethells Road runs along the northern-eastern side of the camping ground so that boundary was fixed. A neighbour’s property (lot 4 DP 45364) ran along the western side of both the camping ground and the clay patch so that boundary was fixed. The position of the southern boundary, shown on Davenports’ plan as a line running east perpendicular from the south-western corner was readily identifiable because the area of clay from which the clay patch took its name was located in that corner; the clay patch would inevitably be delineated by reference to that feature. Finally, the McKay subdivision ran along the eastern side of the camping ground so that boundary was partly fixed. This left only the portion of the eastern boundary between the end of the McKay subdivision and the southern boundary undefined.
[72] Ross’ house lay just outside the now-approved eastern boundary. It was implicit that Chrissie could not have called for land that included Ross’ house. So a line up the eastern boundary from the end of the McKay subdivision to a point
perpendicular with a straight line across the southern boundary at the rear of the clay patch (as depicted in the Davenports’ plan) would produce an area of approximately ten acres that took in the camping ground and the clay patch and did not impinge on Ross’ house.
[73] Chrissie’s call in 1991 resolved the only uncertainty, which was whether she would call for the entire ten acres, it being in her discretion to call for less. I find that from the time Chrissie called for the ten acres in 1991 Ross knew what area was being claimed with sufficient particularity to have sought Council consent for the subdivision of that area. As I have found, the deed imposed on Ross the obligation to seek consent from the Council. That obligation did not change simply because Chrissie could, as a result of legislative changes, have applied for consent herself. Because the obligation was on Ross to seek consent from the Council the parties cannot have intended that, having signalled that she was exercising her right to call for the land, Chrissie would be without protection. In these circumstances I find that in 1991 Chrissie acquired an interest capable of being protected through injunction or caveat, and capable of being the subject of a grant of specific performance.
[74] Chrissie’s interest was, of course, subject only to the contingency of Ross being unable to obtain consent. Whether, in that event, Chrissie could make another call at some later time was not canvassed in argument and I do not need to consider that scenario.
Ross’ refusal to effect transfer
[75] Ross did not accept the validity of, and did not intend to implement, the consent to subdivide. As soon as he was notified of the consent Ross sought to have the Council reverse its decision on the ground that it had wrongly refused to treat him as a person affected. He sought an undertaking from Chrissie that she would not take steps to implement the subdivision until he had resolved his complaint with the Council. Chrissie’s solicitor raised the issue of Ross’ position amounting to a breach of his obligation under the deed, which Ross rejected.
[76] Within a few weeks of that correspondence Ross underwent medical treatment for a heart condition. In anticipation of the surgery Ross prepared a
document, plainly intended to be a will, but never executed. In it he outlined the plans he had for the principal block and his wishes. These were preceded by the observation that “on my death all prior obligations to my sibling family are extinguished” and included the following:
Be aware that I think the trust should also attempt to subdivide two acres in the base camp area24 eastern side for the benefit of Mitchell, Shay and Perry Rickard [Chrissie’s children] to be set up in a trust for them if it is no more than $30,000 cost involved in setting this up.
[77] Chrissie gave evidence of a meeting sometime in 2007 between her, Ross and Peter Reaburn, of Cato Bolam, to discuss a possible resolution. She said that Peter Reaburn made it clear that the Council was unlikely to grant any subdivisional consent for less than 10 acres on the principal block. After the meeting she stood outside Cato Bolam’s offices and talked with Ross. She asked him again to sign the necessary documents to effect the subdivision but he refused.
[78] Chrissie’s husband died in April 2008. It appears that Ross softened his attitude towards her claim after that and initiated some contact to try and resolve matters. However, nothing had been agreed by the time Ross himself died suddenly in October 2008.
[79] Given my findings as to Ross’ obligations under the deed, I am satisfied that his refusal to execute documents to effect a transfer of the ten acre block for which consent had been given amounted to a breach of the deed.
[80] At this point, I mention an aspect of the case that was evident when each of the parties gave evidence. Chrissie advances her claim on the basis of Ross’ refusal to comply with his obligations under the deed. Vicky and Maria are aggrieved by the attack on Ross’ character, especially since he cannot speak for himself. Both were at pains to describe Ross as a man of great integrity, devoted to his family and deeply
committed to the community he had been part of all his life.
24 The camping ground was also referred to as the base camp area as a result of its use by fil m crews after 1994. I discuss this aspect later.
[81] It seems to me that Ross was carrying the burden of his father’s and his own expectations that the land would be kept intact and in the family. He had the responsibility of supporting his family but was faced with the near-impossibility of earning a living from the land. He was enmeshed in battles with the Council in attempts to obtain consent to use the land so that he could make a living from it. He found the long-standing tension between himself and Chrissie stressful. In these circumstances, my finding that Ross did not act in accordance with his obligations should not be seen as detracting from the personal qualities that Vicky and Maria described.
Are damages an adequate remedy?
[82] My findings to this point are that in 1991 Chrissie acquired an interest in the ten acres that is capable of being enforced now by an order for specific performance. However, specific performance is not appropriate if damages would be an adequate remedy and Ms Grant submitted that damages would be adequate. In particular Ms Grant said that Chrissie had sold every piece of land at Bethells Beach bequeathed to her, with the implication that the land was not meaningful for Chrissie.
[83] Chrissie gave evidence that she sold the house site she inherited from her father because she simply did not have the money to build on it. She sold it to a cousin so that it would remain in the family. Chrissie described her relationship with her parents and her connection with the ten acres she now claims. I accept her evidence. All the parties in the case have a strong bond with the land but Chrissie’s connection goes back to her childhood and strongly reflects the relationship and memories she has of her parents. The rights her siblings agreed to confer on her through the deed were intended to reflect and implement her father’s testamentary wishes. In these circumstances damages would be wholly inadequate.
[84] However, before I can conclude that an order for specific performance should be made, Vicky’s defence of laches and assertion of hardship need to be considered. So, too, does Maria’s claim to an equitable interest that takes priority over Chrissie’s interest.
The defence of laches/hardship
The relevant principles
[85] Vicky asserts that Chrissie failed for 26 years to call for the land or to take steps to enforce her right and that, as things stand now, it would be inequitable to allow her to enforce that right. This is the equitable defence of laches. I treat it as having been raised in relation to both the claim for specific performance and the claim for equitable damages in addition to or in lieu of specific performance. In addition, Vicky says that an order for specific performance would create hardship for her that is relevant to the exercise of the discretion. This overlaps with aspects of the laches defence and I consider both together.
[86] A defendant can resist a claim for equitable relief, including specific performance, by showing that the plaintiff, through delaying the prosecution of his or her case, has either acquiesced in the defendant’s conduct or caused the defendant to alter his position, leading to a state of affairs that would make it unjust to grant the relief sought.25 Mere delay in itself will not usually be sufficient to deprive a
plaintiff of his or her rights.26
[87] The classic description of the doctrine of laches is that of Lord Selborne LC
Vicky’s claim for declarations under the Administration Act 1969
[143] Vicky was granted letters of administration in relation to Ross’ estate and is entitled to deal with the estate in terms of the Administration Act 1969. However, she has sought declarations as to her interests and those of Ross’ three children in
Ross’ estate. Submissions were not made in relation to this claim and I am doubtful
that there is any need for declarations to be made.
[144] Under s 61 Property (Relationships) Act 1976 Vicky had the option of making a claim under that Act or distributing the estate in accordance with s 77 of the Administration Act. It appears that she has elected the latter. Section 77 provides that where a person dies intestate leaving both a spouse and children the spouse receives $155,000,47 all personal chattels absolutely with the residue held on trust, one third for the spouse absolutely and two thirds on the statutory trusts described in s 78 for the children. Section 78(1) sets out the terms of the statutory trust.
[145] Given my conclusion regarding the ten acres the extent of the estate that falls to be dealt with under ss 77 and 78 is clearly confined to Lot 2. In these circumstances, there is no need for a declaration. If parties have a different view, they may file memoranda on the point.
Summary and result
[146] I have found that:
(a) The deed conferred on Chrissie the right to call for up to ten acres taking in both the camping ground and the clay patch;
(b)Chrissie made her call for that ten acres in 1991. Both she and Ross had sufficient knowledge of the land that the boundaries of the area being sought could be identified for the purposes of subdivision;
(c) In making her call Chrissie acquired an equitable interest capable of protection pending performance of the deed by Ross;
47 Currently the prescribed amount under regulation 5 of the Administration (Prescribed Amounts) Regulations 2009.
(d)Ross’ obligation was to take reasonable steps within a reasonable time to obtain consent from the relevant council to subdivide the ten acres and to transfer it to Chrissie. His failure to do so was a breach of the deed;
(e) Damages would be an inadequate remedy;
(f) Chrissie’s interest is not defeated by laches and there are no other circumstances that would justify refusing an order for specific performance;
(g)Maria took an equitable interest in the white house and its environs under her 2004 property agreement with Ross in good faith and without knowledge of Chrissie’s claim;
(h) However, Maria has not discharged the onus of proving that her
interest should displace Chrissie’s interest.
(i) There is no basis upon which I could order Chrissie to compensate
Maria for the work done on the white house between 2010 and 2013.
(j)There is no evidential basis for awarding Chrissie equitable damages in addition to specific performance.
[147] I make an order for specific performance requiring Vicky, within one month of the date of this judgment, to convey to Chrissie 4.047 hectares being Lot 1 of CT NA6B/653 as approved for subdivision in the decision of the Waitakere City Council dated 10 May 2007.
[148] Chrissie is entitled to costs. She may file a memorandum on costs by
27 January 2014. Vicky and Maria may file memoranda in reply by 3 February 2013 and Chrissie may file a memorandum in response by 10 February 2014.
P Courtney J
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