Boyer v McCracken
[2024] NZHC 571
•19 March 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-800
[2024] NZHC 571
BETWEEN ARTHUR JAMES BOYER AND NICOLE RUTH KRAMER
PlaintiffsAND
CLARE MCCRACKEN
Defendant
Hearing: 12 February 2024
13 February 2024 additional reply submissions by plaintiffs
Counsel:
R J Hollyman KC and A J Peat for Plaintiffs S A Grant for Defendant
Judgment:
19 March 2024
JUDGMENT OF HINTON J
This judgment was delivered by me on 19 March 2024 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: McEntee, Auckland
Douglas M A Burgess, Auckland
BOYER & anor v MCCRACKEN [2024] NZHC 571 [19 March 2024]
[1] Given this case is over a very small strip of land, it is surprising how much airtime has been devoted to it. Six years after I issued a judgment on 20 April 2017,1 the defendant has applied for a ruling as to interpretation of part of cl 1 of the sealed orders, themselves made long after the judgment. The plaintiffs have responded by seeking a stay on the basis that the Court does not have jurisdiction to hear the application.
[2] Originally both applications were set down before me for hearing on 12 February 2024. However, by minute dated 6 December 2023, La Hood J directed that the hearing be limited to resolving the application for stay and protest to jurisdiction.2
Background
[3] The April 2017 judgment addressed an application by the plaintiffs for orders under ss 321–325 of the Property Law Act 2007 vesting an area of land belonging to the defendant in them, relying on a path as a “wrongly-placed structure”.
[4] In the judgment I recorded that the defendant had also sought ancillary orders amending the existing cross-leases.3 As the orders fell outside the strict ambit of the proceeding but the plaintiffs had indicated they were amenable to them, I indicated my intention to make the orders proposed but asked the parties to confirm the form of the orders.4 Unfortunately agreement was unable to be reached and the April 2017 judgment remained unsealed. An issue arose as to the implementation of this aspect of the judgment. In particular there was an issue between the parties as to the form of the plan lodged with Land Information New Zealand (LINZ).
[5] In a substantive minute issued on 24 March 2020, following a further hearing, I addressed the form of the orders the plaintiffs proposed to seal.5
1 Boyer v McCracken [2017] NZHC 755, (2017) 18 NZCPR 671.
2 Boyer v McCracken HC Auckland CIV-2015-404-800, 6 December 2023.
3 Boyer v McCracken, above n 1, at [96].
4 At [96].
5 Boyer v McCracken HC Auckland CIV-2015-404-800, 24 March 2020.
[6] I concluded that, in the absence of proper pleadings (or consent), it was not appropriate for the plaintiffs to present for sealing a formal judgment containing the following proposed order:6
(a)The restrictive covenant boundary between the plaintiffs’ exclusive use area and the defendant’s exclusive use area is to be adjusted so that the path, up to the line of the former fence, becomes part of the restrictive covenant area of the plaintiffs’ property.
(b)To give effect to (a):
(i)LT Plan 513979, currently lodged with LINZ [Land Information New Zealand] and approved as to survey, shall be deposited.
(ii)The following instruments attached to these orders (Instruments) are to be lodged for registration with LINZ:
1. Variation of Lease C373513.1;
2. Surrender of Lease for Lease Instrument C312314.4;
3. New Lease Instrument for Area 1 on DP 513979 and Restricted Area marked “E” on 513979.
(iii)The plaintiffs and defendant must duly sign Authority & Instruction forms in customary form (Forms) authorising the plaintiffs[’] solicitors to lodge the Instruments for registration with LINZ, and provide the same to the plaintiffs’ solicitors.
(iv)If the defendant has not duly executed the Forms and provided them to the plaintiffs[’] solicitors within 14 days of service of these orders, the Registrar of this Court is authorised and directed to sign the Forms for and on behalf of the defendant and to provide them to the plaintiffs’ solicitors.
(v)ANZ Bank of New Zealand Limited as mortgagee under mortgage 9378868.3 is to provide its consent to the depositing of the Plan and registration of the Instruments, and the defendant is not to prevent or hinder the provision of that consent.
[7] The April 2017 judgment was ultimately sealed on 2 August 2023 in the following terms but without any annexed plan:
JUDGMENT ON TRIAL BY A JUDGE
This proceeding was heard on 8, 9 and 10 August and 28 and 29 November 2016 at Auckland before the Honourable Justice Hinton, who, having heard from R J Hollyman and G Schumacher, counsel for the plaintiff, and S A Grant
6 At [31]–[33].
and S Laing, counsel for the defendant, and having heard the evidence adduced, makes the following orders:
1.An order adjusting the restrictive covenant boundary between the plaintiffs’ restrictive covenant area and the defendant’s restrictive covenant area, shown on the flats plans DP 147940 and DP 151152, so that the path, up to the line of the former fence, becomes part of the restrictive covenant area of the plaintiffs’ property.
2.The order in (1) above is to be put into effect by the lodgement with Land Information New Zealand of a covenant area only plan showing the new covenant areas, and variations to the cross leases to refer to the new plan;
3.The plaintiffs are to pay all costs of survey, related expenses and legal conveyancing expenses;
4.Fixing the compensation to be paid by the plaintiffs to the defendant in the sum of $85,000, to be paid by 20 July 2017;
5.Leave is reserved to apply further.
[8] In 2022 the plaintiffs referred various issues between the parties to arbitration pursuant to an arbitration clause in the cross-lease. One of those issues was the question of where the boundary line between the parties should be drawn. The defendant says she did not agree to arbitrate, at least as to the boundary line issue.
[9] More relevantly, on 11 August 2023 the defendant filed a counterclaim in the arbitration in which she alleged:
23.The Claimants have trespassed repeatedly on the wall that the Respondent has built entirely at her cost, on her exclusive use area, in breach of Clauses 10 and 15 of the cross lease in C 312314.4L.
24.The Claimants have refused to allow the Respondent to complete the finishing sealant on the side of the wall that faces Flat 1, or to otherwise maintain it and have grown plants over the wall.
[10]The defendant then sought, inter alia:
E.A declaration that the Respondent has the exclusive right to the Wall, and that her rights to maintain it are recorded in any new cross lease documents;
[11] The arbitration took place before Dr Anna Kirk on 14–16 November 2023 and a decision is awaited.
Present application
[12] The issue now raised by the defendant is whether the words “the path, up to the line of the former fence” in cl 1 of the sealed orders should be interpreted as a line drawn along the midpoint of the fence, including posts and palings, or should mean a line along the face of the palings looking at the fence from the plaintiffs’ property. The defendant contends it is the latter, and the plaintiffs say it is the former.
[13] The plaintiffs’ protest to jurisdiction and application for stay of the defendant’s application is based primarily on their argument that the issue for which interpretation is sought has already been submitted by agreement to arbitration. The defendant says she did not submit to arbitration and in fact filed a protest or, alternatively, that there was agreement to arbitrate, but only in respect of some of the issues between the parties, not the issue of the location of the covenant boundary.
[14] A number of additional arguments were raised but I do not need to consider them all. I find this Court does not have jurisdiction and that a stay of the present application by the defendant should be granted under r 7.80 of the High Court Rules 2016.
That rule provides as follows:
7.80 Arbitration by consent
(1)The parties to a proceeding may agree to arbitration of their dispute or any part of it under the Arbitration Act 1996 at any time during the course of the proceeding.
(2)If an arbitration agreement entered into during the course of a proceeding relates to all the matters in dispute in the proceeding, the court must, on application by a party, stay the proceeding.
(3)If an arbitration agreement entered into during the course of a proceeding relates to some but not all of the matters in dispute in the proceeding, the court must, on application by a party, stay those parts of the proceeding to which the arbitration agreement relates.
(4)The court may make the stay on terms as to costs or other ancillary matters.
(5)Subclauses (2) and (3) do not apply if the court finds that the agreement has no effect or is inoperative or incapable of being performed.
[16] I agree with Mr Hollyman KC that the matter raised by the defendant has been the subject of arbitration. Both parties’ surveyors agreed for purposes of the arbitration that if the plaintiffs’ surveyor is correct and the boundary should be the midpoint of the fence, then the location of the wall built by the defendant is within “acceptable tolerances and margins of error” so as to be the boundary wall. That would have the consequence that the defendant would not have exclusive rights to the wall as claimed in [23] and [24] of her counterclaim. It therefore necessarily follows that to determine that part of the counterclaim, the arbitrators would need to determine the location of the boundary, that is whether it sits at the midpoint of the fence or on the plaintiffs’ side of the palings of the fence.
[17] While Mrs Grant submitted that the defendant’s counterclaim in the arbitration “is not with regard to the boundary — it is with regard to the wall”, for the above reasons the issue is one and the same. The finding of the arbitrator on the defendant’s counterclaim will necessarily be a finding as to where the line is drawn for purposes of cl 1.
[18] I note the defendant’s claim that she had from the outset raised a possible protest to jurisdiction with the arbitrators. She then filed a formal application for stay of the arbitral proceedings on 30 August 2023. One of the grounds for that application was that the question of the restrictive covenant boundary line was an issue solely within the jurisdiction of the Court. Also on 30 August 2023, the defendant filed an amended defence and counterclaim in the arbitration. While the defendant says she filed her counterclaim only because of the arbitrators’ 14 April 2023 ruling that they were going to deal with her stay application at the same time as they issue their award, her counterclaim was not filed on any without prejudice basis. I agree with Mr Hollyman that the defendant’s counterclaim is the equivalent of an agreement to arbitrate cl 1.
[19] Assuming that this present proceeding is still on foot (that is, that the Court is not functus officio), as the defendant does for purposes of her application, then in terms of r 7.80(2), the parties have entered into an arbitration agreement during the course of a proceeding that relates to all of the matters in dispute in the proceeding
(the exact boundary line being the only matter now “in dispute” in this proceeding). The Court must on application by the parties, stay the proceeding.
[20] On that basis, under r 7.80(2), the proceeding must be stayed and I so order. If, as the plaintiffs alternatively argue, the proceeding is not still on foot, which may arguably be the case given orders have been sealed, then the Court is functus officio. Either way, the Court does not have jurisdiction.
[21] I touch briefly on some of the further points which Mrs Grant submits preclude my granting of a stay.
[22] First, Mrs Grant says the arbitrator does not have power under s 325 of the Property Law Act to make the orders sought by the plaintiffs in the arbitration in terms of the boundary line. This, however, does not preclude the arbitrator making relevant findings which could then be referred to this Court for orders to be made. Mrs Grant says it would be a problem, for example, if this Court says that the arbitral award is inconsistent with the sealed orders. I see little possibility of that being the case given, as the parties both argue and I agree, there is scope for the language in cl 1 to be interpreted either way. That language was provided to the Court by one, or both, parties.
[23] Mrs Grant says further that if LINZ has a substantive problem with this Court’s orders, then the Court would need to refer the matter back to the arbitrators; the arbitrators would need to amend their award; and then refer it back to the High Court. She says this makes it very important that the Court keep control of the proceedings. The defendant simply seeks a full and final order of this Court on the issue. However, these are potential procedural problems only, that may not come to fruition. Also, as I pointed out at the hearing, the Court orders already made have hardly been treated by the parties as full and final. While there may be inefficiencies, as Mrs Grant argues, they are nothing compared to the inefficiencies of having the same matter argued before the arbitrators and then subsequently argued in this Court.
[24] Secondly, Mrs Grant says that r 7.80 has to be read together with art 8 of the Arbitration Act 1996 and to apply r 7.80 in this context would be entirely inconsistent
with art 8. She says that if a party wants a matter to be referred to arbitration they must apply for a stay immediately after the resolution of any interim relief issues in accordance with the decision in Pathak v Tourism Transport Ltd. 7 Art 8 provides:
8 Arbitration agreement and substantive claim before court
(1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.
[25] In Pathak Heath J held the “true test to be applied under art 8 is whether the plaintiffs submitted the substantive dispute to the jurisdiction of the Court”.8 Here the plaintiffs, from the commencement of the present proceeding (which must be read in this context as being the application for interpretation of the sealed orders) have disputed this Court’s jurisdiction. It seems to me that art 8 is entirely consistent with the application of r 7.80 in this case.
[26] As I observed earlier, there were a number of other points on which submissions were made, including as to this Court’s inherent jurisdiction to issue a stay and the effect of r 15.1 of the High Court Rules. Given my findings above, I do not consider any of these points either prevails or is relevant.
[27]I therefore make the following orders:
(a)This proceeding is stayed in accordance with r 7.80(2) of the High Court Rules 2016.
7 Pathak v Tourism Transport Ltd [2002] 3 NZLR 681 (HC).
8 At [48].
(b)The plaintiffs are entitled to costs. If not agreed, a memorandum limited to three pages should be filed by them within 14 days. The defendant is to reply within a further seven days.
Hinton J
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