Burmeister v Registrar-General of Land

[2013] NZHC 2777

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-470-000912 [2013] NZHC 2777

UNDER  the Land Transfer Act 1952

AND

IN THE MATTER OF       a claim for compensation pursuant to s

172 of the Land Transfere Act 1952

BETWEEN  KENNETH SIDNEY BURMEISTER and VALERIE JOAN BURMEISTER Plaintiffs

ANDREGISTRAR-GENERAL OF LAND Defendant

MARK HENLEY-SMITH Third Party

Hearing:                   21 October 2013

Appearances:           No appearance by Plaintiffs

J Burns for Defendant
C Pidgeon QC for Third Party

Judgment:                23 October 2013

JUDGMENT OF ELLIS J

This judgment was delivered by Justice Ellis on 23 October 2013 at 12.00 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date……………………..

BURMEISTER v REGISTRAR-GENERAL OF LAND [2013] NZHC 2777 [23 October 2013]

[1]      The Burmeisters are claiming compensation from the Registrar-General of Land  under  s  172(b)  of  the  Land  Transfer Act  1952  (the  LTA)  following  his registration  of  documents  relating  to  fraudulent  transactions  which,  they  say, deprived them of title to their property.

[2]      Separate proceedings brought by the Burmeisters in relation to the underlying fraud resulted in them obtaining judgment in various causes of action, including deceit, against John and Gillian O’Brien and Geoffrey Clayton (the O’Brien proceedings).   Despite that success they have lost ownership of their home and it may be that their only way of achieving redress will be to succeed in this present proceeding.

[3]      The  proceedings  are  for  trial  in  December  this  year.    In  February,  the Registrar-General indicated that he was considering issuing a third party notice to Mr Henley-Smith.  Mr Henley-Smith was the lawyer who completed the documents that were registered by the Registrar-General.  He was also sued by the Burmeisters in the O’Brien proceedings, but not successfully.  Asher J held that although he did not act in accordance with good professional practice and had been careless, he had no relationship with, or knowledge of, the Burmeisters, and did not owe them a duty of care.

[4]      I am advised, and I accept, that the five days allocated for the trial took into account the possibility that he might be joined.  Mr Burns accepted that the hearing time required would be shorter, in the absence of joinder.

[5]      At the end of June Asher J granted leave (on the papers) to issue the third party notice and, in July, it was served on Mr Henley-Smith.1    The accompanying statement of claim alleges that Mr Henley-Smith owed the Registrar-General a duty of care and that he breached it.  In essence, the Registrar-General says that, to the extent he may be found liable to the Burmeisters, Mr Henley-Smith will be liable to

him in the same amount.

1      Leave was required by r 4.4(2)(b) of the High Court Rules.

[6]      Although Mr Henley-Smith has filed a statement of defence to the Registrar- General’s statement of claim he has now applied to set aside the third party notice.  It is that application to which this judgment relates.

[7]      The principal basis for Mr Henley-Smith’s application was that it is pointless for the Registrar-General to pursue him because he has no money. That was disputed by the Registrar-General.  But I do not propose to deal with the matter on that basis. There is, in my view, a prior and more fundamental issue.

[8]      Mr Burns quite properly agreed that it is appropriate on an application to set aside that the Court consider the circumstances in which the High Court Rules contemplate that third party notices may be issued.   These are set out in r 4.4(1), which provides:

(1)      A defendant may issue a third party notice if the defendant claims any or all of the following:

(a)       that  the  defendant  is  entitled  to  a  contribution  or  an indemnity from a person who is not a party to the proceeding (a third party):

(b)       that the defendant is entitled to relief or a remedy relating to, or connected with, the subject matter of the proceeding from a third party and the relief or remedy is substantially the same as that claimed by the plaintiff against the defendant:

(c)       that  a  question  or  issue  in  the  proceeding  ought  to  be determined not only between the plaintiff and the defendant but also between—

(i)       the plaintiff, the defendant, and the third party; or

(ii)      the defendant and the third party; or

(iii)     the plaintiff and the third party:

(d)       that there is a question or an issue between the defendant and the third party relating to, or connected with, the subject matter of the proceeding that is substantially the same as a question or an issue arising between the plaintiff and the defendant.

[9]      Although various of the documents filed on behalf of the Registrar-General speak in terms of his right to be “indemnified” by Mr Henley-Smith, Mr Burns confirmed that that term had been used by him in a general sense and that there is no

operative contractual or statutory indemnity at play here.   Rather, he said that the Registrar-General relies upon r 4.4(1)(b) as the basis for the third party notice.  In other words, he says that:

(a)      the   Registrar-General   is   entitled   to   relief   or   a   remedy   from Mr Henley-Smith that is related to, or connected with, the subject matter of the proceeding; and

(b)the relief or remedy is substantially the same as that claimed by the plaintiff against the defendant.

[10]     Although I accept that the quantum of damages sought by the Registrar- General from Mr Henley-Smith will necessarily match any compensation that the Registrar-General  is  ordered  to  pay  to  the  Burmeisters,  it  has  been  held  that similarity of relief is not sufficient under this rule.  For example in McAllister v Peat Marwick Management Consultants Ltd Master Hansen commented, at 6 – 7:2

… the defendant’s submissions seem to me to fall into a common trap and that is the simple equation of the damages claimed by plaintiff against defendant with what the defendant claims against the proposed third party. That, of course, in itself is insufficient.  There must be similarity of facts, and  the  third  party  claim  must  be  designed  to  determine  whether  the defendant or the third party should ultimately bear the plaintiff’s loss. Although  superficially  there  would  appear  to  be  a  similarity  of  facts, different  matters  would  have  to  be  considered  between  plaintiff  and defendant and proposed third party.

[11]     In my view, the “trap” referred to by Master Hansen is one into which the Registrar-General has also fallen.  More particularly, although Mr Henley-Smith was involved in the wider factual matrix that gave rise to the Burmeisters’ troubles, in reality their claim against the Registrar-General raises quite different matters from the Registrar-General’s claim against Mr Henley-Smith.

[12]     For example, Mr Burns accepted that Mr Henley-Smith would not be called

as a witness by either side if the Burmeisters’ claim were to be heard separately.

That is unsurprising – the issue of whether or not the Registrar-General is liable to

2      McAllister v Peat Marwick Management Consultants Ltd HC Dunedin CP148/88, 26 February

1991.

pay compensation under s 172(b) has nothing to do with him or his conduct, except insofar as it was he who prepared the documents for registration.  That, however, is not a matter in dispute.

[13]     To the extent that Mr Henley-Smith’s part in the wider matter might (contrary to what I have just said) assumes some relevance in the present proceeding, the Registrar-General’s interests would surely best be served by simply accepting the facts as found by Asher J.

[14]     I take the most obvious point by way of example. Assuming that Mr Henley- Smith’s carelessness might have some bearing on the Registrar-General’s defence to the Burmeisters’ claim (which I doubt) then the Registrar-General would be in a far better position if he simply accepted that as a fact found by Asher J by which the Burmesieters are themselves bound.   By contrast, if Mr Henley-Smith were to be joined  to  the  proceeding,  then  the  Registrar-General  faces  the  real  risk  that Mr Henley-Smith will attempt to re-litigate or contest the finding that he had been careless on the basis that there is no operative estoppel or res judicata as between him and the Registrar-General.

[15]   And there is, of course, the further point that if the Registrar-General successfully defends the Burmeisters’ claim, there will be no need for him to pursue Mr Henley-Smith.

[16]     I appreciate and record that the Registrar-General’s concern is that there be no unnecessary costs incurred in proceedings that already have, through no fault of his, an unfortunate and complicated history.  But in light of the matters to which I have just referred I consider that expedition and the interests of justice (which in the present case largely coincide) favour Mr Henley-Smith not being a third party to these proceedings.

[17]     The third party notice is set aside accordingly.

Rebecca Ellis J