Chinappa v Narain

[2020] NZHC 978

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2638

[2020] NZHC 978

UNDER

Section 142 of the Land Transfer Act 2017

BETWEEN

AJNESH NARAIN CHINAPPA and VILASHNI VANDANA CHINAPPA

Applicants

AND

ANGELINE DEEP NARAIN

Respondent

Virtual hearing:	11 May 2020
Appearances:	NTC Batts for the applicants SCR Raju for the respondent
Judgment:	13 May 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 13 May 2020 at 3.00pm.

Pursuant to Rule 11.5 of the High Court Rules

………………………… Registrar/Deputy Registrar

Solicitors:

Haigh Lyon, Auckland

Aaron Kashyap, Auckland

CHINAPPA v NARAIN [2020] NZHC 978 [13 May 2020]

[1]    By the present application, under s 142 of the Land Transfer Act 2017, the Chinappas seek to remove Ms Narain’s caveat over their residential property in Auckland’s Panmure.

Background

[2]    Ms Narain’s caveatable interest is said to be her advance of funds to the Chinappas – the initial deposit and the final shortfall, together comprising roughly half the purchasers’ contribution – for purchase of the property in March 2009 pursuant to an oral agreement between the parties. Ms Narain is Mrs Chinappa’s sister. The parties lived in the Panmure property, together with Ms Narain’s partner and the sisters’ mother, until early 2012 when the Chinappas served trespass notices on the other occupants.

[3]    In April 2012, Ms Narain lodged a caveat against the property’s title. When the Chinappas applied to the Registrar of Lands for the caveat to lapse, Ms Narain applied to this Court for orders the caveat be sustained. Doogue AJ identified Ms Narain had to show:1

… she has an arguable equitable interest in the property which justifies the continued presence on the register of the caveat in order to protect [her] position … while she take[s] steps to assert her claim.

[4]    On Ms Narain’s “not straightforward or clear” evidence, Doogue AJ nonetheless was “not prepared to conclude that [Ms Narain] does not have a reasonably arguable case for sustaining the caveat”, and therefore sustained it “until further order of the Court”.2 The Judge expressly noted:

It may be … because of the apparent closeness of the family, boundaries between one party’s property and another’s property were not regarded as important as they might be in other families in which there might be more emphasis on keeping a family member’s property strictly separated from that of other family members.

[5]    That was on 4 September 2013. In November 2019, the Chinappas made the present application for the caveat’s removal, on grounds no substantive proceedings

1      Narain v Chinappa [2013] NZHC 2286 at [19].

2      At [41]–[43].

yet had issued, and they were prejudiced by their continuing inability to deal with their property. No timely opposition was filed by Ms Narain, but a notice of opposition was handed up by counsel at the application’s first call on 17 December 2019, Gault J saying in relation to the foreshadowed substantive proceeding she “needs to progress the matter without further delay”.

[6]    Ms Narain’s substantive proceeding was filed in April 2020. It claims her half- share interest in the property, held by the Chinappas on constructive trust for her.

Applicable law

[7]    Section 142 of the Land Transfer Act 2017 economically provides “[t]he court may, on application by a person who has an estate or interest affected by a caveat against dealings, order that the caveat is removed”. It is accepted the new formulation made no change to the position formerly under s 143 of the Land Transfer Act 1952, in which the court “may make such order in the premises, either ex parte or otherwise, as to the court seems meet”.

[8]    Once a reasonably arguable case to sustain a caveat has been established, justice ordinarily requires its maintenance.3 Nonetheless, there is a residual discretion to remove it, to be exercised “cautiously”.4 Such discretion may be exercised:5

… only where the Court is completely satisfied that the legitimate interests of the caveator will not thereby be prejudiced. If, on the facts of a case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of money secured over the land or specific performance of an agreement or if the caveator’s interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate for the caveat to be removed notwithstanding that the right to the claimed interest is undoubted.

Thus an example of the necessary caution is “where the Court finds there is no practical advantage to maintaining a caveat and the caveator will not be prejudiced”.6

3      Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994) 6 TCLR 88 (CA) at 92.

4      Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813 at [24].

5      Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

6      Botany Land Development Ltd v Auckland Council, above n 4, at [24].

Discussion

[9]    The Chinappas say they are prejudiced by the caveat’s continuation. They are in financially straitened circumstances, limited by Mr Chinappa’s health to reliance on Mrs Chinappa’s income alone to bring up their two children. The property requires insulation and basic maintenance. By reason of the caveat’s presence, they are unlikely to be able to access the considerable equity in their property to fund such works.

[10]   Ms Narain disputes the adequacy of that evidence. She says the Chinappas have not adequately explored other sources of funding. They have enjoyed sole occupation of the property since the parties fell into dispute. They had not disclosed their subsequent grant of charging orders over the property, or that some part of the funding is to consolidate debt rather than in property maintenance. The Chinappas reply the charging orders are precisely to secure credit, because they could not access the equity in their property to acquire whiteware to substitute for that taken by the other occupants on their exclusion from the property.

[11]   “[C]ulpable and serious delay … to the prejudice of the registered proprietor” has been held to justify exercise of the discretion to remove a caveat.7 But that was determined at a transitional point in characterisation of the discretion, moving away from an earlier balance of convenience test.8 Such delay, even to the prejudice of the caveatee, alone is not a sufficient ground to secure the caveat’s removal. I am to be ‘completely satisfied’ removal even on that ground will not prejudice the caveator’s legitimate interests.

[12]   On any view, the eight-year gap between lodging the caveat and issuing proceedings to enforce its foundation is extensive. Ms Narain’s mother and brother now regret they convinced her not to pursue family matters through the courts. But the six-year gap between Doogue AJ’s order and the present application only marginally is shorter. Mr Chinappa acknowledges their issues with Ms Narain were “put to one

7      Varney v Anderson [1988] 1 NZLR 478 (CA) at 481.

8      Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA), cited in Varney v Anderson, above n 7, at 479.

side” to focus on various wider family crises. That family-centred mutuality suggests it is difficult to criticise either side for the long-disputed caveat’s continuation.9

[13]   In the circumstances of Ms Narain’s claim in the context of this extended family, I am unsure what legitimate interest, what reasonable expectation of benefit, what practical advantage continuation of the caveat secures. Notably, the caveat is a caveat against “dealings”: something prejudicially affecting the interest protected by the caveat.10 The property is the Chinappas’ family home; its rateable value is nearly three times its purchase price; the Chinappas have limited financial ability to service and therefore to obtain other than modest loans; there is no suggestion the property risks alienation, whether by the Chinappas themselves or on any mortgagee sale; and, even in those circumstances, there is no suggestion any part-interest had by Ms Narain would not be compensable from proceeds. Ms Narain is not seeking to recover money secured over the land, or specific performance of any contended agreement to transfer any legal interest in the land to her. But neither is any alternative proposed to accommodate her.

[14]   The Chinappas bear the onus to provide that basis for exercise of my discretion. Their focus instead on Ms Narain’s delay, and its prejudice to them, means they have not done so. I cannot be ‘completely satisfied’ Ms Narain’s legitimate interests are not prejudiced by the caveat’s removal. Caution therefore commends I refuse to do so. But that is not to allow the parties’ respective lassitude to continue. Ms Narain must expeditiously pursue her substantive proceeding to determination, and the Chinappas have leave to re-apply for the caveat’s removal if she does not.11

Result

[15]The Chinappas’ application for removal of the caveat is dismissed.

9      Marshall v Bourneville [2013] NZCA 271, [2013] 3 NZLR 766 at [46]. Leave to appeal refused [2013] NZSC 107.

10     Land Transfer Act 2017, s 140.

11     Marshall v Bourneville, above n 9, at [47].

Costs

[16]   In my preliminary view, costs on the application should lie where they fall. That is because, although Ms Narain has been successful in resisting the application, her delay in prosecuting her substantive claim disqualifies her from any entitlement to the Chinappas’ contribution to her costs. If that is not accepted by the parties, costs are reserved for determination on a short memorandum of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by Ms Narain within ten working days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.

—Jagose J