Claremont Nominees Limited v Jardine
[2016] NZHC 164
•15 February 2016
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2016-412-000016 [2016] NZHC 164
BETWEEN CLAREMONT NOMINEES LIMITED
First Plaintiff
AND
HOMESTEAD BAY TRUSTEES LIMITED
Second Plaintiff
AND
DICKSON STEWART JARDINE and JILLIAN FRANCES JARDINE, DICKSON STEWART JARDINE and HGW TRUSTEES LIMITED and JILLIAN FRANCES JARDINE and HGW TRUSTEES LIMITED Defendants
Hearing: 11 February 2016 via telephone conference Appearances:
J D Turner for the Plaintiffs
P Page for the DefendantsJudgment:
15 February 2016
JUDGMENT OF NATION J
Mode of hearing
[1] On 9 February 2016, the plaintiffs filed with the High Court a without notice application for orders that a caveat not lapse (the application). Given the application was being made without notice, it could only have been an application for an order the caveat not lapse until further order of the Court.
[2] Although the application was lodged on the basis it needed to be dealt with urgently, I noted the application appeared to have been filed within 14 days of the
Registrar/General of Land giving notice that the defendants had filed an application
CLAREMONT NOMINEES & HOMESTEAD BAY v JARDINE [2016] NZHC 164 [15 February 2016]
to lapse the caveat. Assuming the plaintiffs had served a copy of the application at the same time as it was filed in the High Court, the caveat would not lapse until a further 28 days had passed.
[3] Although the application had been made on a without notice basis, I arranged a telephone conference with counsel for the plaintiffs and the solicitor who it appeared was acting for the defendants to see if agreement could be reached as to how matters should proceed from this point. I indicated in that conference that, on the information provided to me, I considered it would be appropriate to make an interim order but that I anticipated there would be a need for a hearing to determine whether the caveat should continue further into the future and to give directions as to how matters should proceed.
[4] The solicitors for the plaintiffs, in particular Homestead, have been McVeagh Fleming. The solicitor for the defendants for most of the relevant period was Mr Graham Todd of Queenstown. Gallaway Cook Allan began acting for the defendants in September 2015.
[5] During the telephone conference I was told that copies of all the documents filed with the Court were supplied to the defendants’ solicitor after the telephone conference had been arranged.
[6] During the telephone conference, Mr Page, for the defendants, told me that the defendants could not and would not consent to the making of an order that the caveat not lapse, even on an interim basis. He informed me, and as I understood it also for the first time the solicitor for the plaintiffs, that prior to the plaintiffs lodging their caveat the defendants had entered into another sale of their property. That sale is conditional on the vendors obtaining the removal of the plaintiffs’ caveat. The defendants thus want the issue of whether the plaintiffs’ caveat can continue to be determined as soon as possible.
[7] Against that background, I am going to deal with the plaintiffs’ application on
an urgent and without notice basis but on the expectation that the Court will arrange
for a hearing of the application on a notice basis with the defendants having had an opportunity to file affidavit evidence in opposition to the plaintiffs’ application.
The evidential background, as it stands
[8] The first plaintiff, Claremont, by an agreement dated 18 December 2013, agreed to buy from the defendants a large piece of land in the Jack’s Point region of Queenstown, part of the Remarkables Station. The price was originally $18,500,000 plus GST. The property being purchased was described as “Lots 6-7 being a proposed subdivision of Lots 2 and 6 DP 443832 and Easement over Lot 8 DP
443832”. Claremont nominated the second plaintiff, Homestead as the purchaser under a deed of nomination dated 28 August 2014.
[9] The agreement was subject to the purchaser being able to carry out due diligence. The vendor was required to cooperate with the purchaser by providing relevant reports and documentation.
[10] The vendor’s agent provided various documents to one of the directors of Claremont. Those documents did not include a “tripartite agreement” (the TPA) between the defendants and various other parties who were involved in another part of the Jacks Point development outside the proposed Lots 6 and 7. Claremont also obtained the underlying head title CT 607922 for the land being subdivided. That title did not show any encumbrance, mirroring those that ultimately came to be registered against Lots 6 and 7.
[11] By agreement, the time for completing due diligence was extended. At various times there were also changes to the proposed settlement date, the level of deposit and the price, which was ultimately increased to $19,000,000. The agreement became unconditional on 31 August 2014.
[12] Around October 2014, Mr Todd, in an email to the purchasers, referred to the “tripartite agreement”. The TPA provided for various parties, including the defendants, to the Jacks Point development to cooperate over the planning and installation of infrastructure servicing the whole development. A major part of that related to the supply of water to the subdivision. The agreement aimed to ensure
those costs would be shared equitably with an emphasis on the costs being proportionate in accordance with the number of residential lots that the parties were able to develop through use of that infrastructure. It was a term of the agreement that the parties would ensure any purchaser of land which they owned was informed of the agreement and accepted that the land being purchased would be subject to obligations that had passed to the purchaser under that agreement.
[13] There then ensued correspondence and discussions between the parties, or their representatives, over this agreement, what had been known of it before the agreement was entered into, its terms and what it required of the defendants and potentially also of the plaintiffs.
[14] On 17 December 2014, Mr Todd advised McVeagh Fleming that Homestead would be required to sign a deed of covenant prior to settlement agreeing to be bound by the provisions of the TPA. Correspondence in response from McVeagh Fleming indicated Homestead could not give that assurance but wanted to work constructively with all parties to find a practical way forward but also wanted certainty as to what their ultimate obligations might be if they did accept responsibility for certain obligations under the tripartite agreement.
[15] In a letter of 13 February 2015, Mr Todd advised that an agreement in principle had been reached as between the defendants and other parties that a covenant would be registered against the title to the defendants’ property to ensure Coneburn Water Limited and other parties had the benefit and obligations under covenants arising out of the tripartite agreement.
[16] McVeagh Fleming responded in a letter of 27 February 2015 asserting registration of such covenant would be detrimental to current and future value of the lands Homestead was purchasing and objecting to the registration of the covenants against the land. The parties, or their representatives, continued with attempts to find a practical way of resolving issues for the benefit of all parties.
[17] On 5 May 2015, the defendants’ solicitor provided search copies of titles for
Lots 6 and 7 to the solicitors for Homestead. The search copies of the title showed
that two land covenants had been registered against the titles on 4 March 2015. The plaintiffs have not provided the Court with copies of the encumbrances. From other information contained in an affidavit filed in support of the application, it appears that the encumbrances were for the benefit of the Coneburn Water Supply Company Limited, a third party claiming rights arising out of the tripartite agreement, and other parties to the agreement.
[18] By letter of 26 May 2015, McVeagh Fleming objected to these instruments, asked for them to be removed from the titles prior to settlement and stated they were requisitioning the titles to preserve their position.
[19] On 26 May 2015, Mr Todd responded by saying the defendants were “unable and unwilling to remove the Easement Instruments”. The letter went on to say that, notwithstanding that advice, the solicitor confirmed, on behalf of the vendors, “that it too is committed to attempting to resolve the outstanding issues relating to the Tripartite Agreement”.
[20] On 27 May 2015, McVeagh Fleming wrote to the solicitor for the defendants asking for an amendment to a clause 5.2(2)(3)(c) of the sale and purchase agreement. This clause required the purchaser to respond to the vendor’s rejection of the requisition and for both vendor and purchaser to have the right to cancel the agreement if the rejection of the requisition was not accepted by the purchaser.
[21] Mr Todd responded on 29 May 2015 advising that the defendants would not agree to the amendment but reiterating that the defendants were committed to trying to resolve the issues relating to the possible connection to the Coneburn Water Limited water supply in a collaborative manner including in relation to Homestead’s “desire to secure water sufficient to service any future development it might undertake on the land, the subject of the agreement to purchase”.
[22] There then ensued continuing correspondence and negotiations between Homestead and its representatives and the solicitor for the defendants with Homestead attempting to find out exactly what costs it would incur if it were to accept it would have obligations under the TPA. Progress in that regard also
required other parties to the TPA to deal with certain long outstanding issues as between them. Certain proposals were made for moving matters forward in a detailed letter of 30 July 2015 from Mr Todd. Those proposals were without prejudice to the vendors “rights in terms of the Agreement given [Homestead’s] outstanding requisitions to the title of the land the subject of the Agreement”.
[23] McVeagh Fleming responded with further requests for information but also indicating they still wanted to work at achieving a full agreement with all parties.
[24] In a letter of 24 September 2015, Gallaway Cook Allan advised they were now acting as solicitors for the defendants. They gave notice, pursuant to clause
5.2(3)(c) of the agreement, that they were cancelling the agreement.
[25] In a letter of 6 October 2015, McVeagh Fleming responded rejecting the cancellation. In a further letter of 20 October 2015, they gave a more detailed response making it clear they did not accept the purported cancellation. The letter asserted that the encumbrances were not registered over the underlying title relating to the proposed Lots 6 and 7 when the agreement was entered into and that the new encumbrances were not part of the new title for Lots 6 and 7 that the parties had contracted for at the outset. McVeagh Fleming claimed that, under the agreement, the defendants’ obligation was to do all that was required to create the new titles for Lots 6 and 7 and those titles had to be unencumbered by the restrictive covenants which were the subject of the instruments later registered over those titles. The letter advised the defendants that Homestead would be seeking specific performance of the agreement. It required the defendants to perform the agreement and to provide titles to the purchaser, free of the instruments they objected to.
[26] On 21 December 2015, Homestead lodged a caveat against the titles for Lots
6 and 7 claiming an interest in Lots 6 and 7 as the nominated purchaser under the agreement for sale and purchase dated 18 December 2013.
[27] On 27 January 2016, Homestead received a letter dated 22 January 2016 from Land Information New Zealand. It advised that an application had been made by the defendants to lapse that caveat. The letter advised that the caveat would lapse unless
the registrar received notice within 14 days of delivery of the notice that application to the contrary had been made to the High Court or if no such order had been made and served on the registrar within a further period of 28 days.
Relevant principles
[28] The principles which are adopted in relation to the plaintiffs’ application are these:
(a) the burden of establishing that they have a reasonably arguable case for the interest claimed is upon them as caveator;
(b)the plaintiffs must show an entitlement to, or beneficial interest in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission, or of any trust expressed or implied;1 and
(c) if the plaintiffs have discharged the burden upon them, there remains a discretion as to whether to remove the caveat, which will be exercised cautiously.
[29] I must be mindful of the fact that, at this stage, I am making an interim order only and that there will be a further hearing on an opposed basis as to whether there should continue to be an order that the caveat not lapse.
Conclusion
[30] Given the background to the present situation, as apparent from my summary of the plaintiffs’ evidence as currently before the Court, I am satisfied the plaintiffs have established that they have a reasonably arguable case that they do have an entitlement, or beneficial interest in, the relevant Lots 6 and 7 by virtue of an unconditional agreement to purchase those lots. I am satisfied that they have a reasonably arguable case that their rights, pursuant to that agreement, have not been
brought to an end by the purported cancellation of the agreement by the defendants.
1 Land Transfer Act 1952, s 137.
[31] I thus make orders:
(a) that caveat, registered number 10297039.1, lodged by the second plaintiff against all that parcel of land containing 37.0091 hectares more or less being Lot 6 on Deposited Plan 452315 in Certificate of Title
577977 Otago Registry, not lapse;
(b)that caveat, registered number 10297039.1, lodged by the second plaintiff against all that parcel of land containing 8.2494 hectares more or less being Lot 7 on Deposited Plan 452315 in Certificate of Title
577978 Otago Registry, not lapse; and
(c) the above orders are to continue in effect until further order of the
Court.
[32] Given the indication from the defendants that they oppose the making of these orders, even on an interim basis, and that they wish to be heard in respect of the current application, I make the following further directions:
(a) the defendants are to file a notice of opposition to the application and any affidavits in opposition to the application within 20 workings days;
(b) the Registrar is to set the plaintiffs’ application down for hearing on a defended basis to a date as soon as can be conveniently arranged in consultation with counsel, on the basis that the time required for the hearing will be a half day;
(c) the plaintiffs shall file and serve, not later than 10 working days before the hearing:
(i) the plaintiffs’ submissions, to be no longer than ten pages
(Court’s copy to be filed in duplicate);
(ii) a bundle of all authorities referred to in the submissions (excluding any authorities referred to for straightforward and uncontentious propositions);
(iii) a chronology (Court’s copy to be filed in duplicate);
(iv) an assembly of the relevant Court documents in two segments, indexed and with each page numbered, Bundle 1 including pleadings, application, notice of opposition and the narrative part of affidavits and Bundle 2 being limited to the exhibits to affidavits;
(v) the plaintiffs submissions must contain:
·reference (by bundle page number) to any specific passage in the evidence the applicant will refer to at the hearing; and
·a list of the names and correct citations of any authorities mentioned;
(vi) submissions shall adopt no smaller than font size 12 pt;
(g)the defendants shall file and serve not later than five working days before the hearing:
(i) submissions that meet the requirements of the plaintiffs’
submissions (Court’s copy to be filed in duplicate);
(ii) a bundle of all authorities referred to in the submissions (excluding any authorities referred to for straightforward and uncontentious propositions and excluding authorities in the other party’s bundle); and
(iii) if the defendants disagree with the plaintiffs’ chronology, a separate chronology noting areas of disagreement (Court’s copy to be filed in duplicate).
[33] Leave is reserved to the parties to seek a further telephone conference in relation to any issues arising out of these directions or with regard to the planned hearing.
Solicitors:
McVeagh Fleming, Albany
Gallaway Cook Allan, Dunedin.
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