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Compound Group Limited v I'Anson

Compound Group Limited v I'Anson

Case [2024] NZHC 337 27 February 2024

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IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-429-69

[2024] NZHC 337

BETWEEN
COMPOUND GROUP LIMITED

Applicant

AND

MALCOLM BASIL I’ANSON

Respondent

Hearing: 19 February 2024

Appearances:

E J Walton and A C Kelland for Applicant

J A Frampton and O K Kemp for Respondent

Judgment:

27 February 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

COMPOUND GROUP LIMITED v I’ANSON [2024] NZHC 337 [27 February 2024]

[1] Compound Group Limited (Compound) is a building company. In January 2022, Compound agreed to build a property for Mr I’Anson pursuant to a detailed written agreement.

[2] Compound commenced the building works. Unfortunately, and for reasons that I need not detail, the relationship between the parties broke down. Compound claimed Mr I’Anson failed to pay a sum it says is due under the contract.

[3] In April 2023, Compound lodged a caveat pursuant to what it says is an agreement to mortgage contained in the building contract. Mr I’Anson says the contract does not create an agreement to mortgage but rather it only entitles Compound to call for a mortgage and unless and until there is a call in accordance with the requirements of the contract, no caveatable interest exists.

[4] It is common ground the contract has been cancelled, albeit it is disputed as to who was entitled to cancel.

[5] It is not necessary to detail the nature of the disputes between the parties or detail the amount claimed to be outstanding.

The caveat

[6]The caveatable interest claimed is:

Pursuant to Agreement to Mortgage contained in Building Contract Agreement entered into between the Registered Owner Malcolm Basil I’Anson (as Mortgagor) and Compound Group Limited (as Mortgagee) dated 3 January 2022, the Registered Owner agreed to hold the land under registered title OT205/291 as security for the mortgage under the Building Contract Agreement.

[7] Compound says cls 123 to 126 of the contract create the caveatable interest. It is sufficient to set out cls 123 to 125 which are as follows:

123.If the Owner fails to pay any money payable to the Builder under this Building Contract on the due date for payment, then on demand the Owner will straight away provide the Builder with an executed and registrable memorandum of mortgage over the Land (for the purpose of securing all money owing from time to time by the Owner to the Builder under the Building Contract). That mortgage will be in

the form of the All Obligations for produced by the Auckland District Law Society and approved by the Registrar General of Land under number 2011/2200 together with Memorandum number 2011/4300. The Owner also undertakes to complete any Authority and Instruction (“A & I”) form that is necessary to register that mortgage and to instruct their solicitor (or other relevant agent) to take whatever steps are necessary to register that mortgage.

124.The Owner also acknowledges that the Builder is entitled to register a caveat or similar charge against the title of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Compound Group Limited v I'Anson

Details

AGLC: Compound Group Limited v I'Anson [2024] NZHC 337
Case: [2024] NZHC 337
Decision Date: 27 February 2024

CaseChat Overview and Summary

Compound Group Limited, a building company, entered into a contract with Mr I'Anson to construct a property. After the relationship between the parties deteriorated, Compound lodged a caveat over the property, claiming an entitlement to a mortgage over the land as security for payment. Mr I'Anson argued that the contract did not create an agreement to mortgage but only entitled Compound to call for a mortgage if certain conditions were met. The court was required to determine whether the contract clauses created an equitable mortgage and whether Compound was entitled to sustain the caveat.

The court examined the contract clauses and the relevant legal principles. It concluded that the clauses did not create an equitable mortgage without a demand for a registerable mortgage. The court found that an equitable mortgage arises from an agreement to grant a registerable mortgage, and in this case, the agreement was contingent upon a demand for a registerable mortgage. The court rejected the argument that an equitable mortgage arose upon a default in payment, holding that a demand for a registerable mortgage was a condition that must be met before an equitable mortgage could arise. The court also noted some uncertainty in the authorities regarding whether the right to lodge a caveat could be granted by contract, but this issue was not further addressed as the caveat could not be sustained on other grounds.

The court dismissed the application to sustain the caveat and ordered Mr I'Anson to receive costs on a 2B basis plus disbursements.

Orders