Cook v Abdallah

[2016] NZHC 2445

ORDER PROHIBITING PUBLICATION OF NAMES OR IDENTIFYING PARTICULARS OF THE APPLICANT AND HER PARTNER - SEE PARA [2].

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-418-000018 [2016] NZHC 2445

BETWEEN

COOK

Applicant

AND

AKRAM ABDALLAH First Respondent

AND

THE REGISTRAR GENERAL OF LAND Second Respondent

Hearing:	6 October 2016
Appearances:	J G Hardie & P Smyth for the Applicant No appearance for the First Respondent Appearance for the Second Respondent excused
Judgment:	14 October 2016

JUDGMENT OF NATION J

Introduction

[1]      In this proceeding, Ms Cook seeks an order under s 85 of the Land Transfer Act 1952 (the Act), directing the Registrar to cancel and correct an entry in the District Land Register which she says was obtained through fraud against her by the now registered proprietor, Akram Abdallah.

Basis of claim

[2]      In 2005, Ms Cook and Mr Tasman had been in a relationship for some 10 years. 1   Ms Cook owned a house on the West Coast, with a mortgage over it. Both

1      Given the suppression of the names of the applicant and her partner, this judgment has been anonymised through the use of fictitious names for each of them.

COOK v ABDALLAH [2016] NZHC 2445 [14 October 2016]

Ms Cook and Mr Tasman were receiving invalid’s benefits.   Because of financial difficulties they were under, they had been in danger of losing the property some years prior.  Mr Tasman had helped Ms Cook to deal with that situation.  He had also invested money and considerable effort into maintaining and improving the property.

[3]      At  this  time,  Ms  Cook  suffered  from  some  mental  impairment  and  in particular suffered from PTSD, anxiety and depression.   While in that vulnerable state, she began communicating online with someone who said he was from Jordan, using the name Akram Abdallah.  Ms Cook clearly became attached to Mr Abdallah, and he took advantage of this.   He told her that he wanted to come to live in Greymouth but that to obtain a visa he would need to show that he owned property in New Zealand.

[4]      Ms Cook agreed to make him the owner of her property to assist him with this.    She  saw  a  solicitor,  a  Mr  Jamieson  of  Guinness  and  Kitchingham  in Greymouth, and told him Mr Abdallah was buying her property for $30,000.  She asked Mr Jamieson to prepare an agreement on that basis, with the costs of the legal work involved to be paid by Mr Abdallah.

[5]      Mr Jamieson assumed the contract was genuine and put these arrangements into effect.   He prepared an agreement for sale and purchase on those terms.   He faxed it to Mr Abdallah in Jordan for him to sign, and signed the agreement for Ms Cook as vendor as her agent.

[6]      In email correspondence with Mr Jamieson, Mr Abdallah indicated he was attempting to obtain a New Zealand visa from the British and New Zealand Embassies in Jordan, and emphasised that he needed the land transfer documentation complete to assist him in this.  At one point Mr Abdallah indicated there was some administrative obstruction to what he wanted to achieve, but that he still wanted to complete the transaction.

[7]      Mr Abdallah  also  suggested  Mr Jamieson  could  assist  by writing to  the Ministry of Foreign Affairs and Trade (MFAT) and the British Embassy in Amman, asking them to facilitate the granting of his visa.  Mr Jamieson did all of that, but

with no response from the British Embassy and MFAT’s indication that it had no involvement in such applications.   He also carried on with implementing the agreement for sale and purchase, and was told by Ms Cook that the $30,000 consideration has been paid. This was not in fact true.  Through affidavit evidence and through production of her bank statements for the relevant periods, Ms Cook has confirmed that she was not paid anything.  Mr Abdallah also failed to pay the legal costs required of him in terms of the agreement for sale and purchase.

[8]      Acting on advice from Ms Cook that the price under the contract had been paid, Mr Jamieson registered a transfer of title to the property from Ms Cook to Mr Abdallah on 18 November 2005.

[9]      On 24 November 2005, Mr Abdallah emailed Mr Jamieson about Ms Cook‘s need to keep what was happening secret from Mr Tasman and requesting that Mr Jamieson respect that right:

PLEASE KNOW THAT THIS TRANSACTION IS  HERS [Ms Cook’s] AND  SHE  WISHES  TO  KEEP  IT  JUST  BETWEEN  ME  AND  HER AWAY FROM HER PARTNER AND THAT IS HER RITE [sic].

[10]     The following day, Mr Jamieson confirmed that his firm would not discuss

the matter with Ms Cook’s partner.

[11]     The  last  communication  between  Mr  Abdallah  and  Mr  Jamieson  was  in October 2006, when Mr Abdallah referred to problems he was experiencing with selling land in Jerusalem, and promised to pay the outstanding legal fees.  He also said  his  visa  application  had  been  rejected  but  that  he wanted Mr Jamieson  to represent him in New Zealand.  Mr Abdallah has since proven unreachable.

[12]     There was no indication that Mr Abdallah was actually going to move to Greymouth.  Ms Cook realised that she had been duped and asked Mr Abdallah to transfer the property back to her.  He said he would do this but only after she had made certain payments to him.  Ms Cook then began making such payments as she could afford.  A number of these were by cash, so there is no record of them.  Other payments were made by Western Union transfer, of which she no longer has any

record, but Ms Cook showed a bank statement recording an American dollar transfer of $175.21 on 29 December 2005.

[13]     On 15 February 2006, Mr Tasman wrote a letter to Mr Jamieson setting out his dismay and concern at what he had discovered.  In that letter he said Ms Cook had been behaving strangely of late.  He was concerned about her wanting access to their limited savings and her evasiveness about the reasons for that.  Ultimately, she told him about the payments she had been making to Mr Abdallah and what had happened regarding the property.

[14]     Mr Tasman then approached the Registrar-General of Land to see if he could fix the situation over the title.  In a letter to Mr Jamieson of 24 November 2010, legal counsel for the Registrar-General succinctly summarised the basis on which Mr Tasman was asking for action to be taken:

·     the  entire  dealing  was  a  sham,  aimed  at  a  purported  sale  to  Mr Abdallah, to facilitate his entry to New Zealand, after which he was to re-transfer the property to Ms [Cook];

·     Ms [Cook] was duped into the sale, out of sympathy for Mr Abdallah,

whose plight Ms [Cook] learned from an internet ‘chat room’;

·     Mr Abdallah has never appeared on the scene and Ms [Cook] continues to occupy the property, with Mr [Tasman];

·     though she appears to have signed the transfer, at that time, and until recently, Ms [Cook] was suffering from severe depression, rendering her incapable of lucid decision-making;

·     the purchaser has paid nothing or, if he did, Ms [Cook] has never received the proceeds of sale;

· [Mr Jamieson] failed to lodge a protective caveat for Ms [Cook], immediately following the transfer and did not do so until October of [2010].

[15]     Through legal counsel, the Registrar-General advised that he could not act on the basis of these unsubstantiated allegations.  Without evidence, particularly as to the whereabouts or even the existence of Mr Abdallah, the Registrar-General lacked the power of correction.

Evidence before the Court

[16]     As a result of this, proceedings were issued by way of originating application with affidavits in support from Ms Cook and a solicitor who annexed all the documents from Mr Jamieson’s conveyancing file.   Ms Cook’s affidavit provided only a general outline of what happened.  Mr Hardie, counsel for Ms Cook, said he had found it very difficult to elicit more specific information from her.

[17]     Mr Jamieson faced disciplinary sanctions as a result of complaints made to the New Zealand Law Society relating to his conduct in this matter, and is now retired.  Ms Cook has been unable to obtain an affidavit from him in support of her application.

[18]     Various  efforts  were  made  to  communicate  with,  locate  and  serve  Mr Abdallah following the commencement of proceedings.  None have been successful. Consequently, orders were made for substituted service, requiring Mr Abdallah to be served through a PO Box in Amman.  Service has been effected in terms of these directions.  There has been no response.

The Court’s power of correction

[19]     Section 85 of the Act empowers the Court to correct the register by directing the Registrar to cancel any certificate of title, or any entry or memorial in the register relating to the land, and to substitute such certificate of title or entry as the circumstances require.

[20]     This power, however, is closely circumscribed.   It arises only “upon the recovery of any land, estate, or interest by any proceeding in any court” from the registered  proprietor  “in  any  case  in  which  such  a  proceeding  is  not  expressly barred” – in other words, a proceeding not prohibited by s 63.2   In Frazer v Walker, the Privy Council held that the Court’s power of correction “does not extend beyond

those cases in which adverse claims against the registered proprietor are admitted by

2      Land Transfer Act 1952, s 85.

the Act”.3      There  must  therefore  be  a  direct  challenge  made  to  the  registered

proprietor’s right, “as in the old action for ejectment”.4

[21]     Section 63 of the Act protects registered proprietors against ejectment except in specified cases.  Section 63(1)(c) permits proceedings to be brought in the case of a person deprived of any land by fraud, as against the person registered as proprietor of that land through fraud.   The fraud exception gives this Court jurisdiction to consider the present proceeding.

Did Mr Abdallah deprive Ms Cook of her land by fraud?

[22]     I am satisfied, given what I have seen of the communications he had with Mr Jamieson and his actions in relation to Ms Cook, that Mr Abdallah was perpetrating an online scam in order to take advantage of her.  Mr Abdallah had no intention of coming to New Zealand.   The request for the property to be transferred into Mr Abdallah’s name to obtain a visa was a ruse to either ensure Mr Abdallah acquired the property without paying for it or, just as probably, to put him in a position where he had power over Ms Cook and could exploit that power to extract further payments from her.

[23]     Mr Abdallah must have known Ms Cook was in a vulnerable state and unable to make fully rational decisions.   I am also satisfied that, when  he arranged to purchase the property for $30,000, he had no intention of paying that price and must have  known  that  such  a  price  did  not  reflect  the  true  value  of  this  residential property.

[24]     In this case, the fraud has operated on the registered proprietor because it induced Ms Cook to transfer her property to Mr Abdallah.   At the time of the transfer, it does not matter that she may have known he had not paid the purchase price.   In the circumstances, Ms Cook was merely the vehicle for Mr Abdallah’s

fraud.5     I am satisfied she must have believed he was coming to New Zealand

because of the dishonest representations he had made to her.

3      Frazer v Walker [1967] NZLR 1069 (PC) at 1076.

4      Parker v Wakefield (1986) 2 NZCPR 384 (HC) at 386.

5      Keane v Ward HC Auckland CP171/88, 26 October 1990 at 24; upheld on appeal in Ward v

[25]     I  am  satisfied  from  the  evidence  that  Mr  Abdallah  was  registered  as  a proprietor of Ms Cook’s land through depriving her of that land by fraud.  As the claim of fraud has been made out, Ms Cook is entitled to be reinstated on the register as the sole proprietor of the property.  I will make such orders under s 85 but proceed first to consider other bases on which the register could be corrected.

Undue influence

[26]     I  am  also  satisfied  that  the  fraud  on  Ms  Cook  was  associated  with  the exercise of undue influence.  Stemming from their online communication, there was a relationship of “trust and confidence, reliance, dependence, or vulnerability” on Ms Cook’s side, and “ascendancy, dominance or control” on Mr Abdallah’s, as a result of  which  she  was  disposed  to  agree  with  a  course  of  action  proposed  by  Mr Abdallah, who exploited this relationship to register himself as proprietor of her

land.6     Ms Cook  would have been  entitled to  have the agreement  for sale and

purchase  set  aside  on  the  basis  she  had  entered  into  it  under  duress  or  undue influence.

[27]     While that  may have amounted  to  equitable fraud,  which  has  been  held insufficient to establish fraud under s 63,7  in the particular circumstances of this case,  particularly  the  way  in  which  Mr  Abdallah  tried  to  conceal  what  was happening from Mr Tasman, I am satisfied that he knew what he was doing was illegal, knew the particular way in which he was taking advantage of Ms Cook and acted in a way sufficient to establish actual fraud.

Did Mr Abdallah deprive Mr Tasman of any land by fraud?

[28]     Having carefully read all the documents that exist as to what happened and the affidavit evidence, I am satisfied that Mr Abdallah knew that Ms Cook was in a longstanding  relationship  with  her  partner  and  that  he  would  have  claims  and

entitlements in relationship to their home.  If Mr Tasman had known what she was

Keane CA11/91, 21 August 1992.

6      Hogan v Commercial Factors Ltd [2006] 3 NZLR 618 (CA) at [41].

7      Assets Co Ltd v Mere Roihi [1905] AC 176 (PC) at 210 per Lord Lindley.

proposing to do, he would have been able to obstruct the purported transfer of the property to Mr Abdallah.

[29]     In depriving Ms Cook of her interests, as set out above, Mr Abdallah was simultaneously defeating or hindering claims that Mr Tasman would have under the Property (Relationships) Act 1976 (PRA).   That fraud as against Mr Tasman also constituted a fraud under s 63 of the Act, sufficient to justify correction of the register under s 85.8

Setting the disposition aside under the PRA

[30]     Had I been unable to find fraud in terms of s 63, I consider this would have been  a case where s  44(1) of  the PRA could  be properly applied.    There was evidence that Mr Abdallah knew what he was doing would defeat the interests of Mr Tasman in the property.  I am satisfied the transfer was at Mr Abdallah’s direction.

[31]     In  terms  of  s  44(2)(a),  because  Mr  Abdallah  never  intended  to  pay  the

$30,000 or the true value of the property, I am satisfied there was no consideration for the purchase and that the disposition was not bona fide.  Had it been necessary, I would have made an order under s 44(2) for the property to be transferred by Mr Abdallah back to Ms Cook and, to give effect to that order, a further order under s

44(3) vesting title in the property back in the name of Ms Cook.

[32]     Although no application had been made for such orders, I note that under s

44(1A) of the PRA, such orders can be made in any proceedings under that Act or otherwise.      Given   the   nature   of   Mr   Abdallah’s   dishonesty,   his   failure   to communicate or engage in correspondence with Ms Cook’s solicitors over the whole situation and his failure to take any part in the proceedings after they had been sent to him at his PO Box in Jordan, if it had been necessary I would have amended the

pleadings so that relief was sought, and could be granted, on that basis.

8      Ward v Keane, above n 5; Efstratiou v Glantschnig [1972] NZLR 594 (CA) at 603, citing Waimiha Sawmilling Co Ltd (In Liquidation) v Waione Timber Co Ltd [1923] NZLR 1137 (CA) at 1175 (upheld in Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 (PC)).

Orders

[33]     On the above findings of fraud, I am prepared to make orders of the type which Ms Cook seeks.

[34]     The orders I propose to make are as follows:

(a)      Pursuant to s 85 of the Land Transfer Act 1952, the Registrar-General of Land is directed to cancel entry number 6663006.1 on certificate of title WS5D/300 and to substitute a certificate of title that shows Ms Cook as the registered proprietor.

(b)The two caveats on the title lodged by Ms Cook and the Registrar- General (Interests 8599472.1 and 8724744.1) are to be removed from the corrected title.9

[35]     The  Registrar-General  has  advised  the  Court  that  he  abides  the  Court’s decision on Ms Cook’s application.  By consent, the Registrar-General was excused from attendance at the substantive hearing and prior calls, on the condition that if the Court were minded to grant any order sought under s 85, Ms Cook would seek the Registrar-General’s comment on the wording before any final order is made.

[36]     In the meantime, these reasons for judgment shall be served on the Registrar- General.   He shall have leave to apply for further directions should there be any technical issues  concerning registration which  I may have overlooked.    I direct counsel for Ms Cook to confer with the Registrar-General as to the form of appropriate orders and ask that he file a memorandum as to the agreed form of the orders necessary to give effect to this judgment by 31 October 2016.

Solicitors:

J P Sullivan, Community Law Canterbury

J Hardie, Barrister, Christchurch.

9      Section 143 of the Land Transfer Act 1952 empowers the Court to order the removal of caveats.