Epsom Woods Ltd v Waitakere Farms Ltd - [2020] NZCA 226

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA327/2019
[2020] NZCA 226

BETWEEN	EPSOM WOODS LIMITED Appellant
AND	WAITAKERE FARMS LIMITED Respondent

Hearing:	5 March 2020
Court:	Courtney, Ellis and Brewer JJ
Counsel:	D Hayes for Appellant AAH Low for Respondent
Judgment:	10 June 2020 at 10 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BCosts are awarded to the respondent for a standard appeal on a band A basis plus usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Brewer J)

Introduction

Waitakere Farms Ltd (WFL) is the registered proprietor of a 51 ha forestry lot at 131–149 Anzac Valley Road, Waitakere (the land). WFL became the registered proprietor on 14 March 2017 having purchased it from a mortgagee exercising its power of sale.
The mortgagee from which WFL purchased the land was Nags Head Horse Hotel Ltd (Nags Head). Its mortgage was registered on 27 August 2010. The registered proprietor of the land changed subsequently on two occasions but Nags Head’s mortgage remained registered as the first mortgage.
Epsom Woods Ltd (EWL) sued WFL claiming ownership of trees on the land. It relied on an unregistered agreement to lease the land entered into in 2009 between the then registered proprietor (a Mr Vesey) and “North Kaipara Nominees Ltd as trustee of the Anzac Valley Forestry Trust”. EWL took an assignment of the agreement for $1 on 29 October 2018.
WFL applied for summary judgment against EWL. Associate Judge Bell granted WFL summary judgment on 17 June 2019.[1]
[1]Epsom Woods Ltd v Waitakere Farms Ltd [2019] NZHC 1374.
EWL now appeals this decision.[2]

The appeal

[2]EWL’s proceeding against WFL included a prayer for a declaration that the land is subject to a residential tenancy. Associate Judge Bell granted WFL summary judgment on that cause of action also. EWL appeals only the decision granting WFL summary judgment on the cause of action claiming ownership of trees and so we will say nothing further about the residential tenancy claim.

In its statement of claim, EWL pleaded that a Mr Buttling (who originally agreed to purchase the land from Nags Head as mortgagee but who nominated WFL as purchaser) was informed on or about 16 February 2017 in writing that the Anzac Valley Forestry Trust and/or its trustees had claimed rights to the trees.
The statement of claim went on to plead:
14.[WFL] is estopped from denying [EWL’s] ownership of the trees.
15.[WFL] holds the trees on the land in trust for [EWL].
The notice of appeal states the ground of the appeal as:
The Land Transfer Act 1952 sections 105 and 182 have no application in an in personam claim for a declaration as to ownership of the trees on the land. (para 28 of decision)
Paragraph [28] of the Associate Judge’s decision reads:
[28] In that context, mere knowledge of unregistered interests in the land can have no bearing on the ability of a purchaser to take a clean title…

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.

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Details

Case: [2020] NZCA 226
Decision Date: 10 June 2020 at 10 am

CaseChat Overview and Summary

Epsom Woods Limited (EWL) appealed against Waitakere Farms Limited (WFL) in relation to WFL's ownership of trees on a piece of land, which WFL had purchased from a mortgagee exercising its power of sale. The appeal was dismissed by the Court of Appeal of New Zealand, and costs were awarded to WFL. The appeal hinged on the interpretation of sections 105 and 182 of the Land Transfer Act 1952, which EWL argued did not apply to an in personam claim for a declaration as to ownership of the trees on the land. The Court of Appeal found that WFL was entitled to summary judgment as EWL's case could not succeed on the facts and on the law in application to those facts. The appeal was dismissed and WFL was awarded costs on a standard appeal on a band A basis plus usual disbursements.

The Court of Appeal held that section 105 of the Land Transfer Act 1952 provided that upon the registration of any transfer executed by a mortgagee for the purpose of exercising a power of sale over any land, the estate or interest of the mortgagor therein expressed to be transferred shall pass to and vest in the purchaser, freed and discharged from all liability on account of the mortgage, or of any estate or interest except an estate or interest created by any instrument which has priority over the mortgage or which by reason of the consent of the mortgagee is binding on him. The agreement to lease was never registered against the title and there was no suggestion that the mortgagee had ever consented to be bound by it. Therefore, WFL took title to the land "freed and discharged from all liability" on account of the agreement to lease. The Court of Appeal found that there was no pleaded allegation of unconscionable conduct and no evidential basis for such a claim. All that was pleaded, and the evidence supported, was that the person who nominated WFL as purchaser had notice of the claimed agreement to lease. The Court of Appeal held that an in personam claim must have three elements, one of which is unconscionable conduct on the part of the current registered proprietor. In this case, there was no pleaded allegation of unconscionable conduct and no evidential basis for such a claim. Therefore, WFL was entitled to summary judgment.

Orders