Foote v Rea HC Tauranga CIV 2010-470-307

[2010] NZHC 1433

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2010-470-307

UNDER  the Land Transfer Act 1952

IN THE MATTER OF     an Application pursuant to Section 145A, Land Transfer Act 1952 that Caveat Registereed No. 8372685.1 Not Lapse

BETWEEN  JOHN EDWARD FOOTE Applicant

ANDTRACY LEANNE REA Respondent

Hearing:         12 August 2010

Appearances: Mr E J Hudson for applicant

Mr R J Collis for Respondent

Judgment:      17 August 2010 at 4

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

17.08.10 at 4 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:

Mr E J Hudson, Equity Chambers, Hamilton – by email:  [email protected]

Mr R J Collis, Barrister, Auckland– by email: [email protected]

FOOTE V REA HC TAU CIV-2010-470-307  17 August 2010

[1]      The applicant has applied for an order that caveat number 8372685.1 lodged on 14 December 2009 against all the land in Certificate of Title SA5D/1303 not lapse.

[2]      The form of caveat contained the following statements:

Estate of interest claimed and the grounds for claim:

“An undivided interest in the property and estate.  Claimed under Trust Deed for the Foote trust dated 26 day of February 2002 clause “10.03”, “11.3”. “Without the written consent of John Edward Foote” the trust may not be amended or resettled.

[3]      The  brief  factual  background  is  as  follows.    The  parties  married  on  31

December 1987.  They acquired a property at 58 Wallace Road, Te Puna, Tauranga on 20 September 1999.   The parties separated in December 2001 and in April the following year entered into a Relationship Property Agreement.   Pursuant to that agreement the respondent settled a trust, “the Foote trust”.  The trustees were stated to be the respondent and Richard Allan Cooper.   Mr Cooper was described in the trust deed as “the first independent trustee”.  Under the deed, both the parties to this application constituted the “appointer” of additional trustees.   The purposes of the trust were, amongst other things, to make provision for the couple’s children.

[4]      On 8 June 2009 the Family Court at Tauranga made certain orders which included the removal of the applicant as an “appointer” and trustee of the trust.  An appeal was brought against the judgment of the Family Court but no material change was made to the orders that I have just mentioned.

[5]      On  24  June  2009  the  property  was  again  transferred,  this  time  to  the respondent and Wallace Road Trustee Limited.  On 14 December 2009 the applicant lodged the caveat which I have referred to above and which he now seeks to have sustained by order made pursuant to s 145A of the Land Transfer Act 1952.  The application is opposed.  The applicant claims that the caveat is justified because the applicant is:

Clearly interested in the land by virtue of either:

5.3.1    An expressed Trust pursuant to s 137(1)(a); or alternatively

5.3.2    As a Transferor of land to any other person on Trust, pursuant to s

137(1)(b).

[6]      Section 137 reads as follows:

137     Caveat against dealings with land under Act

(1)Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person—

(a)claims to be entitled to, or to be beneficially interested in, the  land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or

(b)is  transferring the  land  or estate  or interest to  any other person to be held in trust.

(2)A caveat under this section must contain the following information: (a)     the name of the caveator; and

(b)       the nature of the land or estate or interest claimed by the caveator, which must be stated with sufficient certainty; and

(c)how the land or estate or interest claimed is derived from the registered proprietor; and

(d)whether or not it is intended to forbid the making of all entries     that  would  be  prevented  by  section  141  or  a specified subset of them; and

(e)the land subject to the claim, which must be stated with sufficient certainty; and

(f)       an address for service for the caveator.

(3)Caveats under this section must be executed by the caveator or the caveator's attorney or agent.

(4)Caveats under this section must be entered on the register as of the day and hour of their receipt by the Registrar.

[7]      In my view the applicant was not at the time when he lodged the caveat and, is not now, one of the classes of person described in s 137(1)(a).   He is not beneficially interested in the land.  The Family Court judgment made that quite clear. The applicant was never a beneficiary under the trust deed.  The beneficial interest in the land was dealt with by the Judge  in the following terms:

(186)I transfer to the applicant [Ms Rea] as her separate property the parties (sic)   relationship property interest in the form of family home situated at Wallace Road that is now held by the Foote trust “on trust” for the parties subject to the mortgage debt secured against it.

[8]      The orders made by the Family Court have not been set aside or varied on appeal despite the applicant having brought an appeal to the High Court.   Those orders must have full effect down to the present time.

[9]      The other basis upon which Mr Hudson said the caveat could be justified was in terms of s 137(1)(b).

[10]     Neither counsel was able to refer me to any authority which cast light on the approach that the Court should take to the construction of that section.

[11]     It is my view that the subsection concerns the circumstances where a person “is transferring” the land or interest to any other person to be held in trust.   The object of the caveat proceeding is to prevent the process for transfer of the property being defeated by other transactions until the Court is able to give a binding and authoritative judgment on the validity of the proposed transfer.   The term “is transferring”  would  seem  to  refer  to  an  as  yet  unexecuted  proposal  to  transfer property to a transferee.  The language is not apt to cover a case where the transferor has  already transferred  the property to  the trustees  to  be held  on  trust.    If the applicant ever had a right to caveat under this subsection it came to an end at the time when the transfer to the trustees occurred on 30 May 2002.

[12]     In general, the Registrar of Land’s interests under the Land Transfer Act

1952 are not concerned with the trust interests: see s 128.  It would be inconsistent with that aspect of the statutory scheme for the Court to accede to a submission that a settlor is authorised to lodge a caveat to prevent future dealings with the title to a property which contravenes the trust deed.  Further, it is now beyond the power of the applicant to carry out any transfer of the land.  He is no longer a trustee because the Family Court made orders removing him as trustee: at [185] of the Family Court judgment.

[13]     In my view the caveat that the applicant has lodged is misconceived.   His application to sustain the caveat is dismissed.   The parties should confer on the matter of costs.  If they are unable to agree they should file memoranda within 21 days on the question of costs.  Such memoranda should be brief and not exceed five

pages on each side.

J.P. Doogue

Associate Judge