Gourdie v Davies

[2021] NZHC 1312

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2021-442-000028

[2021] NZHC 1312

UNDER

section 146 of the Land Transfer Act 2017

IN THE MATTER OF

an originating application for an order permitting the registration of a second caveat against dealings

BETWEEN

JOHN WINTON GOURDIE, COLLEEN NATALIE GOURDIE and ROSS ANDREW

STEVENSON in their capacity as Executors in the Estate of IAN GOURDIE

Applicants

AND

COLLEEN NATALIE GOURDIE

Applicant

AND

ANDREW MARTIN HULME DAVIES and TINA DAVIES

Respondents

Hearing:	On the Papers
Counsel:	A R Shaw for the Applicants
Judgment:	4 June 2021

JUDGMENT OF PALMER J

Solicitors:

C & F Legal Limited, Nelson

GOURDIE v DAVIES [2021] NZHC 1312 [4 June 2021]

What happened?

[1]                 On 9 September  1993,  and again on 21 June  1996,  Mr Ian Goudie  and  Mrs Colleen Gourdie agreed in writing with the owners of an adjoining property to have a right of way over the adjoining property in Atawhai, Nelson.1 I accept the right possessed the essential characteristics of an easement, was granted in exchange for valuable consideration, and there is a sufficient record of the agreement in writing to satisfy s 24 of the Property Law Act 2007. In 1996, a caveat was registered over the adjoining title for an easement.

[2]                 In September 2016, the Davies became the registered owner of the adjoining property. Mrs Gourdie and the executors of the estate of Mr Gourdie (the Gourdies) consented to the transfer, without prejudice to their rights under the caveat. However, in July 2017, the Davies said they had no knowledge of that. The Gourdies’ solicitors sought confirmation of the position. The Davies’ solicitor reserved their right to apply for surrender of the caveat.

[3]                 On 10 December 2020, the Davies’ solicitors requested consent to a variation of the previous consent notice, without accepting the validity of the caveat. Consent was provided on the basis that, on 15 December 2020, the Goudies’ sought further entrenchment of their right of way interest.

[4]                 On 17 December 2020, the Davies gave notice to the Registrar-General of Lands seeking for the caveat to be removed. Unfortunately, the original address for service of the Gourdies, at a law firm that had ceased to exist, was out of date. They did not receive notice. The caveat was removed. The Gourdies became aware of that on 18 May 2021.

[5]                 Now, the Gourdies make an urgent application, without notice, for an order permitting the registration of a second caveat.

1      The facts outlined are based on the affidavit of John Gourdie, 1 June 2021.

Law of second caveats

[6]                 Section 146 of the Land Transfer Act 2017 prohibits a second caveat being lodged by the same person to protect the same interest as a caveat which has lapsed “unless the court orders otherwise”. In Muellner v Montagnat, Thorp J held that the predecessor to s 146, s 148 of the Land Transfer Act 1952, gave the Court an unfettered discretion but the Court will generally have regard to: the strength of the applicant’s case to support the claimed interest in land; any explanation for failure to exercise the caveator’s rights; and whether unavoidable prejudice would be suffered by those acting in reliance on the register.2 That has been applied since, including to s 146 of the current Act.3 But I have not located any case in which it was applied on a without notice basis.

Submissions

[7]                 Mr Shaw, for the Goudries, submits they have a caveatable interest in the 1993 and 1996 agreements and the respondents’ purchased the property with knowledge of the then caveat protecting that interest. He submits the caveat lapsed through no fault of the Goudries. Their solicitors overlooked updating the caveat’s service address so the Goudries did not receive notice of the application for the caveat to lapse. He submits the Goudries have made an undertaking to abide by any Court order as to damages in the event this application or orders made under it cause damage to the respondents. The application is made without notice because of the urgency of protecting the equitable easement which is vulnerable to sale of the adjoining property to a third purchaser for value without notice.

Should a without notice order be granted?

[8]                 I consider that the Gourdies have demonstrated that they have a caveatable interest, which lapsed through no fault of theirs. I also accept that their undertaking is sufficient to compensate for unavoidable prejudice to those acting in reliance on the register. The question is whether an order that a second caveat may be lodged should be granted without notice to the Davies, who applied for removal of the first caveat.

2      Muellner v Montagnat (1986) 2 NZCPR 520 at 523.

3      Lowther v Kim [2003] 1 NZLR 327 (HC) at [18], cited in relation to s 146 in GRP Holdings Ltd v VP Nominees Ltd [2021] NZHC 545 at [22].

[9]                 I am conscious that the Davies protested the validity of the first caveat. I make no comment on that. But, if the Gourdies had been notified of their application to remove it, they would have been able to argue their case. Instead, through no fault of their own, they could not. Their interests are now vulnerable.

[10]              Requiring the Gourdies to proceed on notice will lengthen the period over which their equitable easement is vulnerable to third party purchasers for value without notice. If the application for the second caveat is granted and the Davies wish to pursue their concerns, they will be able to make a further application to challenge it. Everyone would be in a similar position to those they would have been before the solicitors’ oversight. I consider that is the position that most accords with the interests of justice. However, if the Davies face costs associated with a second application that they have already incurred with the first application, it is likely that the Gourdies would be required to pay them.

Result

[11]              I make the order sought, to permit the registration of a second caveat under    s 146 of the Land Transfer Act 2017 against dealings, to protect the same interests as the caveat that lapsed. I order the solicitors for the Gourdies to serve this judgment on the solicitors for the Davies.

Palmer J