Gray v Bast Holdings Limited - [2018] NZHC 3116

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-001986

[2018] NZHC 3116

UNDER Section 148 of the Land Transfer Act 1952

IN THE MATTER OF

An application to register second caveats

BETWEEN

JOHN STANLEY GRAY

Applicant

AND

BAST HOLDINGS LIMITED

Respondent

Hearing: 22 November 2018

Appearances:

L E Mannis for the Applicant

G J C Carter for the Respondent

Judgment:

29 November 2018

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by me on
29.11.18 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors
Doug Cowan, Titirangi
L Mannis, Richmond Chambers, Auckland Wynn Williams, Christchurch

GRAY v BAST HOLDINGS LIMITED [2018] NZHC 3116 [29 November 2018]

Introduction

[1] The applicant, Mr John Gray, is a licensed building practitioner. He makes application pursuant to s 148 of the Land Transfer Act 1952 to lodge second caveats against two properties owned by the respondent, Bast Holdings Ltd (BAST). The properties are 24A Mellsop Ave, Waiuku, a vacant section, and 26 Mellsop Ave, Waiuku, where the construction of residential units is nearly complete.

[2] Ms Heather Bailey is the sole shareholder and director of BAST, the sole registered proprietor of both properties. Mr Gray argues that he, Ms Bailey and Mr Shane Yuile, Ms Bailey’s partner, entered into a joint venture arrangement for the acquisition and development of the two properties.

[3] The claim of a joint venture is based on a Memorandum of Understanding of 14 November 2016 (the MOU). The MOU provided:

(a)BAST was established solely to purchase the properties;

(b)Ms Bailey provided capital, security and bank guarantees;

(c)Mr Gray and Mr Yuile agreed to work on the rebuild of 26 Mellsop for no pay in return for a one-third share each in BAST;

(d)26 Mellsop Ave was to be developed and sold with any surplus to be capital for BAST and used for the development of 24A Mellsop Ave; and

(e)the shares of BAST were to be re-vested equally between Mr Gray, Ms Bailey and Mr Yuile.

[4] Mr Gray contends for a resulting trust and/or a constructive trust over the properties on the basis of contributions he made to the acquisition and development of the land and in the context of the common intention joint venture. This is said to give rise to caveateable interests in the land.

[5] There is no real dispute that in terms of s 148 of the LTA that there is a valid explanation for the lapse of the original caveats, namely administrative oversight by Mr Gray’s solicitors. The critical issue I must determine is whether there is a reasonably arguable case that Mr Gray has an interest in the land. BAST contends that this case is essentially the same as that in Mahon v The Station at Waitiri,1 and that Mr Gray, as a shareholder has no caveatable interest in the assets of BAST. BAST contends that the MOU, the critical document, expressly…

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: [2018] NZHC 3116
Decision Date: 29 November 2018

CaseChat Overview and Summary

The case of Gray v Bast Holdings Limited involved an application by Mr John Gray to lodge second caveats against two properties owned by Bast Holdings Limited (BAST). The properties in question were a vacant section at 24A Mellsop Ave, Waiuku, and a site where residential units were under construction at 26 Mellsop Ave, Waiuku. Mr Gray argued that he had entered into a joint venture with Ms Heather Bailey, the sole shareholder and director of BAST, and Mr Shane Yuile, Ms Bailey’s partner, to acquire and develop these properties. He claimed that a resulting trust and/or constructive trust existed over the properties due to his contributions to their acquisition and development.

The primary legal issue was whether Mr Gray had a reasonably arguable case of having an interest in the properties that would justify the lodging of second caveats under section 148 of the Land Transfer Act 1952. BAST argued that Mr Gray, as a shareholder, had no caveatable interest in the properties. They relied on the terms of the Memorandum of Understanding (MOU), which provided for the allocation of shares in BAST and did not mention any beneficial interest in the land itself.

The court found that Mr Gray had not established a reasonably arguable case for either a resulting or a constructive trust over the properties. The MOU clearly outlined that the parties intended to hold shares in BAST rather than having a beneficial interest in the land. The court held that even though Mr Gray made significant contributions to the development of the properties, there was no reasonable expectation that he would have an interest in the land itself. The decision in Mahon v The Station at Waitiri was deemed applicable, as it held that a party cannot disavow the legal consequences of using a company structure to hold land when it suits them.

The court dismissed Mr Gray's application to lodge second caveats, stating that there was no reasonably arguable case that he had an interest in the properties. Costs were awarded to BAST on a 2B basis, with an order for short memoranda to be filed and served within 14 days if the parties could not agree on costs.

Orders