Guppy v Wohler
[2023] NZHC 3716
•18 December 2023
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2023-488-000063
[2023] NZHC 3716
UNDER Section 143 of the Land Transfer Act 2017 IN THE MATTER OF
An application for an order that caveat not lapse
BETWEEN
SIMON JOHN GUPPY and MARIA QUAYLE-GUPPY
Applicants
AND
DIANE CHRISTINE WOHLER and LYNNE ELISABETH TEMPLETON
Respondents
Hearing: 28 November 2023 Appearances:
J S Baguley for the Applicants V Corbett for the Respondents
Judgment:
18 December 2023
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 18 December 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Atlas Legal Limited, Kerikeri Maxwell Law Limited, Wellington
GUPPY v WOHLER [2023] NZHC 3716 [18 December 2023]
[1] Simon and Maria Quayle-Guppy1 apply pursuant to s 143 of the Land Transfer Act 2017 for an order that a caveat on the title of a property at 1174 Te Ahu Ahu Road, Waimate North, not lapse. The property is owned by Diane Wohler and Lynne Templeton as trustees of the Wohler Family Trust. Mr and Mrs Guppy have lived at the property with their sons since 2014. Mr Guppy is the son of Mrs Wohler, and brother of Ms Templeton.
[2] Brewer J made an interim order on 11 July 2023 that the caveat not lapse pending the application being heard.
[3] The issue is whether it is reasonably arguable that Mr and Mrs Guppy have an equitable interest in the land because they have an oral agreement with the trustees for the sale and purchase of the land, which is unenforceable by reason of s 24 of the Property Law Act 2007, but of which the applicants may be entitled to specific performance because of the equitable doctrine of part-performance.
Facts
[4] In late 2014, the Guppys were looking to relocate to Kerikeri. They found the property at Te Ahu Ahu Road. The purchase price was $170,000. Mrs Wohler agreed to help them to buy the property by purchasing the property using her inheritance of
$80,000 and seeking vendor finance for the balance.
[5] On 14 November 2014, the vendor signed an agreement to sell the property to the Guppys or their nominee. The vendor agreed to leave in a vendor loan of $90,000, repayable over three-and-a-half years, as set out in the Vendor Finance Agreement.
[6]Mrs Wohler established the Wohler Family Trust to purchase the property.
[7] Mr Guppy and Mrs Wohler have different versions of the oral agreement reached between them at the time of purchase. What is not disputed it that they agreed that the Guppys would pay off the vendor finance and that at some point (which is disputed) the trustees would transfer title to the property to the Guppys.
1 For ease, referred to as Mr and Mrs Guppy, or the Guppys.
[8] Settlement occurred on 16 November 2014 and the Guppys moved into the property.
[9] A few days prior to settlement, Mrs Wohler’s solicitors sent an occupation licence to the Guppys which the trustees had already signed. Mrs Wohler (supported by Ms Templeton) states that its terms reflected the oral agreement she had reached with Mr Guppy.2 On Mr Guppy’s evidence, the occupation licence came as a complete surprise, and was inconsistent with the framework he agreed with Mrs Wohler. The Guppys did not sign it and say that the licence was not spoken of again.
[10] It is not disputed that over the ensuing years the Guppys paid sums to the trustees, or directly to the vendor. Mr Guppy deposes that they paid a total sum of
$68,116.23.
[11] Mrs Wohler’s evidence is that the Guppys paid a total of $64,939.23 to the trustees or the vendor. She states that this amount does not cover the vendor mortgage finance of $90,000 or insurance and rates over the years.
[12] Mr Guppy’s evidence is that he has also repaired and improved the property at his own cost and time. He estimates the cost of the work to be around $25,975 (plus GST) for materials, and 667 hours of his time, equivalent to around $49,925 (plus GST).3 Mrs Wohler says that she did not consent to any of the work.
[13] On 17 December 2019, the trustees’ solicitor wrote to the Guppys seeking to bring an end to the arrangement. They offered to sell the property to the Guppys for
$495,000. If the Guppys did not wish to buy it, they were given written notice to vacate the property by 22 June 2020. The Guppys did not buy the property or vacate.
[14] In July 2020, the property was the subject of a major flood which forced the Guppy family to evacuate and made the property uninhabitable.
2 Affidavit of Diane Christine Wohler sworn on 4 August 2023, at [22]; and Affidavit of Lynne Elisabeth Templeton sworn 4 August 2023, at [11].
3 Affidavit of Simon Jon Guppy sworn on 5 July 2023, at [18] and exhibit SJG-5.
[15] At around this time, communication between the Guppys and the trustees broke down. On 23 August 2020, Ms Templeton sent a text to Mr Guppy demanding that they remove all contents and items from the property. The trustees changed the locks in October 2020.
[16] The Guppys moved back to the property, changed the locks, and undertook considerable repair work to make the property habitable again.
[17] From April 2021, the parties corresponded through solicitors in an attempt to broker a settlement to the situation. The Guppys lodged the caveat in November 2021.
Legal principles
[18] An application to sustain a caveat is determined on summary basis in which the Court has regard to the following principles:4
(a)The applicant caveator bears the onus of demonstrating that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively. It is enough if they present a reasonably arguable case.
(b)The process by which these applications are determined is ill-suited to resolving disputed questions of fact. An order for a caveat’s lapse will only be made if it is patently clear it cannot be maintained — either because there was no valid ground for lodging it in the first place or, alternatively, that such ground has now ceased to exist. A conflict between affidavits will generally be resolved in the caveator’s favour. However, the Court is not bound to accept uncritically statements in an affidavit that are equivocal, lacking in precision, inconsistent with
4 Botany Land Development Ltd v Auckland Council [2014] NZCA 61 at [24]; Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]; Bethell v Rickard [2013] NZCA 68 at [22]; MacRae v Rapana HC Auckland M633/94, 17 June 1994; Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8]; and Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
undisputed contemporary documents or other statements by the same deponent, or inherently improbable.
[19] Where the applicant has discharged its burden, the Court retains a residual discretion to remove the caveat. The Court will exercise this discretion cautiously and must be satisfied removal would not prejudice the caveator’s legitimate interest.
[20] An oral agreement for the sale and purchase of land, which is unenforceable (but not illegal or void) because of s 24 of the Property Law Act 2007 may be sufficient to support a caveat if the circumstances are such that the purchaser may be entitled to specific performance of the contract because of the doctrine of part-performance and thus may be regarded as the equitable owner of the land.5
Does the doctrine of part-performance arguably apply?
[21] The test for the doctrine of part-performance is set out in TA Dellaca Ltd v PDL Industries Ltd:6
1 Was there a sufficient oral agreement such as would have been enforceable but for the [Property Law] Act?
2 Has there been part performance of the oral agreement by the doing of something which:
(i)clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and
(ii)when viewed independently of the oral contract was, on the probabilities, done on a footing that the contract relating to the land and such as that alleged was in existence;
3 Do the circumstances in which the part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the [Property Law] Act?
[22] The Guppys submit that all these elements are met. Mr Guppy’s evidence is that he and Mrs Wohler verbally agreed that the Guppys would repay the vendor
5 Neil Campbell Campbell on Caveats (3rd ed, Lexis Nexis, Wellington, 209) at [10.009]; and DW McMorland and others Hinde McMorland & Sim Land Law in New Zealand (online ed, Lexis Nexis) at [4.22] and [10.009].
6 TA Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88 at 109 and recently applied in Khalesi v Lane [2022] NZHC 787 at [11].
finance, that they could repay her contribution to the purchase price of $80,000 as and when their finances permitted, and that any balance would be forgiven in Mrs Wohler’s will.7 Mr Guppy deposes that Mrs Wohler agreed that once they had paid the vendor finance, the trustees would transfer the property to the Guppys.8
[23] The Guppys submit that there has been part-performance of this oral agreement. Mr Guppy states that they met the regular repayments of the vendor mortgage, except for five payments which they could not afford to pay at the time, and which the Trust paid and never demanded from him. (Mrs Wohler disputes this, and states that Mr Guppy made substantial and ongoing defaults throughout the period, resulting in letters of default from the vendor’s solicitors). Mr Guppy says that he also made some contributions to rates and insurance. As noted earlier, his evidence is that he and Mrs Guppy have made payments of $68,116.23 in total.
[24] The Guppys says that they acted consistently with the oral agreement by investing considerable time and cost to improve the property over the years. They say that until the 2020 flood, the trustees never demanded payment. They submit that it would be unconscionable for the trustees to avoid the oral contract and not recognise their significant investment in the property which they considered they would own after repaying the vendor finance.
[25] The trustees submit that the elements of the doctrine of part-performance are not met. They say that no oral agreement exists, as there was no meeting of minds and the agreed terms on payment and transfer were insufficiently certain.
[26]Mrs Wohler’s evidence of the agreement is:
The verbal agreement reached by [Mr Guppy] and I was that:
(a)The Trust would be nominated and would purchase the property and enter into the term loan agreement with the Vendor;
(b)[Mr Guppy] would pay the vendor finance as set out in the term loan agreement (end of June 2018) on behalf of the Trust (those payment [sic] to be made by [Mr Guppy] to the Trust’s bank account then to
7 Affidavit of Simon Jon Guppy sworn on 5 July 2023, at [10].
8 At [9].
the Vendor) as well as the rates, insurance and all the other outgoing expenses.
(c)Once the vendor finance had been paid by [Mr Guppy] as set out in the term loan agreement then [Mr Guppy] would continue to repay the Trust the balance of the purchase price ($80,000.00) by way of continuing fortnightly payments of $989.01. Once the balance of the purchase price was repaid in those fortnightly instalments then the property would be transferred to [the Guppys].
[27] The trustees submit that Mr Guppy’s assertion that there was an oral agreement is undermined by the unsigned occupation licence. They say that the licence, which the trustees’ solicitors sent to Mr Guppy for him to sign, reflects the agreement according to Mrs Wohler. Mrs Wohler’s evidence is that she believed Mr Guppy agreed to its terms as he continued to promise to sign the licence. (Mr Guppy says that he did not accept the terms of the licence and that is why he did not sign the document).
[28] The trustees also point to the different version of the agreement described in the caveat lodged by the Guppys, which states that the interest claimed is:
Agreement for sale and purchase between the Registered Proprietors [Mrs] Wohler and [Mrs] Templeton as vendor and the Caveators [Mr] Guppy and [Mrs] Guppy as purchasers on or about December 2014 partly verbal and partly in writing, agreeing to sell the property to the Caveators for $1.00 upon the Caveators paying the Registered Proprietors sufficient licence fees to repay the Registered Proprietor’s mortgage on the property, and rates and insurance on the property. The Caveator has paid the Registered Proprietor
$68,116.23, has occupied the property from 2014 to 2020, has used materials worth approximately $25,975.00 and spent approximately 667 hours working on improvements to the property (which amounts to $49,925.00 at the Caveator’s usual charge out rate for that type of work).
[29] Furthermore, the trustees submit that even if there was an oral agreement, there was no part performance. The Guppys did not repay the full vendor loan of $90,000. They submit that the repair and other work the Guppys carried out on the property was done without the trustees’ prior written approval as required by the trustees under the licence. Additionally, repairing a property is not generally considered to constitute an act of part-performance.
[30] I find that Mr and Mrs Guppy have demonstrated that they have a reasonably arguable case that there was an oral agreement for the sale and purchase of the land
which they have performed in part and which it would be unconscionable for the trustees to deny by relying on the Property Law Act.
[31] In terms of the oral agreement, it is undisputed that there was an agreement between Mr Guppy and Mrs Wohler that involved the Guppys repaying the vendor finance, paying Mrs Wohler for her contribution to the purchase price, and the property being transferred by the trustees to Mr and Mrs Guppy.
[32] What is disputed is whether Mrs Wohler agreed to transfer the property to Mr and Mrs Guppy once the vendor finance was repaid, or once they had also paid Mrs Wohler her contribution towards the purchase price; and whether they were required to pay her by continuing fortnightly payments of $989.01, or unspecified amounts according to what they could afford, with any balance still outstanding on her death to be forgiven.
[33] This dispute in the evidence cannot be resolved in this caveat application. But even on Mrs Wohler’s evidence there was an oral agreement reached which involved the trustees ultimately transferring the property to Mr and Mrs Guppy. The precise terms of that agreement will need to be resolved in ordinary proceedings between Mr and Mrs Guppy and the trustees, where Mr Guppy and Mrs Wohler will give direct evidence and can be cross-examined.
[34] It is correct that the description of the interest in the caveat differs to that described by Mr Guppy in his evidence. But there are also inconsistencies in the trustees’ position. For one, the licence agreement on which the trustees rely is inconsistent with Mrs Wohler’s evidence of the terms of the agreement. It requires the trustees to pay the vendor finance, insurance for the property, and all rates and taxes.9 It entitles the trustees to prescribe a licence fee from time to time to obtain reimbursement for their expenditure on the property.10 This is not the way Mrs Wohler describes the agreement, and there is no evidence that the trustees ever prescribed a licence fee to the Guppys.
9 Occupation Licence, cls 5, 6 and 7.
10 Clause 3.
[35] Furthermore, the licence gives Mr and Mrs Guppy a right of first refusal to purchase the property once the vendor finance was paid.11 Mrs Wohler’s evidence is that Mr Guppy was required to repay the vendor finance and the $80,000 she contributed to the purchase price before the property would be transferred to the Guppys. These inconsistencies only emphasise that an ordinary proceeding is necessary to resolve the terms of the oral agreement.
[36] The fact that Mr Guppy paid around $68,000 to the vendor and/or the trustees is evidence that there was some form of agreement. There is no suggestion by the trustees that this was a tenancy and that these were rental payments. Nor, as discussed, is there any evidence that these payments were licence fees.
[37] As to whether there has been part-performance of the arguable oral agreement, it is not disputed that Mr and Mrs Guppy paid a substantial sum to the vendor and/or the trustees. It is unclear whether some of this is attributable to rates or insurance or whether was all to repay the vendor finance.
[38] It is accepted that the Guppys did not repay the full vendor finance and that some of it was paid by the trustees. But it is not necessary, for the doctrine of part performance to apply, for the Guppys to have performed the agreement in full; they need only have done something that amounts to a step in the performance of the oral contract which, viewed objectively, was done on the footing that the alleged contract existed.
[39] If there is a binding, valid contract which complies with s 24 of the Property Law Act 2007, or of which there has been a sufficient act of part performance, which is not subject to a condition precedent, such that specific performance is theoretically available to the purchaser (i.e. there is jurisdiction to grant specific performance even though, if it were actually sought, it might be refused on discretionary grounds) the purchaser has the equitable interest in the property.12
11 Clause 14.
12 DW McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at [10.02].
[40] The point the trustees make that the Guppys have not performed their part of the oral agreement (as alleged) by paying the full vendor finance will be relevant to whether specific performance is available. In a claim for specific performance a purchaser must plead and be able to prove that they remain ready, willing, and able to perform their part of the contract at the appropriate time.13 However, it is not possible to determine whether the Guppys have performed their side of the contract without first determining precisely what was agreed. That is a disputed question of fact that cannot be resolved in this caveat procedure. Therefore, having found there to be an arguable oral contract which was partly performed, I am unable to conclude that specific performance of that contract is not theoretically available to the Guppys.
[41] While Mr Guppy has discharged the burden on him of demonstrating a reasonably arguable interest in the land, the Court retains a residual discretion to remove the caveat if satisfied that removal would not prejudice the Guppys’ legitimate interest.
[42] In this case, Mr and Mrs Guppy’s interests could be irreversibly prejudiced if the caveat is removed and they are subsequently found by a court to have an oral agreement to purchase the land capable of specific performance. Conversely, the trustees do not point to any particular prejudice from the caveat remaining in place until the terms of the arrangement between them and the Guppys are clarified.
[43] The Court can impose terms and conditions when making an order preserving a caveat.14
Result
[44] I order that the caveat 12275628.1 over the property at 1174 Te Ahu Ahu Road, Waimate North, Legal Description NA101B/578, not lapse. The order is conditional upon Mr and Mrs Guppy issuing proceedings seeking specific performance of the alleged oral agreement by 9 February 2024.
13 DW McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at [12.32]
14 Parkland Infrastruct Ltd v Lu Trustee Ltd [2020] NZHC 1182 at [46] citing BP Oil New Zealand Ltd v Van Beers Motors Ltd [1992] 1 NZLR 211 (HC) at 218.
[45] I further order the trustees to pay Mr and Mrs Guppy’s costs on a 2B basis, and reasonable disbursements to be fixed by the Registrar.
Associate Judge Gardiner
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