Hollyman v Hollyman
[2020] NZHC 362
•3 March 2020
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2019-442-67
[2020] NZHC 362
UNDER Section 143 of the Land Transfer Act 2017 IN THE MATTER
of Caveat number 5195680.1
BETWEEN
LESLIE JAMES HOLLYMAN
Applicant
AND
BRUCE DOUGLAS HOLLYMAN AND CAROL JOY HOLLYMAN
Respondents
Hearing: 24 February 2020 Appearances:
S Galbreath for Applicant
L F McDonald for Respondents
Judgment:
3 March 2020
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 3 March 2020 at 3.00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 3 March 2020
HOLLYMAN v HOLLYMAN [2020] NZHC 362 [3 March 2020]
[1] Two brothers who farmed in partnership, divided the partnership land between them under a Deed dated 10 June 1992 (“the 1992 Deed”). As a result, the brothers remained neighbours. Under the Deed, one brother granted a right of way to the other, but they fell out over what the Deed meant. As a result of that falling out, the applicant (Leslie) who had the benefit of the right of way, issued District Court proceedings against his brother, Bruce and his wife Carol, seeking specific performance of the 1992 Deed – proceedings being issued in 2003. Those proceedings were settled at a settlement conference and a consent order, which contained some fine tuning of the settlement, was sealed in the District Court on 16 December 2003.
[2] The following year, Bruce and Carol sought to challenge the terms of the consent order claiming it did not reflect the terms of the settlement. That challenge resulted in a judgment in the District Court dated 18 February 2005 in which the learned District Court Judge noted that the terms struck at the settlement conference had been the subject of further negotiation between the parties, including the attachment of a diagram showing where the right of way was to be located. He said that the parties were bound by the agreement they had reached at the end of a period of negotiation and that “[t]he firmest agreement requires giving by all parties to it”.
[3] Under the 1992 Deed, each of the brothers granted the other a first right of refusal in respect of the land that they had divided under the Deed. Leslie considered that Bruce breached this obligation by transferring his property into joint ownership with Carol in December 2000. It seems that Leslie lodged a caveat dated 18 April 2002 in response.
[4]The interest claimed by Leslie under the caveat is:
As granted under an agreement to grant right of way bearing date the 10th day of June 1992 and made between Bruce Douglas HOLLYMAN as landowner and Leslie James HOLLYMAN of Nelson, Watersider, the caveator hereunder, which agreement is binding upon the registered proprietor Bruce Douglas HOLLYMAN and Carol Joy HOLLYMAN.
[5] In September 2019, Bruce and Carol applied to lapse Leslie’s caveat and Leslie has applied to sustain the caveat.
The Deed of 10 June 1992 (“the 1992 Deed”)
[6] The 1992 Deed is unhappily worded when it comes to the creation of the right of way.
[7] Clause 6(a) of the 1992 Deed refers to Bruce granting a right of way to Leslie “WITHOUT creating a binding agreement to grant a registered right of way” whereas cl 6(b) provides that Leslie shall be entitled at his expense to obtain consent from the Nelson City Council to register a right of way in the terms of subclause (a).
[8]Those two clauses provide:
6.a) WITHOUT creating a binding agreement to grant a registered right of way the said Bruce Douglas Hollyman his successors and assigns doth hereby covenant with the said Leslie James Hollyman and his successors that they shall be entitled to access over that part of the “boulder bank” to the west of the right of way marked “B” on Deposited Plan 15440 for the purposes of gaining recreational access to the esplanade reserve and Delaware Inlet and for the purposes of obtaining access to the cemetery thereon. In exercising the right of access the said Leslie James Hollyman and his successors shall ensure that all locked gateways to the boulder bank area are kept locked in accordance with instructions from the said Bruce Douglas Hollyman.
b) THE said Leslie James Hollyman shall be entitled at his expense to apply to the Nelson City Council for consent to register a right of way in terms of sub-clause a). In such event Bruce Douglas Hollyman will sign all necessary documents to enable the right of way to be registered over part of the first described land known as the “boulder bank” appurtenant to the secondly described land.
[9] Given the caveat to be maintained refers to rights created by the 1992 Deed, counsel sought to address the apparent conflict between these clauses. However, on the view I have reached, I do not need to resolve that conflict.
Merger in judgment
[10] The 2003 District Court proceedings were commenced by Leslie asking for an order to allow the registration of the right of way. Neither Bruce nor Carol dispute that was the nature of those proceedings.
[11] A settlement conference was held on 24 October 2003 with the Court issuing a record of settlement the next day.
[12] The parties then filed for sealing what was called “Consent orders following settlement”. The order for sealing was filed with a joint memorandum of counsel. The two months or so between the settlement conference and the tabling of the consent order and memorandum are consistent with there being further negotiations between the parties as to the detail of the order. As I said earlier, the consent order includes a diagram cross referenced to the terms of the order.
[13] I consider the rights the parties had under the June 1992 Deed merged in the judgment of the Court:
When judgment has been recovered in a court of record, the original cause of action is merged in the judgment so that a second action cannot be brought in respect of the same cause of action.1
[14] The claim that Leslie had under the 1992 Deed, that is the right or cause of action that the 1992 Deed gave rise to “…passed into judgment, so that it is merged and no longer has an independent existence”.2
[15] Here, the caveat refers to rights under the 1992 Deed. However, those rights upon which the District Court action was based merged in the consent order of the Court.
[16] To that extent, the submission by the respondents that the caveat registered relates to the rights under the 1992 Deed and not the Court order of 16 December 2003 is correct.
[17] The caveat was lodged prior to the Court proceedings. The Court proceedings sought to enforce the 1992 Deed and in that sense the Court proceedings were consistent with the 1992 Deed. However, the terms of the 1992 Deed were varied by
1 Mr Gallon, Jeremy Finn and Christine French, Laws of New Zealand contract at [360].
2 Blair v Curren (1939) 62 CLR 464 at 532 and Damesh Holdings Ltd v Apple Fields Ltd HC, Christchurch, CP55/02, 30 August 2002, per Master Venning (as he then was).
the agreement reached at the settlement conference and merged in the consent order of the Court.
[18] The advantage for Leslie in this position is that it side-steps having to resolve the inter-relationship between clauses 6(a) and 6(b) set out at [8] above but leaves him with a caveat that refers to the 1992 Deed that has been superseded.
[19]Counsel for the respondents submits:
The applicant suggests that the registered right of way granted by the respondents in 2003 as part of the settlement of the court proceedings is “an agreed variation to the right of way granted under the Deed” and is “the same interest as the interest claimed in the caveat”.
[20] The respondents submit that as the caveat refers only to the Deed and no mention is made of the 2003 agreement, that is fatal to the application to sustain the 2002 caveat.
[21] Given what I have said about the applicant’s rights under the 1992 Deed having merged in the consent judgment, in my view the respondents’ submission is correct and the caveat as it is drafted cannot be sustained. That, however, is not the end of the matter.
[22] The applicant, in my view, has a clear case for a second caveat to protect the rights under the 2003 consent order. I consider this a clear-cut case for there to be leave to file a second caveat pursuant to s 146 of the Land Transfer Act 2017 given the rights asserted in the original caveat have merged in a consent judgment. I do not consider there to be any unfairness to the respondents in that approach as the consent order grants Leslie a right of way in terms set out in the order cross-referenced to a diagram. The terms of the consent order were struck at a settlement conference and apparently fine-tuned between counsel over the following two months to lead to the consent memorandum. The replacement caveat should also address the issue raised by the respondents that the caveat should only apply to part of the respondents’ land to which the right of way relates.
[23] While it may be a counsel of perfection to say that the caveat to which this application relates should have been discharged and replaced with one referring to the consent order because that did not occur, it means that the original caveat was superseded.
Land Transfer Act fraud
[24] Mr McDonald raised an issue with the applicant’s approach to Land Transfer Act fraud. Relying on Schmidt v Pepper New Zealand (Custodians) Ltd, Mr McDonald said that if fraud was to be raised, it needed to be distinctly alleged and distinctly proved.3 The originating application here did not refer to Land Transfer Act fraud by Carol, recalling that she became a registered proprietor in December 2000 and was not a signatory to the 1992 Deed.
[25] There was some suggestion in Leslie’s affidavit that Carol saw the 1992 Deed prior to 2 December 2000 but that was really as far as the evidence went.
[26] I suspect the fraud issue was not pleaded as the applicant’s case treated the consent judgment as amending the 1992 Deed. The consent judgment was against Bruce and Carol, so by running the 1992 Deed and the judgment together, on the applicant’s approach, Carol’s right of indefeasibility in the absence of fraud was answered by the judgment.
[27] While there is an argument that the explanation as to why the land was transferred to Carol does not sit easily with the length of time that Bruce had been registered proprietor in his own right, that does not amount to evidence of fraud by Carol. I accept Mr McDonald’s submission that Land Transfer fraud must be clearly pleaded and those allegations supported by evidence so that a respondent knows what they have to answer. The allegations of fraud belatedly made in this case were too little too late and are not made out.
3 Schmidt v Pepper New Zealand (Custodians) Ltd [2012] NZCA 565.
Orders
[28] The application to sustain caveat number 5195680.1 registered against record of Title NL10A/1080 is dismissed and the interim order made by Associate Judge Paulsen on 1 October 2019 no longer applies.
[29] There is leave to the applicant under s 146 of the Land Transfer Act 2017 to lodge a further caveat to protect the applicant’s claim to a right of way in the respondents’ land under the consent judgment of 16 December 2003.
Costs
[30] Mr McDonald sought costs submitting that costs should follow the event. The application has been dismissed – the caveat sought to be maintained will lapse. That fundamental proposition is hard to counter as Mr Galbreath accepted. The applicant has also had the benefit of an indulgence as there was no application for leave to file a further caveat.
[31] Mr McDonald realistically did not oppose the granting of leave to lodge a second caveat but submitted that because his clients had adopted that position as a matter of convenience to the parties, such should not detract from the fact that the application to sustain had been dismissed. I agree. The respondents are entitled to costs on a 2B basis plus disbursements as fixed by the Registrar.
Undertaking to the Court
[32] The respondents (who were present in Court), through counsel Mr McDonald, gave the following undertaking to the Court.
[33] The respondents undertook to the Court that they would not sell or otherwise deal with the boulder bank land for 90 days from 24 February 2020, the date of hearing, to allow the replacement caveat to be lodged and for discussions to take place between the parties.
[34] Given it is now clear that the right of way issue is governed by the consent judgment, I would urge the parties to recognise that Leslie does have rights under the consent order but they are as defined in that order and not the original 1992 Deed.
Associate Judge Lester
Solicitors:
Duncan Cotterill, NelsonHamish Fletcher Lawyers, Nelson
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