Iveson v Ma HC Auckland CIV2006-404-4265
[2007] NZHC 1912
•25 June 2007
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV2006-404-4265
BETWEEN D J IVESON AND M J IVESON Plaintiffs
AND Z D MA AND K WU First Defendants
AND J G TURRALL Second Defendant
AND S GOH
Third Defendant
Hearing: 30 January 2007
7 March 2007
16 March 2007
Appearances: S Judd for Plaintiffs
D Wood for First Defendant
K Muir and D Badawi for Second Defendant
R D Wallis for Third Defendant
Judgment: 25 June 2007 at 3.30 pm
JUDGMENT OF ASSOCIATE JUDGE H SARGISSON
Solicitors:
King Gerrard Partners, PO Box 327, Pukekohe
Jenny Wang & Associates, PO Box 64-345, Botany Town Centre, Auckland
Morgan Coakle, PO Box 114, AucklandCastle Brown, PO Box 9670, Newmarket, Auckland
D J IVESON AND M J IVESON V Z D MA AND K WU AND ORS HC AK CIV2006-404-4265 25 June 2007
[1] The plaintiffs, Mr and Mrs Iveson, seek an order by way of summary judgment against the first and third defendants, for the vesting of land under s 129 of the Property Law Act 1952.
[2] The first defendants, Mr Ma and Mrs Wu, and the third defendant, Mr Goh, oppose summary judgment. They contend that the Ivesons’ claim against them and the second defendant, Mr Turrall should be determined at trial. They take issue with the Ivesons’ contention that they have no defence to the claim against them.
Background
[3] The Ivesons are the owners of a property at 1036 State Highway 2, Mangatawhari which is used for a Caltex Service Station and residence. These uses were established on the property before the Ivesons acquired it in late 1989. The property comprises some 3807 square metres and is described in Certificate of Title NA 2C/1360, North Auckland Registry.
[4] Mr Ma and Mrs Wu own the adjoining property to the west, described in the Certificate of Title NA8D/536, North Auckland Registry. The property is significantly larger than the Ivesons’ property being just over 4 hectares. Mr Ma and Mrs Wu purchased their property from a Mr and Mrs Tielmans in November 2003, and in July 2005, they entered into an agreement to sell the property to Mr Goh, the third defendant. The agreement is unconditional but settlement has not yet taken place.
[5] A small triangular area of Mr Ma’s and Mrs Wu’s property is fenced off from the balance of their property and is occupied by the Ivesons. The triangular area is used by the Ivesons mainly for driveway purposes, but parts of the service station’s underground fuel storage tank, residence, and carport also encroach on the triangle.
[6] There is no dispute that when the Ivesons purchased their property they were not aware of the encroachments or that the triangular area was not part the property, as there was nothing on the property itself, as opposed to the certificate of title, to indicate that the fence was not on the legal boundary.
[7] The problems were discovered in or around 1994/1995 by surveyors the Tielmans engaged. The Tielmans informed the Ivesons, and subsequently the Ivesons, with the assistance of Caltex, reached an agreement with Mr and Mrs Tielmans to buy the triangular area for $13,500.00. In March 1995 the Ivesons paid the $13,500.00 to the Tielmans and retained Mr Turrall as their solicitor to undertake the necessary conveyancing and legal formalities to have the legal title to the triangular area transferred to them. Their surveyor prepared the necessary plan which was approved by the relevant local authority in June 1996 and approved as to survey by Land Information New Zealand in August 1996.
[8] Unfortunately, for reasons that the Ivesons and Mr Turrall disagree on, Mr Turrall did not complete the legal formalities to convey legal title to Mr and Mrs Iveson. As the Tielmans no longer own their property it is now too late for the Ivesons to seek specific performance of their agreement.
[9] The lack of legal title to the triangle has become a problem for the Ivesons because they wish to sell their property.
[10] In early 2005, Mr and Mrs Iveson had an agreement to sell their service station business to Deep Holdings Limited for $56,302.97. Settlement took place on
16 September on the basis that the Ivesons would lease the service station premises to Deep Holdings for a term of two years with four rights of renewal of two years each at an initial rental of $26,000.00 per annum plus GST subject to the purchaser’s option to terminate the lease on three months notice on completion of the Mangatawhiri bypass. The right to terminate was included apparently because of the possibility that the service station might cease to be viable due to the drop-off in passing traffic when the by-pass is completed.
[11] Subsequently, in October 2005 Mr and Mrs Iveson entered into another agreement to sell the freehold of their property to the Sloan Family Trust for
$430,000.00 subject to a satisfactory Land Information Memorandum. The LIM was not satisfactory and in September 2005 some of the members of the Sloan family submitted a replacement agreement to purchase Mr and Mrs Ivesons’ property for
$485,000.00 subject to a condition that if the boundary problem was not corrected
within twelve months, then $50,000.00 of the purchase price would be forfeited. Mr and Mrs Iveson rejected this offer.
[12] The Ivesons have endeavoured, unsuccessfully, to negotiate a solution with Mr Ma and Mrs Wu and with Mr Goh. During the negotiations Mr Goh made an offer for the Ivesons’ property, apparently at a higher figure than the Trust’s offer but the Ivesons did not accept it.
[13] Against this background, the Ivesons have commenced this proceeding.
The Ivesons’ statement of claim
[14] Mr and Mrs Iveson advance two causes of action in their statement of claim. In the first, they seek a vesting order against Mr Ma and Mrs Wu as legal owners of the triangle and against Mr Goh as equitable owner. They seek the vesting of the triangle in them free of any mortgage or encumbrance. They plead that for decades, the triangle has been regarded by the occupiers of the two properties as being part of their (the Iveson) property, and that it would not be just and equitable to require the removal of all or part of the residence, carport and underground fuel tank which together with the triangle of land are a necessary part of the Caltex service station business. They plead that, conversely, the triangle is of no practical use to its owners and it cannot be occupied by them.
[15] The second cause of action is based in negligence and contract against Mr Turrall. In summary, Mr and Mrs Iveson allege that, as their solicitor, he owed them a duty to exercise the care and skill expected of a reasonably competent and careful solicitor both under the contract of retainer and in tort, and that he breached those duties by failing to complete the legal formalities required to convey the legal title to the triangle of land to them in accordance with their agreement with the Tielmans. They say although they were the equitable owners of the triangle they lost the opportunity to take legal title and to give effect to the agreement when the Tielmans sold the property and they have suffered damage as a result. They plead that Mr Turrall should have either completed the necessary documentation to ensure that
they became registered as proprietors of the triangle or lodged a caveat to protect their interest.
[16] In relation to the second cause of action the Ivesons plead, by way of losses, the legal costs of the proceeding, surveyor’s costs, any compensation that the Court may order them to pay to Mr Ma and Mrs Wu under s 129 and any losses they may suffer as a result of the delay in their ability to sell their land as a result of the need to resolve the problem they describe as “the encroaching land”.
Summary judgment application
[17] At the hearing Mr Judd advised, on behalf of Mr and Mrs Iveson, that the summary judgment application is confined to their request for a vesting order under the first cause of action against Mr Ma and Mrs Wu, and Mr Goh, and that all other issues raised in their statement of claim ought to be left for trial.
[18] Mr Judd advised that Mr and Mrs Iveson accept that the question of what conditions, if any, should attach to the vesting order to ensure Mr Ma and Mrs Wu and/Mr Goh are compensated for the loss of land cannot be dealt with by way of summary judgment and that the same applies to the cause of action against Mr Turrall.
[19] Mr Judd submitted that there is no impediment however to dealing with the request for a vesting order by way of summary judgment as the case is so clear cut that the Court can safely conclude that a vesting order transferring the freehold of the triangle of land to the Ivesons is the only just and equitable solution in the circumstances, and that there are no material disputes of fact indicating the contrary. He submitted that there is no other practical solution to the Ivesons’ boundary problems, and that if the land is not vested in them, they will have to dig up the tank, demolish the carport and move the house. This would be a serious inconvenience, and the costs would be excessive. He also submitted that Mr Ma and Mrs Wu would suffer no prejudice from the land being vested in the Ivesons, as they have sold their property the land and therefore have no claim to it, and that Mr Goh would not be prejudiced, as he has never had possession of the disputed strip and did not
understand that it was part of his title when he bought the property. Further, if necessary Mr Goh can be compensated by a money sum.
[20] Mr Judd accepted that there is a conflict of fact as to whether or not Mr Ma and Mrs Wu knew about the boundary problem when they acquired the property, and he conceded that the Ivesons do not contend that Mr Goh knew about the boundary problem when he acquired the property. However he argued that irrespective of whether subsequent owners of the Tielmans’ property knew or did not know about the boundary problem, the state of Mr Ma’s and Mrs Wu’s knowledge or Mr Goh’s knowledge is not a factor that should affect the Court’s discretion to grant a vesting order. Mr Judd also argued that the extent of Mr Ma’s and Mrs Wu’s knowledge is relevant only to whether they and/or Mr Turrall should pay compensation to Mr Goh for the loss of the triangle of land.
[21] In this last respect Mr Judd suggested that there is no realistic possibility that Mr and Mrs Iveson will have to pay compensation and that any responsibility for compensation is likely to rest with Mr Ma and Mrs Wu and/or Mr Turrall and is best determined at trial.
Defendants’ Positions
[22] Mr Ma and Mrs Wu oppose an order for vesting.
[23] Their position is that they are no longer the equitable owners of their property because of the unconditional agreement for sale and purchase with Mr Goh and that they should be free to proceed with the sale of their land without their title being interfered with. They argue that it would not be just and equitable to attach to them any responsibility for the factual allegations pleaded by the Ivesons because the Ivesons failed over a period of many years to exercise such rights as they may have had against the Tielmans and because of the delay in seeking relief against themselves.
[24] Mr Ma and Mrs Wu also contend that no one raised the matter of the boundary adjustment with them when they purchased the Tielmans’ property and
they deny Mrs Tielman’s deposition that she indicated that the fence line was the agreed boundary. They also say that the Ivesons did not raise the matter in June
2005, when the Ivesons say they found out that the boundary adjustment had not been completed, and that the Ivesons did not make any “appropriate” approach between June 2005 and July 2006, when they sold their property to Mr Goh. They say approaches by and on behalf of the Ivesons were bullying.
[25] Mr Goh also opposes a vesting order. It is his position that such an order would not be just and equitable because Mr Ma and Mrs Wu did not inform him of the encroachment problem when he bought the property, he wishes to subdivide it, and that a loss of land area could affect subdivisibility. He pointed out that, as a developer, he has had in mind seeking a formal change to the district plan, and he is reluctant to lose land area that may limit future subdivision. At the hearing his counsel raised whether a land swap might provide a solution.
[26] Mr Goh also contends that if the Ivesons do not qualify for relief under s 129 it is unlikely they would be without a remedy as they appear to have a claim against Mr Turrall, and that a just and equitable outcome cannot be determined without discovery and cross-examination of witnesses at trial because of the complex background and disputed facts. His notice of opposition puts the position as follows:
[i]ssues of fact central to the question of whether or not relief should be granted are also integral to the question (if relief is granted) as to the conditions that should attach to that grant. The orders sought by the plaintiffs would, if granted, effectively split the determination of those intertwined issues which is likely to increase the cost and complexity of litigation and may lead to conflicting findings of fact.
[27] Mr Turrall supports an order for vesting, but denies acting negligently and he does not accept that he should bear any responsibility whether for compensation purposes or otherwise. He contends that he has a defence based on disputed matters of fact and law, that he has faithfully and diligently discharged his obligations to the Ivesons, and that he has not breached the standard of a reasonably competent solicitor. He takes the position that if the Ivesons have suffered loss then it has not been caused by any fault on his part. He alleges the Ivesons are responsible for any loss they have suffered because the Ivesons paid for the boundary adjustment prior to
his being instructed and without obtaining his advice; and that the Ivesons failed to follow matters up once he was instructed.
Relevant Legal Principles
[28] The application is made under s 129 and it is useful to set out the key provisions of that section in full and to highlight those of most relevance.
[29] Section 129 states:
129 Power of Court to grant special relief in cases of encroachment
(1) Where any building on any land encroaches on any part of any adjoining land (that part being referred to in this section as the piece of land encroached upon), whether the building was erected by the owner of the first- mentioned land (in this section referred to as the encroaching owner) or by any of his predecessors in title, either the encroaching owner or the owner of the piece of land encroached upon may apply to the High Court, whether in any action or proceeding then pending or in progress and relating to the piece of land encroached upon or by an originating application, to make an order in accordance with this section in respect of that piece of land.
(2) If it is proved to the satisfaction of the Court that the encroachment was not intentional and did not arise from gross negligence, or, where the building was not erected by the encroaching owner, if in the opinion of the Court it is just and equitable in the circumstances that relief should be granted to the encroaching owner or any other person, the Court, without ordering the encroaching owner or any other person to give up possession of the piece of land encroached upon or to pay damages, and without granting an injunction, may in its discretion make an order-
(a) Vesting in the encroaching owner or any other person any estate or interest in the piece of land encroached upon; or
(b) Creating in favour of the encroaching owner or any other person any easement over the piece of land encroached upon; or
(c) Giving the encroaching owner or any other person the right to retain possession of the piece of land encroached upon.
(3) Where the Court makes any order under this section, the Court may, in the order, declare any estate or interest so vested to be free from any mortgage or other encumbrance affecting the piece of land encroached upon, or vary, to such extent as it considers necessary in
the circumstances, any mortgage, lease, or contract affecting or relating to that piece of land.
(4) Any order under this section, or any provision of any such order, may be made upon and subject to such terms and conditions as the Court thinks fit, whether as to the payment by the encroaching owner or any other person of any sum or sums of money, or the execution by the encroaching owner or any other person of any mortgage, lease, easement, contract, or other instrument, or otherwise.
(5) Every person having any estate or interest in the piece of land encroached upon or in the adjoining land of the encroaching owner, or claiming to be a party to or to be entitled to any benefit under any mortgage, lease, contract, or easement affecting or relating to any such land, shall be entitled to apply for an order in accordance with this section, or to be heard in relation to any application for or proposal to make any order under this section. For the purposes of this subsection the Court may, if in its opinion notice of the application or proposal should be given to any such person as aforesaid, direct that such notice as it thinks fit shall be given to that person by the encroaching owner or any other person.
…
[30] I come next to the principles relating to summary judgment, to be applied to this case. The starting point is r 136 of the High Court Rules.
[31] Rule 136 (1) states:
136Judgment where there is no defence or where no cause of action can succeed.
(1) The Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to the claim in the statement of claim or to a particular part of any such claim.
[32] The outstanding feature of the rule is that the onus of establishing there is no defence is cast on the plaintiff. It requires the plaintiff to establish a negative in circumstances in which, in general, the existence and nature of any defence is within the knowledge of the defendant: The concept of no defence is described as “the absence of any real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1, 3.
[33] It is for the plaintiff to adduce sufficient evidence to prove its claim. If it does so, there is an evidential onus on the defendant to provide a foundation for any defences that are raised and in order to defeat a plaintiff’s application for summary judgment, the defendant must provide sufficient particulars to show that there is an issue worthy of trial. However, once the defendant has provided an evidential foundation for the defence, the onus is on the plaintiff to show that the defence is not genuinely arguable: Pemberton v Chappell at 3.
[34] The Courts have described in various ways the nature of the evidential onus that is placed on the defendant when the plaintiff’s evidence is sufficient to prove its claim.
[35] If no credible evidential foundation is provided by the defendant, then the plaintiff’s verification ought to be accepted unless it is patently wrong: Australian Guarantee Corporation (NZ) Ltd v McBeth [1992] 3 NZLR 54, 59.
[36] Simple assertions by a defendant in an affidavit in opposition are insufficient to raise an arguable defence, particularly where those assertions are inconsistent with proved documents and lack credibility: Bishopdale Developments Ltd v Lincoln Turner (NZ) Ltd (1990) 4 PRNZ 584.
[37] In Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA), 85-86, Cooke P
summarised the situation by stating that:
… the need for judicial caution has to be balanced, when considering a summary judgment application, with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. In the end it can only be a matter of judgment on the particular facts.
[38] In the words of Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC
331 at 341 E, the Judge is not bound:
to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.
[39] However, the importance of the plaintiff’s overall onus cannot be over emphasised. In this respect, it is worth mentioning the Privy Council’s recent decision in Jones v Attorney General [2004] 1 NZLR 433 approving a passage from Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) wherein Elias CJ said:
[62] An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded by the affidavit. It may also be inappropriate where the ultimate determination depends on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated proceedings and affidavit evidence will sufficiently expose the facts and legal issues ...
[63] Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary judgment procedure the sufficiency of the proof of the plaintiff’s claim. …
[40] The decision makes clear how important it is that the plaintiff provides sufficient proof of its claim.
[41] Summary judgment may be given where the relief sought is discretionary in appropriate cases: Sim’s Court Practice observes at HCR 136.7:
Where the relief sought, or the defence raised, relies on the exercise of a discretion there is no bar to summary judgment, particularly if there is no further evidence touching on the subject-matter of the discretion: Australian Guarantee Corporation (NZ) Ltd v Wyness [1987] 2 NZLR 326 (CA).
[42] In AGC v Wyness Somers J said for the Court of Appeal at 330 that there is no general rule that the power to enter summary judgment should not be exercised where a defence is raised which invokes a statutory discretion, adding that such an approach would be to add a gloss to the rules about summary judgment.
[43] In Claydon v Herron (1994) 7 PRNZ 631, 634 Fisher J averted to the difficulty of exercising discretion on summary judgment, saying:
notoriously when one comes to the exercise of a judicial discretion, unforeseen circumstances can have a bearing upon what at the moment may seem obvious.
[44] Fisher J declined to give discretionary relief under the Illegal Contracts Act
1970 on summary judgment.
[45] In Harris v Patton (HC Hamilton, CP 24/97, 24 November 1997) Master Faire noted at 8 that “the position must be looked at carefully when the relief claimed in summary judgment involves the exercise of a discretion”. The case before the Master was an application for relief pursuant to s 120 of the Property Law Act. He reviewed AGC v Wyness and said “[i]n principle there would seem to be no reason why the same factors should not apply where it is the plaintiff who seeks the discretionary relief”. Master Faire was mindful of the reservation expressed by Fisher J in Claydon v Herron.
[46] Hawkes Bay Commercials Ltd v Mayfair Equities Ltd (HC Napier, CP 34/01,
18 December 2001, Master Thomson) was also an application for relief under s 120
Property Law Act by way of summary judgment. Master Thomson said at [8] “it is clear the Court may exercise a statutory discretion by way of summary judgment”, citing Harris v Patton and AGC v Wyness. He agreed with Master Faire that the s
120 discretion could only be exercised on summary judgment in the clearest of cases.
[47] There is no reason in principle why the approach taken to s 120 Property Law Act in Harris v Patton and Hawkes Bay Commercials Ltd v Mayfair Equities Ltd should not apply to s 129 PLA. I therefore adopt that approach accordingly.
Discussion
[48] The Ivesons have had de facto occupation of a triangular area of approximately 156m2 of the property that adjoins theirs since they acquired their property in 1989. The service station’s underground tank and the residence encroach to a minor degree on the triangular area, and the carport is located wholly within the area. The driveway to the carport passes over a substantial part of the area.
[49] The Ivesons’ evidence that they did not erect the encroaching buildings (s
129 (2)) is not disputed. The question therefore is whether it is just and equitable to grant them relief.
[50] The Ivesons’ case for an affirmative finding on the question is not without merit, and there are practical arguments in their favour. Their proposal that the triangle of land be vested in them is, from their perspective, the most cost effective and practical solution. If they are not able to acquire a sufficient interest in the adjoining land, it is likely that they will have to dig out the storage tank, demolish the carport and move the residence. The cost would clearly be very significant. Conversely, their contention that the adjoining owners would not suffer any prejudice by the loss of the triangular area appears not without some merit, although it may be overstated. The triangle is a very small part of the adjoining owners’ property which they do not use currently, and as the Ivesons point out, Mr Ma and Mrs Wu have never had possession of the triangle, and Mr Goh, the purchaser of their property, gives no indication that he thought the triangle was part of the Ma/Wu property when he entered into the agreement to buy it.
[51] Further, the Ivesons have produced evidence from the relevant local authority to the effect that Ma/Wu property cannot be subdivided as of right under the relevant district plan. Mr Goh’s wish to subdivide the property seems a long way from being able to be realised, and compensation may be an appropriate means of doing justice to him if an order were made.
[52] Yet, the Ivesons’ case does not clear the threshold of being one of the clearest of cases. There are several factors which immediately indicate that I am not able to conclude, on the evidence before me, that it is just and equitable in the circumstances to grant the vesting order that is sought and that it is not appropriate to deal with this case by summary judgment.
[53] I comment on each factor in turn.
Do the Ivesons bear some responsibility for the problem?
[54] While it has not been suggested that this is a case where the encroachments were intentional or that they arose from gross negligence on the part of the Ivesons, there is a dispute as to whether the Ivesons had the opportunity to resolve the
problem over a period of some eight or nine years after they entered into their agreement with the Tielmans.
[55] Mr Turrall contends that the fact that the agreement between the Tielmans and the Ivesons was not carried through to completion was not a result of his negligence but because the Ivesons failed to give him instructions.
[56] This dispute means I cannot discount the possibility that the Ivesons were themselves wholly or partly responsible for the failure to solve the problem of the encroachment when they had the opportunity, and before new owners became involved.
[57] The extent to which the Ivesons may have been responsible for the ongoing problem is a factor that cannot be determined in the context of this summary judgment application, but it is part of the circumstances that need to be taken into account in determining whether it is just and equitable that relief should be granted to them against the new owners, including Mr Goh.
[58] If the Ivesons have sat on their hands, then that factor will have to be weighed, together with other factors, in deciding whether they should have discretionary relief or whether they should be left to resolve the problem within the confines of their own property and to bear the attendant cost.
Nature and extent of interest to be transferred
[59] Even assuming it is just and equitable to grant some form of relief, the nature of the interest in land and the extent of the area of land that ought to be vested in the Ivesons are not so clear as to warrant summary judgment.
[60] As to the extent of land which ought to be transferred, the mere fact that the fence has not followed the boundary line does not of itself entitle the Ivesons to the entirety of the triangle of the adjoining owners’ land, which is on their side of the fence. As Fisher J said in Briggs v Currie (1994) 2 NZ ConvC 191,837, 191,842:
Plainly the Court must limit the exercise of its powers under s 129 to the minimum intervention necessary in order to secure proper relief for the encroaching owner.
[61] The Court may vest more land than simply the footprint of the encroaching building in order to allow sensible enjoyment thereof: Briggs v Currie. However, it is fundamental that an application under s 129 is made on the basis of encroaching buildings rather than wrongly placed fences, and the necessity of the entire triangle being vested in the Ivesons has not been clearly established. The widest part of the triangle is behind the carport, and it is not clear on what basis the Ivesons require this part. The necessity of the carport remaining where it is has also not been sufficiently addressed. If the carport were taken down a significant area of land might be returned.
[62] The likelihood of the long-term retention of the service station remains unclear and this is a factor that may affect the nature of the interest the Court might order be vested or created. The lease agreement between the Ivesons and Deep Holdings Limited contained a right to terminate on three months notice on completion of the Mangatawhiri by-pass. I raised the significance of this provision with Mr Judd at the hearing as it suggests the possibility that the service station may cease to be a viable operation if passing traffic diminishes when the by-pass is completed. Given that the Court is being asked to interfere with another's title, the Ivesons ought to provide further evidence to explain the significance of the Mangatawhiri by-pass and the likelihood of the long-term retention of the service station and hence the storage tank. If the likelihood is low, then that may well affect the nature of the interest that should be transferred. If the service station ceases operation that would also raise the possibility of easier access to the residence and may further reduce the Ivesons’ need for use of the triangle of land. In these circumstances, a short term lease may be a more just form of interference with the adjoining owners’ title than an order for the transfer of the freehold title.
[63] In addition, further consideration of an easement as opposed to a transfer of the freehold title is warranted. While I accept the evidence that the relevant district plan does not presently authorise subdivision, district plans change from time to time and an easement which preserves intact the adjoining owner’s land area may be of
significance when it comes to the right to subdivide in the future, and a way of minimizing any harm to Mr Goh's aspiration to seek a plan change.
[64] The Ivesons argue that an easement would not be appropriate as easements allow for rights in the nature of access, not in the nature of exclusive possession and use of a dwelling and ancillary structures. I am not satisfied however that the practicality of an easement has been sufficiently explored on the evidence as it presently stands. While it seems that private parties may not create an easement of encroachment, s 129(2)(b) allows a Court to do so: see Hinde McMorland & Sim at
9.063, fn 12.
Compensation
[65] Next, there is a question of compensation.
[66] It is common ground that the issue of compensation cannot be dealt with by way of summary judgment.
[67] In their statement of claim, the Ivesons appear to recognise the possibility that they may have to compensate Mr Ma and Mrs Wu, because they plead they should be entitled to recover damages against Mr Turrall if they are required to pay compensation. At the hearing, Mr Judd submitted emphatically that there was no realistic possibility that the Ivesons would have to pay compensation to Mr Ma and Mrs Wu, and that the real question is whether Mr Goh should be compensated by Mr Ma and Mrs Wu and/or by Mr Turrall. They suggest that there is a factual dispute here about the issue of Mr Ma and Mrs Wu’s knowledge, and therefore the question of compensation ought to be left to trial.
[68] Section 129(4) recognises that an order for relief in favour of the encroaching owner may be made upon and subject to such terms and conditions as the Court thinks fit, whether as to the payment by the encroaching owner or any other person of any sum or sums of money, or by the execution by the encroaching owner or any other person of any mortgage, lease, easement, contract, or other instrument, or otherwise.
[69] I do not think it is appropriate that there be an order vesting in the Ivesons an interest in the adjoining land, until any terms and conditions attaching to that order are determined. If, as seems likely, Mr Goh is to be paid compensation in the event that a vesting order is made, then a condition is required to determine the amount and the person or persons responsible for payment and the amount they must pay. The question of who should compensate involves arguments between the remaining parties which will go to trial. Whether it is to be the Ivesons, or Mr Turrall, or Mr Ma and Mrs Wu who will bear responsibility, it is arguable that Mr Goh should be paid at the time of settlement and that he should not be forced to divest himself of an interest in land in advance of payment or alternatively without proper security. If Mr Ma and Mrs Wu are the ones to be compensated, then similar considerations apply.
[70] Arguably too, orders under s 129 should be arranged analogously to settlement procedures in normal conveyancing. If that is correct, and settlement is not to take place until compensation is determined and paid, then there is no advantage in summary judgment.
[71] In short, I am not able to be satisfied that it would be just and equitable that Mr Goh, and/or Mr Ma and Mrs Wu should be deprived of any of their interest in the adjoining land before they have had the opportunity to argue the extent of the compensation, if any, they should receive for it, and who they should receive it from. As there are several possible compensating parties here, the issue of compensation is not simply one of quantum.
[72] If the encroachment issue was discrete and the party seeking the s 129 order was willing to pay reasonable compensation, giving an undertaking to that effect and placing a charge over their own land, leaving quantum as the only question, then the appropriateness of vesting an interest in land in the Ivesons and leaving compensation for trial might have been clearer.
Indefeasibility of title
[73] Finally there is the policy of the Land Transfer system. The chief feature of the Torrens system of title registration is indefeasibility of title. I accept that s 129 is
remedial and provides an established exception to indefeasibility, with the result that there is no presumption against non-interference with another’s title: see BA Trustees Ltd v Druskovitch [2007] NZ CA 131, 17 April 2007.
[74] However, because s 129 provides an established exception to indefeasibility, the section:
ought therefore to be applied with circumspection: not so as to defeat the purpose for which [it was] enacted, but rather to ensure that no more is done than is necessary to achieve that purpose.
Blackburn v Gemmell (1981) 1 NZCPR 389, 393 per Hardie Boys J.
[75] The suitability of summary judgment in such a context should be approached carefully. While Mr Goh apparently did not appreciate that the triangle of land was included in the property he was buying, that does not mean his right to a registered title of all of the land in CT NA8D/356, including the 156m2 triangle of land, should be interfered with lightly. I am unable to be satisfied on the evidence before me that the remedy the Ivesons propose does no more than is necessary to achieve a just and
equitable outcome and I cannot decide that question by summary judgment. It must go to trial.
Conclusion
[76] Taking these factors into consideration I conclude that while there appears to be much to be said in the Ivesons’ favour, this is not a case where granting discretionary relief on a summary judgment application is appropriate.
Result
[77] The application for summary judgment is declined.
[78] Costs are reserved in accordance with the Court of Appeal’s decision in NZI v
Philpott [1990] 2 NZLR 403.
[79] The case is to be allocated a telephone conference on 5 July 2007 at 2.50 pm with a view to my discussing directions to make the case ready for trial and to
allocate a judicial settlement conference.
Dated at Auckland on at am/pm.
Associate Judge Sargisson
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