Joshi v Eesha Holdings Limited
[2015] NZHC 2837
•13 November 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-001519 [2015] NZHC 2837
UNDER the Land Transfer Act 1952 IN THE MATTER OF
an application for removal of caveat number 10093458.1
BETWEEN
KULBHUSHAN JOSHI AND JEEVAN JOSHI
Applicants
AND
EESHA HOLDINGS LIMITED First Respondent
KAMIL RAGINA DEWAN GOUNDAR Second Respondent
NALINA REKHA GOUNDAR Third Respondent
Hearing: 28 October 2015 Appearances:
K Lakshman for Applicants
M R T Colthart for RespondentsJudgment:
13 November 2015
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 13 November 2015 at 4.00 pm
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date……………………….
JOSHI v EESHA HOLDINGS LTD & ORS [2015] NZHC 2837 [13 November 2015]
Introduction
[1] The plaintiffs, Mr and Mrs Joshi, are the registered proprietors of a property in Coronation Road, Papatoetoe. They have applied under s 143 of the Land Transfer Act 1952 for an order removing a caveat from the title.1 The caveator is the first defendant, Eesha Holdings Ltd (EHL). It asserts a caveatable interest in the property as purchaser under an unconditional sale and purchase agreement.
[2] Mr and Mrs Joshi say that there was no concluded agreement between them and EHL, or that any agreement was void for uncertainty or has been avoided or that EHL has lost its rights as a result of delay. EHL opposes the application on the basis that it has an arguable case as to the validity of the agreement and that determination of that question must await trial because of the many disputed facts.
[3] At the outset of the hearing Mr and Mrs Joshi applied for leave to adduce further evidence from Mrs Joshi about text messages sent between her and the second respondent, who is known as Ragina Goundar. This evidence could have been adduced earlier and the late notice of it would have been prejudicial to the EHL. I therefore refused leave.
Factual background
[4] The parties were known to one another before the events giving rise to this application. The third respondent, Nalina Goundar, is a director of EHL. Ragina Goundar, is an accountant and is Nalina Goundar’s sister. On a previous occasion Mr and Mrs Joshi purchased another property and received some assistance from, at least, Ragina Goundar, in relation to the preparation of accounts and arranging of finance. On Mr and Mrs Joshi’s account the women held themselves out as licensed real estate agents connected with Century 21 (of which Nalina Goundar’s brother is a licensed real estate agent) but this is denied.
[5] In November 2014 Mr and Mrs Joshi purchased the Coronation Rd property from Ragina Goundar for $445,000. The rent did not cover the mortgage payments
1 In related proceedings between the same parties (CIV-2015-404-1520) Mr and Mrs Joshi seek injunctive relief restraining EHL from dealing with the property but only the application for removal of the caveat fell for determination at this hearing.
and when they raised the rent the tenant quit. Within a short time they decided that the purchase was a mistake. The parties disagree about what happened next.
[6] Mr and Mrs Joshi say that they asked Nalina and Ragina Goundar to find a buyer for the property. They wanted only to recover what they had originally paid together with the costs associated with the purchase. Nalina Goundar said she would find a buyer and had Mr and Mrs Joshi sign a standard-form sale and purchase agreement. Mr and Mrs Joshi maintain that they were shown only two pages of the form and the only specific information recorded was their names. There was no other signature, no purchaser, no purchase price, no deposit, no dates for the payment of the deposit or for settlement and no special conditions. They say that Nalina Goundar told them that the sale would be settled on 30 January 2015.
[7] On the respondents’ account, however, Nalina Goundar’s brother prepared two copies of a sale and purchase agreement that showed EHL as the purchaser, a sale price of $455,000, and a deposit of $5,000. Nalina Goundar took both copies to a meeting with Mr and Mrs Joshi. After they signed the forms she gave one of the copies to them to keep. The sale and purchase agreement did not provide for a settlement date but this was because Nalina Goundar had to arrange the sale of two commercial properties before EHL could complete the purchase of Coronation Road. She says that they agreed that the actual settlement date would be discussed further when Mr Joshi returned from a planned trip to India. She arranged for the February and March mortgage payments and also for the water rates bill for February 2015.
[8] By the end of January 2015, however, there was no settlement in sight. Matters became urgent in April 2015. There was no sign of a sale being concluded. No further payments had been forthcoming to cover the mortgage. Mr and Mrs Joshi were looking to build a house in Wellington and a condition of funding for that project was the sale of Coronation Road. In an email to the BNZ sent on 1 April
2015 Mr Joshi said:
Coronation will be paid in full as we are currently [sic] have a contract in place subject to finance.
[9] On 15 May 2015 Mrs Joshi texted Nalina Goundar to ask if she was sure that settlement would take place that month and she answered that she was positive it would.
[10] On 26 May 2015 Mr Joshi emailed Ragina Goundar and Nalina Goundar saying:
… If we can just settle this amount on Friday or Tuesday 2 June at the latest it will be great …
[11] There was no reply to this email.
[12] On 29 May 2015 Mr Joshi emailed Nalina Goundar’s husband, Sanjeet Goundar, recording the events to date, expressing concern about both Nalina Goundar’s and Ragina Goundar’s conduct in relation to the property and saying:
… I have decided to not bother Regina [sic] and Nalina in any property issue from now on. In fact Nalina does not even need to settle Coronation Road and hence nothing lost for her. I will consider the S & P agreement null and void as the date has lapsed anyway. Regina [sic] does not need to worry about that also. She can invoice me for her fees and I will pay them accordingly. I will sell the properties myself and am in the process of doing so already. I just need the keys to Coronation Road.
[13] A response came the same day from Nalina Goundar which included:
Yes, the settlement should have taken long ago [sic] but the circumstances were such as we were involved in the purchasing of commercial properties at the same time which as [sic] dragged on. …
To avoid further drama on this subject I will give you back the keys for Coronation provided you pay me the amount I spent after I acquired it … You purchased it for $445k and I bought it off you for $455k so which profit you talking about that she has made from you?
[14] Following that exchange Mr Joshi had the locks changed and engaged a real estate agent to market the property. Then Nalina Goundar became aware of a “for sale” sign outside the property. Within days Mr and Mrs Joshi received a letter from solicitors, Frost & Sutcliffe, advising that:
We refer to the undated agreement for sale and purchase of the above property and confirm that we act for the Purchaser.
We note that on the back page of the Agreement no solicitor is recorded as acting for you as Vendors.
As you have not advised us of any solicitor representing you in this matter this letter, giving notice is forwarded directly to you.
We are pleased to advise that the Finance condition is satisfied. The contract is now declared unconditional.
The contract provides no date for settlement so we suggest this takes place on 30 June 2015.
Please confirm …
Our client is today lodging a caveat on the certificate of title for the property to protect their interest pursuant to the agreement.
[15] Mr Joshi’s reply the following day expressed complete confusion about the contents of this letter. He asserted that he and Mrs Joshi had never been provided with a copy of the sale and purchase agreement and requested a copy of the caveat and details of the caveator.
The application
Relevant principles
[16] The approach to be taken on an application under s 143 was summarised by the Court of Appeal in Sims v Lowe:2
It is clear that this summary procedure for the removal of a caveat against dealings is wholly unsuitable for the determination of disputed questions of fact. From this it follows, and has been consistently held, that an order for the removal of such a caveat will not be made under s 143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so … The patent clarity referred to will not exist where the caveator has a reasonably arguable case in support of the interest claimed.
[17] The Court went on to make it clear, however, that the onus is on the caveator to show that he or she has a reasonably arguable case for the interest claimed:3
The caveator seeks to clog or fetter the proprietary interest of another. As a matter of principle it seems right that he must justify the continued existence of his caveat. He will do that if he can show he has a reasonably arguable case for the interest he claims.
2 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660.
3 At 660.
An arguable case?
[18] On the face of the sale and purchase agreement there is an arguable case to sustain the caveat. However, Mr Lakshman, for Mr and Mrs Joshi, advanced four distinct arguments against that conclusion, arguing that, even on the respondents’ version of events, there was no basis on which EHL could ultimately succeed in maintaining the caveat.
[19] Mr Lakshman argued, first, that there had been no concluded agreement. He invited me to infer that the document that Mr and Mrs Joshi signed was in the form Mr Joshi describes in his affidavit rather than in the completed form described by Nalina Goundar. He relied on the inherent unlikelihood of Mr and Mrs Joshi agreeing to wait for an unspecified period to obtain a price set by reference to the costs incurred to January 2015 when costs associated with the purchase would inevitably rise over the passing months. He also pointed to the fact that no deposit had ever been paid.
[20] Clearly, the state of the document that Mr Joshi signed in January 2015 is critical to determining whether there was a concluded contract. I cannot resolve this issue by inference from the affidavit evidence alone. There are deep differences between the respective accounts that should be resolved by a trial judge with the benefit of cross-examination.
[21] Mr Lakshman’s second argument was that, even if the sale and purchase agreement had been signed in the form asserted by EHL, it was void for uncertainty because the date for settlement had been specifically reserved for further negotiation. The fact that no date is fixed for the settlement of a contract does not render the contract void for uncertainty. In such cases the parties’ obligation is to settle within a
reasonable time.4 However, where the parties have agreed that the date for
settlement will be agreed later by negotiation, the contract will lack certainty. Mr Lakshman relied on the Court of Appeal’s decision in Willetts v Ryan, in which
Turner J, speaking for the Court, said:5
4 Hunt v Wilson [1975] 2 NZLR 592 (SC) at 597, affirmed at [1978] 2 NZLR 261 (CA) at 268 –
269; see also Venning J’s discussion in Lee v Warrander HC Christchurch CP15/01, 25 June
2001 at [19].
5 Willetts v Ryan [1968] NZLR 863 (CA) at 868, applied in Barrett v IBC International Ltd [1995]
3 NZLR 170 (CA) at 174.
But although it is not necessary that the parties should express their agreement as to the time and manner of payment, and although if they do not do so the Court will take them to have agreed to abide by such terms as the Court may think reasonable in this regard, it is otherwise where they have expressly reserved such a matter as one for later negotiation and agreement. Such an express reservation will compel the Court to conclude that the matter so reserved is not one about which the parties thought it unnecessary to say anything, being content that the Court should if necessary decide what is reasonable; on the contrary they have declared it to be a matter upon which they must negotiate and agree before their pactum shall be given legal force …
… if the offeror has in fact reserved a material term for further negotiation and agreement, and his intention emerges that until this term is settled no binding contract shall be concluded between the parties, there can be no valid acceptance, resulting in a binding contract, while such a term remains outstanding, even though the offer be in due form, and even though it has been given for valuable consideration.
[22] Mr Lakshman argued that, although the sale and purchase agreement on which EHL relies is silent as to the settlement date, Nalina Goundar’s evidence that the settlement date would be discussed when Mr Joshi returned from India and the subsequent emails between the parties in May 2015 made it clear that settlement had been left for further negotiation between the parties.
[23] This, again, is a matter that I consider should await trial. On the face of it, there is inconsistency between the form of the sale and purchase agreement on which EHL relies (which is silent as to the settlement date) and the subsequent communications between the parties (which suggest that it was specifically left for negotiation). But the extent to which the parol evidence is admissible and the effect of it was not argued before me and I consider this is properly a matter for a trial judge in the context of resolving the factual disputes between the parties.
[24] Mr Lakshman’s third argument was that, even if an agreement had been concluded, it had been avoided by Mr Joshi’s email of 29 May 2015. This is also a matter that must be determined at trial. If the agreement was in the form asserted by EHL the contract was conditional upon the purchaser arranging finance but no date was fixed for satisfaction of that condition. In those circumstances Mr and Mrs Joshi’s right to avoid the contract could only arise upon their giving notice making
time for fulfilment of the condition of the essence.6 Whether Mr Joshi gave such
6 Hunt v Wilson, above n 4; Mt Pleasant Estates Co Ltd v Withell [1996] 3 NZLR 324 (HC).
notice before purporting to avoid the agreement is a question of fact to be determined with the benefit of all the evidence.
[25] The final argument was that EHL had failed to act promptly to protect its equitable interest, including taking no steps to obtain an order for specific performance of the agreement for sale and purchase on which it relies. Questions of reasonableness turn on the facts of the case. Given the significant factual disputes that exist in this case, whether EHL has acted reasonably is a matter that can only be resolved at trial.
Result
[26] Given the nature and extent of the disputed facts it is impossible to say whether EHL does, in fact, have an interest in the property that would support its caveat but it has shown that it has an arguable case for such an interest. For this reason the application must fail.
[27] I am, however, concerned that EHL has taken no steps to establish its interest by seeking specific performance of the agreement. The position must be resolved quickly because Mr and Mrs Joshi are unable to deal with their property and this has the potential to cause significant loss to them.
[28] I therefore dismiss the application on the condition that the caveat may remain only if:
(a) within 14 days EHL commences proceedings (either by a new statement of claim or by counterclaim in the existing proceedings) for specific performance of the agreement relied on; and
(b)prosecutes the claim for specific performance promptly. To this end the matter is to be listed in the Duty Judge List on Thursday
4 February 2016 so that progress can be monitored and further
directions made.
P Courtney J
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