Link Technology 2000 Limited v Penetito HC Wellington CIV-2011-485-1999
[2011] NZHC 1754
•8 November 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-1999
UNDER the Land Transfer Act 1952 Section 145
BETWEEN LINK TECHNOLOGY 2000 LIMITED Applicant
ANDSHANE DEAN PENETITO AND SHARON MARIE ISAAC Respondents
Hearing: 8 November 2011 (Heard at Wellington)
Counsel: K. Smith - Counsel for Applicant
A. Knowsley - Counsel for Respondents
Judgment: 8 November 2011
ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
Solicitors: Peter C Gilbert, Solicitor, PO Box 2420, Wellington
Rainey Collins, Solicitors, PO Box 689, Wellington
LINK TECHNOLOGY 2000 LIMITED V SD PENETITO AND SM ISAAC HC WN CIV-2011-485-1999 8
November 2011
Introduction
[1] Before the Court is an application by the applicant dated 4 November 2011 that purports to be an application to “Re-instate Caveat 8129851.1”. This caveat was lodged by the applicant against the respondents‟ property I understand in April 2009 but has since lapsed.
[2] The application before me is effectively one pursuant to s 148 Land Transfer
Act to register a second caveat against the title in question. [3] That application is opposed by the respondents. Background Facts
[4] There is no dispute between the parties that in June 2008 the applicant as vendor and the respondents as purchasers reached an agreement relating to a Tearoom/Cafe property situated at the Rimutaka Summit, State Highway 2, Rimutaka Hill. There is, however, some dispute between the parties over the intent of this agreement.
[5] The Agreement itself dated 25 June 2008 (“the Agreement”) provided for a sale price of $110,000.00 on the basis, according to the respondents as purchasers, that the applicant would sell to them what is described in the Agreement as a “leasehold” interest in the “Premises of the Tearoom/Cafe” together with the Tearoom/Cafe building itself.
[6] The second-named respondent Ms Isaac has placed before the Court an affidavit dated 21 October 2011 exhibiting a copy of the Agreement. Significantly, I note that the Agreement is on the eighth edition Auckland District Law Society form for an “Agreement for Sale and Purchase of Real Estate” and that copy document annexed to her affidavit notes that the estate or interest sold by the Applicant under the Agreement is a “leasehold” estate. The Agreement also goes on to provide a detailed legal description presumably for the land in question.
[7] The Agreement clearly provides for the sale price of $110,000.00 to be paid or satisfied first, by way of a deposit of $5,000.00 (which was paid between the parties) and secondly, the balance of $105,000.00 according to the further terms of sale, to be repaid after 2 years with interest at 12% paid in the meantime on an interest only basis. This $105,000.00 was also to be secured by way of personal guarantees provided by the respondents as purchasers “together with a registered mortgage over the property situated at Cape Palliser Road, Lot 4 DP 22981, Block 1, Kaiwaka Survey District”. The Agreement at special condition 18.0 also stated “The building is purchased on an „as is where is‟ basis”.
[8] The copy Agreement exhibited to the affidavit of Ms Isaac appears to be one received by the respondents by fax transmission from a Mr Harry Memelink (Mr Memelink) a director of the applicant which was forwarded to them on 17 November
2008.
[9] An immediate issue arises however over the terms of the Agreement.
[10] Mr Memelink has himself filed an affidavit in support of the present application. This affidavit, dated 3 October 2011, exhibits as exhibit “A” a further copy of what he says is the Agreement for Sale and Purchase between the parties. He contends, however, that there was not one but in fact there were two Agreements for Sale and Purchase signed on 25 June 2008 by the parties. The copy Agreement for Sale and Purchase which he has exhibited to his affidavit appears on page 1 to have the word “leasehold” deleted. In all other respects that copy Agreement for Sale and Purchase appears to be virtually identical with the copy Agreement annexed to the affidavit of Ms Isaac.
[11] It is Mr Memelink‟s contention on behalf of the applicant that what was sold under the second Agreement for Sale and Purchase entered into between the parties in June 2008 was simply the building at the Rimutaka Summit Tearoom/Cafe and no interest in the land. He maintains this argument based first, upon deletion of the word “leasehold” from the copy of the Agreement he has annexed to his affidavit, together with secondly, the special condition in para 18.0 that the building was purchased on an “as is where is” basis. He does not however endeavour to explain
why the description of the “property” on page 1 of both copies of the Agreement was completed in full nor that the form of contract used was the standard Eighth Edition, Auckland District Law Society, Agreement for Sale and Purchase of Real Estate form. This form of course has numerous undeleted provisions in the fine print (all initialled by all parties here) relating to the sale being of an interest in land.
[12] The relevance of these matters, as I see it, is critical in this case for the following reasons.
[13] The Agreement between the parties provided for possession to be given on 15
June 2008, although I understand from counsel this may not have occurred until around October 2008. At that time, the deposit of $5,000.00 under the contract had been paid. No mortgage over the Cape Palliser Road property had been provided by the respondents at that time however in terms of the special condition 17.0 to secure their personal guarantee of the $105,000.00 unpaid purchase price.
[14] After taking possession of the property, the respondents discovered that the vendor applicant, Link Technology 2000 Limited had no interest in the land in question by way of leasehold or otherwise. It does seem that Mr Memelink, the director of the applicant, at one stage did himself have a Licence to Occupy the site from the local authority, but as at June 2008 this Licence had lapsed.
[15] There was therefore no interest of any type either by way of lease, licence or otherwise held by the applicant in the land in question either when the Agreement was signed or even when subsequently settlement was purported to be taken.
What Happened Next?
[16] Once the respondents discovered there was no registered or other lease over the property held by the applicant to be transferred to them as part of the sale, nor that the applicant indeed had any rights at all over the property, they gave notice through their solicitor cancelling the Agreement pursuant to the Contractual Remedies Act 1979. This occurred by letter on 27 November 2008.
[17] The basis for the cancellation of the purchase under the Agreement appears to be s 7 Contractual Remedies Act 1979 whereby the respondents contended that “they had been induced to enter into the contract by a misrepresentation whether innocent or fraudulent made by or on behalf of the applicant as the other party to that contract”.
[18] It is the respondents‟ position that an essential term of the contract (which was in fact specified in the body of the document itself) was that they were purchasing a leasehold interest in the land on which the Tearoom/Cafe premises stood together with the Tearoom/Cafe building itself and this was entirely false.
[19] The respondents maintain therefore that since the Agreement was cancelled prior to ultimate and final settlement (by completion of the vendor finance mortgage), this vendor finance of $105,000.00 never became payable. It follows therefore that the right under the Agreement to mortgage the respondents‟ property as security for the vendor finance and thereby to register the caveat never arose.
[20] Significantly in my view here, it does seem that the original caveat which the applicant registered over the respondent‟s property (being caveat number 8129851.1) was not registered until some 4 months after the respondents cancelled the Agreement, this occurring on 9 April 2009.
[21] Since that date in April 2009, not a great deal occurred until 22 September
2011. On that date the respondents made application under s 145A of the Land
Transfer Act 1952 for the applicant‟s caveat to lapse.
[22] As a consequence, on 26 September 2011 the usual Notice was sent by LINZ
to the applicant under s 145A.
[23] On 3 October 2011 the applicant filed in this Court an originating application that the caveat not lapse.
[24] Also on that date, the applicant notified LINZ that it had filed an application in the High Court that the caveat not lapse.
[25] Regrettably from the applicant‟s point of view, nothing happened then for the next 28 days, and LINZ accordingly lapsed the caveat around 1 November 2011.
[26] A day or so later on about 2 November 2011 her honour Justice Mallon in this Court purported to make an interim order that the caveat No. 8129851.1 not lapse until further order of this Court was made. This was simply done to endeavour to preserve the position.
[27] At that point however the caveat had already lapsed and this order was therefore of no effect.
[28] The mandatory 28 day period from the time the caveator had given notice to LINZ that application had been made to prevent the caveat lapsing by when an appropriate order preserving the caveat needed to be made, had not been complied with by the applicant. It was therefore through its oversight that the caveat had lapsed.
[29] It is this which has resulted in the present application under s 148 for registration of a second caveat.
Counsel’s Arguments and My Decision
[30] Turning now to the legal position concerning s 148, it is clear that the Court has an unfettered discretion to consider an application under this section, but generally it is to have regard to:
(a) The strength of the case made by the applicant to support the claimed interest in the land;
(b) Any explanation for failure to exercise the caveator‟s rights under s
145 or s 145A Land Transfer Act; and
(c) Whether unavoidable prejudice would be suffered by those who have acted in reliance on the register, or in the belief that the caveator was not pursuing the claim.
[31] It is clear from decisions such as Nee Harland v Asset Finance Limited, HC, Napier, CIV-2011-441-143, 25 March 2011 and Mueller v Montagnat (1986) 2
NZCPR520 that these considerations are to be taken into account by the Court when faced with an application under s 148.
[32] As to the matter noted at para [30](b) above regarding any possible explanation for the failure by the caveator to exercise its rights, in the present case as I have noted above the error as to timing of the application to sustain the caveat must rest solely with the applicant. This aspect does not assist its application here.
[33] So far as para [30](a) above and the strength of the case made by the applicant is concerned, in my view there are very real problems with the contentions advanced by the applicant here. First, I refer to what must be a matter of some considerable concern to the Court. This is the suggestion by Mr Memelink for the applicant (emphatically denied by the respondents) that there were indeed two contracts signed by the parties here, both on the same day 25 June 2008, the second of which had the word “leasehold” deleted from it. This contrasts however with clear factual matters which are before the Court. These include the evidence of the respondents that the copy Agreement faxed by Mr Memelink to them on 17
November 2008 which Mr Isaac annexes to her affidavit did not have the word “leasehold” deleted. And, even from the form of Agreement annexed to Mr Memelink‟s own affidavit sworn 3 October 2011, questions must be raised as to why a full legal description for the property was included if indeed there was no interest in the land to be transferred. Further, the inclusion in the Agreement of a wide range of terms and conditions relating to the sale of interests in land would be unusual if this transaction was simply one involving an agreement only for the sale of a building.
[34] The inclusion of clause 18.0 in the Agreement‟s special terms providing that the building is purchased on an “as is where is” basis, despite its assertions to the contrary, in my view does not really assist the applicant here. This simply relates to that portion of the sale relating to the building but in my view it does not take away anything from the fact that the Agreement also purports to include a sale of an interest in the land.
[35] Further, the suggestion from the respondents advanced before me here that they would never have agreed to pay a purchase price of $110,000.00 for a Tearoom/Cafe building alone to which their rights of occupancy could be terminated at any time by the land-owner, as I see it, would seem to carry some weight.
[36] In my view it is reasonable to conclude that the sale in this case related to the Tearoom/Cafe premises at the Rimutaka Summit property together with an interest in the land on which the Tearoom/Cafe business stands, presumably by way of some form of lease or at the very least a continuing licence.
[37] That said, I must conclude that as this did not occur, the respondents were entitled to cancel the contract as they did on 27 November 2008. At that time no mortgage to secure the unpaid purchase price had been entered into by them nor had any caveat been registered over their property. As I have noted, it was not until April
2009 that the applicant registered the caveat over the Cape Palliser Road property. As I see the position, there was no right at that time for the caveat to be registered as the Agreement between the parties had been terminated and the vendor finance requirement cancelled.
[38] I conclude therefore that for all the reasons as I have outlined above, the applicant‟s case to support the claimed interest in the land over which he registered the caveat is weak.
[39] Finally, I turn to consider the issue of prejudice here.
[40] The evidence before me discloses that the respondents have entered into a contract to sell their Cape Palliser Road property. If any second caveat by the applicant were to be registered against the title to this property this would of course impact upon this sale. In my judgment, the prejudice which would be caused to the respondents in that event would far outweigh any prejudice that might be suffered by the applicant here.
[41] If I am wrong in concluding that the Agreement between the parties had been properly terminated in November 2008, then it is open to the applicant to sue the
respondents under that contract for the unpaid $105,000.00. This right remains. On balance, however, under all the circumstances here I have concluded that the Agreement was validly cancelled and hence the obligation to provide the vendor finance mortgage lapsed.
Conclusion
[42] For all these reasons I am satisfied that the present application to register a second caveat by the applicant must fail.
[43] The application is dismissed.
[44] As to costs, the respondents have been successful in opposing this application and I see no reason why costs should not follow the event in the usual way. Costs are awarded to the respondents against the applicant on this application on a category
2B basis together with disbursements as fixed by the Registrar.
‘Associate Judge D.I. Gendall’
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