LSK Builders 2011 Limited v Chamberlain - [2022] NZCA 228

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA537/2021
[2022] NZCA 228

BETWEEN	LSK BUILDERS 2011 LIMITED Appellant
AND	MARK ELWYN DAVID CHAMBERLAIN AND SUZANNE CATHERINE CHAMBERLAIN Respondents

Hearing:	28 March 2022 (further submissions received on 1 April 2022)
Court:	Brown, Clifford and Lang JJ
Counsel:	G D Pearson and M E Byczkow for Appellant L S B Acland for Respondents
Judgment:	7 June 2022 at 10.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe appellant must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Brown J)

Introduction

The appellant (LSK) is a building company that was engaged by the respondents (the Chamberlains) to build their new home. LSK and the Chamberlains are in dispute concerning the payments due under the relevant residential building contract (the contract). The contract conferred on LSK the entitlement to register a mortgage over the residential property owned by the Chamberlains (the property), to secure payment of moneys due and owing under the contract. The contract conferred a further entitlement to lodge and maintain a caveat against the title to the property for the protection of LSK’s rights in the contract.
Having lodged a caveat against the Chamberlains’ title to protect its right to register a mortgage, on 16 January 2019 LSK registered an “all obligations” mortgage security which included a priority amount of $175,000.
In response to the Chamberlains’ application to the Registrar‑General of Land for the lapse of the caveat, LSK sought an order under s 143 of the Land Transfer Act 2017 that the caveat not lapse. An affidavit in support of LSK’s originating application stated that the caveat was necessary to prevent any dealings with the title to the property, and to ensure LSK’s interest in the property was protected until the dispute was resolved. There was no specific reference in the application or supporting affidavit to the priority amount included in the mortgage or its implications.
On 5 August 2021, Associate Judge Johnston dismissed the application.[1] LSK appeals that decision.

The High Court judgment

[1]LSK Builders 2011 Ltd v Chamberlain [2021] NZHC 2018 at [27].

The key clause in the contract, cl 5.4, entitled “Payment”, provides for progress payments and payment following practical completion in fairly orthodox terms. The builder’s protections to which this appeal relates are contained in cls 5.4.5 to 5.4.7:
5.4.5 The Owner hereby irrevocably agrees and acknowledges that to secure payment of the monies due and owing to the Builder under this Contract, they shall grant a registered mortgage over the Site, the real property description of which is contained in the First Schedule hereof, in favour of the Builder. The form of the mortgage shall be the current Auckland District Law Society All Obligations Mortgage Memorandum (or in the event the Auckland District Law Society ceases to exist the form used by the lawyers for the Builder from time to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read LSK Builders 2011 Limited v Chamberlain and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2022] NZCA 228
Decision Date: 7 June 2022 at 10.30 am

CaseChat Overview and Summary

LSK Builders 2011 Limited (LSK) appeals against the decision of the High Court to dismiss its application to sustain a caveat against the title to the Chamberlains’ property. The key issue for the Court of Appeal to determine was whether, upon registration of a mortgage, a caveat previously lodged to protect the mortgagee’s interest becomes redundant. The Court held that upon registration of a mortgage, a caveat previously lodged to protect the mortgagee’s interest does become redundant. The appeal was dismissed, and LSK was ordered to pay the respondents’ costs.
The appeal arose from a dispute between LSK, a building company, and the Chamberlains, the owners of the property. The contract between the parties provided for the registration of a mortgage over the property to secure payment of monies due under the contract. The contract also allowed LSK to lodge and maintain a caveat against the title to the property for the protection of its rights in the contract. LSK registered an “all obligations” mortgage over the property, including a priority amount of $175,000. The Chamberlains applied to the Registrar-General of Land for the lapse of the caveat, and LSK sought an order that the caveat not lapse. The Associate Judge dismissed the application, and LSK appeals that decision. The Court of Appeal held that upon registration of a mortgage, a caveat previously lodged to protect the mortgagee’s interest does become redundant. The Court held that the contractual right to maintain a caveat is spent once the contractual right which the caveat protects, namely the right to register a mortgage, has been exercised. The Court of Appeal dismissed the appeal and ordered LSK to pay the respondents’ costs.

Orders