Lu Trustee Ltd v Parklane Infrastruct Ltd
[2020] NZCA 682
•22 December 2020 at 12 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA354/2020 [2020] NZCA 682 |
| BETWEEN | LU TRUSTEE LIMITED AND HO NO. 2 TRUSTEES LIMITED |
| AND | PARKLANE INFRASTRUCT LIMITED |
| Hearing: | 19 November 2020 |
Court: | French, Cooper and Gilbert JJ |
Counsel: | K E Cornegé and J C Muggeridge for Appellant |
Judgment: | 22 December 2020 at 12 pm |
JUDGMENT OF THE COURT
AThe appeal is allowed.
BThe order made by the High Court that caveat 11635782.1 not lapse is set aside.
CThe caveat shall not lapse until the later of the events set out at [65(a) and (b)].
DThe respondent is granted leave to lodge a further caveat in respect of the newly created Lot 3 under s 146 of the Land Transfer Act 2017 only after the steps described in [65(b)] have been taken.
EThe parties have leave to apply for such further orders as may be necessary to give effect to the above orders.
F The respondent must pay the appellants’ costs calculated on a category 2 band B basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Cooper J)
The appellants, Lu Trustee Ltd and Ho No.2 Trustees Ltd, own land situated at 80 Laurent Road Cambridge (the Trinity land). They are partners in the Trinity Green Estate partnership (Trinity).[1]
[1]We refer to the appellants as “Trinity”.
On 29 May 2020, Moore J granted an application by Parklane Infrastruct Ltd (Parklane) under s 143 of the Land Transfer Act 2017 that a caveat it had lodged against the Trinity land should not lapse.[2] The order was conditional upon Parklane issuing a proceeding within 15 working days seeking specific performance of its rights under an alleged grant of an equitable easement relied on for the purposes of the caveat.[3] We were advised that the condition was complied with.
[2]Parklane Infrastruct Ltd v Lu Trustee Ltd [2020] NZHC 1182 [High Court judgment].
[3]At [50].
Trinity now appeals. It accepts that the issue of whether it agreed to grant an easement to Parklane, which it denies, is a matter that will have to be addressed at the substantive hearing of Parklane’s proceeding. But it argues on appeal that the High Court should not have concluded there was an arguable case that Parklane had an interest over the whole of the Trinity land, in particular over a part of the land that it intends to sell to a third party (Summerset). Essentially it argues on appeal that any caveat should be restricted to a part of its land, either by amendment, the imposition of conditions or providing for the existing caveat to lapse and granting leave to lodge a second caveat over the reduced area. If it does not succeed in reducing the area subject to the caveat, Trinity seeks further conditions, including provision of appropriate undertakings as to damages and satisfactory evidence of an ability to pay damages if it is established that there was no caveatable interest.
Background
The Trinity land comprises approximately 8.5 hectares. It is situated on the outskirts of Cambridge. It was purchased by Trinity in 2016. Trinity intended to develop the land but was prevented from doing so by a neighbour, Mr Bourke and associated entities who owned adjoining land to the south (described as Lots 26 and 201) over which it would be necessary to provide access to any development on the Trinity land. Summerset eventually agreed to purchase Lots 26 and 201 and offered to transfer Lot 201 to Trinity if Trinity sold a substantial part its land to Summerset for the purposes of Summerset’s own intended development. The part of the land that Summerset seeks to acquire is described as Lot 2 in a subdivision of the Trinity land and is 6.0405 hectares in area. The area described as Lot 1 is to vest in the local council for drainage. Trinity would retain the balance of the land, described as Lot 3 in the subdivision, comprising 2.225 hectares. The various parcels of land we have mentioned are shown in the subdivision plan attached as a schedule to this judgment.
Summerset is the nominated purchaser of Lot 2 under a conditional sale and purchase agreement entered into with Trinity (the Summerset agreement). The named purchaser on the agreement was Welhom Developments Ltd, a property‑owning company which is part of the Summerset group of companies.
Lot 2 was to be amalgamated with lot 26, creating one title for Summerset. Lot 201 would be transferred to Trinity by Summerset, thereby facilitating access to Lot 3 from the local roading system. This is reflected in the terms of the subdivision consent, dated 12 February 2020, which contains a condition that no further development of Lot 3 is to occur until the proposed extension of an adjacent road (Bourke Drive) to the southern boundary of Lot 3 is vested as public road, or Lot 3 is amalgamated with Lot 201. The consent decision explains that the condition “is required to ensure that suitable road access is provided to Lot 3 prior to further development on the site”.
The adjoining land to the north was acquired by the New Zealand Transport Agency (NZTA) from Fonterra to be developed as part of the extension of the Waikato Expressway (the NZTA land). It is referred to on the plan as SEC 4, SO 520692. As events transpired, the land was not needed for that purpose and it was offered back to Fonterra under the relevant provisions of the Public Works Act 1981. Fonterra, however, did not exercise its right to buy back the land. Parklane is interested in purchasing the land from NZTA for the purposes of developing it for Kiwibuild housing. It has not entered into any agreement to do so, but there was affidavit evidence before the High Court from Trent Cary, a consultant employed by Parklane, that Parklane had spent considerable time and effort developing proposals for the future development of the NZTA land and “seeking to attract the support of the Crown (through the Ministry of Business, Innovation and Employment) and others in Parklane acquiring the land and developing it”.
If the NZTA land were to be developed for residential purposes it would be necessary to provide access to it across the Trinity land. Trinity claims that it only contemplated allowing that access across Lot 3. Any development of the NZTA land would also, therefore, rely on access being provided from the local roading system to Lot 3, over Lot 201. But Parklane says the easement might also have affected part of the land described as Lot 2.
Mr Cary said that after learning of Fonterra’s decision not to buy back the NZTA land he identified the possibility of combining with the owners of adjoining land including Trinity. He said that he met with one of Trinity’s principals, Henry Wu, in December 2018 when they agreed to share plans and information of mutual interest. Mr Cary claimed the possibility of a joint venture was also discussed. The Judge recorded there was “some dispute over aspects of their interaction”, but accepted there had been a number of discussions culminating in a meeting on 5 February 2019.[4] Those at the meeting included Mr Wu, Emily Zhang (who described herself as Mr Wu’s business partner), Trinity’s solicitor Mr Taylor, Mr Cary, Murray Price (the director of Parklane) and a planning consultant retained by Parklane.
[4]At [5].
The Judge found the purpose of this meeting was to “advance discussions about Trinity granting road access to Parklane over the Trinity land”.[5] He also observed that it appeared an oral agreement had been reached because on 11 February 2019 Parklane’s solicitors wrote to Trinity’s solicitors about what had been discussed on 5 February 2019 in these terms:
[5]At [5].
The purpose of the meeting [of 5 February 2019] was to discuss the parties mutual interests and obtaining road access for their respective land/projects.
Our client’s understanding is:
1.Your client has an existing agreement to sell part of their land to Summerset New Zealand (“Summerset”) and in part consideration your client will receive a portion of the land that Summerset has an agreement on to purchase from Bourke.
2.The land received in part consideration from Summerset will allow your client the roading access needed to their land and would also provide access to the [NZTA land].
3.That an extension of the Summerset agreements has been granted to the 21st February 2019.
In order for our client’s project to be considered it will need to provide confirmation to Kiwibuild and [the local council] that it has the necessary access through your client’s land to the [NZTA land].
Your client has agreed to grant road access through their land to our client for their project on the basis the Summerset deal is confirmed. This agreement will allow our client to progress their proposal with Kiwibuild without the delay of waiting for the outcome of the Summerset agreements.
…
In the event the Summerset agreements are not confirmed then our client has expressed interest in taking over the agreement that Summerset has to purchase from Bourke. This will allow our respective clients the same access and will take Summerset out of the equation. …
Then after several exchanges by text and email, Mr Cary sent a text to Mr Wu on 13 February 2019 in these terms:
Hi Henry
Following our discussion yesterday I have sent you a copy of the letter prepared by our solicitor and also a reply to [Ms Zhang’s] email of concern.
We are now very much hoping we can all move forward more quickly on a more positive note.
Can you please come back to us with something formal in writing so we can table a proposal with MIBE [and/or] Kiwibuild that gives them confidence that we may be able to expedite access to the [NZTA land]. Just to be very clear any agreement provided to us by yourselves in relation to consent for access to the [NZTA land] will be on the assumption that you are also successful in gaining access to your block via Bourke’s block as part of the deal with [Summerset] or by any alternative means.
Please note we have booked flights to Wellington for next Monday and are wanting to meet and engage in further discussion with [MBIE] [and/or] Kiwibuild in relation to the [NZTA land].
On that basis if you could … please urgently revert with a … formal confirmation in way of consent for access to the [NZTA land] on behalf [of] the entity that owns your block. At the very least we will need an email [of] your entity rather than a text message confirming your consent.
…
The ball is firmly in your court.
Please urgently advise if you are going to provide confirmation so we can confirm our appointment … with MBIE [and/or] Kiwibuild.
Mr Wu replied with what the Judge described as the “first draft of what would later become the grant”.[6] After taking legal advice from Parklane’s solicitors, Mr Cary responded on 14 February 2019 with a revised draft, which Mr Wu signed. It read as follows:
[6]At [7].
To Parklane Infrastruct Limited
Access Right granted to Parklane Infrastruct Limited (“Parklane”)
I confirm the following
●The registered proprietors of 80 Laurent Road, Cambridge, Waipa District, being Lu Trustee Limited and Ho No.2 Trustees Limited as general partners in the Trinity Green Estate Partnership (Trinity) supports Parklane’s proposal to approach Kiwibuild to develop the [NZTA land].
●To enable Parklane to progress its proposal, Trinity agrees to allow roading and services access across Trinity’s land to provide the necessary access to the [NZTA land].
Regards
Henry Wu
as duly authorized agent for
Trinity Green Estate Partnership
Parklane relies on this for the grant of an easement for the purposes of access to the NZTA land (the alleged grant). It is said to have created a caveatable interest over the Trinity land.
As noted by the Judge,[7] during the discussions between Mr Wu and Mr Cary, Mr Wu gave Mr Cary a plan showing the proposed subdivision of the Trinity land. In a subsequent version of the plan, there was a notation marked “[f]uture road to vest in the Waipa DC” over an area of some 348m2 within Lot 201.[8] That was part of an extension of Bourke Drive to the southern boundary of Lot 3. This was depicted as a straight line extending across Lot 3 to the southern boundary of the NZTA land, marked on that version of the plan as “Future Extension of Bourke Drive”. Mr Cary observed in his first affidavit that this plan showed “the approximate line and location of the access that Mr Wu and I discussed at the time of the grant in February 2019”. In a further affidavit Mr Cary asserted that “[c]ontrary to Parklane’s expectation, the indicative road and roading connection shown on the plan … were not carried through to the consented subdivision plan or required as part of the consent.” This was clearly a reference to the road depicted across Lot 3.
[7]At [10].
[8]The Trinity land is in the territory of the Waipā District Council.
Mr Wu said in his affidavit that the version of the plan showing the extension of Bourke Drive came out of discussions between Parklane and Summerset, not Trinity. It was also his evidence that he regarded the emails and discussions between the parties as having been subject to full legal documentation and review by Trinity’s solicitors. The word “easement” had not been used. Mr Wu said he thought that Mr Cary would come back to him after meeting with the Ministry of Business, Innovation and Employment (MBIE). He recorded his understanding that the details of access or what Parklane might pay for it would be subject to further negotiations once Parklane succeeded in its proposal for the development of the NZTA land. Those discussions had not progressed at the time he was asked to provide the “letter of support” for Parklane’s meeting with MBIE. Mr Wu said he learned that Parklane had lodged the caveat when shown a copy of a letter written by Parklane’s solicitors to Summerset on 13 December 2019. This letter referred to Trinity’s grant of an easement to establish access across the Trinity land and noted that a caveat had been lodged.
Consent to the subdivision of the Trinity land was actually obtained by Summerset Villages (Cambridge) Ltd, which had been nominated as purchaser under the Summerset agreement. Parklane sought to be heard by the Waipā District Council (the Council) on the application as an affected party but the application was granted without consultation with Parklane. NZTA had given its written consent to the application.
In addition to the condition referred to above preventing further development of Lot 3 pending provision of suitable road access,[9] there was a condition concerning stormwater drainage. As we have mentioned, Lot 1 of the subdivision was to be set aside as a local purpose drainage reserve. As shown on the subdivision plan attached to this judgment, Lot 1 lies to the west of Lot 2. The condition stipulated that for subsequent development of Lots 2 and 3 a suitable qualified engineer would be required to submit to the Council for its approval design details of the proposed stormwater management plan. It was also said that:
… the design for the future development within Lot 2 shall make provision for stormwater disposal from Lot 3 through Lot 2 to the Local Purpose Drainage Reserve (Lot 1). This provision shall include all necessary easements and the secondary overland flowpath from Lot 3, through Lot 2 to Lot 1.
[9]Above at [6].
This condition was not mentioned by the Judge, but Mr Casey QC, counsel for Parklane, referred to it in argument and we return to it below.
The Judge recorded that offers of settlement had been made by each of the parties. The offers were in evidence and briefly discussed in the High Court judgment.[10] Parklane’s offer made on 29 April 2020 provided for Trinity supporting and not competing with Parklane’s proposal (described as “the MBIE driven housing project”) for the NZTA land. It envisaged that if Parklane obtained consent it would complete roading and services work through Lot 3 and the Bourke Drive extension area (over Lot 201) at its cost, unless Trinity proceeded with its own development earlier in time. In the latter case Trinity would provide the costs of roading and services for its development of Lot 3, and Parklane would reimburse Trinity for the costs of roading and services and complete what was required through Lot 3 to the NZTA land. There would be a partial withdrawal of the caveat as it affected Lots 1 and 2 of the subdivided land.
[10]High Court judgment, above n 2, at [15]–[16]. The Judge referred to Parklane having made an offer on 29 March 2020. It appears from the evidence that may have been in error, and that the correct date was 29 April 2020.
Trinity’s offer, dated 6 May 2020, was simpler. It proposed that if Parklane were to consent to the subdivision and withdraw its caveat from Lots 1 and 2, any of Parklane’s subsequently established access rights to Lot 3 would be extended over the Bourke Drive extension when Lot 201 was transferred to Trinity.[11]
[11]It is not clear why there was a reference to Parklane consenting to the subdivision, because the consent had already been granted.
In the event, no agreement was able to be reached.
The High Court judgment
The Judge decided that Mr Wu’s communication of 14 February 2019 was sufficient to constitute an agreement to grant an easement and was sufficient to constitute a caveatable interest. He rejected an argument advanced by Trinity that the access defined in the grant was too wide and uncertain to be enforceable. He noted Mr Casey’s argument about that issue in the following terms:[12]
Mr Casey suggested the disputed access right was granted for Parklane’s access for both roading and services for the [NZTA land]. The proposal was for it to be formed via an extension of Bourke Drive (or one of the other two short roads) over Lot 201 from Laurent Drive from the western side of the Trinity land. Mr Casey stressed that the access will ultimately be determined according to Council roading and access requirements. It would seem practical for the respondents, before the subdivision was finalised, to define access in flexible terms.
[12]High Court judgment, above n 2, at [26].
In the result, the Judge concluded that Parklane had not been granted the right to “wander at large” over the Trinity land.[13] The access rights were not so vague and uncertain as to preclude Parklane from maintaining a claim to an equitable interest.
[13]At [27].
The Judge was also prepared to infer that it was at least arguable there was valuable consideration for Trinity in executing the alleged grant. In doing so, he could not, given the limited compass of an originating application for an order that a caveat not lapse, determine contested factual issues.[14] He concluded also that there was evidence that the parties must have intended to create an easement. He thought it significant in that respect that Trinity had gone to the trouble of reproducing the draft that Parklane’s solicitors had prepared, on Trinity letterhead, signing it and dating it. The Judge considered that Mr Wu would not have taken those steps if he did not intend Trinity to create a binding legal relationship with Parklane.[15] The Judge’s reasoning in this part of the judgment included the following:
[35] Parklane was aware that Trinity intended to subdivide and sell part of the Trinity land. Mr Cary was shown initial draft plans for the proposed subdivision which marked the extension of Bourke Drive. No useful purpose would have been served in Parklane engaging with KiwiBuild about the future development of the [NZTA land] without an assurance that access issues had been resolved with Trinity. As the contemporary correspondence reveals, the access was a condition precedent to Parklane’s discussions with KiwiBuild in Wellington. Had that assurance not been given it is plain the meeting would have been cancelled. On this basis, it is strongly arguable as a matter of common sense that the parties must have intended the access rights to run with the land rather than being a personal license.
(Footnote omitted.)
[14]At [30]. The Judge referred to applications under s 138 of the Land Transfer Act 2017 but we presume he intended to refer to applications under s 143 of the Act.
[15]At [34].
Since the Judge was also satisfied that there was a sufficient record in writing to satisfy s 24 of the Property Law Act 2007,[16] he concluded that there was an arguable case that Trinity had granted Parklane an equitable easement as claimed.[17] The issue of whether there had in fact been an agreement was a matter that would be determined at the substantive hearing.
[16]At [37].
[17]At [38].
The Judge next addressed the argument advanced by Trinity that Parklane’s alleged access right could relate only to the part of the Trinity land to be comprised in Lot 3 on completion of the subdivision. The Judge acknowledged that “[f]or the most part”, access had been discussed in relation to Lot 3 through the extension of Bourke Drive over Lot 201.[18] He noted however that “the final form of any access cannot at this stage be determined”.[19] He considered that various options had been suggested, and that in any event any access route would require the cooperation of third parties. In the circumstances, he was of the view that Parklane’s failure to particularise the land over which its interest was claimed should not result in the lapsing of the caveat.[20] In expressing that conclusion, the Judge immediately acknowledged the desirability of the matter being quickly resolved, so that the Summerset arrangements could be progressed.
[18]At [41].
[19]At [41].
[20]At [42].
Next, the Judge considered and rejected an argument advanced for Trinity that Parklane had acted unreasonably in refusing to accept Trinity’s offer. The Judge considered it was inappropriate for him to determine whether or not that was the case, although he said that on the evidence, he did not consider that Parklane was not acting bona fide.[21]
[21]At [45].
Finally, the Judge considered whether he should impose terms and conditions beyond a requirement, accepted by Parklane, that Parklane should commence substantive proceedings in relation to the interest claimed in the caveat expeditiously.[22] He noted a suggestion made by Trinity that both Parklane and its director give an undertaking as to damages. As to that suggestion the Judge said:[23]
I do not consider that there is prima facie evidence to support the claim that if this Caveat is ultimately not sustained, Trinity will suffer loss beyond inconvenience. This obviously depends on the matter being quickly resolved.
[22]At [47].
[23]At [48].
Consequently, the Judge made the order that the caveat not lapse.[24] The order was conditional upon Parklane issuing proceedings seeking specific performance of its rights under the alleged grant within 15 working days from the date of delivery of the judgment.
[24]At [50].
The effect of the order made by the Judge sustaining the caveat over the Trinity land has been that completion of the subdivision, and consequently settlement of the Summerset agreement, has not yet taken place.
The appeal
Trinity accepts that arguments as to whether there was in fact any agreement to grant an easement over any part of the Trinity land will need to be pursued at the substantive hearing of Parklane’s proceeding. But as we have noted it argues on appeal that even if there was such an agreement the caveat should not remain over all of its land. It says it is not reasonably arguable that the alleged grant of 14 February 2019 signed by Mr Wu gave Parklane rights over the part of the land that was always intended for transfer to Summerset, that is Lot 2 in the proposed subdivision. Trinity submits that the Judge erred in fact and law in concluding that a caveat over the land to be retained by Trinity (Lot 3) following implementation of the Summerset agreement would not accommodate Parklane’s access rights (if able to be established). It also claims the Judge erred in refusing to exercise his residual discretion to remove the caveat, and by not requiring an undertaking as to damages as a condition of sustaining the caveat.
In summary, Trinity’s proposition is that even if Parklane has an arguable interest in some of the Trinity land, it does not have an arguable interest in the part that is to be transferred to Summerset. Counsel for Trinity, Ms Cornegé, submits that any such interest would in any event rank behind Summerset’s equitable interest as purchaser under a prior agreement of which Parklane was aware. Ms Cornegé contends that in refusing to restrict its caveat to only the land that Trinity will retain, Parklane is illegitimately using a caveat to prejudice Trinity’s position. A solution that allowed the Summerset agreement to settle would allow Parklane’s claimed rights to be determined substantively without continuing to hold up the Summerset agreement. If the Summerset agreement cannot be implemented, Ms Cornegé says that Trinity and Summerset are at risk of substantial loss. In the circumstances, she submits that Parklane and its director, Mr Price, should provide undertakings as to damages.
The undertakings are sought in the context that despite the Judge having emphasised the desirability of a quick resolution of the dispute,[25] it seems likely that a fixture will not be able to be obtained for the substantive proceeding until September next year. It is in this context that this Court agreed to allocate a priority fixture.[26]
[25]At [42].
[26]Lu Trustee Ltd v Parklane Infrastruct Ltd CA354/2020, 29 September 2020 (Minute of Brown J).
Mr Casey argues that since Trinity accepted for the purposes of the appeal that Parklane had a caveatable interest in the Trinity land, the issues on appeal all go to the exercise of the Judge’s discretion as to the imposition of conditions. He contends it is therefore necessary for Trinity to show that the Judge acted on a wrong principle, failed to take into account a relevant matter, took into account an irrelevant matter or was plainly wrong.
He submits that the Judge was correct to find that the protection of Parklane’s interests required the caveat to be sustained over the whole of the Trinity land including the part which is the subject of the Summerset agreement. He contends that until there is clarity about what part of the land will be required for services and roading, Parklane’s interests will not be protected if the caveat were restricted only to the land being retained by Trinity.
Mr Casey emphasises that Mr Wu had confirmed in the alleged grant of 14 February 2019 Trinity’s agreement “to allow roading and services access across Trinity’s land to provide the necessary access to the [NZTA land]”. He argues that the word “necessary” embraced whatever was required to ensure that access, including in particular what the local authority might require in terms of the location and alignment of roading and services.
Mr Casey submits that at the time Trinity agreed to grant Parklane access to the NZTA land, there was no clarity as to where the Council might require roading and services to be located. It was not possible at the time for the alleged grant to identify the specific route or land, in the context of the proposed subdivision, over which that interest would be provided. He refers to the Judge’s observation that it was practical for the access to be defined in flexible terms, before the subdivision was finalised.[27] In this respect, Mr Casey refers to the possibility that the two other roads to the west of Bourke Drive might be used to connect over the proposed Lot 2, a possibility mentioned by the Judge. He submits further that it was not necessarily the case that access for services would coincide with the access necessary for roading. On the other hand, Trinity could have resolved those issues during the subdivision consent process.
[27]High Court judgment, above n 2, at [26].
Mr Casey further submits that there would be no useful purpose in imposing a condition requiring Parklane to pursue its substantive case with due diligence. All that was required was compliance with usual directions as to the exchange of evidence and submissions. He also claims that there was no basis upon which an undertaking as to damages should be required in circumstances where the Summerset agreement contemplated that a period of two years might elapse between the grant of the subdivision consent and completion of the subdivision.
Analysis
The extent of the easement
This Court summarised the applicable legal principles which govern applications to sustain caveats in Philpott v Noble Investments Ltd as follows:[28]
(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;
(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;
(c)The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and
(d)When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.
[28]Philpott v Noble Investments Ltd [2015] NZCA 342 at [26] (footnotes omitted).
The claimed easement in the present case applies to all of the Trinity land. The interest is noted on the caveat as simply an “agreement to grant an easement dated 14th February 2019”.
As we have seen, the Judge concluded that the access rights granted were not so vague and uncertain as to preclude Parklane from maintaining a claim to an equitable interest over the whole of the Trinity land.[29] The Judge evidently considered that Trinity had arguably agreed that road access could be provided at a number of points across the Trinity land to the NZTA land. We are not persuaded that the evidence justifies that conclusion. We say that for a number of reasons.
[29]High Court judgment, above n 2, at [26]–[27].
First, Trinity had entered into its agreement with Summerset in November 2018, prior to the meeting between Mr Cary and Mr Wu the following month. It is clear that Mr Cary was aware of the proposed subdivision and the intended transfer of Lot 2 to Summerset. Consistently with this, the subdivision was advanced on the basis that access to Lot 3 would be provided by an extension of Bourke Drive. The condition of subdivision consent concerning access, as has been seen, prevented further development of Lot 3 pending the provision of suitable road access. Mr Cary himself acknowledged there was a plan showing the extension of Bourke Drive to Lot 3, the road then being extended in a straight-line extension over Lot 3 to the NZTA land. Mr Cary said this was a proposal he and Mr Wu had discussed in February 2019. The complaint made in his further affidavit was that the indicative roading connection had not been formally made a part of the consented subdivision plan. That however is a different point and far from establishes a factual basis upon which it could be asserted that the parties contemplated access would be provided across the Trinity land otherwise than by an extension of Bourke Drive.
Further, the correspondence exchanged by the parties leading to the alleged grant of 14 February 2019 signed by Mr Wu clearly took place against the backdrop of the Summerset agreement. As has been seen, the letter from Parklane’s solicitors to Trinity’s solicitors dated 11 February 2019 referred to Parklane’s understanding about the arrangements in the agreement, and said that Trinity had “agreed to grant road access through their land to our client for their project on the basis the Summerset deal is confirmed”. That can hardly have contemplated that Lot 2 would be made available by Trinity for access, given it was to be transferred to Summerset. Similarly, Mr Cary’s letter of 13 February 2019 to Mr Wu said that any agreement by Trinity for access to the NZTA land would be “on the assumption that you are also successful in gaining access to your block via Bourke’s block [Lot 201] as part of the deal with [Summerset] or by any alternative means”. Again, the deal with Summerset would transfer Lot 2 out of Trinity’s ownership; Lot 201 would be part payment for the transfer of Lot 2. The alleged grant of 14 February 2019 then followed, agreeing to allow roading and services access across Trinity’s land to provide the “necessary access” to the NZTA land.
Consistently with the foregoing facts, the settlement proposals exchanged by both parties also contemplated the extension of Bourke Drive over Lot 201 to the southern boundary of the Trinity land, and then for access over Lot 3. In the circumstances, we are unable to agree with the Judge’s conclusion that it was practical for Trinity to have defined access “in flexible terms”.[30] If by that he meant it was practical for Trinity to contemplate that access would be provided over the part of its land always intended to be transferred to Summerset, we disagree.
[30]At [26].
The Judge also referred to the possible provision of access over Lot 201 from Laurent Drive. Laurent Drive is to the west of Lots 2 and 26. Those lots were to be owned by Summerset. We do not consider there was any evidence which suggested access to the NZTA land was contemplated across any land owned by Trinity with frontage to Laurent Road.
We referred earlier to the Judge’s reasoning at [35] of the High Court judgment.[31] The Judge’s observations there are consistent with the idea that any grant of a right of way would have been across Lot 3.
[31]Quoted above at [24].
For these reasons, we do not consider the evidence justified the proposition that access would be provided across the Trinity land except insofar as the part of it that was to be retained in Lot 3. It may be noted that even if Bourke Drive was not extended the two roads to the west of Bourke Drive were also shown as having frontage to Lot 201. The conditions of subdivision consent contemplated that either the proposed extension of Bourke Drive would proceed, or Lot 3 would be amalgamated with Lot 201. In either case, there would be no need for land to be transferred to Summerset to be involved in providing access to Lot 3 and, indirectly, to the NZTA land.
Mr Casey sought in argument to place some emphasis on the fact that the claimed grant related not only to access, but also to services. At one stage, he appeared to suggest that the alleged grant of 14 February 2019 was consistent with any development on the NZTA land being serviced on Lot 2. He also raised concerns about water supply and telecommunications. He submitted that these issues had not been dealt with as part of the subdivision consent and suggested that the provision of adequate services to the NZTA land might not be able to be achieved relying solely on Lot 3.
Given that NZTA granted its consent to the subdivision, and there is no specific proposal for development of the NZTA land, Mr Casey’s concerns are speculative. In any event, the only evidence adduced by Parklane in relation to this issue was in Mr Cary’s third affidavit, and there, the issue concerning services was linked to road access. Mr Cary said, with reference to the conditions of subdivision consent:
The failure by the Council to deal with the question of access to, and through, the Trinity land as part of the subdivision was a matter of significant concern to Parklane. Not only does the condition provide no protection for Parklane’s interest under the 14 February 2019 agreement, but it does not address any of the design, engineering or other details that would need to be considered as part of the necessary road access through the Trinity land. This normally includes stormwater, wastewater, water supply for firefighting, wastewater pump stations, power, telecom, roading widths, for the intensity of development proposed.
In context, Mr Cary was complaining that the Council had not required Trinity to provide the road access necessary to service the NZTA land. How the Council could have made a proper requirement in that respect in the absence of any development proposal for the NZTA land is unexplained. But that is not the present point. Mr Cary is not in this part of his evidence suggesting that services needed to be provided other than in association with the road access. For reasons we have already addressed, the terms of the subdivision consent were such as to enable the necessary access for the NZTA land to be provided in compliance with the alleged grant of 14 February 2019.
In any event, as mentioned above, there was a condition of the subdivision consent that dealt with stormwater.[32] It required provision to be made to ensure that stormwater generated from the development on Lots 2 and 3 was managed appropriately in accordance with a proposed stormwater management plan. The design for the future development within Lot 2 was to make provision for stormwater disposal from Lot 3 through Lot 2 to the local purpose drainage reserve (Lot 1). It seems clear that stormwater arriving on Lot 3 from the NZTA land would be able to be accommodated in the disposal system contemplated by this condition.
[32]Above at [17].
For reasons discussed, we are satisfied that there was not a proper basis for sustaining the caveat insofar as it protected a claimed interest in the Trinity land other than in respect of the part of it that would be within Lot 3 of the proposed subdivision. We have not been able to agree with the Judge’s conclusion that there was sufficient demonstration of an interest over the balance of the land. While we are reluctant to reach a different conclusion, the evidence is in affidavit form and we are obliged to reach our own view on it. We add that we do not accept Mr Casey’s argument that Trinity’s acceptance for the purpose of the appeal that there was a caveatable interest means the argument in this Court was restricted to matters relevant to the exercise of the Judge’s discretion in relation to conditions. Trinity has clearly challenged the Judge’s decision as to the extent of the land which was the subject of the claimed easement. On that issue we have reached a conclusion different to that of the Judge.
That being the view we have formed, the question arises as to what steps might be taken to preserve Parklane’s claimed caveatable interest while ensuring that the land affected by it is not overly broad. As noted, in its current form the caveat simply refers to the agreement to grant an easement dated 14 February 2019 “in respect of the land contained in the above certificate of title”. Clearly, the caveat had to be lodged against the existing title, but the description of the interest claimed means that all of the Trinity land is affected by it. Neither party before us directly addressed an argument that the court has power to amend a caveat so as to reduce the area of land to which it applies.
The possibility that the court has power to amend a caveat has been addressed in the context of applications under s 143(1) of the Land Transfer Act 1952 (the 1952 Act) for removal of a caveat. Under s 143(2) of the 1952 Act there was power to “make such order in the premises … as to the court seems meet”. It was suggested by the authors of New Zealand Land Law that arguably the wording “as to the court seems meet” enabled the court to make an order amending the caveat itself, where an application had been made for its removal. [33] Similarly, Don McMorland wrote, in an article addressing the court’s power to amend a caveat, that s 143 of the 1952 Act opened up the possibility of amendment.[34] However, he said that the possibility of amendment “would exist in the context of an application for an order for removal, but not in the context of an application for an order that the caveat not lapse”.[35] He queried whether this was simply the result of legislative drafting that did not contemplate amendment of a caveat.
[33]Ben France-Hudson and Elizabeth Toomey “Caveats” in Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at [4.4.07].
[34]Don McMorland “Amendment of Caveats” (2012) 15 BCB 43 at 44.
[35]At 44.
The wording of s 143(2) of the 1952 Act was not repeated in the equivalent provision for removal of caveats in the Land Transfer Act 2017, s 142, which simply empowers the court to order that the caveat be removed. In any event, the present case involves an application to sustain a caveat and no power to amend is set out in s 143(4) of the Land Transfer Act. The question of whether the court might have inherent power to amend a caveat has been considered in a number of cases. These include Athena Professional Trustees Ltd v Foundation Custodians Ltd, Federal Capital Ltd v MTE 31 Ltd and Goodwin v Rocket Surgery Ltd.[36] In each case the possibility of amending the caveat was rejected. That there is no such power was also the view expressed in Adams’ Land Transfer (NZ).[37] By contrast, in N G W v G S Wylie J stated that it “may well be possible” for a caveat to be amended.[38] Those cases, unlike the present, did not deal with the possibility of amendment to reduce the area to which thecaveat was applied. That possibility was addressed in Kendall v G & S Developments Ltd where Associate Judge Abbott said:[39]
… the caveat has been lodged against all of the land in certificate of title SA 24C/455, and that the interest affects only that part of the title identified in the undisputed agreement for sale and purchase. Although this point was not argued … I am inclined to the view that the caveat can and should be amended, if required by the respondent, to apply to part only of certificate of title SA 24C/455 being that part identified in the agreement for sale and purchase.
[36]Athena Professional Trustees Ltd v Foundation Custodians Ltd (2009) 11 NZCPR 239 (HC) at [44]; Federal Capital Ltd v MTE 31 Ltd [2020] NZHC 811, (2020) 21 NZCPR 29 at [18]; and Goodwin v Rocket Surgery Ltd [2013] NZHC 2046 at [25].
[37]Struan Scott, Stephanie Muller and Thomas Gibbons Adams’ Land Transfer (NZ) (online ed, LexisNexis) at [S138.9].
[38]N G W v G S [2013] NZHC 862 at [45].
[39]Kendall v G & S Developments Ltd HC Tauranga CIV-2005-470-505, 9 November 2005 at [52].
The Judge did not explain why he considered the power existed. Given that a power to amend has not been asserted by Trinity, and we have not had the benefit of argument on the point, we prefer to leave open the issue of whether in appropriate circumstances a caveat may be amended so as to reduce the area to which it applies.
It is not necessary to resolve that question in this case because there is another means by which it is possible to ensure Parklane’s claimed interest can be protected. Ms Cornegé submits that the Court could make orders that have the effect of preserving the existing caveat, until deposit of the plan which would result in the creation of separate titles for the land in the subdivision. Her proposal is that the Court make an order quashing the High Court’s order that the caveat not lapse. The Court would then grant leave to lodge a further caveat once the subdivision plan and associated documents had been formally deposited and separate records of title issued.
The parties would then be able to argue the issues relevant to the claimed easement over Lot 3 at the hearing of Parklane’s proceeding seeking specific performance. We also note that Parklane’s position would be preserved by maintenance of the caveat pending resolution of the High Court proceeding by leaving the caveat in place until the subdivision is implemented. Thus, if for some reason the subdivision did not proceed, the existing caveat would remain.
Ms Cornegé proposes that the Court make orders in the following terms:
(a)the Caveat shall lapse upon the later of:
(i)service of the lapse order on the Registrar-General of Land; and
(ii)the date the dealing to deposit LT 547050, including the following documents, is registered by Land Information New Zealand:
1.Withdrawal of caveat number 11383583.1 by Welhom Developments Limited;[40]
[40]Welhom Developments Ltd has also lodged a caveat on the title.
2. The transfer of Lot 201 DP 519601 to the appellants (Lot 201);
3. The transfer of newly created Lot 2 to Welhom Developments Limited or nominee;
4. a certificate under section 224(c) of the Resource Management Act 1991 in respect of LT 547050;
5. Order for new [record] of title in accordance with the survey plan;[41]
6. Consent notice on behalf of Waipa District Council; and
7. Any other ancillary documents which may be necessary to complete the subdivision.
(b)the respondent is granted leave to lodge a further caveat in respect of the newly created Lot 3 only after the steps described in (ii) above have been taken.
[41]Referred to by Ms Cornegé as the previously used term “certificate of title”.
We are satisfied that such orders, in modified form, could be made in exercise of the Court’s power to sustain a caveat under s 143(4)(b) of the Land Transfer Act, subject to conditions. We say in modified form because s 143 does not explicitly give power to make an order that a caveat lapse. The three kinds of order contemplated by s 143(4) are orders (a) that a caveat not lapse, (b) interim orders that a caveat not lapse and (c) orders adjourning the application. We consider the orders proposed could properly be made under 143(4)(b) incorporating terms such as those set out above as a condition of the order.
We are satisfied that if orders are made in these terms it would not be necessary to contemplate further conditions of the kind sought by Trinity except for a condition requiring that Parklane diligently proceed with its High Court proceeding. Completion of the subdivision will remove one aspect of the prejudice suffered by Trinity resulting from the lodging of the caveat, but uncertainty arising from the caveat’s continued existence in respect of the land in Lot 3 would remain and make it desirable that the proceeding be resolved expeditiously.
In this respect, we note the suggestion that no fixture could be allocated for the hearing of Parklane’s proceeding prior to September next year. That is essentially an issue for the High Court, but we record our view that it would be highly desirable if the matter could be determined before then and in our experience the High Court would normally be in a position to provide a hearing date within a shorter timeframe.
Result
The appeal is allowed.
The order made by the High Court that caveat 11635782.1 not lapse is set aside.
We order that the caveat shall not lapse until the later of:
(a)service of this order on the Registrar-General of Land; and
(b)the date the dealing to deposit LT 547050, including the following documents, is received by Land Information New Zealand:[42]
(i)withdrawal of caveat number 11383583.1 by Welhom Developments Ltd;
(ii)the transfer of Lot 201 DP 519601 to the appellants (Lot 201);
(iii)the transfer of Lot 2 to Welhom Developments Ltd or nominee;
(iv)a certificate under s 224(c) of the Resource Management Act 1991 in respect of LT 547050;
(v)order for new record of title in accordance with the survey plan;
(vi)consent notice on behalf of the Waipā District Council; and
(vii)any other ancillary documents which may be necessary to complete the subdivision.
[42]The draft orders prepared by Ms Cornegé referred to the dealing being “registered” by Land Information New Zealand. We have altered this to “received” by Land Information New Zealand to reflect the process contemplated pt 10 of the Resource Management Act 1991.
The respondent is granted leave to lodge a further caveat in respect of the newly created Lot 3 under s 146 of the Land Transfer Act only after the steps described in [65(b)] above have been taken.
The parties have leave to apply for such further orders as may be necessary to give effect to the above orders.
The respondent must pay the appellants’ costs calculated on a category 2 band B basis together with usual disbursements.
Solicitors:
Tompkins Wake, Hamilton for Appellants
Davies Law, Auckland for Respondent
SCHEDULE
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