Mahon v The Station at Waitiri Ltd - [2017] NZCA 387

IN THE COURT OF APPEAL OF NEW ZEALAND

CA209/2017
[2017] NZCA 387

BETWEEN	NEVILLE CHRISTOPHER MAHON Appellant
AND	THE STATION AT WAITIRI LIMITED Respondent

Hearing:	26 July 2017
Court:	Winkelmann, Brewer and Peters JJ
Counsel:	A M Glenie for Appellant D J Chisholm QC and MJW Lenihan for Respondent
Judgment:	5 September 2017 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Winkelmann J)

The appellant, Mr Mahon, seeks to sustain a caveat over properties in Park Street, Queenstown. The properties are currently registered in the name of the respondent, The Station at Waitiri Ltd (Waitiri). Waitiri is a company associated with the interests of Mr Timothy Edney.
Mr Mahon alleges that he and Mr Edney agreed that the land would be transferred to a company associated with Mr Edney, and that this vehicle would be used for the special purpose of holding the land. The special-purpose vehicle would hold the land until Mr Mahon was in a position to pay the agreed price for it, at which point the land would be transferred to him by means of the transfer of all of the shares in the company. Mr Mahon’s case is that, as a result of this agreement, he acquired a caveatable equitable interest in the land.
Mr Edney disputes there was any such agreement and has refused to transfer the land to Mr Mahon. He began procedures to remove the caveat. Mr Mahon’s response was to apply to the High Court for an order sustaining the caveat, an application declined by Associate Judge Bell.[1] Mr Mahon now appeals against that decision.

Background

[1]Mahon v The Station at Waitiri Ltd [2017] NZHC 631 [HC judgment].

Mr Mahon is a property developer. He has done business with Mr Edney, a financier and land investor, over the course of many years.
In 2015 Mr Mahon identified the Park Street properties as a good prospect for development. On 25 June 2015 Mr Mahon, through his company Coronation Road Holdings Ltd (Coronation), agreed to buy the land for $5 million. But Mr Mahon soon recognised that he would not have sufficient funds available to complete due diligence on the land (in order to make the purchase agreement unconditional) by the required date of 19 October 2015, or to have the purchase settle on 30 November 2015. He approached Mr Edney to see if he would be interested in taking the entire transaction over from Coronation. Mr Edney was interested and discussions proceeded from there.
Mr Mahon negotiated extensions to the due diligence and settlement dates while discussions continued between him and Mr Edney. It is the content of these discussions which is at the heart of the dispute between them. On Mr Mahon’s evidence an oral agreement was reached during a discussion in December 2015 as follows:
(a)Mr Mahon would nominate a special-purpose…

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.

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Details

Case: [2017] NZCA 387
Decision Date: 5 September 2017 at 2.30 pm

CaseChat Overview and Summary

Neville Christopher Mahon sought to appeal against a decision of the High Court declining to sustain a caveat he lodged over certain properties in Park Street, Queenstown. The properties were registered in the name of The Station at Waitiri Limited (Waitiri). Waitiri is a company associated with the interests of Mr Timothy Edney. Mr Mahon alleged that he and Mr Edney had agreed that the land would be transferred to a company associated with Mr Edney, and that this vehicle would be used for the special purpose of holding the land. The special-purpose vehicle would hold the land until Mr Mahon was in a position to pay the agreed price for it, at which point the land would be transferred to him by means of the transfer of all of the shares in the company. Mr Mahon’s case was that, as a result of this agreement, he acquired a caveatable equitable interest in the land. Mr Edney disputed there was any such agreement and had refused to transfer the land to Mr Mahon. He began procedures to remove the caveat. Mr Mahon’s response was to apply to the High Court for an order sustaining the caveat, an application declined by Associate Judge Bell. Mr Mahon now appeals against that decision.

The Court of Appeal held that the appeal should be dismissed. Mr Mahon's appeal was based on three grounds: first, an oral option agreement made in December 2015, enforceable by reason of part performance in early 2016; second, an institutional constructive trust, reflecting a common intention formed in December 2015 between Mr Mahon and Mr Edney that the land would be re-transferred to Mr Mahon; and third, an equitable estoppel, which arose from representations by Mr Edney in December 2015 upon which Mr Mahon reasonably relied to his detriment.

The Court found that the first ground was not reasonably arguable because Mr Edney disputed that he had ever granted an option to Mr Mahon and it was improbable that Mr Edney would have agreed to an open-ended option over the property. The second ground was also not reasonably arguable because the agreement Mr Mahon alleged had been reached was for the transfer of the shares in Waiwhakatu, not the land. The third ground was also not reasonably arguable because the representation Mr Mahon relied upon was a representation that shares in a company, and not land, would be transferred to him.

The appeal was dismissed and the appellant was ordered to pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

Orders