McArthur v Van Noordt HC Auckland CIV-2011-404-2534

[2011] NZHC 739

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-2534

UNDER  the Land Transfer Act 1952

IN THE MATTER OF     an application under s 145A Land Transfer Act 1952 for an order that a caveat not lapse

BETWEEN  JAMES WALKER MCARTHUR AND LETITIA CAROL MCARTHUR Applicants

ANDJOHN VAN NOORDT AND ADRIANNA CORNELIA VAN NOORDT

First Respondents

ANDBASECORP FINANCE LIMITED Second Respondents

Hearing:         15 June 2011

Counsel:         J M Airy for the Applicants

No appearance for the First Respondents
D J Taylor for the Second Respondents

Judgment:      15 June 2011

(ORAL) JUDGMENT OF PETERS J

Solicitors/Counsel:

Inder Lynch, Solicitors, Manukau – Email: [email protected]

Mr D J Taylor, Barrister, Hamilton – Email:  [email protected]

MCARTHUR v VAN NOORDT HC AK CIV-2011-404-2534 15 June 2011

[1]      The first respondents are the registered proprietors of 282 McNicol Road, Clevedon,  Auckland  (“property”),  being  the  land  contained  and  described  in identifier NA35B/534, North Auckland.   The applicants are the first respondents’ daughter and son in law.  The second respondent, “Basecorp”, is a mortgagee of the property.  The first respondents granted a mortgage of the property to Basecorp on or about 3 September 2008.

[2]      On 11 April 2011 the applicants lodged caveat 8740227.1 (“caveat”) against the title to the property.  In the caveat, the applicants claimed an interest in the land as cestui que trust of a constructive trust created orally on or about 10 August 1999 between the first respondents as trustees and the applicants as beneficiaries.

[3]      On or about 19 April 2011 Basecorp made an application to the Registrar- General  of  Land  for  the  caveat  to  lapse,  being  an  application  pursuant  to s 145A Land Transfer Act 1952.

[4]      On 5 May 2011 the applicants made an application (“application”) to the High Court at Auckland for an order that the caveat not lapse.  On 13 May 2011 the Court made an order that the caveat not lapse pending further order of the Court.

[5]      The substance of the applicants’ application has been argued today.

Background

[6]      The background to the application is as follows.

[7]      The property is a lifestyle block comprising about four hectares.   The first respondents have lived on the property for many years.  Apparently, in about 1998 the first respondents and applicants reached an agreement that the applicants could construct and live in a (second) dwelling on the property (“dwelling”).   The first respondents required assistance to maintain the property and this was a solution which enabled them to remain living on the property in their later years.  The terms

of the agreement between the applicants and the first respondent are evidenced by a draft agreement prepared at about that time, but never executed.

[8]      The construction of the dwelling required resource consent and on 10 August

1999 the Manukau City Council granted consent on conditions which included the following:

(a)       That the dwelling might remain on site for a  maximum of either

10 years  from  the  date  of  the  consent  or  when  it  was  no  longer required for the accommodation of persons providing care to the first respondents;

(b)That the property should not be disposed of or subdivided unless the dwelling was first removed from the site.  This condition was to be the  subject  of  a  covenant  entered  into  pursuant  to  s  108  of  the Resource Management Act 1991 and registered as a covenant against the certificate of title.  The Manukau City Council City Solicitor was to prepare the covenant documents but for reasons which are not apparent this was never done.

[9]      After resource consent was granted, the applicants constructed the dwelling at their expense in about 1999/2000, at a total cost it is said of about $200,000.

[10]     After the dwelling was built, the first respondents granted several mortgages of the property, the most recent of which was that to Basecorp.

[11]     Nothing was registered against the title to the property which would have put Basecorp or anyone else on notice of the interest which the applicants claimed or of the conditions which the Manukau City Council imposed in the resource consent and, specifically, the need to remove the second dwelling.

[12]     The first respondents defaulted in payments due to Basecorp and Basecorp exercised its rights as mortgagee to conduct a sale of the property.

[13]     Some prospective purchasers investigated the Council’s records in respect of the property and became aware, prior to the auction, of the conditions which the Council had imposed when granting resource consent.  As a result of enquiries those by prospective purchasers Basecorp learned that the dwelling was subject to a condition requiring its removal and that removal was in fact overdue.  The Council’s position to date has been that it requires compliance with the terms of the consent and that the dwelling therefore will have to be removed.

[14]     The property was  sold  at  auction  to  Ms  C  E Fisher or  her nominee  on

16 March  2011.    Ms Fisher  purchased  knowing  that  removal  would  have  to  be undertaken, but apparently was unaware of the interest claimed by the applicants.

[15]     Basecorp and Ms Fisher were due to settle the sale and purchase on 13 April

2011.

[16]     Shortly before settlement, on 8 April 2011, the applicants’ solicitors wrote to Basecorp’s solicitors.   They advised Basecorp’s solicitors that the applicants contended that they owned the dwelling, advised of the conditions attached to the resource consent and stated that the applicants considered that the dwelling remained their property.   Amongst other things, the applicants sought confirmation that the applicants would be permitted to remove the dwelling from the property.

[17]     Basecorp’s  solicitors  did  not  reply  to  that  letter  immediately  and  the applicants lodged the caveat.  That led to the Notice to Lapse and to the application to which I have referred to above.

[18]     The settlement of the sale to Ms Fisher has been delayed pending resolution of this matter.  Apparently, Ms Fisher remains ready, willing and able to settle the purchase and indeed she was present throughout today’s hearing and during the giving of this decision, although she took no part in the hearing and was not represented.

[19]     The applicants’ primary case is that the dwelling is a chattel which they own, that as a chattel the dwelling has never been subject to Basecorp’s security and that they are entitled to remove the dwelling from the property.

[20]     Alternatively they say that the dwelling is a fixture and that they have a caveatable interest in the land as beneficiaries of the trust to which I have referred.

[21]     As yet, the applicants have not issued any proceedings to determine whether the dwelling is a chattel or a fixture.

[22]     Basecorp’s case is that, if the dwelling is a chattel, then it has never been subject to Basecorp’s security and it is not subject to the sale to Ms Fisher.  On the other hand, if the dwelling is a fixture, it was subject to Basecorp’s security as it formed part of the land.  In that case, Basecorp says Ms Fisher as purchaser acquired an equitable interest in it as of 16 March 2011.

[23]     It is common ground between the parties that if the dwelling is a chattel the applicants do not have a caveatable interest in the land.  It is also common ground that if the dwelling is a fixture the applicants do have a caveatable interest but it is defeated by Basecorp’s registered interest as mortgagee.

[24]     Because of that, in my view, there is no basis for making an order that the caveat not lapse.  Accordingly, I vacate the order of the Court dated 13 May 2011, to which I have already referred.

[25]     It remains open to the applicants to issue proceedings for a declaration that the dwelling is a chattel and that they may remove it.  It will be in the applicants’ interests to commence any such proceedings urgently and, in the absence of some agreement, to seek an order preserving the status quo in respect of the dwelling pending further order of the Court.

Result

[26]     For the reasons I have given, I decline the application made by the applicants dated 5 May 2011.

[27]     The  second  respondent  is  entitled  to  costs  on  a  2B  basis  to  the  second respondent with disbursements as fixed by the Registrar.

...................................................................

PETERS J