McCully v McCully

[2022] NZHC 3124

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-124

[2022] NZHC 3124

UNDER

s 146 Land Transfer Act 2017 and s 42 Property (Relationships) Act 1976

IN THE MATTER OF

an originating application for an order permitting registration of a second notice of claim against dealings

BETWEEN

DIANE REBECCA MCCULLY

Applicant

AND

ALLAN JOHN MCCULLY

Respondent

Hearing:	On the papers
Appearances:	S J Jamieson and E J Booth for Applicant
Judgment:	28 November 2022
Reissued:	1 December 2022

JUDGMENT OF DUNNINGHAM

This judgment was delivered by me on 28 November 2022 at 2.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

MCCULLY v MCCULLY [2022] NZHC 3124 [28 November 2022]

Introduction

[1]    This is an application made without notice, for an order permitting the registration of a second notice of claim against dealings over 31 Thyme Crescent, Alexandra (Record of Title 219848, Otago Registry) (the property), pursuant to s 146 Land Transfer Act 2017.

[2]    On 21 November 2022, I granted the application and made an order permitting the applicant to lodge a second notice of claim against the property. I now set out my reasons for doing so.

Background

[3]    The applicant and the respondent were married for 20 years. Shortly after their marriage, Mr McCully established the A J McCully Family Trust (the Trust), and various properties they lived in as their family home, including the property, were owned by the Trust. Mrs McCully was a beneficiary of the Trust and was also appointed as a trustee in 2012. Two  weeks after their separation on 10 July 2021,  Mr McCully removed her as a trustee of the Trust. Mr McCully’s lawyer said that he was seeking to refinance the trust and required her to sign an authority and instruction to allow her to be removed from the title. As Mrs McCully was concerned that there was a real risk that Mr McCully would deal with the property in order to defeat her interest in it from a relationship property perspective, she lodged the notice of claim.

[4]    On 27 October 2022, Land Information New Zealand (LINZ) prepared a letter notifying Mrs McCully that Mr McCully had made an application under s 143(1)(b) Land Transfer Act 2017 to lapse the notice of claim. It advised that the notice of claim would lapse unless an application to sustain it was made to the relevant Court within 10 working days after the notice was given.

[5]    The letter was received at the office of Mrs McCully’s lawyers, Tavendale and Partners, on 3 November 2022. Based on a receipt date of 3 November 2022, the date for filing the application and notifying LINZ that an application to sustain a notice of claim had been filed, was calculated to be 17 November 2022.

[6]    Tavendale and Partners prepared the requisite application. Mrs McCully currently lives in Queensland, and she affirmed her affidavit in support of the application to sustain the notice of claim on 16 November 2022. The affidavit was provided to Tavendale and Partners on the evening of 16 November 2022.

[7]    On 17 November 2022, the application to sustain the notice of claim, together with Mrs McCully’s affidavit in support, was filed at the Family Court at Alexandra. LINZ was also notified of the application that day. However, LINZ advised that the time for notifying it of an application  to  sustain  a notice of claim  had  lapsed  on 16 November 2022. This is because, LINZ advised, notice had been delivered to Tavendale and Partners’ P O Box on 2 November 2022. Mrs McCully now seeks leave of the Court to file a second notice of claim over the property on the basis that if the notice of claim lapses, then there is a real risk that her interest in the property under the Property (Relationships) Act 1976 will be defeated.

Discussion

[8]    The application is made pursuant to s 146 Land Transfer Act 2017. That provides as follows:

Unless the court orders otherwise, a caveat against dealings must not be lodged by or on behalf of the same person to protect the same estate or interest as a caveat against dealings that has been removed under section 142 or lapsed under section 141(2)(a) or 143.

[9]    The approach to such applications (albeit referring to the equivalent section in the Land Transfer Act 1952) was summarised by Randerson J in Lowther v Kim, as follows:1

[18]      The Court of Appeal has held that an order under s 148 will not lightly be made. It is an indulgence and the applicant's claim is “scrutinised carefully”: Cotton v Keogh [1996] 3 NZLR 1, at p 8. In Mueller v Montagnat (1986) 2 NZCPR 520, at pp 523-524, Thorp J reviewed previous authorities. He determined that the Court is given an unfettered discretion under s 148 but the Court will generally have regard to:

(a)the strength of the case made by the applicant to support the claimed interest in the land;

1      Lowther v Kim [2003] 1 NZLR 327 (HC).

(b)any explanation for failure  to  exercise  the  caveator's  rights under s 145;

(c)whether unavoidable prejudice would be suffered by those who have acted in reliance on the register and in the belief that the caveator was not pursuing the claim.

[19]      Thorp J, rightly in my view, did not accept the submission made to him that an order under s 148 should only be made in exceptional cases. In considering the strength of the applicant's claim to an interest in the land, it is appropriate to adopt the standard of a reasonably arguable case as identified in Sims v Lowe [1988] 1 NZLR 656, at pp 659-660 (CA), but with the reminder that careful scrutiny is required where leave to lodge a second caveat is sought.

[10]   In the present case, I accept that Mrs McCully’s affidavit shows she has a reasonably arguable interest in the property by virtue of the Property (Relationships) Act 1976 (the Act). The claim would presumably rely on orders being made under  ss 44 or 44C of the Act on the basis that property was transferred into the trust either in order to defeat her interest in that property under the Act or on the basis that the disposition of property had the effect of defeating her interests under the Act.

[11]   In terms of whether there is a sufficient explanation for the failure to file the application for orders that the notice of claim not lapse in time, I accept Mrs McCully’s solicitor’s explanation as to when that firm understood the LINZ notice was received. It is clear that the applicant intended to apply in time and acted as quickly as possible to make an application which complied with the requirements of s 143 of the Land Transfer Act.

[12]   In light of the explanation for the non-compliance as set out in the affidavit of Emma Jayne Booth, I accept that the consequences of the miscalculation of the time period for filing should not be visited on Mrs McCully. I also note that counsel have referred me to a recent High Court decision, Hua Xiang Homes Ltd v Val Residential Ltd, where Davison J similarly was prepared to make orders on a without notice basis, permitting the applicants to lodge a second caveat against dealings over a property where it was clear the applicants intended to apply in time and had provided detailed affidavits in support of their applications.2

2      Hua Xiang Homes Ltd v Val Residential Ltd & Ors [2022] NZHC 313, (2022) 22 NZCPR 902.

[13]   Finally, I accept there is no prejudice to Mr McCully by what, in practical terms, will be a delay of three working days between when the application should have been filed, and when it has been filed as a consequence of the making of the order permitting the lodging of a second caveat.

[14]   In terms of the application to proceed without notice, I accept that this application needed to be dealt with as a matter of urgency, particularly as LINZ advise that the notice of claim would lapse on Tuesday,  22 November 2022 and because  Mr McCully has indicated that he is looking to refinance the property. Allowing the applicant to lodge a second notice of claim does not interfere with Mr McCully’s right to apply to the Court to lapse the notice of claim, and the parties will be in the same position they would have been had Mrs McCully’s application been made within the 10 working day period.

[15]   Accordingly, on 21 November 2022, I made the following orders as set out in the without notice originating application for an order permitting registration of a second notice of claim against dealings:

(a)pursuant to s 146 Land Transfer Act 2017, the applicant is permitted to lodge a second notice of claim against dealings over the property situated at 31 Thyme Crescent, Alexandra, Record of Title 219848,

Otago Registry; and

(b)leave is granted to rely on the affidavit of Diane Rebecca McCully affirmed 16 November 2022 in support of the application.

Solicitors:
Tavendale and Partners, Christchurch