Parklane Infrastruct Limited v Lu Trustee Limited
[2020] NZHC 1182
•29 May 2020
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2020-419-000042
[2020] NZHC 1182
BETWEEN PARKLANE INFRASTRUCT LIMITED
Applicant
AND
LU TRUSTEE LIMITED and HO NO. 2 TRUSTEES LIMITED
Respondents
Hearing: 8 May 2020 Appearances:
M Casey QC for the Applicant
K Cornegé and J Muggeridge for the Respondents
Judgment:
29 May 2020
JUDGMENT OF MOORE J
This judgment was delivered by me on 29 May 2020 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
PARKLANE INFRASTRUCT LIMITED v LU TRUSTEE LIMITED & ANOR [2020] NZHC 1182 [29 May 2020]
Introduction
[1] Parklane Infrastruct Limited (“Parklane”) applies under s 143 of the Land Transfer Act 2017 (“the Act”) for an order that Caveat 11635782.1 (“the Caveat”) not lapse. The Caveat is lodged against a property situated at 80 Laurent Road, Cambridge (“the Trinity land”) owned by the respondents, who are partners in the Trinity Green Estate Partnership (“Trinity”).
[2] The interest specified in the Caveat is an easement to grant access to the Trinity land contained in an agreement dated 14 February 2019 (“the grant”).
[3] Trinity opposes the application on the basis that the grant does not create an easement. Trinity also says that the Court should exercise its discretion to allow the Caveat to lapse as it does not serve any practical purpose.
Background
Introduction
[4] The Trinity land is an area of some 8.5 ha situated near Cambridge. Along part of its northern boundary is an area of Crown land (“the block”), acquired by the New Zealand Transport Authority (“NZTA”) from Fonterra to be developed as a state highway, being the extension of the Waikato Expressway. Because it was surplus to NZTA’s requirements it was offered back to its original owners as is required. Fonterra elected not to exercise its rights to purchase. Parklane is interested in acquiring the block to develop it for “KiwiBuild” housing. To advance this proposal Parklane needs access to the block over the Trinity land.
The grant
[5] Mr Cary, a consultant employed by Parklane, approached the respondents through Mr Henry Wu about a possible joint venture which might include a development of the Trinity land. He says this was in late 2018. While there is some dispute over aspects of their interaction, it appears to be common ground that from then until early 2019 there were a number of discussions which culminated in a face- to-face meeting on 5 February 2019 involving Mr Cary, Mr Wu, Ms Zhang (who
describes herself as Mr Wu’s business partner), Trinity’s solicitor and a Mr Price who was, apparently, Parklane’s planning consultant. The purpose of the meeting was to advance discussions about Trinity granting road access to Parklane over the Trinity land. It would appear that an oral agreement was reached because on 11 February 2019 Parklane’s solicitors wrote to Trinity’s solicitors. Referring to the meeting of 5 February 2019 Parklane’s solicitors recorded:
“… The purpose of the meeting [of 5 February] 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 ex-Fonterra block.
3. That an extension of the Summerset agreements has been granted to the 21st February 2019.
In order for all our client’s project to be considered it will need to provide confirmation that Kiwibuild and [the local council] that it has the necessary access through your client’s land to the ex-Fonterra block.
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 take Summerset out of the equation. …”
[6] According to Mr Cary, very shortly afterwards, he and Parklane’s solicitors received an email from Ms Zhang stating that she and Mr Wu did not want Parklane communicating with their solicitors. Instead, she directed they should communicate directly with her and/or Mr Wu. There then followed various exchanges by text and
email between Mr Cary and Mr Wu and/or Ms Zhang culminating on 13 February 2019 with a text message to Mr Wu from Mr Cary which contained the following:
“Hi Henry
Following our discussion yesterday I’ve sent you a copy of the letter prepared by our solicitor and also 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 some confidence that we may be able to expedite access to the [ex-Fonterra] block. Just to be very clear any agreement provided to us by your clients in relation to consent for access the [ex-Fonterra] block 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 Sommerset 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 IMBE and or Kiwibuild in relation to the [ex-Fonterra] block.
On that basis if you side (sic) could you please urgently revert with a formal confirmation in way of consent for access to the [ex-Fonterra] block on behalf of the entity that owns your block. At the very least we will need an email of (sic) your entity rather than a text message confirming your consent.
…
The ball is firmly in your court.
Please urgently advise if you’re going to provide confirmation so we can confirm our appointment … with MBIE and or Kiwibuild.
Regards Trent
On behalf of the Director Murray Price Parklane Limited”
[7] After that text message was sent, Mr Cary received an email from Mr Wu which contained the first draft of what would later become the grant. On the afternoon of 14 February 2019, after consulting with Parklane’s solicitors, Mr Cary sent back a revised draft via email.
[8] This is the grant relied on by Parklane. It was signed by Mr Wu. The text is set out in full below:
“Trinity Green Estate
Suite 3, Level 1, 55 London St, Hamilton Centre, Hamilton
Ph: 07 838 0829
Fax: 07 839 1668
14 February 2019
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 ex- Fonterra block.
●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 ex-Fonterra block.
Regards
Henry Wu
as duly authorized agent for Trinity Green Estate Partnership”
Subdivision of Trinity land
[9] In the lead up to the grant being signed, Parklane was aware that Trinity intended to subdivide the Trinity land into Lots 1, 2 and 3. This was a condition of Trinity’s agreement to sell part of its land to the aged-care facility provider, Summerset. Lot 2 would be sold to Summerset. Lots 1 and 3 were to be retained by Trinity. Lot 201 is a strip of land running along part of the southern boundary of the Trinity land, including the proposed Lot 3. Under the sale and purchase agreement, it was to be purchased by Summerset and then transferred to Trinity.
[10] Parklane’s evidence is that it anticipated that Bourke Drive, one of three short roads below the Trinity land, would be extended through Lot 201 to provide access to Trinity’s Lot 3. This would enable road access to Trinity land (and if permitted, through Lot 3 to the block). Otherwise Lot 3 and the block would be effectively landlocked. When the parties were discussing the access proposal, Mr Wu gave Mr Cary a copy of the proposed subdivision plan, as well as a subsequent version. Both showed the line of a proposed road access through Lot 201 to Lot 3. They also showed a notation “Future road to vest in the Waipa DC” over Lot 201. This was consistent with what Mr Wu had discussed with Mr Cary.
[11] Parklane also claims that before the grant was signed, Mr Cary had discussed other access possibilities with Trinity, which included extensions of one of the other two roads below the Trinity land, or over Laurent Drive from the western side of the Trinity land. Neither was without difficulties.
[12] Parklane’s lawyers wrote a letter to the Waipa District Council (“the Council”) requesting they be notified as a party whose interest would be adversely affected by the Council’s decision in the event any consent had the effect of landlocking Lot 3. However, when the subdivision consent was granted, no provision for road access to Lot 3 was made, despite Parklane’s request.
[13] It is apparently uncertain whether Bourke Drive (or one of the other two short roads) will be extended over Lot 201 to facilitate access to Lot 3, or whether Lot 201 will be transferred to Trinity at all.
[14] Relying on its claim that the grant given by Trinity created an equitable interest in the Trinity land, Parklane lodged a caveat over the Trinity land to preserve its access rights to the block over Lot 3 in order to continue its negotiations with KiwiBuild for developing the block for housing.
Offers
[15] On 29 March 2020, Parklane made an offer to the respondents to settle the access issue. This included a clause that it would limit its caveat to cover only Lot 3.
It also set out how the parties would be responsible for obtaining the consents and carrying out the work necessary for the access way.
[16] On 6 May 2020, Trinity made an offer to Parklane. In short, this provided that, if Parklane was to consent to the subdivision and withdrew its Caveat from Lots 1 and 2, any of Parklane’s subsequently proved access rights to Lot 3 would be extended over Bourke Drive when it is transferred to Trinity.
The lapsing of caveats — legal principles
[17]A caveatable interest must come within s 138(1) of the Act:
“(1) A person may lodge a caveat against dealings with an estate or interest in land (a caveat against dealings) on the basis that the person—
(a) claims an estate or interest in the land, whether capable of registration or not; or
(b) has a beneficial estate or interest in the land under an express, implied, resulting, or constructive trust; or
(c) is transferring the estate or interest in the land to another person to be held on trust; or
(d) is the registered owner of the estate or interest in the land and—
(i) has an interest that is distinct from that of registered owner; or
(ii) establishes to the satisfaction of the Registrar that at the time the caveat is lodged there is a risk that the estate or interest may be lost through fraud.”
[18]As s 138(1)(a) makes clear, the interest does not have to be registerable.
[19] The Court will not allow a caveat to lapse unless it is patently clear the caveat cannot be sustained.1 All the applicants are required to show is a reasonably arguable case for claiming an interest. They need not establish the interest definitively; for obvious reasons s 143 applications are not suited to the determination of disputed questions of fact.2
1 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660.
2 Philpott v Noble Investments [2015] NZCA 342 at [26] (citations omitted).
[20] The Court has a residual discretion not to uphold a caveat but that is to be exercised cautiously, such as when a caveat could serve no useful purpose or alternative safeguards are available.3 The onus of establishing this lies with the respondent.4
Does the agreement create a caveatable interest?
[21] Mr Casey QC, for Parklane, submitted that the grant gives rise to an estate or interest in the Trinity land by way of an unregistered right-of-way easement.
[22] An agreement to grant a right-of-way or other form of easement does give rise to a caveatable interest.5 The agreement does not explicitly grant an easement. For an equitable agreement to arise, three conditions must be satisfied:6
(a)a right to be granted which possess the essential characteristics of an easement;
(b)valuable consideration; and
(c)either a sufficient record in writing to satisfy s 24 of the Property Law Act 2007, or a sufficient act of part performance.
[23] As to the first condition, an easement may be created in gross,7 so the only essential characteristic at issue is whether the right is capable of forming the subject
3 Pacific Homes Ltd (In Receivership) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 337.
5 Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at [4.3.03(8)(a)].
6 DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (LexisNexis, online ed) at [16.035].
7 Property Law Act 2007, s 291. This means the alleged easement does not have to be for the benefit of land owned by Parklane.
matter of a grant.8 In this case, that question turns on whether Parklane’s access rights have been defined in clear and certain terms.9
[24] Such a right for access could be in the nature of a personal licence to Parklane. A licence of that sort is insufficient to grant a caveatable interest.10 Thus it must also be shown that the parties intended to create an easement, rather than a licence. The Court will construe the right as an easement unless there are strong indications it was intended to be personal to the grantee.11
Is the easement defined in sufficient detail to be enforceable?
[25] Ms Cornegé, for the respondents, submitted that the access as defined in the agreement is too wide and uncertain to be enforceable.
[26] The agreement does not provide specifications for Parklane’s access to the land. Nevertheless, in Olo Ltd v KA No 3 Trustee Ltd, Lang J determined that the nature and parameters of the right could be inferred from the purpose for which it was granted.12 He considered a right-of-way to be sufficiently defined where it had no defined departure and arrival point. Here, Mr Casey suggested the disputed access right was granted for Parklane’s access for both roading and services for the block. The proposal was for it to be formed via an extension to 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.13
8 Olo Ltd v KA No 3 Trustee Ltd [2014] NZHC 1075 at [25].
9 Whether the right may be the subject of such a grant also depends on two other requirements (that an easement is negative from the point of view of the burdened owner and that an easement does not amount to a claim to exclusive or joint occupation), but these are clearly met in this case. See DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (LexisNexis, online ed) at [16.006].
10 DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (LexisNexis, online ed) at [10.010].
11 At [16.035].
12 Olo Ltd v KA No 3 Trustee Ltd [2014] NZHC 1075 at [36].13 See Philpott v Noble Investments Ltd [2012] NZHC 1431 at [75].
[27] As was the case with the applicants in Olo, I do not consider that Parklane has been granted the right to “wander at large” over the property.14 I am therefore satisfied that the access rights are not so vague and uncertain as to preclude Parklane from maintaining a claim to an equitable easement.
Was there consideration and did the parties intend to create an easement?
[28] The existence of valuable consideration is the second condition which must be satisfied. For convenience I shall examine this question in conjunction with the intention of the parties. That is because they are interlinked on the facts of this case.
[29] Ms Cornegé submitted that there was no consideration supporting the agreement and the parties did not intend to create legal relations through the grant. She submitted that the respondents made the grant to enable Mr Cary to meet with KiwiBuild, but not with the expectation that there would be any commercial advantage for the respondents if the development proceeded.
[30] Given the limited compass of applications under s 138(1) it is inappropriate for this Court to attempt to determine contested factual questions relating to the discussions between the parties and what was, in fact, the purpose of the grant. In any event on the material before me that is not possible. Nevertheless, it strikes me as implausible that the respondents signed the agreement solely to help Parklane to progress its proposal with KiwiBuild, motivated purely or primarily by the spirit of neighbourly goodwill without any prospect of commercial advantage. As Mr Cary’s evidence reveals, there had been discussions about a possible joint venture by which the Trinity land or part of it might be developed. There were other potential advantages for Trinity. In agreeing to the grant Trinity not only improved any chance it might have to explore with Parklane a commercial involvement in the development but also it permitted some level of influence over how their neighbouring land would be developed.
14 At [36].
[31] That there was some advantage to Trinity is reflected in the opening paragraph of the letter of 11 February 2019 from Parklane’s solicitors. It makes reference to the parties’ “mutual interests” in securing access for their “respective land/projects”.
[32] It follows I am satisfied that it is, at least, arguable there was valuable consideration for Trinity in executing the grant.
[33] The next, albeit related, question is whether there is evidence the parties intended to create an easement.
[34] The 13 February 2019 text sent to Mr Wu by Mr Cary, that is the day before Mr Wu signed the grant, asked Trinity to “urgently revert with a formal confirmation in way of consent for access to the [block]”. It then added, “At the very least we will need an email of (sic) your entity rather than a text message confirming your consent.” It is clear that from Parklane’s perspective a confirmatory email from the respondents would have been sufficient for it to progress its meeting with KiwiBuild. I regard it as significant that Trinity elected to respond more formally than Parklane required, by reproducing the draft Parklane’s solicitors had prepared on Trinity letterhead, signing and dating it and returning it to Mr Cary. I do not believe that Mr Wu would have taken these steps if he did not intend Trinity to create a binding legal relationship with Parklane.
[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 block 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.15
[36] Ms Cornegé also submitted that in a commercial context, Trinity would not have entered into a legal agreement about its land at a point before the Summerset deal had been confirmed. In Philpott v Noble Investments Ltd it was held that similar evidence, based on considerations of commercial reality, “cannot be conclusive in the context of a jurisdiction based on arguability” as the caveators’ arguable case was based on actual contractual documents.16 For the same reasons, I will not construe the agreement as not involving the creation of an equitable easement.
[37] The third condition of which I must be satisfied is whether s 24 of the Property Law Act is satisfied. Unsurprisingly, both parties were agreed that the requirement for writing is met.
[38] Given I am satisfied that all conditions necessary under s 138(1) are met, it follows I find that there is an arguable case that Trinity granted Parklane an equitable easement as claimed. It is not “patently clear” that the Caveat cannot be sustained. The issue of whether an easement exists in fact is a matter to be determined at any substantive hearing.
Is the Caveat defective?
[39] Where a caveator claims an interest only in part of the land comprised in a certificate of title, the caveat should relate to just that part, leaving the registered proprietor to deal freely with the remaining interest in the land.17 Ms Cornegé submitted that Parklane’s alleged access right relates only to part of the Trinity land (Lot 3). It is thus defective by application of this principle.
[40] Ms Cornegé referred me to Howard v Rangeview Investments Ltd as support for the proposition that the respondents should not be impeded by the Caveat in
15 See Keane v Thompson (2004) 5 NZCPR 153 at [29], where the grantor had specified that it would notify any buyer about the right in question, which was taken to show that there was an intention that the right would run with the land.
16 Philpott v Noble Investments Ltd [2012] NZHC 1431 at [62].
17 Taylor v Couchman [1995] 3 NZLR 336 at 341.
completing its subdivision.18 In that case, a vendor had sold a parcel of land on the condition that the purchaser would create a separate lot and transfer it back to the vendor. The vendor caveated the entire title to protect its interest in the lot which included an access way which had previously been provided by the respondent. It was held that the applicant was not entitled to caveat the land beyond the lot. The protection of the right of access could be achieved through undertakings from the respondent that they would not compromise the existing right of way.19
[41] For the most part, access in this case has been discussed in relation to Lot 3 via Bourke Drive over Lot 201. If the Caveat existed only over Lot 3, the respondents would be free to progress their arrangements with Summerset. However, the final form of any access cannot at this stage be determined. Various options have been suggested and in any event any access route will require the co-operation of third parties. As the Court in Lindsay v Noble Investments Ltd noted, the approach in Howard only worked because the access route was settled and the undertakings were a means of formalising a defined right of way.20
[42] On this basis, I do not consider that Parklane’s failure to particularise the land over which its interest is claimed means that it should lapse. However, I do agree that it is desirable for this matter to be resolved quickly so that the Summerset arrangements can progress.
Should I exercise my discretion to remove the Caveat?
[43] Ms Cornegé submitted that I should exercise my discretion in any event, and remove the Caveat. She pointed to Parklane’s refusal to accept Trinity’s offer. She said the refusal was so unreasonable it suggests Parklane is not acting bona fide and is using the Caveat for improper collateral purposes rather than the genuine protection of its interest in the property.21 She further submitted that there is no practical advantage in maintaining the Caveat because Parklane’s interests can be accommodated in other ways.
18 Howard v Rangeview Investments Ltd (2006) 7 NZCPR 473.
19 At [31].
20 Lindsay v Noble Investments Ltd [2014] NZHC 799 at [108].
21 Holt v Anchorage Management Ltd [1991] 1 NZLR 108 (CA) at 124.
[44] Mr Casey responded by observing that Parklane’s offer was an attempt to resolve the matter by way of compromise; it does not represent Parklane’s view of what an ideal resolution would look like.
[45] At this stage in the proceedings, it is inappropriate for me to determine whether Parklane was acting unreasonably in rejecting Trinity’s offer. However, on the evidence I do not consider the conduct complained of suggests it is not acting bona fide. At the present time Parklane’s access rights cannot be accommodated in any other way. There is no certainty that access from Bourke Drive will be formalised. Although Parklane cannot take advantage of its access rights until the respondents’ transaction with Summerset is concluded, the Caveat serves the purpose of protecting Parklane’s interest pending final determination of the dispute. For that reason I am not prepared to exercise my residual discretion to remove the Caveat.
Should conditions be imposed on an order maintaining the Caveat?
[46] The Court is able to impose terms and conditions when making an order preserving a caveat.22
[47] As accepted by Parklane, conditions requiring Parklane to commence substantive proceedings in relation to the interest claimed in the Caveat and to progress those proceedings expeditiously, are reasonable in the circumstances.
[48] A further condition suggested by Trinity is that both Parklane and its director give an undertaking as to damages.23 In Topa Partners Ltd v JWL International Group Ltd, Associate Judge Paulsen recently rejected the suggestion that the Court should assume the owner would be likely to suffer loss.24 It was held there was an onus to provide evidence of loss. 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 BP Oil New Zealand Limited v Van Beers Motors Limited [1992] 1 NZLR 211 (HC) at 218.
23 Raiser Developments Ltd v Trefoil Properties Ltd (2008) 9 NZCPR 161, confirming BP Oil New Zealand Ltd v Van Beers Motors Ltd [1992] 1 NZLR 211.
24 Topa Partners Ltd v JWL International Group Ltd [2020] NZHC 182 at [62].
Result
[49]The application is granted.
[50] I order Caveat 11635782.1 shall not lapse. The order is conditional upon Parklane issuing proceedings seeking specific performance of its rights under the agreement within 15 working days from the date of delivery of this judgment.
Costs
[51] Costs are reserved. I invite the parties to attempt to agree on the question of costs and to file a joint memorandum. If the parties cannot resolve costs by agreement, I direct that memoranda be filed and served within 20 working days of the date of this judgment. No memorandum is to exceed five pages. I shall then determine the question of costs on the papers.
Moore J
Solicitors:
Mr Casey QC, Auckland Tompkins Wake, Hamilton
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