Peet v Bourne HC Hamilton CIV 2006-419-1272
[2007] NZHC 1575
•2 February 2007
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV 2006-419-1272
IN THE MATTER OF Section 145A Land Transfer Act 1952
AND
IN THE MATTER OF an application to sustain a caveat
BETWEEN DAVID ANDREW PEET AND JACQUALYN MARINI PEET Applicants
ANDGILMORE ROBERT BOURNE AND LOIS NANCY BOURNE
Respondents
Hearing: 1 February 2007
Counsel: D O’Neill for applicants
M Black for respondents
Judgment: 2 February 2007 at 17:55
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application that caveat not lapse]
Solicitors: Clark & Gay, PO Box 5, Waihi for applicants
Allen Needham & Co, PO Box 12, Morrinsville for respondents
PEET & ANOR V BOURNE & ANOR HC HAM CIV 2006-419-1272 2 February 2007
The application
[1] The applicants apply for an order that
Caveat No 6706398.1 being lodged by the applicants against the land owned by the respondents, being 9.5 hectares more or less being Lot 3 of a subdivision of Lot 2 Deposited Plan 311340 comprised in head Certificate of Title 44753 (South Auckland Registry) Certificate of Title 44753
shall not lapse.
[2] The application is made pursuant to s 145A of the Land Transfer Act 1952. The application was made following the issue of a notice pursuant to s 145A on behalf of the Registrar-General of Lands. No issue is taken as to the timeliness of the application. To protect the position pending the hearing of this fixture an interim order that the caveat not lapse was made on 2 October 2006.
[3] The grounds set forth in the application allege simply that the applicant has a caveatable interest.
The caveat
[4] The caveat claims an estate or interest derived from the registered proprietor expressed in the following way:
Pursuant to an agreement for sale and purchase dated 5 October 2004 in respect of 9.5ha hatched black more or less being part of the land contained in the above certificate of title as defined on the attached plan and made between the registered proprietors Gilmore Robert Bourne and Lois Nancy Bourne and the abovenamed caveators.
The grounds advanced in opposition
[5] In an amended notice of opposition dated 30 January and which was further amended without opposition by Mr O’Neill at the hearing of this application, the following eight grounds were pleaded in opposition.
1.The applicants do not have a caveatable interest. The sale and purchase agreement dated the 5th of October 2004 (the first agreement) never became unconditional and there has never been a completed and enforceable agreement between the applicants and respondents.
2.Further, the first agreement was cancelled and came to an end in or about December 2005. Confirmation of that position was also acknowledged and accepted by the applicants in:
a.Subsequent correspondence between their respective solicitors from December 2005 and into July 2006:
b.By the applicants and respondents addressing a “second agreement” which was never completed or signed by the parties and is therefore unenforceable.
3.In respect of the second agreement the applicants also required various amendments and changes to the proposed second agreement which were never completed or signed to by the parties. The correspondence between the parties’ solicitors also confirmed that there was never a binding or completed agreement.
4.Accordingly, the correspondence subsequent to the cancellation of the first agreement, also resulted in a proposed “second agreement” which was never signed by the applicants and respondents (there never was a completed second agreement) which was in writing nor enforceable under Section 2 of the Contracts Enforcement Act.
5.The subsequent correspondence also constituted a representation made by the applicants that the parties expressly required the signing and completion of the second agreement.
6.The representation evidenced by the correspondence also constitutes a representation under Section 9 of the Fair Trading Act or evidence of an estoppel that the applicants would be bound upon signing the second agreement.
7.The same correspondence evidences a waiver (express or implied) and an acceptance not to rely upon the first agreement. The second agreement also had different terms and conditions from the first agreement.
8. The respondents rely upon Section 2 of the Contracts Enforcement
Act 1954 sic [6].
9. As appearing in the affidavit of GILMORE ROBERT BOURNE of
Waihi, Farmer sworn and filed herein.
[6] The grounds in opposition in fact can be reduced to the following:
a) the sale and purchase agreement dated 5 October 2004 was cancelled in December 2006;
b)the sale and purchase contract was acknowledged as having come to an end in correspondence between the solicitors for the parties between December 2005 and July 2006;
c) the rights of the applicants under the sale and purchase contract were waived by them by their conduct which is evidenced by the correspondence between the solicitors for the parties between December 2005 and July 2006.
The general principles applicable to applications that caveats not lapse
[7] Section 145A of the Land Transfer Act 1952 provides:
145A Early lapse of caveat against dealings
(1) The registered proprietor of any estate or interest in the land protected by a caveat against dealings (other than a caveat lodged by the Registrar) may apply to the Registrar for the caveat to lapse.
(2)The Registrar must give the caveator notice of an application under subsection (1).
(3)The caveat lapses with the close of the prescribed period after the date on which the notice under subsection (2) is given unless—
(a) the caveator has earlier given to the Registrar notice that an application for an order to the contrary has been made to the High Court; and
(b)an order to that effect has been made and served on the Registrar within the prescribed period after the date on which the notice under paragraph (a) is given to the registrar.
[8] The applicable principles which apply in considering applications pursuant to ss143, 145 and145A of the Land Transfer Act 1952 can be shortly stated. They are:
(a)the sections of the Land Transfer Act 1952 give no guide as to the circumstances in which the Court may make an order that a caveat be removed: Catchpole v Burke [1974] 1 NZLR 620 at 623
(b)If it is clear that there was no valid ground for lodging a caveat, or that the interest which in the first place justified the lodging of the
caveat no longer exists, such a caveat should be removed: Sims v
Lowe [1988] 1 NZLR 656, 659
(c)The onus under the sections of the Land Transfer Act 1952 lies on the caveator to show that he has a reasonably arguable case for the interest he claims: Castlehill Run Ltd v NZI Finance Ltd [1985] 2
NZLR 104-106
(d)The caveat, being a creature of statute, may be lodged only by a person upon whom a right to lodge it has been conferred by statute. It is not enough to show that the lodging and continued existence of the caveat would be in some way advantageous to the caveator: Guardian Trust & Executor Co of New Zealand Ltd v Hall [1938] NZLR 1020 at 1025
(e) For the purpose of this application, the caveator therefore must show that they are entitled to, or to be beneficially interested in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission or of any trust expressed or implied.: s 137, Land Transfer Act 1952
(f)What the caveator must establish is an arguable case for claiming an interest of the kind in s 137 of the Land Transfer Act 1952
(g)Even if the caveator establishes an arguable case for the interest in the land claimed, the Court retains a discretion to make an order removing the caveat although it will be exercised cautiously: Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd 1996] 2 NZLR 652 at 656
(h)Delay is a relevant factor to be weighed in the exercise of the Court’s wide discretion under s 143. Delay is more important where there is specific prejudice. What is required is a consideration of all the circumstances: Varney v Anderson [1988] 1 NZLR 478 at 480;
(i)The summary procedure for removal of a caveat against dealing is wholly unsuitable for the determination of disputed questions of fact. Accordingly it has been said:
. . that an order for the removal of such a caveat will not be made under s 143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so. Sims v Lowe [1988] 1 NZLR 656 at pp 659-660.
[9] The jurisdiction which the Court may exercise in respect of applications that caveats not lapse includes a jurisdiction to impose conditions in appropriate cases: BP Oil NZ Ltd v van Beers Motors Ltd [1992] 1 NZLR 211 at 218.
[10] The respondents own a farm which consists of approximately of 122 hectares. It borders the Waihi-Whangamata Road and the Golden Valley Road. The respondents took steps to subdivide approximately 9.5 hectares from their farm. The particular lot to be subdivided borders the Golden Valley Road.
[11] The portion of land to be subdivided off is Lot 3 on a plan. The applicants, as purchasers, and the respondents, as vendors, entered into an agreement for sale and purchase of Lot 3 on 5 October 2004. The agreement contained a number of special conditions.
[12] Special Condition One assumes importance for the purpose of this application. It provides as follows:
1. SUBDIVISION OF PROPERTY:
1.1Vendor to prepare plan: The vendor has instructed the vendor’s surveyor to prepare a subdivisional plan of the property in substantial conformity with the plan. The vendor will at its cost apply for the necessary resource consents from the Local Authority to subdivide the land to enable a separate Certificate of Title to issue for the property.
1.2Conditional upon Resource Consent to Subdivide: This agreement is conditional on the vendor obtaining the resource consents referred to in clause 1.1 on or before ten (10) weeks following execution of this agreement by the parties.
1.3If the Council grants the resource consents referred to in clause 1.1 subject to conditions then this agreement is further conditional upon the vendor and purchaser acting reasonably, approving such conditions of consent. In considering the conditions and the reasonableness or otherwise of approval, the parties shall consider and take into account as at the date of this agreement the following matters:
1.3.1The requirements of the District Plan of the Council, in general, and any party wishing requirements of the District Plan relevant to the land;
1.3.2The type and nature of the conditions ordinarily imposed by the Council and other territorial authorities in relation to subdivisions of parcels of land of a type and nature comparable to the vendor’s land;
1.3.3The requirements of this agreement in relation to any easements, covenants and restrictions reserved or granted.
The date for fulfilment of this condition by the parties shall be five (5) working days after the Council grants the Resource Consents referred to in clause 1.1.
[13] Because the respondents’ farm adjoins a limited access road it was important that they obtain consent from Transit New Zealand. Without it, the application for resource consent would achieve practically little, if anything. The initial problems which have beset this case arise from the initial difficulty in securing an appropriate consent for access to the lands from Transit New Zealand.
[14] On or about 19 December 2005 the applicants’ solicitors received from the respondents’ solicitors a letter which, in substance, said that the access requirements advised by Transit were unreasonable and that, therefore, to adopt the solicitor’s words:
We declare the agreement as cancelled.
[15] The parties met on 21 December 2005. A surveyor was in attendance. An oral understanding was reached. The purchasers’ solicitors communicated the content of that to the vendors’ solicitors by email on 22 December 2005 and invited a response that the agreement was not cancelled. On the same day that email received a reply from the respondents’ solicitors wherein they advised that the vendor/respondents:
Have instructed us to withdraw our cancellation and re-instate the agreement strictly on the basis that it is acknowledged that our client will not accept the conditions relating to the entrance ways that are the same or similar to Transit’s stance indicated in the last correspondence.
[16] The parties then entered into an intensive period of negotiation with correspondence passing between the solicitors and, apparently, a number of meetings with the applicants and respondents. The resource consent was, in fact, obtained. At about the same time, on 15 February 2006 the applicants lodged the caveat which is the subject of this proceeding against the title.
[17] On or about 24 March 2006 the respondents’ solicitors wrote to the applicants’ solicitors making reference to certain matters that had allegedly been agreed between the parties and forwarded a new form of agreement for sale and purchase. The covering letter from the respondents’ solicitors specifically stated:
We suggest a new agreement be executed between the parties, to be conditional upon resource consent being granted on terms and conditions acceptable to both parties. Accordingly we enclose for execution and return agreement for sale and purchase (in duplicate).
[18] It is common ground that despite considerable further correspondence no concluded contract was executed by the applicants and respondents. Indeed, frustrated by the lack of progress, the respondents’ solicitors wrote on 13 June 2006 and, importantly, said:
Accordingly, please take this letter as notice that unless we receive the signed agreement at our offices by 4pm Friday, 16 June 2006, then our clients’ offer given with our letter of 19 April 2006 is withdrawn and the matter is at an end.
[19] Further correspondence ensued. It did not result in a concluded executed agreement for sale and purchase. On 4 August 2006 the respondents’ solicitors wrote as follows:
Re: Bourne to Peet
Further to our letter of 13th June 2006, once again we have to note that your clients are still failing to sign an Agreement for Sale and Purchase.
On every occasion that our clients have attempted to have your clients to commit in writing by signed Memorandum of Agreement for their
abovenamed purchase, they are met with further queries, difficulties and alterations.
Accordingly our clients have decided to place the property on the open market for sale and your clients are able to make an offer to buy on the new terms, in particular the increased price at which the property will be marketed at.
With regard to our previous correspondence those negotiations are at an end. We note that you have lodged a Caveat against our clients’ title. As there is
no Agreement, nor was there any Agreement at the time you lodged the Caveat, we give you notice that the Caveat has been unlawfully lodged against our clients’ title. No doubt you will point out to your client Section
146 of the Land Transfer Act that provides for penalties for unlawful lodgements of Caveats against titles. Can we please have your advice by
return that you are arranging for and will have a Withdrawal of Caveat executed by your client and lodged with LINZ.
The position analysed
[20] The agreement for sale and purchase referred to in the caveat, having been reinstated by the parties, has not been formally cancelled. Although the time for compliance with conditions has passed, there is no specific evidence indicating fulfilment of the conditions or waiver of the conditions which would lead to the avoidance of that contract. The contract was drawn on the form approved by the
Real Estate Institute of New Zealand and the Auckland District Law Society 7th
edition and contains the following provision in relation to compliance with conditions:
Operation of conditions
8.7If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:
(1) The condition shall be a condition subsequent.
(2)The party or parties for whose benefit the condition has been inserted must do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.
(3)Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.
(4)The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.
(5)If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement the purchaser shall be entitled to the return of the deposit and any other moneys paid by the purchaser and neither party shall have any right or claim against the other.
(6)At any time before this agreement is avoided the purchaser may waive any financial condition and either party may waive any condition inserted for the sole benefit of that party. Any waiver must be by notice.
[21] The negotiations which involved the second form of agreement that was never executed as a contract cannot, on the material placed before me, lead to the conclusion that a second contract was entered into. Indeed, the fact that the parties instructed their lawyers, and the lawyers proceeded on the basis that a formal contract would be executed simply evidences the parties’ intention to follow the position which was outlined by Richmond J in the Court of Appeal in Carruthers v Whitaker & Anor [1975] 2 NZLR 667 at 671 where he said:
It is established by the evidence to which I have earlier referred that at the time when the parties instructed their respective solicitors they all had in mind only one form of contract which would govern the sale and purchase of the farm, namely, a formal agreement in writing to be prepared and approved by the solicitors. When parties in negotiation for the sale and purchase of property act in this way then the ordinary inference from their conduct is that they have in mind and intend to contract by a document which each will be required to sign. It is unreasonable to suppose that either party would contemplate that anything short of the signing of the document by both parties would bring finality to their negotiations. Furthermore both parties would expect their solicitors to handle the transaction in a way which would give them proper protection from the legal point of view. There is no evidence whatever in the present case to rebut this prima facie inference.
[22] Mr Black submitted that, nevertheless, the actions of the parties evidenced an intention to abandon the agreement of 5 October 2004. In considering that submission, it is important that I again refer to the principles applicable in determining applications that caveats do not lapse. In particular:
a) The onus which is on a caveator is simply to establish an arguable case for claiming the interest of the kind justified by s 137 of the Land Transfer Act 1952; and
b)The summary procedure for the removal of a caveat against dealing is wholly unsuitable for the determination of disputed questions of fact.
[23] The position, in summary, is this:
a) Both parties had instructed their respective solicitors;
b)The correspondence between the solicitors makes it plain that they saw the need to have documents formally executed;
c) The respondents’ solicitors, when they first became aware of the problem regarding resource consent, gave formal notice cancelling the contract. The notice, however, was formally rescinded in the same way it was given, namely, by correspondence between the lawyers;
d)The lawyers made it plain that their clients would not be bound by any replacement contract unless the parties executed a formal contract. All the correspondence and the drafting was centred around the form of contract approved by the Real Estate Institute of New Zealand and Auckland District Law Society 7th edition;
e) Although time for compliance with the various conditions set forth in the contract of 5 October 2004 has passed no specific action has been taken pursuant to clause 8.7. In particular, no notice cancelling or avoiding the contract has been given; and
f) I am advised by Mr O’Neill from the Bar, that the applicants intend to issue specific performance proceedings forthwith and, indeed, would comply with any condition to that effect that I impose.
[24] I have already referred to the Court’s jurisdiction permitting the attachment of terms to any order made that a caveat not lapse. This is clearly an appropriate case where any order must be subject to the requirement that proceedings be filed and served promptly and prosecuted with all due diligence. Indeed, I am surprised, having regard to the current position, that such proceedings have not already been filed and served by the applicants. Be that as it may, whether such delay would properly ground a basis for refusing a decree of specific performance, in my view, can only really be appropriately adjudicated on at a trial.
Decision
[25] I conclude, when I consider the matters summarised in [23], that the application should be granted but subject to the condition that proceedings be filed and served and prosecuted with all diligence.
Orders
[26] I order:
a) The interim order that Caveat No 6706398.1 being lodged by the applicants against the land owned by the respondents, being 9.5 hectares more or less being Lot 3 of a subdivision of Lot 2 Deposited Plan 311340 comprised in head Certificate not lapse is confirmed;
b)This order is made subject to the condition that the applicants file and serve on or before 16 February 2007, in this Court, proceedings for specific performance of the sale and purchase contract of 5 October
2004 by 16 February 2007;
c) The Registrar of this Court shall convene a case management conference in respect of such proceeding at 9am on Tuesday, 3 April
2007. The following matters will be addressed at that conference:
i) Track assignment;
ii) Costs category for the proceeding;
iii) The specific issues requiring resolution at trial;
iv) Any outstanding interlocutory matter;
v)Settlement and whether a Judicial settlement conference should be convened;
vi)Trial duration, the fixing of a trial date and the making of any special trial directions that are required.
Counsel shall file and serve memoranda dealing with these items two working days before the conference.
d)Leave is reserved to the respondents to have this application listed in the Caveat List at 12 noon on 26 February 2007 if proceedings seeking specific performance have not been filed and served on them. Application to the Registrar shall be filed and served giving seven
days’ notice of the request to list the proceeding.
Costs
[27] But for the fact that the applicants have not so far filed proceedings seeking an order for specific performance I would have been minded to deal with costs on the conclusion of this application. Because they have not taken that step, I simply fix the quantum of costs based on Category 2 Band B plus any disbursements which are fixed by the Registrar. Liability for costs are reserved at this stage and may be raised at the case management conference on 3 April 2007 or, in the event that no proceedings are issued, at the special call of this proceeding on 26 February 2007. In the event that proceedings are issued, I shall take particular note of the respective positions of the parties as revealed by the their pleading in determining whether a further reservation of costs to await the outcome of the specific performance
proceeding is appropriate, or whether costs should then be fixed without further
delay.
JA Faire
Associate Judge
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