Pisidia Holdings Ltd v Darby - [2019] NZHC 1216

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2019-425-47

[2019] NZHC 1216

BETWEEN
PISIDIA HOLDINGS LIMITED

Applicant

AND

KRISTEN MARY DARBY

First Respondent

AND

CABO LIMITED

Second Respondent

Hearing: 29 May 2019

Appearances:

J W A Johnson and J J Anson-Holland for the Applicant D A T Chambers QC for the First Respondent

No appearance for the Second Respondent

Judgment:

30 May 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

Background

[1] Pisidia Holdings Ltd (“Pisidia”) applies to remove seven notices of claim registered by the first respondent, Kristen Darby (“Kristen”) from titles in Central Otago.

[2] Kristen is married to John Darby (“John”) but their relationship has come to an end.

PISIDIA HOLDINGS LIMITED v DARBY [2019] NZHC 1216 [30 May 2019].

[3] John is the sole director of Pisidia. The shares in Pisidia are held by a company called Island Ltd which is a corporate trustee for the Karearea Trust. Alan Richardson is the director of Island Ltd.

[4] AJR1 Trust Company Ltd is the shareholder in Island Ltd. Again, Alan Richardson is the director of that company and he is also the sole shareholder of that company.

[5] The Trust Deed for the Karearea Trust is not before the Court and Ms Chambers QC for Kristen expressed her disappointment at what she characterised as a lack of co-operation in relation to the provision of information. I will return to this below.

[6] Pisidia is the registered proprietor of a two-fifth interest in the seven Lots identified in the application. The second respondent, Cabo Ltd, owns the balance. The second respondent by memorandum has advised that it will abide the decision of the Court in respect of this application.

[7] This application was heard on relatively short notice given two of the seven Lots are subject to contracts of sale; one of which is an unconditional contract due to settle on 31 May 2019.

The notice of claim

[8] The notice of claim in respect of all seven properties is in the same terms. Under the heading “Derivation from registered owner” there appears:

John Gerard DARBY as the sole director of the registered proprietor Pisidia Holdings Limited (as to a 2/5 share) and beneficially interested under a constructive trust, which is relationship property pursuant to s 8(1) of the Property (Relationships) Act 1976, and sections 44 and 44C of that Act.

Principles applicable to an application to remove notice of claim

[9] There was no dispute as to the applicable principles relating to sustaining caveats. As set out by the Court of Appeal in Philpott v Noble Investments Ltd:1

1 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].

(a) The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

(b) It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;

(c)…

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: [2019] NZHC 1216
Decision Date: 30 May 2019

CaseChat Overview and Summary

Pisidia Holdings Ltd sought to remove seven notices of claim registered by Kristen Darby on titles in Central Otago. Kristen claimed that John Darby, her estranged husband and sole director of Pisidia, held a beneficial interest in the land under a constructive trust, which was relationship property pursuant to the Property (Relationships) Act 1976. The court had to decide whether John's directorship of Pisidia and his presumed beneficial interest through the Karearea Trust meant that he had an interest in the land owned by Pisidia.

The court found that John's directorship of Pisidia and his presumed beneficial interest through the Karearea Trust did not mean that he had an interest in the land owned by Pisidia. The court held that a notice of claim pursuant to s 42 of the PRA required more than a spouse having a shareholding in a company which owned the land subject to the notice. The court found that there was a well-established rule that a shareholder has no proprietary interest, whether legal or equitable, in the assets of the company in respect of which he holds his shares. The court also found that Kristen's argument for a constructive trust interest in the land was not reasonably arguable. The court concluded that the fundamental difficulty for Kristen's notice of claim was the way in which the land was held. The court held that Kristen's complaints about non-disclosure did not amount to something more as the court had approached John's interest in Pisidia as if he was the shareholder and not a beneficiary of a trust that held the shares.

The court ordered that all seven notices of claim be removed. The court also directed that certain paragraphs of Kristen's affidavit not be read, and that affidavit was not to be searched without leave of a Judge. Costs were reserved.

Orders