Profico Development Limited v 26 Clinton Avenue Limited
[2022] NZHC 466
•16 March 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1269
[2022] NZHC 466
UNDER the Land Transfer Act 2017 IN THE MATTER OF
Caveat no. 12016410.1 and Caveat no. 12178065.1
BETWEEN
PROFICO DEVELOPMENT LIMITED
Applicant
AND
26 CLINTON AVENUE LIMITED
Respondent
CIV-2021-404-1834 BETWEEN
I AM DEVELOPER LIMITED
ApplicantAND
8 WALMER LIMITED
First Respondent
PROFICO DEVELOPMENT LIMITED
Second Respondent
Hearing: 21 February 2022 Appearances:
K F Gould for Profico Development Ltd and 8 Walmer Ltd D J Pine for 26 Clinton Avenue Ltd
Judgment:
16 March 2022
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
This judgment was delivered by me on 16 March 2022 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
PROFICO DEVELOPMENT LIMITED v 26 CLINTON AVENUE LIMITED [2022] NZHC 466 [16 March
2022]
Introduction
[1] These two proceedings relate to two caveats registered against two properties. First, Profico Developments Ltd ("Profico") applies for an order sustaining caveat number 12016410.1 (“Clinton Avenue caveat”) in proceeding CIV 2021-404-1269.
[2]The respondent in this first proceeding is 26 Clinton Ave Ltd.
[3] Secondly, I Am Developer Ltd ("IAD") applies for an order sustaining caveat number 12178065.1 (“Walmer Road caveat”) in proceeding CIV 2021-404-1834.
[4] The first respondent in this second proceeding is 8 Walmer Ltd, and the second respondent is Profico.
[5] Both caveats and subsequent proceedings arise largely from the same set of facts, and the proceedings were consolidated in an order from Venning J on 5 October 2021.
Background
CIV 2021-404-1269 proceedings
[6] In 2019, Mr Grigori Koulanov approached Mr Thomas Ward and Mrs Jessica Ward for the purpose of engaging in a property development venture. Mrs Ward had acquired property at 21 Waione Avenue, Te Atatu Peninsula (the “Waione property”) in November 2019. It was proposed that the development of the Waione property would be carried out through a joint venture to be set up by the parties. The Waione property was transferred to a company set up specifically for the development — IAP 21 Waione Avenue Ltd. Mr and Mrs Ward invited Mr Koulanov to work together on the development of that particular property. Mr Koulanov’s involvement was through his company, Profico.
[7] The parties agreed that they would enter into a joint venture agreement (“JVA”). The JVA was unsigned, although on 23 September 2020 Mr and Mrs Ward expressed a willingness to sign the JVA conditional on there being no objections to amended confidentiality clauses. There is dispute over whether the agreement was complete, with Mrs Ward deposing in her affidavit that no agreement was reached.1
[8] Despite the JVA remaining unsigned, parties entered into the Waione property development project together. This development project was completed.
[9] In February 2020, there was discussion between the parties about working together on another property at 26 Clinton Avenue ("Clinton property"). There is dispute over whether the terms for this development had been agreed upon, with counsel for the applicant submitting that parties had agreed that the same terms of the JVA for the Waione property would apply to the development of the Clinton property.2 Counsel for the respondent has submitted that the JVA expressly limits the joint venture relationship to the Waione property.3
[10] Mrs Ward emailed Mr Koulanov on 21 December 2020, advising him that he would not be involved in the Clinton property development going forward. The basis for this, as explained in Mr and Mrs Ward’s affidavits and submissions, is that they were not happy with how the Waione property project had been carried out and they felt that the duties and responsibilities had not been evenly shared.
[11] In late January 2021, the monies advanced by Mr Koulanov for the purpose of purchasing the Clinton property were subsequently repaid as a loan, together with a further $5,500 by way of interest calculated at 10 per cent on the original amount paid.
[12] Mr and Mrs Ward incorporated the respondent (26 Clinton Ave Ltd) on 19 January 2021 and took title to the property on 2 February 2021 without further reference to the applicant.
1 Affidavit of Jessica Anne Cynthia Ward in opposition to the Applicant’s originating application dated 16 August 2021 at [13].
2 Submissions of counsel for Profico Developments Limited and 8 Walmer Limited dated 25 January 2022 at [1.4].
3 Submissions of counsel for I am Developer Limited and 26 Clinton Ave Limited dated 16 February 2022 at [14]–[15].
[13] On 17 February 2021, Profico registered a caveat against the title of the Clinton property, and subsequently applied to this Court for an order that the caveat not lapse. The asserted basis for sustaining the caveat is an alleged JVA between the parties, including the Clinton property.
CIV 2021-404-1834 proceedings
[14] As part of the discussion between the parties relating to an ongoing property development relationship, a property at 8 Walmer Road (“Walmer property”) was identified by Mrs Ward and suggested as a possible development.
[15] The Walmer property was purchased by Mr Koulanov on 28 October 2020 without the involvement of Mr and Mrs Ward.
[16] The Walmer Road caveat was subsequently lodged. This caveat was based upon Mr and Mrs Ward’s concern that if the Court found that there was a joint venture between the directors of the applicants and respondents that covered all properties discussed by these directors, then this would include the Walmer property.
Originating application for an order sustaining caveat number 12016410.1 (CIV 2021-404-1269)
Application
[17]Profico applies for orders:4
(a)That Caveat number 12016410.1 registered against Record of Title NZ 12A/153 not lapse.
(b)For the costs of and incidental to this Application and the Order.
[18]The grounds on which these orders are sought are:5
(a)The Applicant and Respondent are Joint Venture equal partners in the development of the property situated at 26 Clinton Avenue, West Auckland.
(b)The Respondent has purported to deny the Applicant’s interest in the property and the Joint Venture.
4 Originating application for an order sustaining caveat dated 13 July 2021 at [1].
5 At [2].
(c)Appearing in the Affidavit of Grigori Koulanov filed herein.
Grigori Koulanov’s affidavit signed 13 July 2021
[19] In an affidavit sworn 13 July 2021, Mr Koulanov deposes that despite the JVA being unsigned, it is a valid agreement, and the applicant did not have any objection to the confidentiality clauses contained in cl 10 of the Agreement.6
[20] He deposes that in February 2020, the potential purchase of the Clinton property was discussed between him, Mr Ward and Mrs Ward. He deposes that it was agreed between them in email correspondence that the same terms of the joint venture agreement for the Waione property would apply for the development of the Clinton property.7 The email correspondence records:
(a)Mr Koulanov emailing Mr and Mrs Ward on 26 February 2020 stating that “this project will mirror the terms and structure as 21 Waione”, amongst other proposed terms for the development; and
(b)Mrs Ward responding later that day stating, “Yes we agree with all the following points”.8
[21] Mr Koulanov deposes that on 10 December 2020 he received an email from Mrs Ward indicating that her and Mr Ward’s architecture fees were to be paid for by the joint venture for the Clinton property.9
[22] He deposes that, after emailing some concerns to Mr and Mrs Ward on 15 December 2020, he received no response. Subsequently, in late January 2021, the deposit for the Clinton property was refunded to Profico. Mr Koulanov emailed Mr and Mrs Ward on 28 January 2021 to confirm that the applicant was a joint venture partner in the Clinton property and proposing that Profico’s interest in the Clinton property be purchased by Mr and Mrs Ward. He did not receive a response.
6 Affidavit of Grigori Koulanov dated 13 July 2021 at [5].
7 At [9].
8 Annex D.
9 At [10].
Notice of opposition to originating application for an order sustaining caveat number 12016410.1 (CIV 2021-404-1269)
[23]The notice of opposition states:10
(a)The Respondent intends to oppose the Originating Application filed herein by the Applicant dated 13 July 2021 and seeks an order for its costs in this proceeding.
(b)The Respondent is opposed to the making of all orders sought in the subject application.
[24] The grounds upon which the Respondents oppose the making of the orders are:11
(a)No joint venture agreement was concluded in respect of the subject property situated at 26 Clinton Avenue, West Auckland, between the Applicant and Respondent, or between the Applicant and any other person related to the Respondent;
(b)No written and signed contract or other disposition was concluded in respect of the subject property exists in favour of the Applicant as required by sections 24 and/or 25 of the Property Law Act 2007;
(c)Accordingly, the Applicant has no reasonably arguable estate or interest in the subject property supporting the continued registration of Caveat no. 12016410.1;
(d)And upon the grounds appearing in the Affidavit of Jessica Driver to be filed here in support of the Respondent’s opposition.
Jessica Ward’s affidavit sworn 16 August 2021
[25] In an affidavit sworn 16 August 2021, Mrs Ward deposes that the firm position of the respondent is that there has never been a concluded JVA between the parties in the proceeding, despite one being prepared.12 She deposes that there was no resolution on the confidentiality clauses and an agreement was never signed relating to either the Waione property or the Clinton property.
[26] Mrs Ward deposes that Mr Koulanov was invited to invest in the development of the Waione property on the clear condition that the project would provide the parties
10 Notice of opposition to originating application for an order sustaining caveat dated 19 July 2021 at [1]–[2].
11 At [3].
12 Affidavit of Jessica Anne Cynthia Ward in opposition to the Applicant’s originating application dated 16 August 2021 at [2].
with an opportunity to determine whether there was potential to work together on any future development projects.13 She deposes that Mr Koulanov was notified on multiple occasions that the Wards were not happy with the progression of the Waione property development.14
[27] She says the proposed JVA relating to the Waione property never had any connection to the Clinton property and that no formal document had ever been concluded for the development of that particular property between the parties.15 She refutes the idea that the incomplete JVA was intended to operate as a blanket agreement for any and all properties that might be jointly developed in the future. She deposes that there is no reference to the Clinton property anywhere in the proposed JVA.16
[28] Mrs Ward deposes that she recalls a meeting at Profico’s offices on 24 September 2020 where it was agreed that the agreement itself would only relate to the Waione property. She deposes that the minutes of the meeting issued by Profico attended by herself, Mr Ward, Mr Koulanov and Chris, Mr Koulanov’s associate, states:17
It was also noted that the Joint Venture Agreement was specific to the Waione project only and did not include for subsequent ventures.
[29] In response to Mr Koulanov’s statement in his affidavit that it was agreed between them that the same terms of the JVA for the Waione property would apply for the development of the Clinton property (see [20] above), Mrs Ward deposes that the email correspondence occurred while the proposed JVA was still in its preparation stage. Furthermore, she deposes that her email on 10 December 202018 confirms that the final structure of the development project for the Clinton property had not been confirmed.19
13 At [4].
14 At [11].
15 At [5].
16 At [8].
17 At [13].
18 At [16], referring to the affidavit of Grigori Koulanov dated 13 July 2021, annex E.
19 At [14]–[15].
[30] In response to Mr Koulanov’s claim in his affidavit that he did not receive a response to his email dated 15 December 2020, Ms Ward deposes that this is false and in fact she and Mr Ward met with Mr Koulanov at their house on 16 December 2020, where it was agreed that the Clinton property development would not proceed on a joint venture basis. This is confirmed in an email dated 21 December 2020.20
[31] Mrs Ward deposes, in reference to an email from Mr Koulanov on 19 December 2020, that Mr Koulanov referred to multiple “options” being available in relation to the Clinton property.
[32] Mrs Ward deposes that at this stage Mr Koulanov had not made any further investment into the Clinton property, nor had he visited it, and the initial deposit was refunded with a further payment of $5,500 interest.21
[33] Mrs Ward deposes that the key reason that she and Mr Ward were not prepared to work with Mr Koulanov after the Waione property project was because their duties and responsibilities were not evenly split.
Grigori Koulanov’s reply affidavit sworn 22 October 2021
[34] In a reply affidavit sworn 22 October 2021, Mr Koulanov deposes that he does not accept Mrs Ward’s evidence as determinative, referring back to email correspondence (see [20] above), from his initial affidavit.22 He further deposes that Mrs Ward’s email correspondence on 23 April 2020 where she states “ … the property is not located as well as our two” can only refer to the properties at Waione Avenue and Clinton Avenue.
[35] Mr Koulanov says that while it is correct that no formal JVA was signed in relation to either the Waione property or the Clinton property, the terms had been agreed. Furthermore, Mr Koulanov deposes that in an email on 8 December 2020,
20 At [21]; and see annex B1–B7.
21 At [23].
22 Affidavit of Grigori Koulanov in response to affidavit of Jessica Ward sworn 22 October 2021 at [2].
Mrs Ward demanded that 50 per cent of the development costs for the Clinton property be paid by the applicant.23
[36] Furthermore, Mr Koulanov recognises that he attended a meeting with Mr and Mrs Ward on 16 December 2020 but deposes that the recorded discussion did not mention the applicant no longer had an interest in continuing to develop the Clinton property.24
[37] Mr Koulanov rejects Mrs Ward’s evidence that the proposed draft venture agreement had not been concluded, again referring back to evidence provided in his initial affidavit.
Interlocutory application regarding affidavit of Jessica Ward
[38]Profico applies for orders:25
(a)That the paragraphs in the Affidavit of Jessica Anne Cynthia Ward, dated 16 August 2021, as identified in the Schedule hereto, not be read; and
(b)For the costs of and incidental to this application and the Orders thereon.
[39] The grounds on which the orders are sought are that the paragraphs identified contain evidence that would not be admissible if given at trial by the deponent, as they are argumentative.26
[40]26 Clinton Ave Ltd opposes these orders on the following grounds:27
(a)Mrs Ward is a co-director and 50% shareholder in I Am Developer Limited ("IAD"), which operates as a property development consultancy firm. The respondent, 26 Clinton Ave Limited ("CAL") is a related company, established for the purpose of developing the property at 26 Clinton Avenue, Auckland;
(b)Mrs Ward is the sole director and sole shareholder of CAL;
23 At [5]; and see annex C.
24 At [6].
25 Interlocutory application on notice that paragraphs of the affidavit of Jessica Anne Cynthia Ward dated 16 August 2021 not be read dated 16 October 2021 at [1].
26 At [2].
27 Notice of Opposition by Respondent to Interlocutory Application That Paragraphs of the Affidavit of Jessica Ward Dated 16 August 2021 Not Be Read, dated 17 February 2022
(c)Mrs Ward's involvement, via IAD and CAL, in the commercial arrangement involving the parties entitles her to comment on the arrangement and provide an explanation to the Court of what the parties had intended and/or agreed;
(d)The paragraphs the applicant seeks to have not read do not meet the threshold of argumentative, nor do they constitute legal submission.
[41] Counsel for the respondent recognised the notice of opposition is filed out of time.28 Their explanation for this was that lead counsel on the file left the firm shortly after the receipt of the interlocutory application, it was filed during COVID-19 Level 4 lockdown restrictions, and during which time the partner involved in this matter was dealing with a close family bereavement.
Originating application for an order sustaining caveat number 12178065.1 (CIV 2021-404-1834)
Application
[42]IAD and 26 Clinton Ave Ltd applies for orders:29
(a)that Caveat number 12178065.1 not lapse; and
(b)for the costs of and incidental to this application and the order.
[43]The grounds on which these orders are sought are:30
(a)The Second Respondent has alleged that the directors of the Applicants and the Respondents are joint venture equal partners in the development of properties.
(b)The Second Respondent relies on this joint venture partnership to assert an interest in a property at 26 Clinton Avenue, West Auckland in proceeding number CIV 2021-404-1269.
(c)The purchase of the property at 8 Walmer Road arose in the same background and in the same context as the purchase of 26 Clinton Avenue, West Auckland.
(d)If the Court finds that there was a joint venture between the Applicants and the Respondents, then the Applicants have an interest in the property at 8 Walmer Road.
28 Memorandum Of Counsel For Respondent In Support Of Notice Of Opposition To Interlocutory Application That Paragraphs Of The Affidavit Of Jessica Ward Dated 16 August 2021 Not Be Read, dated 17 February 2022
29 Originating application for an order sustaining caveat dated 24 September 2021 at [1].
30 At [2].
(e)As appearing in the affidavit of Thomas Ward.
Thomas Ward’s affidavit (undated)
[44] In an undated affidavit, Mr Ward deposes that discussions with Mr Koulanov about potentially setting up a joint venture to purchase and develop land involved many potential properties.31 He deposes that there are two versions of a draft JVA, but terms were not finalised in either of them.
[45] In relation to the Clinton property, Mr Ward deposes that while he recognised there was discussion of working on this development with Mr Koulanov, this was conditional on the development at the Waione property being successful. Mr Ward says that he and Mrs Ward decided they no longer wanted to go ahead with the Clinton property development with Mr Koulanov and that they informed him of this.32
[46] Mr Ward deposes that the caveat relating to the Walmer property was lodged due to the risk that the Court will find that there is a joint venture between the directors of the applicants and respondents, which he deposes would have to be the case if Mr Koulanov succeeded in his claim, as 26 Clinton Avenue Ltd was not even named in the draft JVA.33
[47] Mr Ward deposes that if there is a joint venture between the directors of the applicants and respondents it would presumably cover all properties discussed, with the Walmer property being one of them. Furthermore, he says that he and Mrs Ward would have more of a right to the Walmer property because of the work they had contributed to it, including finding the property, investigating the previous owner, and assisting with due diligence.34
31 Affidavit of Thomas William Ward (undated) at [2]–[3].
32 At [6]–[8].
33 At [12].
34 At [13]–[14].
[48] Mr Ward also deposes that the application relating to caveat number 12016410.135 should be consolidated with the application regarding caveat number 12016410.136 for the following reasons:37
(a)The two caveats arise from the same events, factual background and context.
(b)It would save all parties time and costs if the applications were heard together, rather than traversing the same issues of fact in two different hearings.
(c)If it is found that a joint venture exists between the parties, the Applicants and the Respondents both have an interest in both Clinton Avenue and Walmer Road.
(d)We do not think it would be fair if the Court arrived at inconsistent conclusions and Grigori was able to “have his cake and eat it too”. That is, he should not be able to be successful in claiming an interest in Clinton Avenue, but also be successful in claiming that we do not have an interest in Walmer.
Notice of opposition to originating application for an order sustaining caveat number 12016410.1 (CIV 2021-404-1834)
[49]The notice of opposition states:38
(a)The first and second respondents intend to oppose the interlocutory application by the applicant dated 24 September 2021.
(b)The respondents are opposed to making the orders numbered 1.1 and 1.2.
[50] The grounds upon which the respondents oppose the making of the orders are:39
(a)There is no evidential foundation for the applicant to claim a caveatable interest in the property.
(b)There is no arguable case, or serious question to be tried, as to the validity of the applicant’s claim to have a caveatable interest.
35 Proceeding CIV 2021-404-1834.
36 Proceeding CIV 2021-404-1269.
37 Affidavit of Thomas William Ward, above n 31, at [16].
38 Notice of opposition to originating application for an order sustaining caveat dated 4 November 2021 at [1]–[2].
39 At [2].
Grigori Koulanov’s affidavit sworn 2 November 2021
[51] Mr Koulanov deposes that the applicant has neither paid moneys nor done any work with respect to the Walmer property.40
Applicant’s submissions relating to CIV 2021-404-1269
[52] Mr Kevin Gould, for the applicant, submits that the evidence of Profico, particularly exhibits “C” and “D” of Mr Koulanov’s affidavit dated 13 July 2021, clearly shows an agreement between the parties to develop the Clinton property as a 50/50 joint venture, as had been agreed and effected in relation to the Waione property.41
[53] Furthermore, Mr Gould submits that Mrs Ward’s demand for 50 per cent of the development costs for the Clinton property development is consistent with a JVA and inconsistent with the position now taken by Mrs Ward that there has never been a concluded JVA.42
First Respondents’ submissions relating to CIV 2021-404-1269
[54] Mr Pine, for the first respondents, submits that the evidence Profico is relying on shows no such agreement, instead the email exchange is referring to the establishment and structure of a JVA in relation to the Clinton property, rather than an agreement that a JVA exists. He submits that discussions between parties relating to the Clinton property did not go further than an agreement to agree, and parties had not finalised any enforceable contractual obligations regarding the Clinton property.43
[55] Mr Pine submits that the Clinton property was purchased by IAD and was not subject to a joint venture with the applicant. Ultimately, he says the applicant does not have an interest (legal or equitable), capable of registration against the title.44
40 Affidavit of Grigori Koulanov dated 12 November 2021 at [2].
41 Submissions of counsel for Profico Developments Limited and 8 Walmer Limited dated 25 January 2022 at [4.1].
42 At [4.3].
43 Submissions of counsel for I am Developer Limited and 26 Clinton Ave Limited dated 25 January 2022 at [31]–[32].
44 At [33].
[56] Mr Pine referred to Simperingham v Martin,45 where the applicant had committed money to a business venture purchasing and developing a property in Picton. A caveat was registered against the title by Mr Simperingham, and the argument was advanced that a caveatable interest arose by virtue of the fact that the proposed development of the property in question was the subject of a joint venture.
[57] Blanchard J in the High Court rejected the argument that an interest in the land could be founded on fiduciary obligations arising from the joint venture relationship. The Court of Appeal summarised that his Honour:46
… regarded this argument as taking the matter no further without more to demonstrate that it was an element of any joint venture that as a joint venturer Mr Simperingham was to have a beneficial interest in the land rather than in the company shares.
[58]The Court of Appeal agreed with this decision, stating:47
Like Blanchard J we cannot see that merely because the project can be described as a joint venture between the shareholders the case for a beneficial interest in the land is advanced.
Applicant’s submissions relating to CIV 2021-404-1834
[59] Mr Pine submits that the interest being pursued in the caveat against the Walmer property is done on the basis that if a joint venture is found to exist between the parties, giving Profico an interest capable of registering against the Clinton property, then IAD must have a caveatable interest against the Walmer property on the same basis.48
[60] In response to Profico’s claim that the caveat cannot be sustained in the present proceedings because the caveat is registered in the name of Mrs Ward rather than the applicant, Mr Pine submits Mrs Ward has the authority to act on behalf of IAD. This authority derives from her being co-director, and 50 per cent shareholder, of IAD, which has a beneficial interest in the property pursuant to the terms of a joint venture.49
45 Simperingham v Martin CA5/95, 2 June 1995.
46 At 9.
47 At 14.
48 Submissions of counsel for I am Developer Limited and 26 Clinton Ave Limited, above n 43, at [34].
49 At [36].
[61] Mr Pine submits it was Mrs Ward who found the Walmer property and suggested it to the parties as a joint venture development opportunity. He submits that Mrs Ward found the property, carried out due diligence and investigated the owner and market conditions for the property.50
[62] Ultimately, Mr Pine submits that while it is the position of IAD that no agreement was concluded regarding future joint ventures (and therefore Profico does not have any caveatable interest in the Clinton property), in the event the Court finds a caveatable interest has been established as a result of a proposed joint venture, the same reasoning must be applied to the Walmer property.51
First and Second Respondents’ submissions relating to CIV 2021-404-1834
[63] Mr Gould, for Profico, submits that the applicant cannot satisfy the requirements of s 138 of the Land Transfer Act 2017 to establish an estate or interest in the land. He submits that Mr Ward’s assumption (that should a joint venture be established with respect to the Waione and Clinton properties, then the joint venture would cover all properties discussed between the parties) is insufficient evidence to support the lodging of a caveat.52
[64] Mr Gould submits that the applicants have the onus of proof to show an arguable case, or a serious issue to be tried.
[65] He also submits that there is a fundamental problem in that the caveat number 12178065.1 is registered in Mrs Ward’s name and not the name of the applicant in this proceeding.
[66] Mr Gould submits that a caveat, being a creature or stature, may only be lodged by a person upon whom a right to lodge it has been conferred by statute.53 Mr Gould refers to Guardian Trust and Executors Co of New Zealand Ltd v Hall,54 which says
50 At [37].
51 At [38].
52 Submissions of counsel for Profico Developments Limited and 8 Walmer Limited dated 25 January 2022 at [5.1]–[5.3].
53 At [7.2].
54 Guardian Trust and Executors Co of New Zealand Ltd v Hall (1938) NZLR 1020 (PC) at 1025.
that it is not enough to show the lodging and continued existence of the caveat would be, in some way, advantageous to the caveator.
Legal principles
Application to sustain a caveat
[67] An application for the lapse of a caveat can be made to the Registrar under s 143(1) of the Land Transfer Act (the LTA). An application in response, for an order that the caveat not lapse, can be made pursuant to s 142(3).
[68] An application to sustain a caveat is determined on summary basis in which the Court has regard to the following principles:55
(a)The applicant caveator bears the onus of presenting a reasonably arguable case that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively.
(b)The process by which these applications are determined is ill-suited to resolving disputed questions of fact. An order for a caveat’s lapse will only be made if it is patent it cannot be maintained — either because there was no valid ground for lodging it in the first place or, alternatively, that such ground has now ceased to exist. A conflict between affidavits will generally be resolved in the caveator’s favour.56 However, the Court is not bound to accept uncritically statements in an affidavit that are equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable.57
55 Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813. See also Philpott v Noble Investments Ltd [2015] NZCA 342.
56 Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.
57 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].
(c)Where the applicant has discharged its burden, the Court retains a residual discretion to remove the caveat. The Court will exercise this discretion cautiously and must be satisfied removal would not prejudice the caveator’s legitimate interest.58
The right to lodge a caveat
[69]The right to lodge a caveat is set out in s 138 of the LTA:
138 Caveats against dealings with land
(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
…
…
(3)A caveat against dealings document must contain the prescribed information.
[70] The prescribed information referred to at s 138(3) of the LTA is set out in sch 2 of the Land Transfer Regulations 2018. The caveat must, relevantly, include:
A description of the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty) …
Details of how the estate or interest claimed is derived from the registered owner.
[71] The regulations are consistent with the courts’ long-held view that the caveator must have a specific legal or equitable interest in the land caveated.59
Legal Issues
[72]The issues to be considered are:
58 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
59 Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA) at 114.
(a)Was there a joint venture arrangement in place between the parties in relation to the Clinton property?
(b)If so, does it give rise to a caveatable interest in favour of Profico in the Clinton property?
(c)If there is a caveatable interest held by Profico in the Clinton property, should the Court exercise its discretion to remove the caveat anyway?
(d)If there is a joint venture arrangement in place, and Profico has a caveatable interest in the Clinton property, does IAD have a caveatable interest in the Walmer property?
(e)If IAD has a caveatable interest in the Walmer property, should the Court exercise its discretion to remove the caveat anyway?
[73]I move on to consider each of these issues in turn.
Analysis
Was there a joint venture arrangement in place between the parties in relation to the Clinton property?
[74] I am of the view that there was no concluded joint venture agreement between Profico and the respondent in relation to the Clinton property. The reasons for this view are set out in the following paragraphs.
[75] The draft JVA which was prepared for the Waione property was restricted to the Waione property and was not intended to apply to future property development between the parties. This is evidenced by the various correspondence between the parties, particularly the minutes of a meeting held on 24 September 2020 which were issued by Profico and are set out at Exhibit B8 of Mrs Ward’s affidavit.
[76] It is clear that there may have been an intention to expand the joint venture and the minutes record that Profico intended to discuss with its attorneys adding language to make the JVA language more generic, and for a joint project to be added as
schedules for each project. This was never achieved and, as noted in the email of 19 October 2020 from Mrs Ward to Profico, the respondents did not agree to an overarching agreement being entered into.
[77] Given that the JVA prepared for the Waione property did not extend to future properties, the next issue is whether correspondence between the parties created a joint venture agreement that was based on the terms of the JVA for the Waione property.
[78]In this respect, Mr Gould relies on:
(a)the exchange of correspondence between Mr Koulanov and Mr and Mrs Ward, being the emails of 26 February 2020 and the Wards’ response of the same date, attached as Exhibits C and D to Mr Koulanov’s affidavit of 13 July 2021;
(b)the email from Mr Koulanov to Mrs Ward dated 24 February 2020, and Mrs Ward’s response of 23 April 2020 as Exhibits A and B to Mr Koulanov’s affidavit of 22 October 2021;
(c)the request for contribution to 50 per cent of the development costs for the Clinton property made by Mrs Ward to Mr Koulanov on 8 December 2020, attached as Exhibit C to Mr Koulanov’s second affidavit.
[79] In my view, when these emails are seen in context, they do not establish a joint venture agreement. It is clear that while the original intention may have been to enter into a joint venture on similar terms to that established for the Waione property, as discussions progressed through 2020, it is clear that no final agreement was reached and the respondents had come to the view they did not wish to enter into such an agreement with Mr Koulanov.
[80] In particular, I take the view the following correspondence makes it clear there was no concluded agreement:
(a)in the email from Mr Koulanov to the Wards dated 19 December 2020, under the sub-heading “Clinton proposal”, it is clear that Mr Koulanov is putting forward options for the proposed structure in relation to the Clinton property and this is inconsistent with there being a concluded joint venture; and
(b)considerable reliance has been placed by the applicant on Mrs Ward’s email of 8 December 2020 to Mr Koulanov, setting out the costs in relation to the Clinton property, and requesting that he organise finance of 50 per cent of the following costs, to be deposited into the company’s bank account. While this superficially appears to recognise that a joint venture arrangement is in place, it must be read against the background of the emails of 19 October 2020 from Mrs Ward to Mr Koulanov and the email of 25 November 2020, asking Mr Koulanov for further thoughts on structuring the Clinton property development. It is clear from these emails that Mrs Ward had in mind that if Mr Koulanov was to participate in the Clinton property, then it would be on some other basis and that basis was still being explored.
If there is a joint venture arrangement between Profico and the respondents, does it give rise to a caveatable interest in Profico in the Clinton property?
[81] As a result of my finding above that there is no joint venture agreement in place in relation to the Clinton property, strictly speaking, this question does not need to be considered. However, in the event that my finding in relation to the absence of a joint venture arrangement between Profico and the respondents in respect of the Clinton property is incorrect, I consider whether, if such a joint venture arrangement was in place, this would give rise to a caveatable interest in the Clinton property in favour of Profico.
[82] I am of the view that it would not. Under Mr Gould’s argument, if a joint venture arrangement did exist in relation to the Clinton property, it would be on terms similar to the Waione property JVA. While not signed, they are largely recorded in the draft JVA. In the Waione property joint venture, it is clear in cls 4.1 and 4.2 of the draft JVA that the property is owned by the joint venture company. Each of the parties
held shares in that company, rather than any direct interest in the land. In this respect, I accept Mr Pine’s submission that the position is similar to that set out in Simperingham v Martin.60 If there had been a joint venture arrangement between the parties in relation to the Clinton property, then it would not amount to a beneficial interest in the land that could support a caveat. The joint venture arrangement related to shares in the special purpose joint venture company.
If there is a caveteable interest held by Profico in the Clinton property, should the Court exercise its discretion to remove the caveat anyway?
[83] As a result of my findings under the previous two sections, this question does not arise.
Is a joint venture arrangement in place and Profico has a caveatable interest in the Clinton property, does I Am Developer Ltd have a caveatable interest in the Walmer property?
[84] As with the above at [83], because of the previous findings, this question does not arise. Similarly, no question arises as to whether the Court’s discretion should be exercised to remove any caveat lodged in relation to the Walmer property.
[85]As a result of the above analysis, I find that:
(a)Profico does not have a caveatable interest in the Clinton property and accordingly caveat number 12016410.1 should lapse.
(b)I Am Developer Ltd does not have a caveatable interest in the Walmer property and accordingly the caveat number 12178065.1 should lapse.
Interlocutory application that paragraphs of the affidavit of Jessica Ward dated 16 August 2021 should not be read
[86] Mr Gould has filed an interlocutory application for orders that the paragraphs in the affidavit of Mrs Ward dated 16 August 2021 (the “Ward affidavit”) shall not be read.
60 Simperingham v Martin, above n 54.
[87] The grounds on which the order is sought are that the paragraphs identified contain evidence that would not be admissible if given at a trial by the deponent as they are argumentative or are submissions.
[88] Mr Pine has filed a notice of opposition to the orders sought by the applicant in respect of the Ward affidavit and also a memorandum explaining why the notice of opposition was filed out of time. Mr Pine submits that the relevant paragraphs in the Ward affidavit are not argumentative and are not submissions.
[89] Having reviewed the paragraphs in the Ward affidavit objected to by Mr Gould, I accept his submissions that these paragraphs should not be read except for:
(a)the first sentence of [29]; and
(b)the first sentence of [30].
I agree with Mr Gould’s submission that the remainder of the paragraphs objected to are argumentative or submissions.
Orders
[90]I make the following orders:
(a)That the paragraphs of the Ward affidavit set out in the schedule to the interlocutory application filed by the applicant in proceeding 1269 shall not be read except for the first sentence of [29] and the first sentence of [30];
(b)caveat no.12016410.1 registered in respect of the Clinton property shall lapse; and
(c)caveat no.12178065.1 registered in respect of the Walmer property shall lapse.
Costs
[91]I make the following orders regarding costs:
(a)In relation to proceeding CIV-2021-404-1269:
(i)costs are awarded to the respondent on a 2B basis; and
(ii)costs in respect of the applicant’s interlocutory application relating to the Ward affidavit are awarded to the applicant on a 2B basis.
(b)in relation to proceeding CIV-2021-404-1834, costs are awarded to the first and second respondents on a 2B basis;
(c)if counsel are unable to agree costs within 10 working days of the date of this judgment:
(i)counsel for the respondent in proceeding 1269 shall file a memorandum (not exceeding three pages) within five working days;
(ii)counsel for the respondents in proceeding 1834 shall file a memorandum (not exceeding three pages) within a further five working days.
…………………………….. Associate Judge Taylor
Solicitors:
DMG Solicitors (DM Graham), Auckland, for Profico Developments Ltd and 8 Walmer Ltd
McVeagh Felming (D J Pine/J T Burley), Auckland, for I Am Developer Ltd and 26 Clinton Avenue Ltd
Copy for:
K F Gould, Barrister, Auckland, for Profico Developments and 8 Walmer Ltd
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