Rabobank New Zealand Limited v Komene
[2013] NZHC 1285
•31 May 2013
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
CIV 2013-443-000232 [2013] NZHC 1285
BETWEEN RABOBANK NEW ZEALAND LIMITED
Plaintiff
ANDROY KOMENE Defendant
Hearing: 29 May 2013
Appearances: G J Toebes for plaintiff
S R Ebert for defendant
Judgment: 31 May 2013
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 31 May 2013 at 4.45pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors:
J Toebes, J T Law, Wellington
S R Ebert, Billings, New Plymouth
RABOBANK NEW ZEALAND LIMITED v KOMENE [2013] NZHC 1285 [31 May 2013]
[1] Rabobank New Zealand Limited holds a first registered mortgage over land in three certificates of title, together comprising a farm property at Hampton Road, Okato. The current registered proprietors of all three parcels of land are Kelvin Lloyd Gray and Christopher Frederich Schurr (the owners). They hold the land as trustees of Hampton Farms Trust. The Gray family, who have farmed the land for four generations, are beneficiaries of that trust.
[2] Rabobank’s mortgage secures indebtedness currently in excess of $5.6 million. Rabobank has sold the farm (all three titles) in exercise of its power of sale. The sale is due to settle on 31 May 2013.
[3] The defendant, Mr Komene, lodged a caveat against all three titles late on 6
May 2013, shortly after Rabobank’s solicitors advised the owners and their solicitors (who also act for Mr Komene) of the sale and the settlement date. Mr Komene claims that he has a caveatable interest in the land as beneficiary of an oral trust of which the owners are the trustees. This claim derives from an alleged arrangement between the original owner, Porikapa, and a member of the Gray family, to allow Maori of the area access to and use of parts of the land. Mr Komene contends that this arrangement was never carried through to the title due to error.
[4] Rabobank seeks an order removing the caveat. It says that the interest that Mr Komene asserts (access to and use of parts of the land) does not give him a proprietary interest in the land, and in any event it is insufficient to impeach its indefeasible title. It also says that even if the Court was to find that there is an arguable case for a caveatable interest, the Court should exercise its discretion to remove the caveat, as Mr Komene’s interest is adequately protected by provisions in the Historic Places Act 1993, by the local district plan and resource consents for any land development required under the Resource Management Act 1991.
[5] Rabobank’s application was served on Mr Komene on 14 May 2013. He had
not filed notice of opposition by the time the application came before the Court on
28 May 2013. After hearing from his counsel that opposition and a supporting affidavit had been drafted, I directed that he file any opposition by the end of that
day and scheduled a further hearing for the following afternoon to address when the application could be heard. As another matter scheduled for that afternoon had finished early, and given the proximity of the date for settlement of Rabobank’s sale, the hearing of the application proceeded that afternoon.
The claimed interest
[6] Both Mr Kelvin Gray and Mr Komene have filed affidavits in support of Mr Komene’s opposition. They say that the original Maori owner of the land, Porikapa, chief of the local tribe Nga Mahanga, had a close relationship with Mr Kelvin Gray’s ancestor William (Willie) James Gray.1 They contend that Porikapa decided to pass this land to Willie Gray trusting in him to ensure that Maori in the area would continue to have access to, and use of, parts of the land. They say this arrangement
amounts to a trust vested in Willie Gray and his descendents under which they have the responsibility of protecting Maori interest in, and relationship with, the land. They say that this trust was recognised by his widow Ruhira Porikapa conveying the land after Porikapa’s death in the late 1880s, and has been honoured since by the descendants of Willie Gray.
[7] Mr Komene claims his interest as a beneficiary to this trust as Nga Mahanga. He contends that this trust allows Maori of the area, and particularly Porikapa’s tribe, to use in perpetuity parts of the land that had historical and cultural significance for them. He says that the trust is evidenced by members of Porikapa’s tribe having lived on part of the land at Kaihihi (on the banks of the Kaihihi river) until floods in
1935 washed away their whare and destroyed an adjacent tidal lagoon. He also refers to historical access to and use of parts of the land for urupa, fishing (particularly eeling) and growing food. He contends that the caveat is needed to protect Maori interest in the preservation of sites with cultural significance for Maori, to allow access to those sites, and to be consulted on land use to ensure that the sites are not harmed, and to ensure taonga believed to exist within them are
preserved. He has identified six such sites.
1 Mr Komene says that Porikapa acknowledged Willie Gray as whangai, making him one of his family.
History of title
[8] As mentioned, Mr Komene’s caveat relies on an alleged trust arising at the time that the lands were owned by Porikapa. He produced a minute obtained from the Maori Land Court showing a Crown grant2 number DI 6/361 of sections 112 and
113 Okato Block to Porikapa on 29 June 1866.
[9] The minute also records that land in both sections was later “sold by owner”, including 356 acres in section 112, of which 70 acres are shown as going from Ruhira Porikapa to W Grey3 in 18734 (recorded in R22/658) and 101 acres from Ruhira Porikapa to W Grey in 1891 (recorded in R21/349 with reference I6,361).
[10] Mr Komene also produced copies of two pages from the deeds register for the Taranaki Land District which record registration of two deeds conveying land from Ruhira Porikapa to W Gray: the first being on 5 June 18915 and the second being a parcel of 70 acres on 30 September 18936.
[11] The deeds register pages are endorsed as having been closed on 2 July 1929, when both blocks of land were registered under the land transfer system7 as certificate of title TN 128/193 comprising 171 acres, issued to Willie Gray’s descendant Mr R B Gray. Land transfer records since show further transfers of this land in 1965, 1973 and 1978 to succeeding generations of the Gray family and division of the land into two of the three titles mortgaged to Rabobank.8
[12] Counsel for Mr Komene accepted in the hearing that the third title9 was acquired separately and is not subject to the alleged trust.
2 Under New Zealand Settlement Act 1863 and New Zealand Settlement Amendment and
Continuance Act 1865.
3 Spelt W Grey, but clearly meant to be W Gray.
4 The record says that this was in 1873, but this would seem to be an error as Ruhira did not become owner until Porikapa died in the late 1880s and it is clear that title did not pass until after his death. The later date for this transaction is also supported by a later deeds register record for this
transfer.
5 Deeds index page 6/371 recording deed number 19867, held in deed book R21/349.
6 Deeds index page 6/376 recording deed number 21540, held in deed book R22/659.
7 Pursuant to the Land Transfer (Compulsory Registration of Titles) Act 1924.
8 TNE 2/1280 and TNE 2/1281 comprising 65.1893 hectares (approximately 170 acres).9 Identifier 350158.
[13] The parties have been able to obtain a copy of deed 19867 by which the first conveyance of 101 acres was made (in 1891).10 Rabobank produced a transcript of the deed as the original handwritten document was hard to read. There is no issue over the accuracy of that transcript.
[14] The deed records the history of the land in that conveyance from the Crown grant to Porikapa in 1872, to his death in 1888. It also records Porikapa’s will leaving the land to Ruhira, a lease of the land to William James Gray in 1889, and then sale of the land to William James Gray for £400. The deed was signed by Ruhira Porikapa in the presence of a resident magistrate, a settler and a solicitor, after an interpreter had explained the effect of the deed to her.
[15] Neither the available deed 19867 nor any of the titles issued subsequently under the land transfer system contain any reference to an easement to protect the access and use that Mr Komene claims Willie Gray and his descendants were entrusted to provide.
Legal principles
[16] Rabobank brings its application under s 143 of the Land Transfer Act 1952. An order for removal will not be made unless the Court is satisfied that the caveat cannot be maintained either because there was no valid ground for lodging it, or because any valid ground no longer exists.11
[17] The caveator has the onus of establishing a reasonably arguable case for his or her right to the estate or interest claimed in the caveat.12
[18] Even if the caveator demonstrates an arguable case for the claimed estate or interest, the court has a discretion to remove the caveat where it is satisfied that the legitimate interests of the caveator will not be prejudiced: as where the caveator can have no reasonable expectation of obtaining a benefit from continuance of the caveat
in the form of recovery of money secured over the land or specific performance of an
10 Efforts to find a copy of the later deed (21540) have so far been unsuccessful. There is no reason to expect it to differ in any significant way from the earlier deed.
11 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659 – 660.
12 Ibid, at 660.
agreement, or if the caveator’s interest can be reasonably accommodated in some
other way. However, this discretion must be exercised cautiously.13
[19] Further, even where the caveator shows an arguable case against the registered proprietor, the caveat will usually be removed on application by a mortgagee exercising its power of sale because s 105 of the Land Transfer Act 1952 provides that a purchaser from a registered mortgagee obtains clear title, subject to two exceptions.14 One of the exceptions to s 105 is where there is an estate or interest, created by any instrument, which has priority over the mortgage.
Grounds for application
[20] Rabobank says that it is entitled to an order removing the caveat because its interest as mortgagee of the properties is indefeasible,15 as is its power of sale.16 It says that the caveat should be removed in light of an order for vacant possession granted on 19 March 2013, entry into an unconditional agreement for sale (pursuant to its power of sale) on 2 May 2013, the advice given to the mortgagors/owners at
4.42 pm on 6 May 2013 that the property had been sold with settlement to take place on 31 May 2013, and the lodging of the caveat at 5.12 pm that day.
[21] It also says that the interest claimed in the caveat is not a caveatable or proprietary interest in the properties, has not been mandated by the group said to be the beneficiary of the interest (the Nga Mahanga tribe), and is not an interest for which equity will grant specific performance benefit.
[22] Lastly Rabobank says that the caveat is not required to achieve proper protection of, and access to, the wahi tapu on the property.
[23] In written submissions filed ahead of the hearing counsel for Rabobank emphasised the indefeasibility of its title (its interest as mortgagee was not obtained
by fraud), and that there was no evidence to support a claim to a proprietary interest
13 Pacific Homes Ltd v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA).
14 National Mutual Finance (1988) Ltd v Berryman, HC Wellington, M451/91, 2 October 1991, McGechan J; Canterbury Finance Ltd v Sagar Trust Ltd (1997) 3 NZ ConvC 192,571 at 192,577
15 Frazer v Walker [1967] NZLR 1069 at 1075.
16 Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Limited
[1984] 2 NZLR 704 at 713-714.
under a trust of which the owners were trustees – there was no evidence in writing (or suggestion of any evidence) of a trust17 declared by Ruhira Porikapa (the transferor to Willie Gray, nor by any of the Gray owners from time to time. Rather, deed 19867 referred to a sale to Willie Gray, with no reservation of rights. The later deed 21540 also is described as a deed of sale. He also submitted that there was no evidence or certainty of beneficiary, because although Mr Komene was a member of
the Nga Mahanga tribe, the evidence before the court was that he had not been an active member of the tribe for many years and had no mandate to speak on its behalf. He also said that wider Maori interests in wahi tapu sites were not interests in land under the Land Transfer Act, but rather were protected by ss 25 and 33 of the Historic Places Act 1993. He argued that if Mr Komene contended that the interest ran with the land (which had to be the case for it still to bind the land notwithstanding several transfers) then a caveat was not needed to protect that right: it was for Mr Komene to establish that position by issue of an appropriate proceeding. In the alternative, if the interest did not run with the land, the beneficial interest was now vested in the purchaser under the mortgagee sale.
[24] In his oral submissions counsel for Rabobank repeated its two primary points that a claim to an easement for access to cultural sites was not a caveatable interest18 and that even if there had been some condition as to access to the sites attached to the transfer to Willie Gray, it had not been recorded on the titles and did not impeach Rabobank’s indefeasible title. He submitted that Mr Komene’s claim was more appropriately advanced as a claim for possible rectification of the title register, which
did not need the protection of the caveat – it was open to Mr Komene to bring it at any time, or to establish his claim by seeking by seeking to file a second caveat.
The grounds of opposition
[25] Mr Komene’s grounds for opposing removal given in his notice of opposition
are:
17 A requirement of s 25(2) Property Law Act 2007 (or its predecessor s 49A Property Law Act 1952).
18 Relying on the finding in ANZ National Bank Limited v Uruamo [2012] NZHC 1895 at [38] a claim to a right of access to sites of cultural significance was not a caveatable interest.
(a) He has a caveatable interest arising out of Chief Porikapa’s grant of the land to his whangai (adopted son) William Gray and successive Gray family owners to hold on trust in respect of certain rights of respect for Tikanga Maori, preservation and use by members and descendants of Ngamahanga hapu;
(b)There is an unbroken chain of Gray family owners, culminating in the current owners, who have respected (and continue to respect) these rights;
(c) He has a right to lodge the caveat as a beneficiary of this trust;
(d)The rights are more than a mere licence and to give effect to the original grant require legal protection by way of easement binding upon successive owners;
(e) If the land is transferred now to an unknown third party there is no guarantee that these rights will be respected (or will continue to be respected);
(f) The equitable interest arising under this grant was in existence before the land was brought under the Land Transfer Act, and the omission of the interest from the title is either a fraudulent misdescription19 or an
omission of an easement existing upon the land,20 either of which is
an exception to the principle of indefeasibility of title;
(g)There is a practical advantage to maintaining the caveat pending converting the interest into a formal easement, namely to ensure his legitimate interest in the rights arising from the grant are protected,
warranting exercise of the Court’s discretion to maintain the caveat.
19 Counsel did not press this point in the hearing.
20 Relying on s 62 (b) of the Land Transfer Act 1952.
[26] In his oral argument counsel for Mr Komene submitted that the difference between this case and ANZ National Bank Limited v Uruamo21 was that Mr Komene was claiming a proprietary right to use the land, not just to have access, and that this arose under a trust rather than the agreement alleged in Uruamo. He focussed his argument on the exception to indefeasibility contained in s 62(b) of the Land Transfer Act, contending that the conveyance to Willie Gray wrongly omitted
reference to the intended easement (which he argued was an easement in gross for the benefit of local Maori in general, but particularly Nga Mahanga tribe). He relied on a phrase in the operative part of deed 19867 reading “With all the rights fortuned and appurtenanced thereunto belonging” as support for Mr Komene’s argument that there were underlying interests which were not expressed, and submitted that it was likely that the omission of the underlying interests would not have been apparent to Ruhira as a consequence of translation and different understandings of land ownership. Although he focussed his argument on an omission of interests, counsel argued in the alternative that the failure to carry the interests through to the title would also constitute fraud for the purposes of an exception to indefeasibility.
[27] Counsel also said that Mr Komene did not want to prevent or delay the sale, but the caveat was necessary as the interests would not be protected if the purchaser had no notice of the interest, and in particular the six areas that Mr Komene wanted to protect. He submitted that the case did not come within the cases where the court exercises its discretion to remove even where a caveatable interest is established, and emphasised that the court approaches such decisions cautiously.
Discussion
[28] I am not persuaded that Mr Komene has a caveatable interest. I accept that local Maori, and particularly those of the Nga Mahunga tribe, have been allowed access to, and use of, areas of the land in the larger title (TNES/1281) over a lengthy period of time, with consent of the Gray family. However, there is no evidence to suggest that this is anything more than a licence, or at best an oral understanding as to access and use. I do not regard it as any more of a caveatable interest than the interest advanced by the caveator in Uruamo. Mr Komene’s wish to elevate this into
a trust giving rise to a proprietary interest in the land has no support in the scant evidence now available:
(a) There is no written record of the alleged trust, which on Mr Komene’s case had to be established before the land was conveyed to Willie Gray.
(b)Although there is reference in the affidavits to Porikapa gifting the land because of his belief that Willie Gray and his descendants would protect Maori interests in the land and its wahi tapu (and a gifting might have provided some support for an argument for reserving an interest) it is clear that the land did not pass by way of gift.
(c) Both the deeds records and deed 19867 are expressed in terms of an outright sale, rather than settlement on a trustee.
(d)The historical records of the title are silent as to any trust or any reservation of interest. The phrase in deed 19867 on which counsel for Mr Komene placed reliance clearly refers to rights that were being conveyed to Willie Gray, rather than rights being reserved to Ruhira Porikapa.
[29] I find that the contention that there was an express oral trust giving rise to a proprietary interest in the land, and therefore a caveatable interest, is no more than speculation (however well intentioned) on the part of Mr Komene. In the absence of such a proprietary interest, an agreement to allow access and use of the land,
however longstanding, is not a caveatable interest.22
[30] I also accept that this is not a case where any exception to the principle of indefeasibility applies. The interest that Mr Komene’s caveat seeks to impeach is Rabobank’s interest as mortgagee, including its power of sale. There is no basis whatsoever for contending that Rabobank acquired its interest by way of fraud. Further, even if Mr Komene has standing to contend that an easement in gross exists
as a consequence of some agreement reached between Porikapa and Willie Gray (and I merely note here, without making any finding, that others within the Nga Mahanga tribe say that the tribe itself does not make any such claim) that is a matter that Mr Komene can pursue, without the need for the caveat. Giving notice of that claim to the purchaser will not change matters, as the purchaser obtained its beneficial interest prior to registration of the caveat.
[31] Even if I am wrong on the two findings just made, I would consider this an appropriate case to make an order removing the caveat in any event, on the grounds that if the interest that Mr Komene claims is a proprietary interest that runs with the land, it does not need the protection of the caveat. Mr Komene can still apply to lodge a second caveat based on that contention. Alternatively, if the interest did not run with the land, the beneficial interest is now vested in the purchasers from Rabobank.
[32] I accept that Mr Komene has a genuine interest in protecting wahi tapu. However, that is not a basis for maintaining this caveat. There is protection available under the Historic Places Act 1993, under provisions of the district plan, and in requirements of the Resource Management Act 1991 in relation to significant work on the land requiring resource consents.
[33] For the sake of completeness, I record that there is no basis, in any event, for a claim to a caveatable interest over the third title, identifier 350158.
Decision
[34] For the reasons I have given I find that Mr Komene does not have a caveatable interest, or any basis to impeach Rabobank’s title as mortgagee and its entitlement to transfer the land to its purchaser (pursuant to any exercise of its power of sale) free of the caveat.
[35] I make an order that caveat 9390813 be removed from certificates of title TNE2/1280, TNE2/1281 and 350158 (Taranaki Registry), together being property known as 243, 307 and 325-327 Hampton Road, Okato (the property) upon the
lodgement by e-dealing of a transfer in exercise of the power of sale of the property by Rabobank New Zealand Ltd.
[36] Counsel ask that costs be reserved for determination on the basis of memoranda to be filed. If the parties are unable to resolve the incidence and quantum of costs, Rabobank (as the successful party) is to file and serve a memorandum within 10 working days of this judgment, and Mr Komene is to file and serve a memorandum within a further five working days. Unless there is some good reason to hear counsel, costs will be determined on the basis of the memoranda
filed.
Associate Judge Abbott