Remarkable Wines Limited v Camp Creek Limited
[2015] NZHC 2537
•14 October 2015
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2015-425-000086 [2015] NZHC 2537
BETWEEN REMARKABLE WINES LIMITED
Applicant
AND
CAMP CREEK LIMITED Respondent
Hearing: 7 October 2015 Appearances:
G Stewart for Applicant
J Moss for RespondentJudgment:
14 October 2015
JUDGMENT OF DUNNINGHAM J
[1] On 9 October 2015, I declined the applicant’s application to sustain a caveat registered against ID2742 Otago Land Registry, a property owned by the respondent.1
[2] Because the decision was made urgently, in the face of likely cancellation of an agreement by a third party to purchase the respondent’s property, I did not give full reasons at the time of making the order. This judgment sets out my reasons.
Background
[3] On 7 August 2015, the applicant registered caveat 10149723.1 against the
respondent’s property claiming:
[A]n interest as the grantee of easements to take and convey water agreed to in a written Water Use Agreement dated 10 December 2010 signed between the Registered Proprietor (Camp Creek Limited) of ID 2742 and the Caveator as registered proprietor of ID 343074 from which the Caveator’s current ID 600116 was derived.
1 Remarkable Wines Ltd v Camp Creek Ltd [2015] NZHC 2478.
REMARKABLE WINES LIMITED v CAMP CREEK LIMITED [2015] NZHC 2537 [14 October 2015]
[4] The respondent triggered the caveat lapsing process and, on
23 September 2015, the applicant’s director, Mr Guthrey, filed an application that the caveat not lapse. However, the application did not disclose the basis for the caveat. The Court advised him of this and granted him leave to file an amended application.
[5] Mr Guthrey sought legal advice and an amended application was filed on
1 October 2015, along with a supporting affidavit sworn by Mr Guthrey. The affidavit attached a copy of the document dated 10 December 2010 (“the December 2010 agreement”) which was relied on as the agreement which gave rise to the claimed caveatable interest.
[6] The document states that certain property owners, including the applicant, are to have “access to Camp Creek for the purpose of taking and conveying potable water from the stream and across property”. A further term of the December 2010 agreement is that the owner of the property which has Camp Creek flowing through it, “will permit any necessary registrable easements in favour of the other participating parties to take and convey water across this property”.
[7] The respondent denies that this is a binding agreement. However, it does not dispute that it is sufficient for the purposes of demonstrating that the applicant has a reasonably arguable case for asserting the claimed caveatable interest. Instead, the respondent’s lawyer, Mr Moss, says that, in the particular circumstances of this case, there are two reasons why the caveat should not be sustained. They are:
(a) an easement already exists to convey water from Camp Creek to the applicant’s land and that easement is already registered on the title to the respondent’s land; and
(b)the sole reason for lodging the caveat on the title is to frustrate the conditional sale and purchase agreement for the property that the respondent has, in order to obtain leverage to settle related proceedings between the applicant and the respondent in the District Court.
[8] On 7 October 2015, an urgent telephone conference was convened at the request of the respondent to deal with the application to sustain the caveat in light of the issues set out in the paragraph above. At that telephone conference, Mr Moss relied on the documents annexed to the affidavit evidence from Nicola Anne Field, a director of the respondent, which he said demonstrated that a suitable easement already existed to protect the claimed caveatable interest, and that the applicant had lodged the caveat for the improper purpose of obtaining leverage to settle the District Court proceeding.
[9] Ms Field’s affidavit evidence explains that the urgency sought to deal with the application was because the purchaser of the respondent’s land, Ms Gemma Finlay, had recently advised that she was not prepared to extend the time for confirming the purchase as unconditional in order to allow the outstanding caveat issue to be resolved. In an email sent to the respondent from Ms Finlay’s lawyers they say “our client has sold her two properties to finance this purchase and needs to reorganise her affairs so that she is not left in a position where she has nowhere to go. Our client cannot afford to be drawn into a protracted affair”. If the caveat issue was not resolved the contract would lapse on 12 October 2015.
[10] Ms Field also attaches to her affidavit an email from the director of the applicant, Mr Guthrey, to the real estate agent selling the respondent’s property, which says:
Hello Adrian,
As discussed, I am willing to withdraw the caveat, but only after our claim against Camp Creek has been resolved. Please inform your client that we are willing to consider any reasonable offer of settlement they are prepared to submit in writing to my lawyer.
Meanwhile the caveat will remain in place.
[11] Finally, Ms Field’s affidavit annexes copies of:
(a) the caveat;
(b) the relevant certificate of title owned by the respondent (ID2742);
(c) the applicant’s certificate of title (ID600116);
(d) a copy of easement 7448665.3, which is registered against both the
applicant and the respondent’s title;
(e) plan DP 379763, referred to in easement 7448665.3; and
(f) an aerial photograph overlaid with the boundary and easement lines. [12] Mr Moss said it was clear from these documents that the registered easement
runs from the edge of Camp Creek to the applicant’s land and would allow the exercise of the water take referred to in the December 2010 agreement. It was already being used by other neighbouring properties and by the Queenstown Lakes District Council.2
[13] Mr Moss pointed out that the statement in the December 2010 agreement that “the owner of this title will permit any necessary registrable easements in favour of the other participating parties to take and convey water across this property” did no more than enable registration of an easement if it is required. As there was already an easement which allows this to occur, there was no further easement required to be registered and the caveat was not needed.
[14] Mr Moss also pointed out that the email from Mr Guthrey to his client’s real estate agent supported his contention that the caveat was placed on the property simply as a method of gaining leverage in a current dispute between those parties which is presently before the District Court, and which the parties advised related to the exercise of a different, spring-sourced water right.
[15] In response, Mr Stewart for the applicant, relied on a letter of advice obtained in October 2014 from a surveyor in Paterson Pitts Group, which says:
As a result of a complex series of subdivisions, numerous appurtenant easements to convey water are now registered on your title. These were originally intended to service other adjoining land. However, because small parts of that other land are now incorporated into your title, these easements
2 Although the applicant disputes these parties are still using the easement.
have “automatically” come down onto your title. Many of these easements
are redundant.
[16] Mr Stewart relied solely on the last sentence in that advice as bringing into question whether the existing easement was sufficient for his client’s purposes. However, as I pointed out, it did not address the respondent’s argument which was that there was an easement on the title that was adequate to allow the applicant to exercise the water rights contained in the December 2010 agreement.
[17] I therefore deferred dealing with the matter for two days to allow the applicant to file affidavit evidence from Mr Dymock of Paterson Pitts Group, or from another suitably qualified surveyor, to identify whether the existing easement was adequate to permit the exercise of the water rights which the applicant says it has under the December 2010 agreement. I recorded that if there was reason to believe that the existing easement was inadequate to allow exercise of the December 2010 agreement, then the caveat must remain on foot.
[18] Prior to the further telephone conference convened on this matter to deal with the applicant’s application to sustain its caveat, I received the following further evidence:
(a) affidavit of Adrian David Chisholm in support of notice of opposition to application to sustain caveat;
(b)affidavit of David Anthony van der Zwet in support of notice of opposition to application to sustain caveat; and
(c) the affidavit of Peter Langdon Dymock in support of notice of interlocutory application for order that caveat not lapse.
[19] Mr Chisholm is the applicant’s real estate agent. His affidavit annexed the email from Mr Guthrey which had previously been annexed to Ms Field’s affidavit and which said the caveat would be withdrawn if the District Court proceedings could be resolved. He also stated that:
… following the urgent High Court conference held on Wednesday
7 October 2015 I received a telephone call from Richard Guthrey to say that he wanted the purchaser’s contract to proceed but wanted the purchaser to
agree to two things, an easement to remedy the encroachment of his Wine
Cellars’ building over the respondent’s property, and to resolve the water
issue.
[20] The affidavit of Mr van der Zwet, a surveyor, simply reviewed the respective titles to the applicant’s and respondent’s properties and the easement to take water which was registered on the titles to the properties. He concluded that the applicant, “which owns the land known as Lot 1 DP 451487, identifier 600116, currently benefits from the water easements as shown on DP 379763”.
[21] The applicant’s evidence from Mr Dymock also acknowledged that there was an easement to take and convey water in place over the respondent’s land in favour of the applicant. However, it raised various reservations about the suitability of the easement for the applicant’s purposes. In summary, he said:
(a) easement 7448665.3 is only a right to convey water, but a right to convey electricity for a pump was also required;
(b)the easement corridor is not the most practical one as it cuts across the existing car park and access areas of the respondent’s land, and if the applicant exercised its existing easement rights under 7448665.3, it would be at considerable inconvenience to the respondent;
(c) he was concerned as to whether the easement corridor included the current bed of Camp Creek as “the bed of Camp Creek is subject to frequent shifts in its location”;
(d)that portion of Camp Creek which is within the respondent’s land does not provide an ideal site for an intake structure as it suffers from flash flooding and has an “unstable, volatile bed”;
(e) the easement which grants a right to convey electricity only goes as far as the area set aside for a pump shed and the pump may well need
to be located closer to the intake point, or even within the intake structure itself if it is a submersible pump;
(f) the right to convey water is only appurtenant to part of the land within the applicant’s title, namely that part which was formally within Lot 3, DP 346899 and this area is not the part of the applicant’s land where the wine tasting room is located.
[22] For these reasons, Mr Dymock concluded that “I would not advise the Applicant to rely on easement 7448665.3 to provide its only source of potable water and would recommend instead that the parties work on creating the new easements contemplated by the agreement”.
[23] However, I accept the respondent’s submission that Mr Dymock’s affidavit does not advance the applicant’s case, and generally supports the respondent’s position. Significantly he accepts that an easement to convey water from Camp Creek to the applicant’s land is in place.
[24] In respect of the other points he notes about the practicality of the easement, I am satisfied that none justify sustaining the present caveat. My reasons are as follows:
(a) Whether or not there is a right to convey electricity is immaterial. The caveat only claims a right to an easement to take and convey water. In any event, it is clear from the undisputed affidavit evidence that there is also an easement granting the right to convey electricity to the area marked “I”on DP 379763 and which is intended to house a pump shed on the respondent’s land. There is also uncontroverted evidence in the affidavits that this easement has been used by the Queenstown Lakes District Council and other land owners. While Mr Stewart gave evidence from the bar that parties had ceased to use it because of difficulties experienced with the current land owner, including it diverting water away from the intake structure, that merely goes to whether there has been compliance with the rights and powers
contained in the registered easement. That is a separate question as to whether, in law, there is the legal right to convey water from the applicant’s land to the respondent’s land, which is all the caveat can protect.
(b)In respect of the practicality of the easement corridor over the respondent’s land, that may well be an issue for the respondent. It cannot, though, unilaterally alter the applicant’s entitlement to exercise the rights which are granted under the easement. If the respondent found the existing easement corridor inconvenient, it would have to negotiate with the applicant, and with other land owners with the benefit of the easement, to replace the existing right with a more suitable and convenient corridor.
(c) Concerns about the suitability of the water source and the difficulties of maintaining an intake structure on it because “Camp Creek is unstable” and “subject to frequent shifts in location” are also irrelevant. The caveat is to protect access to this water resource and not to an alternative, more reliable source. It is clear from the overlay of the relevant easements on aerial photographs that they extend to Camp Creek. The rights and power implied under Schedule 4 to the Land Transfer Regulations 2002 would allow such ongoing works and modifications as are required to ensure the free and unimpeded flow from the source of supply, and also prevent the respondent from undertaking diversion works to diminish or reduce the flow of water in the water supply. If Camp Creek is a naturally unsuitable water source, that is a problem which is inherent in the terms of the December 2010 agreement which nominate it as the source and cannot be improved by the caveat.
(d)Finally, the suggestion that the right to convey water is only appurtenant to “part of the land within the applicant’s title” and, by implication, does not allow the water to be conveyed to the tasting room on the applicant’s property, cannot be sustained. The easement
is registered on the respondent’s title for the benefit of the applicant. It simply enables water to be conveyed across the servient land owned by the respondent, to the applicant’s land. Once there, there is no impediment to the applicant directing the water to where it is required on its property.
[25] In the end, Mr Stuart acknowledged that there was an existing easement in place which addressed the interest claimed in the caveat. However, he stated that the applicant’s real concern was that a subsequent owner might not permit the exercise of those rights by allowing appropriate infrastructure to be installed along the easement corridor.
[26] Whether or not that concern is justified, it is not an issue which can be addressed by maintaining the present caveat. The caveat cannot give greater rights or protection to the caveator than it would have under the claimed registrable interest. If a subsequent owner does not permit the full exercise of the easements rights granted to the owner of the applicant’s land, that would need to be the subject of separate proceedings to enforce those rights. It cannot justify the maintenance of the present caveat.
[27] Thus, because I am satisfied that the unchallenged evidence is that an easement already exists on the respondent’s land which allow the applicant to convey water from Camp Creek to the applicant’s land, and that satisfies the caveatable interest claimed by the applicant, I reached the view the caveat should not be sustained, and made an order to that effect on 9 October 2015.
[28] That conclusion means I do not have to consider Mr Moss’s second argument, which is that the sole reason for lodging the caveat on the title was in order to obtain leverage to settle a dispute over separate water rights as between the parties in the District Court proceedings.
[29] However, the impression I gained after hearing from the parties was that there was a general misunderstanding by the applicant about its existing legal entitlements,
and that lack of understanding arose out of its interpretation of the general comments in the letter of advice obtained in October 2014 from its surveyor.
[30] Thus, although the point was not fully argued before me, I think it unlikely that the caveat was lodged for improper purposes, but rather in the genuine belief that if the applicant’s District Court proceeding relating to the spring-sourced water rights was not successful, it needed to ensure its rights under the December 2010 agreement were protected.
[31] I reserve the issue of costs, but my initial inclination is that no more than standard 2B costs should be awarded.
Solicitors:
Stewart & Associates, Alexandra
Canterbury Legal Services, Christchurch
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