Robertson v Stevens HC Christchurch CIV 2010-409-429

[2010] NZHC 535

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

CIV-2010-409-000429

UNDER  the Land Transfer Act 1952

IN THE MATTER OF Caveat No 8385147.1 (Canterbury

Registry) affecting the land in Certificate of Title 157775

BETWEEN  CRAIG JAMES ROBERTSON

Applicant

AND  KIRK PETER JUSTIN STEVENS

PAULA LISA MARIA SAYWELL Respondents

Hearing:               27 April 2010

Appearances: K W Clay for Applicant

JWA Johnson for Respondents

Judgment:           29 April 2010

RESERVED JUDGMENT OF ASSOCIATE JUDGE DOHERTY

Introduction

[ 1 ]  The applicant is the caveator pursuant to a caveat registered over the property

at 114 Riverlea Estate Drive, Christchurch (the property). Caveat 8385147.1 claims an interest “ by virtue of an unregistered mortgage dated 3 September 2009 between the caveator as mortgagee and the registered proprietor as mortgagor”. On 15 March 2010 the parties consented to an interim order that the caveat not lapse, pending further order of this Court. The applicant seeks a further order that caveat 8385174.1 not lapse.

ROBERTSON V STEVENS AND ANOR HC CHCH CIV-2010-409-000429 29 April 2010

Facts

1. The applicant had entered into an agreement for sale and purchase to purchase the property from Shelly Travis on 14 April 2009 for $145,500. Possession was scheduled for “27/11/2009 or earlier by mutual agreement” but the agreement enabled the purchaser to take possession for the purpose of carrying out improvements prior to settlement. The purchaser was described as “Craig Robertson or Nominee”. For reasons that are immaterial, the applicant nominated Troy Wells.

2. On 11 August 2009 Troy Wells entered into an agreement for the sale of the property with the respondents. The price was $260,000 and possession was scheduled for “30/10/2009 or earlier by mutual agreement”. The vendor accepted responsibility to carry out certain works on the property prior to settlement.

3. The applicant says that at all times the respondents were aware that he was the vendor of the property and that Wells was merely a nominee. He says that in his capacity as vendor, he agreed to “leave in” $40,000 to assist the respondents with the purchase. He intended to gift $10,000 “as no real estate agent’s fees were payable, and to assist with the deposit that the respondents required to meet their bank’s requirements” with balance of $30,000 being a loan advance. To secure that advance he says on or about 3 September 2009 the purchasers entered into a term loan agreement and signed both that agreement and a mortgage instrument (both on standard forms produced by the Auckland District Law Society) which he had his solicitors prepare. There is evidence of an exchange of emails in the latter part of August 2009 between the applicant and the respondents negotiating the terms of the loan. There is evidence of the existence of the documents prepared by the solicitors.

4. The applicant is not able to produce those signed documents, merely draft copies of them. He says that the signed documents are either in the possession of the respondents (why they would be is not explained) or he has misplaced them in successive shifts of premises.

5. In any event, the applicant says that when it came time for settlement, the settlement statement provided by his solicitors records the fact that he loaned

$40,000 to the respondents. There is also evidence from the respondents’ solicitors seeking an assurance that settlement would allow for a $40,000 “credit”.

1. The applicant’s initial affidavit in support of his application did not refer to him being the owner of the property (although there is reference to Wells being a nominee purchaser), but that his relationship to the respondents was as a lender. It was only when affidavits in opposition were filed that his reply claimed that he was the actual seller of the property, using Mr Wells as his nominee.

2. The respondents say there was never any agreement for the provision of funds by way of loan, although they accept that the applicant had offered such and that there were negotiations for terms. They deny signing a loan agreement or a form of mortgage, and specifically refute they attended at the applicant’s home on 3 September 2009 when the applicant says they did and signed the documentation.

3. The respondents say that when it came time to settle, the agreed works to the property had not been completed. They say that Troy Wells offered to deduct $40,000 from the purchase price to recognise the uncompleted state of the property. They say that arrangement was formalised by a “deed of gift” signed by Wells on 2 November 2009. The annexed “deed of gift” reads:

   This is to confirm that I Troy Michael Wells will give to the purchases [sic] Kirk Stevens and Paula Saywell forty thousand dollars ($40,000), as an unrepayable gift for the purchase of 114 Riverlea Estate Drive, Stewarts Gully, Christchurch.

[ 10]             In an affidavit Wells confirms that he was the registered proprietor of the

property and that the respondents “purchased the property from me pursuant to an agreement for sale and purchase dated 11 August 2009”. He confirmed that the improvements were not completed at settlement date and that he agreed to the reduction of purchase price and entered into the “deed of gift”. He confirms that the respondents paid the $220,000 purchase price to him on settlement.

Principles

[ 11 ] The principles to be applied in applications such as this are well established through the decisions of the Court of Appeal in cases such as Holt v Anchorage Management Ltd [1987] 1 NZLR 108, Sims v Lowe [1998] 1 NZLR 656 and Pacific Homes Limited v Consolidated Joineries Limited [1996] 2 NZLR 652, and more recently in High Court decisions such as Boulton v Senior HC Blenheim CIV-2004- 406-000019, 10 February 2004, Ellen France J (which cited with approval Allen v Hogan Developments Limited (2001) 4 NZ ConvC 193,420) dealing with applications for removal of caveats pursuant to s143 Land Transfer Act 1952.

[ 12] I propose to apply the following principles in reaching my decision:

i)The onus is on the applicant to demonstrate that he holds an interest in the land which is sufficient to support the caveat.

ii)He must put forward a reasonably arguable case to support the interest he claims.

iii)An order for the removal of the caveat will only be made if it is clear that there was either no valid ground for lodging it in the first place, or alternatively that such ground as then existed has now ceased to exist.

iv)The current application is wholly unsuitable for determination of disputed questions of fact.

v)Even if he establishes an arguable case, the Court retains a discretion whether to allow the caveat to remain.

The Issue

[13] The issue is whether the applicant has shown he has an arguable case that he holds an equitable mortgage and thus an interest in the land which is sufficient to support the caveat.

[ 14] To be an equitable mortgage the applicant must show there is either a signed written agreement to mortgage or an oral agreement with sufficient acts of part-performance.

[15] The respondents submit there is no arguable case for either proposition.

Discussion

[ 16]          Both sides claim internal and external inconsistencies in the evidence of each other’s witnesses, and inconsistencies with contemporaneous documentary evidence.

[ 17]          If the documents that the applicant said were signed (the loan agreement and memorandum of mortgage) were able to be produced, there would be little or no argument.

[ 18]          In support of his evidence that the documents were signed but have been either misplaced by him or are in the possession of the respondents, there is the following:

i)Negotiations by email directly between the applicant and the respondents as to the amount and terms of a loan from him to the respondents for a principal sum of $30,000. The intention at that time was to gift $10,000 to the respondents as no real estate agent’s fees were payable. This, the applicant says, would also assist the respondents with the requirements of their bankers.

ii)Draft loan and mortgage documents prepared by the applicant’s solicitors forwarded to the respondents by the applicant.

iii)Email correspondence on 28 October 2009 from the respondents to the applicant directly, relating to valuations and settlement details.

1. Correspondence between solicitors at the date of settlement:

   a.   A request from the respondents’ solicitors on the date of settlement requesting an amended settlement statement “which should record the purchase price pursuant to the agreement for sale and purchase and should record the credit to our clients of $40,000” and which also acknowledged that the sum of $10,000 would be withheld from the settlement payment to secure the uncompleted work on the property.

   b.   A response from the vendor’s solicitors by way of an amended settlement statement from the vendor recording a $40,000 loan from the applicant as a credit of the amount required to settle.

2. An apparent acknowledgment by Wells that the amended settlement statement was a correct reflection of the transaction (Wells endorsed a copy with “Approved Troy Wells” and then signed that endorsement).

3. Proceedings filed in the Disputes Tribunal seeking redress for further amounts required to make good the property. The details of that claim contain statements such as: “Craig Robertson has not completed the applicant’s property as per the sale and purchase agreement and the initialled agreed document containing items to be completed at 114 Riverlea Estate Drive”; and, “Consent meant to be into council before settlement and was advised by his lawyer as so”; and, “Craig Robertson agreed verbally initialled list and advised by his lawyer to have work completed within three weeks from 02/11/09”.

   vii)Any renovation expenses incurred prior to settlement where paid for by the applicant.

   viii)An inconsistency in the evidence of the respondents and Mr Wells that there was a $40,000 gift and credit to recognise the uncompleted work, yet the respondents’ solicitors on settlement retained $10,000 for that purpose.

[19] Against the applicant’s position is:

i)Wells’s evidence that he was the vendor, although that is somewhat equivocal as he refers to himself as the registered proprietor and the person who entered into the agreement for sale and purchase as vendor.

ii)The respondents deny they entered into any loan arrangement and that they signed the documents alleged by the applicant and that they ever went to the applicant’s home for the purpose of doing so.

iii)Equivocation on the part of the applicant as to the date the documents were alleged to have been signed. Originally he was sure they were signed on 3 September 2009 at his house, but his affidavit in reply acknowledged he was unsure of the precise date.

iv)A change in the amount advanced between the time the applicant says the documents were signed (at $30,000) and settlement ($40,000).

v)A lack of documentary evidence about the supposed gift of $10,000.

vi)  A statement by email by the applicant to a Deputy Registrar of

the District Court administering the Disputes Tribunal in

relation to the claim against him by the respondents that “I am the contractor that was doing the work on 114 Riverlea Estate under the seller’s instruction (I am not sure why they are trying to claim against myself) as you will see on the sale and purchase agreement that it is someone else (Troy Wells)”.

[20] There is as much unsaid as there is said in the evidence before the Court. To an extent that may be because the emphasis by the applicant shifted from his initial affidavit (which portrayed him as a straight lender) to his affidavit in reply (portraying him as a vendor-lender). The respondents complained about this but did not seek leave to file further affidavits.

[21 ]  Whilst there is evidence that the deposit paid by the respondents in respect of

the purchase went (on the authorisation of Mr Wells) from the trust account of the vendor’s solicitors acting on the transaction directly into the applicant’s bank account, there is no evidence as to the accounting treatment of the settlement transaction, nor to whom the funds ultimately went. The applicant’s counsel advised from the bar that because of issues being raised by the respondents’ solicitors as to the ethical position of the solicitors acting on the settlement, he felt it prudent not to file a prepared affidavit from that solicitor in case that breached any privilege that may have existed in favour of Wells. That evidence may well be enlightening, particularly in light of such contradictions as the evidence of Wells that $220,000 was paid on settlement, when counsel concedes what was likely paid was $198,104.87.

[22] As well as the inconsistencies referred to above, there are others, such as why the loan documentation refers to $30,000 where the settlement statement refers to a loan of $40,000 and makes no reference at all to the gift of $10,000 that the applicant says he was intending to make. On the other hand, there is the inconsistency and inherent improbability of the sums the respondents allege were credited for the non-completion of work. It also seems inherently unlikely that if there was a credit of $40,000 in settlement of claims for non-completion of work, there would have been a deduction of $10,000 for the same purpose at settlement of the transaction which took place the day after the alleged settlement/gift.

1. It also seems unlikely that the solicitors for the respondents would have settled on the basis of the amended settlement statement which showed the “credit” they had earlier referred to as a loan rather than a gift as their clients contend. Of course, the solicitors may not have known the true nature of the “credit”.

2. These observations highlight the unsatisfactory state of the evidence as a means of resolving the conflicts raised by the evidence of the respective parties, let alone getting to the truth of the matter. This is exactly the situation envisaged by Master Faire (as he then was) in Allen v Hogan Developments Ltd (at [12](i)) when he said in relation to s143 applications: “The summary procedure for removal of a caveat against dealing is wholly inappropriate for the determination of disputed questions of fact.”

3. Whilst there are difficulties with the applicant’s evidence, it is not “patently lacking in credibility on its face”. See Macrae v Rapana High Court, Auckland, M633/994, 17 June 1994, Fisher J at 3, cited by the respondents.

4. I find the applicant has made out an arguable case that there are or were in existence documents executed by the respondents that created an equitable mortgage. I also find there is an arguable case there was an advance made by the applicant to the respondents.

Discretion

1. There is no evidence that this caveat is impinging on any intention by the respondents to deal with the land.

2. The respondents claim the applicant lodged the caveat some months after the date of settlement and as a direct response to the issue of the Disputes Tribunal claim. The implication being it was designed to procure a negotiating advantage. There is no compulsion upon a potential caveator to lodge a caveat at the first possible opportunity. There may be many reasons to delay doing so. It is unhelpful to speculate in this case.

3. This is not a case where the rare exercise of the discretion against the applicant is appropriate.

Outcome

1. The application is granted.

2. I order that Caveat 838147.1 affecting the land in Computer Freehold Register Indentifier 157775 (Canterbury Registry) not lapse.

3. There is no reason why costs should not follow the event. Costs are awarded to the applicant on a schedule 2B basis together with disbursements as set by the Registrar.

Associate Judge Doherty