Sadiq v Ayer Properties Limited HC Auckland CIV 2004-404-6793
[2005] NZHC 1748
•20 May 2005
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2004-404-6793
IN THE MATTER OF the Land Transfer Act 1952
BETWEEN MOHAMMED SADIQ AND ANOR
Applicant
AND AYER PROPERTIES LIMITED
Respondent
Hearing: Auckland, 9 & 12 May 2005 Appearances: J E Dorbu for Applicants
R O Parmenter for Respondent Judgment: 20 May 2005
DECISION OF LAURENSON J
Solicitors:
Murdoch Hall & Co, Hunters Corner, Papatoetoe, Auckland Graham & Co, Auckland
MOHAMMED SADIQ AND ANOR V AYER PROPERTIES LIMITED HC AK CIV 2004-404-6793 [20 May 2005]
Introduction
[1] The applicants seek an order pursuant to s145 and s145A of the Land Transfer Act 1952 that caveat 6207550.1 registered against land owned by the respondent and more particularly described in certificates of title NA28D/929-931, NA827/128, NA89C/579 and NA90C/21, 22 not lapse. The respondent opposes the application.
Factual background
[2] On 12 August 2004 the respondent agreed to sell a number of properties situated on the corner of Lincoln Road and Buscombe Avenue, Henderson to the applicant. The agreement for sale and purchase included the following:
[a]Purchase price of $2,500,000.00;
[b]Deposit $100,000.00 to be paid on unconditional date;
[c]Balance to be paid on possession date;
[d]Possession date 120 working days after satisfaction of clause 14;
[e]Clause 14 provided that resource consents were to be obtained by 4pm on the 30th day after signing by both parties;
[f]Clause 15 provided:
15.0The vendor warrants that it will within five (5) working days of signing of the contract stated herein provide to the purchaser all plans, specifications, costings, Q.S reports, and all such other information that it has in it’s [sic] possession, inclusive of completed & approved plans, Geotech/engineers/ surveyors plan.
[g]Clause 17 provided:
17.0Completion of this contract by the Purchaser is entirely conditional upon its completing and being
satisfied with a due diligence programme in respect of the plans, specifications, costings, Q.S reports and construction of the buildings and any other factors it may deem necessary within ten (#)20 working days of the execution of this contract by both parties.
[3] The parties varied the terms of the agreement by a written variation some time in October 2004 as follows:
The Vendor and the Purchaser have agreed to make the following changes to the Contract:
1.The Purchase Price to be reduced to $2,450,000 plus GST if any.
2.The Unconditional Date will be 3 working days from issue of
a. Resource Consent
b. Full disclosure of relevant information held by the vendor including documents from the Architect, Surveyor, Engineer, Geotech and other relevant authorities stating:
i.Work already done
ii.Time frame to complete the project
iii.Information Needed to complete the project
iv.Cost
3.The Vendor warrants and agrees to provide to the Purchaser within 42 working days, from Unconditional date vacant possession of all the exiting [sic] properties.
[4] On 17 August the respondent’s solicitors wrote to the land agent advising that the respondent was not agreeable to the amendment in the agreement of the possession date from 30 days, as printed in the agreement, to 120 working days.
[5] No reply was received by 2 November 2004. The respondent’s solicitors accordingly wrote again on that day advising:
… Our client is not prepared to allow this matter to drift on indefinitely and accordingly this letter is to advise that the Vendor is withdrawing from these negotiations effective immediately there being no binding contract at this time. …
[6]On 3 November 2004 the applicants registered caveat 6207550.1.
[7] On 11 November 2004 the respondent’s solicitor wrote to the District Land Registrar seeking lapse of the caveat.
[8] On 1 December 2004 the applicants applied to this Court for an order that the caveat not lapse.
[9] On 8 December 2004 the parties agreed that the caveat should not lapse pending resolution of the dispute. An order was accordingly made by consent on 9 July 2004.
[10] On 20 December 2004 the applicants’ solicitors advised that the agreement was regarded as unconditional and sought details as to where the deposit should be paid.
[11] On 21 December 2004 the respondent’s solicitors wrote advising that the agreement could go ahead providing the applicants agreed to settlement date no later than 25 February 2005.
[12] On 21 December 2004 the applicant’s solicitors wrote declining to settle other than 120 days after 12 August 2003 and requiring settlement on that date.
[13] On 22 December 2004 the respondent’s solicitors wrote withdrawing the offer to settle made on 21 December 2004.
[14] On 9 February 2005 the applicants filed proceedings seeking specific performance of the agreement.
[15]On 23 February 2005 Harrison J ordered:
[1] By consent I make orders according to paras (a) to (e) of counsels’ joint memorandum, including my handwritten amendments to paras (b), (c) and (d).
[2] The proceeding is to be listed for mention only in the Duty Judge list in the week commencing 18 April 2005. In the event that the proceeding is settled before hand and the applicants file a notice of discontinuance, the mention date will be vacated and counsel will be excused from any further attendances.
[16]The memorandum referred to in paragraph 1 of the above orders stated:
Consent Memorandum of counsel for the Applicant and counsel for the Respondent.
1.Counsel are in agreement that the following orders may be made by consent.
(a)The Respondent is to provide documentation in terms of Clause 15 of the Agreement, to the Applicant by 4.00pm on Thursday 24 February 2005.
(b)The Applicant is to provide a bank cheque in the sum of
$100,000.00 to the Respondent’s solicitor by 4.00pm on 25 February 2005 in payment of the deposit.
(c)The agreement for sale and purchase is to settle on Tuesday 29 March 2005.
(d)If the agreement is settled by 5 April 2005 the Applicant is to file a Notice of Discontinuance. In the event a Notice of Discontinuance is not filed by 5 April 2005, matter to be re- listed before the Duty Judge.
(e)Matter to be re-listed upon request by either party in the event of default of the above.
[17] The respondent gave notice in accordance with clause 8.7 of the agreement requiring payment of the deposit within three days.
[18] On 14 March 2005 when there was no response, the respondent cancelled the agreement.
[19] On 23 March 2005 the applicants filed the amended statement of claim seeking damages, but not specific performance.
The arguments
[20] The applicants submit that, as a result of the consent orders made by Harrison J, the Court had effectively made an order for specific performance and therefore, all that had to be resolved was the issue whether or not the respondent still had to comply with the requirements of clause 15 regarding the provision of plans. It was submitted that this was an issue which could only be resolved at the hearing of the substantive proceeding.
[21]The result, so far as the applicant was concerned, is:
[a]It had a caveatable interest as a purchaser under the agreement for sale and purchase.
[b]The Court has effectively ordered specific performance.
[c]There remains only the issue of the respondent’s obligation to provide plans.
[d]Therefore, the caveat should be maintained.
[22]The respondent submitted:
[a]The orders made by Harrison J did not amount to an order for specific performance rather, they simply recorded an agreement by the parties to continue with the agreement subject to:
(a)The respondent providing plans.
(b)The applicants paying the deposit.
[b]In fact, neither of those events took place:
· The respondent says it has no clear idea or what plans were still required. If, however, what is claimed is an engineer’s geodetic report, then in terms of clause 15 it does not have and never has had any such report.
· The applicants refuse to accept this and have therefore refused payment of the deposit.
[c]The agreement reached and endorsed by Harrison J is therefore at an end.
[d]The result is that the respondent then proceeded to cancel the agreement in accordance with the procedures provided in clause 8.7 of the agreement.
[23] The respondent submits that, at that point, the appellant had two options, either:
[a]To contest the cancellation and proceed with its claim for specific performance; or
[b]Accept the cancellation and seek damages. In fact, the applicants filed an amended statement of claim, claiming damages, and not specific performance. The claim for damages was based on a breach of contract, namely:
(a)the failure to provide the documents; and
(b)a repudiation by the respondent when it purported to cancel the agreement in its letter of 14 March 2005.
[24]The respondent therefore submits:
[a]There was an effective cancellation of the agreement by the respondent.
[b]Whether or not that is correct, the relief claimed by the appellant in the amended statement of claim can only mean that the applicants have accepted the respondent’s repudiation and then cancelled the agreement themselves.
[25] Either way, the agreement for sale and purchase is at an end and hence, the appellants no longer have a caveatable interest to protect.
[26]Mr Dorbu in reply submitted:
[a]The amended statement of claim merely asserted the order for specific performance made by Harrison J, and now seeks relief in relation to the alleged breach of clause 15. Therefore, the applicants retain an interest in the agreement for sale and purchase, namely to ensure that the subject matter of the agreement (the properties) remain available to meet the damages which may be payable as a result of the breach.
[b]There remains an issue in relation to the cancellation alleged by the respondents arising from its letter of 14 March 2005, namely whether the respondent was entitled to do so. The resolution of this issue will depend on a hearing of the substantive matter and cannot be resolved in the affidavits. Therefore, the caveat should not lapse until this issue is resolved.
[c]The applicants were not required to seek specific performance in the amended statement of claim because Harrison J had effectively made such an order on 23 February 2005. Therefore, all the applicants had to contend with was the issue regarding the respondent’s alleged repudiation based on the failure by the applicants to pay the deposit. Furthermore, it is inconceivable that a right to maintain a caveat in this circumstance should go simply because the caveatee purports to cancel the agreement.
[d]There is a real dispute as to the respondent’s obligation to provide the further documentation and accordingly the caveat should remain in force until this issue is resolved.
Discussion
[27] The onus is on the applicants to satisfy the Court that there is an arguable case for the continuation of the Court. In Sims v Lowe [1988] 1 NZLR at 660, Somers J said:
The caveator seeks to clog or fetter the proprietary interest of another. As a matter of principle it seems right that he must justify the continued existence
of his caveat. He will do that if he can show he has a reasonably arguable case for the interest he claims. The issue is the same as that which arises under s145. The onus under s143 should lie on the caveator: See New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41, 43.
[28]That is, however, not the end of the matter. At p659, Somers J said:
It is clear that this summary procedure for the removal of a caveat against dealings is wholly unsuitable for the determination of disputed questions of fact. From this it follows, and has been consistently held, that an order for the removal of such a caveat will not be made under s 143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so. See eg Plimmer Bros v St Maur, Re Caveat No. 2538 (1906) 26 NZLR 294, 296; Catchpole v Burke [1974] 1 NZLR 620, 623-624, 625 (a
case under s 145); Mall Finance & Investment Co Ltd v Slater [1976] 2 NZLR 685, 686, 688. The patent clarity referred to will not exist where the caveator has a reasonably arguable case in support of the interest claimed. Catchpole v Burke, New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984]1 NZLR 41, 43 and Holt v Anchorage Management Ltd [1987] 1 NZLR 108 show that the same test applies to both s 143 and s 145.
[29] It is well established that a purchase of land under a conditional agreement for sale and purchase has a sufficient interest in the property to support a caveat: Bevan v Smith [1994] 3 NZLR 648. However, once a contract has been validly cancelled there are no grounds for a caveat to remain: See Francis v Taradale West End Limited (1998) 3 NZConvC 192, 762 and Prix Car New Zealand Limited v Armit (HC Akld, M1670/95, 27 February 1996).
Cancellation by the respondent
[30] The applicants submit that they were entitled not to pay the deposit because the respondent had failed to provide the documents within five days of signing the contract. That condition should have been complied with by 17 August 2004. It was not. Subsequently, the applicants declared the agreement unconditional on 20 December 2004. In accordance with clause 8 of the agreement the applicants had waived the benefit of this provision and, arguably, they could claim damages for breach in this regard.
[31] The respondent, however, still had not been paid its deposit. Based on this failure by the applicants it duly gave notice requiring payment on 9 March 2005 in
accordance with clause 8.7 of the agreement. The appellants did not respond, therefore the respondent cancelled the agreement on 14 March 2005.
[32] Whilst it may have been arguable that the applicants were not required to pay the deposit because of the dispute regarding the provision of documents, it seems to me that they have effectively waived any rights in this regard by:
[a]not protesting the alleged failure to provide the documents by 4pm on 24 February 2005; and
[b]failing to pay the deposit by the extended date agreed to i.e. 4pm 25 February 2005 as required by the respondent on 9 March 2005.
[33] In my view, these matters cannot be disputed. The respondent took all necessary steps to cancel the agreement in accordance with the terms of the agreement. Accordingly, the agreement was cancelled on 14 March 2005. Therefore, there is no agreement upon which the caveat can be based.
[34] The appellants reacted to the respondent’s cancellation by filing the amended statement of claim. This does not seek specific performance. It does recite that, the orders made by consent by Harrison J, were an order for specific performance. In my view, clearly they were not. They were merely endorsing an agreement between the parties which they hoped would lead to the settlement of the matter by a settlement of the transaction on 29 March 2005.
[35] As I have said, the applicants did not protest what they allege was a failure by the respondent to provide the documents, nor did they comply with the demand to pay the deposit. There was no reason that I can see why they could not have paid the deposit, settle the transaction and then argued whether there was a failure by the respondent in relation to the provision of documents which justified an award of damages. Instead, they issued a proceeding which did not seek specific performance and did seek damages for the loss of the whole transaction.
[36] The amended statement of claim can therefore be regarded as either an acceptance that the agreement had been cancelled or, that they, the applicants, accepted the respondent’s cancellation as a repudiation in respect of which they in turn elected to cancel the agreement and then rely on their remedy in damages. Either way, it was clear that the agreement was cancelled and cannot provide a basis to sustain the caveat.
Result
[37]The applicants’ application to sustain the caveat is therefore dismissed.
Costs
[38] The respondent is entitled to costs which I direct are to be calculated on the 2B basis.
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