Salter v Salter
[2020] NZHC 1583
•6 July 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-344
[2020] NZHC 1583
UNDER section 143(4) of the Land Transfer Act 2017 IN THE MATTER
of an application that Caveat 11674771.1 on CT366105 (North Auckland) not lapse
BETWEEN
BRITON TREVOR SALTER
Applicant
AND
BRITON JOHN SALTER and ANGUS EDWARD SALTER
Respondents
Hearing: 6 July 2020 Appearances:
C Murphy for applicant
M Tuilotolava for respondents
Judgment:
6 July 2020
ORAL JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] This is an application for an order pursuant to s 143(4) of the Land Transfer Act 2017 for an order sustaining a caveat.
[2] The background is not especially complicated. In August 2007 the applicant, Mr B T Salter, sold his one third interest in a property at 44 Owai Avenue in Northland to the respondents, who are his sons, Mr B J and Mr A E Salter. The sale and purchase agreement provided for vendor finance of $100,000, secured by an agreement to mortgage, coupled with a contractual entitlement on the part of the applicant to caveat the title to the property in support of his equitable mortgage.
SALTER v SALTER [2020] NZHC 1583 [6 July 2020]
[3] In February 2020 the applicant registered a caveat against the property, citing in the instrument the basis upon which he claimed an interest in the land as the earlier contract. Although nothing appears to turn on this, I record that it is clear that this step was precipitated by the applicant’s perception, right or wrong, that the respondents were planning to sell the property without discharging a remaining indebtedness that he believed they had to him. The immediate response was some quite revolting texts to the applicant, but they are irrelevant to the issue at hand.
[4] The Registrar-General of Land wrote to the applicant on 12 February 2020 advising him that the respondents had applied for a determination that his caveat lapse, and informing him that unless he gave the Registrar-General notice within 10 working days that application had been made to the Court for an order that the caveat not lapse, and then served such an order within a further 20 working days, the caveat would lapse.
[5] Having, through his solicitors, written to the respondents asking them to withdraw their application, and having received no reply, the applicant commenced this proceeding on 26 February 2020. Counsel inform me that it was agreed that an interim order should be made and that such an order was made by consent, pending determination of this application.
[6]The applicant’s originating application is supported by a short affidavit.
[7] The respondents filed a notice of opposition on 10 March 2020, supported by affidavit evidence sworn by the second-named respondent setting out the bases on which they deny that the applicant has any extant proprietary interest in the property capable of supporting a caveat.
[8] The dispositive issue is whether the applicant can establish that he has any such interest.
[9] The applicant’s starting point is a strong one. It is common ground that in the sale and purchase transaction it was the parties’ intention that he should have security
and that, at least on the face of the formal documentation, there was a substantial indebtedness ($100,000) justifying the need for that security.
[10] In their notice of opposition and affidavit evidence the respondents advance a series of grounds for their opposition. I would summarise these as follows:
(a)First, that the applicant should not have acted on the sale and purchase transaction. He is apparently a solicitor, and the firm he was employed by at the time acted on the matter. The respondents did not obtain independent advice, and say that the applicant did not “encourage them to” do so;
(b)The sale and purchase agreement is undated;
(c)The caveat lodged against the title wrongly describes the applicant as the purchaser and the respondents as the vendors;
(d)The express contractual entitlement of the applicant to register a caveat against the title is contained in the body of the sale and purchase agreement, as opposed to in an independent document;
(e)The respondents have no outstanding indebtedness to the applicant, and he therefore has no interest in the property.
[11] There is nothing at all in any of the first four points. Whether the firm that employed the applicant, or the applicant himself, was conflicted, if so whether at law that affected the transaction, and if so how, are not matters that can be determined in this summary process. On the face of the documentation before the Court, it seems to me that the sale and purchase agreement was in fact dated — by the respondents. Even if it was not, I cannot see why that would affect the position. It is common ground that the sale and purchase agreement was signed by the parties in August 2007. The misdescription of the parties in the caveat lodged by the applicant against the title to the property is neither here nor there. It is a clear error. The applicant would be entitled to an order for rectification. In any event, as Ms Murphy points out, the
applicant had nothing at all to gain by misdescribing the situation. The fact that the contractual entitlement to caveat the title to the property as a means of supporting the equitable mortgage was contained in the agreement does not render it invalid.
[12] That leaves the last issue, whether there is any residual indebtedness. This is the critical point. If, as the applicant says, there is, then he is entitled to rely on his security and to maintain his caveat, all other things being equal. If, as the respondents say, there is no remaining indebtedness, then the applicant is no longer a secured creditor and has no right to maintain his caveat.
[13] As to this, there is a direct clash of evidence. The applicant’s original affidavit evidence was that he left $100,000 in the property from the outset and that this has not been repaid, in part or in whole. In their affidavit evidence in support of their notice of opposition, the respondents say that when the original sale and purchase transaction was negotiated, it was agreed that, whilst the documentation itself would record the sale and purchase price as $350,000, the parties agree that the actual price would be
$250,000, which they have paid.
[14] Putting aside the fact that this contention was not identified or even hinted at in the respondents’ notice of opposition, it is inherently incredible. I can imagine no reason why the applicant would propose or the respondents would agree to misrepresenting the sale and purchase price in the agreement, and none has been put forward. Even if there is more in this than there appears to be, the evidence before the Court is that both parties executed a formal written agreement to the effect that the sale and purchase price was to be $350,000 and there is no evidence other than vague suggestions by the second-named respondent in his affidavit that the arrangement was otherwise. The respondents seek to draw support from the then rateable value of the property which was apparently $860,000. A one third interest in the property was therefore closer to $250,000 than $350,000. It is of course not the Court’s role to determine the adequacy of consideration for the transaction. In any event, even a Wellington Judge is aware that the market value of Auckland property in 2007 was not necessarily accurately reflected in its CV. All in all, this contention is not credible.
[15] The respondents also say that when one or either of them had a Lotto win of something like $20,000 in 2010, and the applicant became aware of this, he asked them for more money, and they agreed to pay him an additional $20,000 (over and above the $250,000 which they had paid) on the understanding that that resolved all issues between the parties. For his part, the applicant says he has no recollection of this. The respondents point to payments out of one of their current accounts as evidence in support of this. The applicant responds that there is no evidence that any such payment reached him and he does not accept that it did. This suggestion too strikes me as incredible. Although the respondents say that the applicant was, at the time, in financial difficulty, given that this was an arm’s length transaction in relation to the sale of an interest in real property, albeit one within a family, it is hard to imagine a vendor who holds security for a $100,000 debt being prepared to compromise it at 20 per cent.
[16] Finally, I observe that the two contentions advanced by the respondents are mutually inconsistent. If the position was that the real sale and purchase price was
$250,000, and the respondents did not regard themselves as having any further obligations to the applicant, why, then, when they paid an additional $20,000 to the applicant, assuming they did so, would it have been necessary for them to seek to negotiate a full and final settlement of the sale and purchase transaction.
[17] I am left in no doubt at all that the applicant can make out a reasonably arguable case that the respondents are still indebted to him in the sum of $80,000 or $100,000, and that that indebtedness is secured by his equitable mortgage over the property.
[18]On that basis, the applicant has made out his entitlement to sustain his caveat.
[19] I am conscious that the respondents say that they, and the owners of the other two third interest in the property, wish to sell it, that there is a potential buyer, and that the applicant’s caveat stands between them and any sale.
[20] It should not be beyond the collective wit of the parties to deal with this. There seems no reason why the parties cannot agree to a sale proceeding on the basis that the amount claimed by the applicant be paid into a solicitor’s trust account to be held
pending the resolution of the dispute between them. If necessary, the Court might be asked by the applicant to make an order pursuant to r 7.55 of the High Court Rules 2016 preserving that fund pending the resolution of the parties’ dispute, though that might be something of a belt and braces exercise. Those however are ultimately matters for the parties to resolve.
[21] In the meantime, for the reasons stated, I make an order pursuant to s 143(4) of the Land Transfer Act sustaining the caveat registered over the title to the respondents’ property by the applicant pending further order of the Court.
[22] I direct that that caveat will, however, lapse, unless the applicant commences a proceeding putting in issue his claim against the respondents within 20 working days of the date of this judgment.
[23] As to costs, the applicant as the successful party on this application is entitled to his costs on a 2B basis together with such disbursements as may be allowed by the Registrar.
Associate Judge Johnston
Solicitors:
Gregory Simon Law, Auckland for applicant Ferguson Tuilotolava, Auckland for respondents
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