Teece v Veint
[2021] NZHC 409
•9 March 2021
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2020-425-000073
[2021] NZHC 409
UNDER the Land Transfer Act 2017 IN THE MATTER
of an application that a caveat not lapse
BETWEEN
DAVID JOHN TEECE
First ApplicantAND
HERITAGE PTC, LLC
Second Applicant
AND
LLOYD JAMES VEINT
Respondent
Hearing: 19 February 2021 Appearances:
S J Mills QC and J Moss for Applicants
P F Whiteside QC and D M Jackson for Respondent
Judgment:
9 March 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 9 March 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
TEECE v VEINT [2021] NZHC 409 [9 March 2021]
The application
[1] This case concerns an application to sustain a caveat lodged to protect a contractual equitable easement. There has been a prior related decision concerning whether this application was made in time; an issue decided in favour of the applicants.1
[2] An equitable easement is an interest in land capable of supporting a caveat.2 The respondent, Mr Veint, argues the applicants have no caveatable interest in his land because conditions requiring and justifying the grant of an easement in this case have not been satisfied. However, his primary submission is the caveat should lapse in any event in the exercise of the Court’s discretion because the applicants have no reasonable expectation of obtaining any benefit from the continuance of the caveat.
The facts
[3] In 1997, Dr Teece, the first applicant, purchased land near Glenorchy known as the Paradise Block from Mr Veint. The Paradise Block was part of a larger property known as Arcadia Station which is still retained by Mr Veint.
[4] Dr Teece lives in the United States but is a New Zealander. He has property interests here and planned to develop the Paradise Block as an eco-tourist lodge. No such development has occurred.
[5] The Paradise Block has now been transferred to the second applicant (Heritage). Heritage is a corporate trustee of a trust associated with Dr Teece. The parties proceeded on the basis that Dr Teece and Heritage have identical interests and obligations. Therefore, throughout this judgment I will simply refer to Dr Teece.
[6] Mr Veint and Dr Teece entered into a heads of agreement for the sale and purchase of the Paradise Block dated 25 August 1997. Settlement was to be on 31 October 1997 (or earlier by mutual agreement) and Dr Teece obtained a right of
1 Teece v Veint [2020] NZHC 3501.
2 Pure Crystal Holdings Ltd v Canterbury Regional Council [2017] NZHC 1885 at [21]; see also
North v Longford Holdings Ltd HC Wellington M 307/97, 17 September 1997.
access to use and, if necessary, extend an airstrip on Arcadia Station in the event that, after taking advice and researching the viability of an airstrip on blocks 1 and 2 of the Paradise Block, he concluded this was not feasible. It should be noted, blocks 1 and 2 comprise only a portion of the Paradise Block.
[7] In early October 1997, Dr Teece’s lawyer, Lindsay Lloyd of Macfarlanes (later known as MDS Law), instructed DC3-Pionair to provide advice as to the viability of establishing an airstrip on blocks 1 and 2. Mr Lloyd considered it was in the interests of both parties to have the details of the easement clearly resolved and settlement was delayed.
[8] On 24 November 1997, Dr Teece and Mr Veint entered into the agreement for sale and purchase (superseding the heads of agreement) pursuant to which Dr Teece ultimately acquired the Paradise Block. Dr Teece was granted a first right of refusal in the event Mr Veint wished to sell the balance of Arcadia Station.
[9] The agreement for sale and purchase also contained the following special conditions 17 (cl 17) and 19 (cl 19) concerning the easement:
Clause 17:
David will take advice and research the viability of an airstrip on Blocks 1 and 2 and having taken that advice in the event of his finding that it is not feasible to create an airstrip on those blocks suitable for his requirements in regard to aircraft operation and safety for a modern two engine aircraft then Jim will grant David a legal right created by easement to use the existing airstrip and to have access to it. … This easement shall be forever appurtenant to two of the titles purchased by David, or his wife and children or a company or Trust controlled by them or for their benefit. It shall not enure for the benefit of any other party and upon the sale of any other part of the land purchased by David or his said family, the airstrip easement shall be surrendered on or before settlement in respect of that other land sold.
Clause 19:
If David has to use the existing airstrip he will be able to improve and extend it so it is capable of all weather use.
[10] In a letter of 2 December 1997, Mr Veint’s lawyer, Chris Steven, wrote to Macfarlanes calling for settlement that day and recording:
… I have now spoken with Jim Veint regarding the requirements of special condition 17 of the Agreement for Sale and Purchase. I can confirm that Jim Veint, with no hesitation at all, readily acknowledged his obligations under that condition. He is concerned only to ensure that the proper feasibility study of blocks 1 and 2 is undertaken before David Teece seeks recourse to his rights to an easement over the existing strip.
[11] Settlement occurred on 2 December 1997. The easement issue remained outstanding.
[12] In February 2000, Dr Teece received advice from Rex Dovey, a commercial pilot, as to the viability of constructing an airstrip on the Paradise Block to accommodate an aircraft capable of carrying 10 passengers from Auckland. The parties emphasise different aspects of this report. Dr Teece’s case is that he concluded it was not feasible to create an airstrip on the Paradise Block because of the cost and because he would need to have his own aircraft and crew.
[13] On 6 June 2003, Mr Lloyd instructed Simon Palmer, an aviation expert, to provide advice. Dr Teece says this report was sought because proceedings were being filed against Mr Veint requiring registration of the easement and Mr Dovey’s report was relatively informal. Mr Palmer’s report noted blocks 1 and 2 were “unsuitable for the development of an airstrip” but “blocks 6, 7 and 9 would be the most suitable for the development of an airstrip”. Dr Teece says as blocks 6, 7 and 9 were not the locations specified in the agreement he did not take this any further.
[14] Mr Lloyd was concerned that the limitation period for commencing a proceeding seeking specific performance of the easement agreement did not expire and Dr Teece commenced a High Court proceeding against Mr Veint on 20 November 2003.
[15] Paragraph 6 of Dr Teece’s statement of claim asserts that between 1 December 1998 and 9 December 2002 Dr Teece took advice and researched the viability of an airstrip on blocks 1 and 2. Paragraph 7 asserts that on various occasions between 10 December 2002 and 30 March 2003 Dr Teece requested Mr Veint grant the easement, but Mr Veint refused and/or failed to grant a legal easement. This latter allegation was admitted by Mr Veint, although he also pleaded it is feasible to create an airstrip on blocks 1 and 2 suitable to Dr Teece’s requirements.
[16] Dr Teece lodged his caveat on 25 November 2003 asserting an interest over three titles of Mr Veint’s land pursuant to the agreement to grant an easement contained in the agreement for sale and purchase of 24 November 1997.
[17] The issue of a court proceeding against him upset Mr Veint. In a letter to Dr Teece of 6 January 2004 he stated that, “… even now you have never to my knowledge stated that an airstrip, capable of landing a two engined plane, cannot be created on Blocks 1 and 2.” He also set out reasons why the airstrip on Arcadia Station could not practically be extended. There is no evidence of any reply to that letter. Dr Teece and Mr Veint then agreed to a stay of the Court proceeding on 5 May 2004. Mr Veint says they agreed to leave the issue alone “for a few years” and then he forgot about it. Although leave was reserved to bring the proceeding back before the Court neither party has ever sought to do so.
[18] There is evidence that in 2007 Dr Teece attempted to sell the Paradise Block but it did not sell.
[19] In 2017, Dr Teece sought expert advice as to the potential for development of the Paradise Block and submissions were made on his behalf at hearings in respect to Queenstown Lakes District Council proposed District Plan changes concerning the property.
[20] In late 2019, Mr Veint decided to sell Arcadia Station. On 21 March 2020, he entered into an agreement for the sale of Arcadia Station to The Station at Waitiri Ltd. In the agreement, there is an acknowledgement that Dr Teece had the first right of refusal to acquire the land. There is also, at cl 33.4 of the further terms of sale, an acknowledgement of the caveat. The details of the caveat are at sch 5 of the agreement. It sets out cl 17, substantially verbatim, but omitting title references. There is no stipulation that Mr Veint will remove the caveat before settlement or anything to suggest the caveat is subject to dispute.
[21] On 8 April 2020, Mr Veint’s lawyers emailed Dr Teece’s lawyers concerning how the caveat would be dealt with in connection with the sale of Arcadia Station. It identified three possible outcomes which were described as follows:
1.After having taken advice, it is feasible for your client to create a suitable airstrip on Blocks 1 and 2. In that case, the Caveat should be withdrawn as soon as possible.
2.After having taken advice, it is not feasible for your client to create a suitable airstrip on Blocks 1 and 2. Regardless, circumstances may have changed, and your client may not wish to pursue the airstrip by way of easement on Arcadia any further. In that case, the Caveat should be withdrawn as soon as possible.
3.After having taken advice, it is not feasible for your client to create a suitable airstrip on Blocks 1 and 2 but your client still wants to pursue using the airstrip contemplated by the Caveat. If that is the case (and if it is indeed possible for such an airstrip to be safely used and consented in that position), then we should proceed to register the easement immediately and arrange for the Caveat to be contemporaneously withdrawn.
… We are a while out from settlement, but it is our strong preference to reach agreement on the path forward with respect to the Caveat as soon as possible for the benefit of all parties (including your client).
[22] In June 2020, Dr Teece engaged another aviation expert, Craig Anderson, to provide a report on the viability of an airstrip on the Paradise Block. Dr Teece was planning a landing strip on a property at Mt Beautiful and thought “insight on Paradise would be helpful as triangular trips between Auckland – Paradise – Mt Beautiful… were being contemplated”. Mr Anderson concluded from a flying perspective it was possible to build an airstrip on the Paradise Block, although with operational limitations. Dr Teece says Mr Anderson had not been instructed that any airstrip had to be feasible and viable on blocks 1 and 2. He also notes Mr Anderson stated that issues of planning, building and costing were outside his expertise.
[23] On 23 June 2020, Mr Holland, a solicitor acting for Mr Veint, and Mr Lloyd, had a telephone conversation in which Mr Lloyd stated the caveat would not be discharged unless Mr Veint provided some other “creative solution”. Then, on 26 June 2020, MDS Law wrote to Mr Veint’s lawyers stating that Dr Teece had determined it was not feasible to create an airstrip on his land suitable for his requirements and calling for the easement to be registered.
[24] On 21 July 2020, Dr Teece provided consent to the registration of an unrelated easement on the titles of Arcadia Station at Mr Veint’s request. Mr Veint’s solicitors
had indicated Dr Teece’s delay in consenting to this “really is holding things up for us in the context of our client’s sale”.
[25] In November 2020, Mr Veint applied to the Registrar-General of Land to lapse Dr Teece’s caveat. Dr Teece received notice of that and filed this proceeding to sustain the caveat.
[26] Settlement of the sale of Arcadia Station to The Station at Waitiri Ltd was to have occurred on 3 December 2020. Mr Veint says he cannot provide clear title to his land that is subject to the caveat and is in default. The Station at Waitiri Ltd has given him notice of its intention to charge default interest for late settlement from 3 December 2020 at the rate of $4,592 per day.
Caveat principles
[27] As noted in Sims v Lowe, a “caveator seeks to clog or fetter the proprietary interest of another” and must justify the continued existence of the caveat.3 The caveator will do that if they can show a reasonably arguable case for the interest claimed.
[28] In Philpott v Noble Investments Ltd, the Court of Appeal noted the following relevant principles in relation to applications to sustain caveats:4
(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;
(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;
(c)The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and
(d)When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis.
3 Sims v Lowe [1988] 1 NZLR 656 (CA) at 660.
4 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26] (footnotes omitted).
Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.
[29] At this juncture there are two points in particular to highlight. First, it has long been recognised that on applications of this kind the Court ought not to finally determine the rights of the parties unless both consent, or the facts are not in dispute and the law has been fully argued.5
[30] Second, once a caveator has established a reasonably arguable case to the interest claimed, the Court has a residual discretion to nonetheless remove the caveat. This power is sparingly used and only in exceptional cases where there is no practical advantage in maintaining a caveat. The Court must be completely satisfied that the caveator’s legitimate interests will not be prejudiced by the removal of the caveat. The onus lies on the party challenging the caveat to show why the residual discretion should be exercised.
[31] Relevant to this second point, Mr Whiteside referred me to the Court of Appeal’s judgment in Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd, where Blanchard J, in delivering the judgment of the Court, said:6
We are of the view that in the dictum in Sims v Lowe Somers and Gallen JJ were concerned with the situation which was then before the Court and were not putting their minds to a situation in which there is no practical advantage in maintaining a caveat lodged by someone who could properly claim a caveatable interest. In such circumstances the Court retains a discretion to make an order removing the caveat, though it will be exercised cautiously. An order will be made for removal only where the Court is completely satisfied that the legitimate interests of the caveator will not thereby be prejudiced. If, on the facts of the case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of money secured over the land or specific performance of an agreement or if the caveator’s interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate for the caveat to be removed notwithstanding that the right to the claimed interest is undoubted.
Mr Veint’s case
[32]Mr Whiteside advances arguments which I will deal with under the headings:
5 Neil Campbell Campbell on Caveats (3rd ed, LexisNexis, Wellington 2019) at 10.020(a).
6 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
(a)unsatisfied conditions;
(b)implied term;
(c)good faith;
(d)delay and prejudice;7
(e)Rule 15.2 High Court Rules 2016.
Unsatisfied conditions
[33] Mr Whiteside argues Dr Teece was only entitled to lodge his caveat if he had made a finding under cl 17 that it is not feasible to create an airstrip on blocks 1 and 2 suitable for his requirements in regard to aircraft operation and safety for a modern two engine aircraft. He submits Dr Teece is yet to make a finding under cl 17 and in the absence of such a finding the caveat must be immediately removed. I do not accept that submission.
[34] Under cl 17, Mr Veint would grant Dr Teece a legal easement to use and have access to the existing airstrip on Mr Veint’s land subject to meeting two conditions. Those conditions were:
(a)Dr Teece was to take advice and research the viability of an airstrip on blocks 1 and 2 suitable for his requirements; and
(b)Dr Teece was to decide whether it was feasible to build an airstrip on those blocks.
[35] The first condition required an objective assessment as to the viability of an airstrip. The second condition involved a subjective assessment by Dr Teece under which he might consider a range of issues including the availability of planning consents, safety and operational limitations, engineering requirements and costs.
7 Mr Whiteside treated delay and prejudice as separate matters but I find it convenient to deal with them under one heading.
[36] Mr Whiteside’s argument proceeds on the basis that Dr Teece is still working through outstanding issues to make a finding under cl 17 and has not made a decision that it is not feasible to create an airstrip on blocks 1 and 2. In fact, Dr Teece made that decision in 2003 when he commenced his proceeding against Mr Veint. Paragraph 6 of his statement of claim pleads Dr Teece had “found that it is not feasible to create an airstrip on Blocks 1 and 2 suitable for his requirements”. It was on that basis he sought specific performance of the agreement to grant him the easement.
[37] Mr Whiteside’s submission does not, to my mind, fairly reflect Dr Teece’s evidence. In the later paragraphs of Dr Teece’s affidavit, that Mr Whiteside relies upon, he is making the point that without additional material from a range of experts there is no basis for him to change his view that it is not feasible to build an airstrip on blocks 1 and 2.
Implied term
[38] Mr Whiteside argues the parties regarded Dr Teece as having an obligation to promptly take advice and research the viability of an airstrip on the land he purchased and promptly make a decision whether such an airstrip was feasible. Dr Teece is, he contends, in breach of an implied term to act promptly under cl 17 and is not entitled to continue to prevaricate over the easement and to maintain the caveat in the meantime.8
[39] Mr Mills did not discount the possibility of an implied term that Dr Teece would act reasonably (not promptly) in seeking advice in relation to the viability and feasibility of an alternate airstrip, but argues there was no breach of such an implied term.
[40] Mr Whiteside’s submission is again based on the incorrect premise that Dr Teece has yet to make a decision whether an airstrip on blocks 1 and 2 is feasible. Dr Teece made a decision that an airstrip was not feasible in 2003 and at that point he purported to exercise his contractual right to call for a legal easement. Whether
8 Mr Whiteside relied upon BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1997) 16 ALR 363 (PC) at 376 and Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10.
Dr Teece was at that point in time in breach of an implied term to act promptly (or reasonably) is of academic interest only in the present context.
Good faith
[41] Mr Whiteside asserts that Dr Teece is not entitled to specific performance as he has not acted in good faith or performed his contractual duties “honestly and reasonably and not capriciously or arbitrarily”.9 This is because, he says, Dr Teece did not provide reports promptly to Mr Veint, did not act promptly in relation to the obtaining of advice or in making a finding over feasibility and has been inactive for 17 years in relation to the easement.
[42] Mr Whiteside did not refer to any authority to support a view that the duty of honest performance recognised in Canada has any place in New Zealand law. While I accept that a party guilty of unconscionable conduct may be deprived of specific performance as a remedy there is nothing in the facts of this case that could reach such a high threshold.10 The submission advanced is substantially founded on the fact of delay which I deal with below.
Delay and prejudice
[43] Mr Whiteside argues Dr Teece can have no reasonable expectation of obtaining any legitimate benefit from the caveat. This is because by reason of his inordinate, inexcusable and inexplicable delays, specific performance of the agreement to grant him the easement is no longer available to him. The caveat should therefore be removed. This argument is founded on the equitable doctrine of laches.
[44] Delay on the part of the caveator is a relevant factor to be weighed in the exercise of the Court’s discretion in relation to caveats. In Plimmer Bros v St Maur, in re Caveat No 2538 Stout CJ removed a caveat in a case where R had assigned his interest as purchaser under an agreement for sale and purchase of an hotel to the
9 Bhasin v Hrynew [2014] 3 SCR 495 at 496.
10 Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Brookers, Wellington, 2011) at [8.8.4].
defendant.11 The contract for sale and purchase was due for settlement on 1 March 1905 when the defendant presented a valueless cheque. Sixteen months later, having done nothing further to complete the purchase, the defendant lodged a caveat against the plaintiff’s title. Stout CJ said:12
In my opinion an action for specific performance under such circumstances would be hopeless, and a caveat under such circumstances must be deemed vexatious. The Courts have, even in cases where actions have been commenced, struck them out as being vexatious when they appeared on their face to be without merits … in my opinion to prevent a man dealing with property after such a long delay is so inequitable that the Court will not lend its assistance to such a proceeding.
[45] In Varney v Anderson, the Court of Appeal allowed an appeal from a decision of Chilwell J removing the appellant’s caveat where the appellant was guilty of delay in the pursuit of a proceeding before the High Court for specific performance as purchaser under an agreement for sale and purchase.13 The Court of Appeal considered the delays were not great and were explained to some extent, and there was no claim or evidence of prejudice by the vendors.14 The Court confirmed delay is a relevant factor to be considered in the exercise of the discretion to remove a caveat and it is established practice that “in the case of a caveat by a party claiming to be a purchaser the Court has always insisted on the diligent prosecution of specific performance proceedings as the price of preserving the caveat”.15 Cooke P noted that a registered proprietor invoking delay in support of an application to remove a caveat will have a stronger case if specific prejudice is shown. He said:16
The mere presence of a caveat on a title may be some prejudice or embarrassment, but a registered proprietor invoking delay by a caveator in support of a s 143 application will obviously have a stronger case if he can show specific prejudice. A mere general tendency to prejudice is not in our opinion enough to lead more or less automatically to a removal on the ground of delay. All the circumstances of the particular case have to be considered …
…
It is true that delay is not necessarily a bar to specific performance … We think it fallacious, however, to convert the possibility of obtaining a specific performance decree into an invariable and automatic ground for preserving a
11 Plimmer Bros v St Maur, in re Caveat No 2538 (1906) 26 NZLR 294 (SC).
12 At 297 (citations omitted).
13 Varney v Anderson [1988] 1 NZLR 478 (CA).
14 At 478.
15 At 479 citing Tapper v Lapwood (1979) 1 NZCPR 83 at 87 and Merbank Corp Ltd v Carter (1981) NZCPR 279 (HC) at 285.
16 At 480 – 481.
caveat, no matter what the delay. It is reasonable, especially where there has been culpable and serious delay, that a party who has delayed to the prejudice of the registered proprietor should – or at least may – have to do so at the cost of the removal of his caveat. That may add a risk that a decree for specific performance will be ineffective, but it is a risk which the delaying caveator takes.
[46] In Virtual Spectator Ltd v Rothlander, Associate Judge Bell considered a caveat where delay was relied on by the property owner and said:17
Lapse of time may give grounds for finding that there is not a caveatable interest. If the cause of action to establish the interest has become barred under a limitation statute, or laches and other factors would lead a court to deny equitable relief such as specific performance, or delay amounting to want of prosecution under r 15.2 of the High Court Rules would give grounds to dismiss a proceeding, then the inability to sue would lead to a loss of a caveatable interest.
[47]Further, the Judge said:18
As was noted in Varney, it is standard practice when making an order sustaining a caveat to require the caveator to pursue a claim for the substantive interest with due diligence. Failure to follow that condition may provide grounds for removing a caveat.
[48] Mr Mills referred me to Eastern Services Ltd v No 68 Ltd, as the leading New Zealand authority on the doctrine of laches.19 The facts were that Eastern was the registered proprietor of two adjoining pieces of land at 68 and 70 Anzac Avenue, Auckland. It contracted to sell No 68 to M. The agreement for sale and purchase provided that Eastern would create and transfer to M a right of way easement over No
70. Its obligation was conditional upon it obtaining all necessary consents. A sum of
$10,000 was retained by M pending Council approval of the right of way. A plan showing the creation of the right of way was approved by the Auckland City Council and deposited with the Land Transfer Office permitting the creation of the registered easement in favour of M. The $10,000 that had been withheld was paid to Eastern. Certain engineering works were undertaken to render the right of way usable by vehicles to which M contributed in small part. There was some use of the right of way by M and its invitees but such activities were beyond the contemplation of the grant. Two decades passed without M calling on Eastern to perfect its title by executing a
17 Virtual Spectator Ltd v Rothlander [2016] NZHC 499 at [62].
18 At [64], referring to Varney v Anderson, above n 13 at 478.
19 Eastern Services Ltd v No 68 Ltd [2006] NZSC 42, [2006] 3 NZLR 335.
registrable transfer of the easement. When M did call for a transfer of legal title to the right of way Eastern refused to do so and M’s successor in title sued for specific performance. The defence of laches was raised.
[49] The Supreme Court said the defence of laches requires a balancing of equities and to maintain and obtain relief a defendant must have an equity which, on balance, outweighs the plaintiff’s right.20 The Supreme Court approved the caution that Cooke P expressed in Neylon v Dickens about acceptance of an unqualified principle concerning mere delay without prejudice.21 It also referred with approval to the judgment of Cooke P in The New Zealand Law Society v The Wellington City Council where the Judge said:22
The issues arising under the Society’s defences of estoppel, laches and acquiescence, and the contention that Davison CJ exercised his discretion wrongly, can conveniently be considered together. Essentially they require consideration of the equities and can be summed up in the question whether it would be unconscionable to grant relief in the light of the reasonable expectations of the parties. As to laches, which on the facts here is the most promising defence from the Society’s point of view, it has been accepted in this Court in Neylon v Dickens [1987] 1 NZLR 420, 407-409, that the length of the delay and the nature of the acts done during the interval are always important in laying down a balance of justice or injustice between the parties, and that in some cases an inference may be drawn as a matter of common sense that delay in making a claim has prejudiced the defendant.
[50] The Supreme Court held that specific performance was available on the facts of the case before it. A number of factors were important. The Court noted M had paid valuable consideration as part of the transaction, yet Eastern sought to retain the benefit it had received and at no cost to itself. Also during the period of delay Eastern had virtually exclusive practical use of a physical feature (the right of way) to which M had not insignificantly contributed. Although a value had not been discreetly placed on the easement in the original agreement for sale and purchase, and the obtaining of a registrable interest was conditional, it was nevertheless an interest of significant value as shown by the reservation of $10,000 of the purchase price which was to be retained on behalf of Eastern. The Court noted also that equity will be most reluctant
20 At [13] referring to Nwakobi v Nzewku [1964] 1 WLR 1019 (PC) at 1026.
21 At [37] referring to Neylon v Dickens [1987] 1 NZLR 402 (CA) and see Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 1060-1061.
22 Eastern Services Ltd v No 68 Ltd, above n 19, at [36] referring to The New Zealand Law Society v Wellington City Council [1990] 2 NZLR 22 (CA) at 26.
to accept that an equitable interest in land could be “lost or destroyed by mere inaction”,23 and on the facts all that needed to be done between the parties was the conveyancing step of transferring the legal estate. Therefore, notwithstanding delay, the Court did not accept the balance of equities required that specific performance be withheld.
[51] Mr Whiteside argues Eastern Services Ltd is of little assistance because it turns on its own facts. Mr Mills, on the other hand, notes Eastern Services Ltd was a decision following a full trial in the High Court where all the evidence was heard and tested. The Court of Appeal and then the Supreme Court had the benefit of a record of this evidence. He submits I should be cautious before making any ruling that laches applies on a caveat application and summary principles. Nevertheless, he also submits Eastern Services Ltd assists Dr Teece because the circumstances were more extraordinary in that case than in this.
[52] In Equity and Trusts in New Zealand, the authors refer to Eastern Services Ltd and express the view that delay without prejudice will be insufficient to establish the defence of laches.24 The authors write it has been stated repeatedly that delay, without more, is insufficient to make out laches and note in neither Eastern Services Ltd (a delay of 26 years) and Aberdeen Town Council v Aberdeen University25 (an 80 year delay) was delay fatal in the absence of material detriment.26
[53] The application of the doctrine of laches requires a balancing of equities “in relation to the broad span of human conduct”.27 All the relevant facts must be identified and weighed in determining where the balance of justice lies.
[54] There is no denying the fact of delays in this case. It has been 23 years since Dr Teece acquired the Paradise Block and 17 years since he commenced his action for specific performance and lodged the caveat. Nothing meaningful in relation to the easement occurred between 2004 and 2020. However, context is important and
23 At [39] citing Sharp v Milligan (1856) 52 ER 1242 (CA) and Williams v Greatrex [1956] 3 All ER 705 (CA).
24 Butler (ed) Equity and Trusts in New Zealand, above n 21, at 38.1.4(3).
25 Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544 (HL).
26 At 38.1.4(3).
27 Eastern Services Ltd v No 68 Ltd, above n 19, at [37].
Dr Teece has not been entirely inactive. Certainly, up to 2004, Dr Teece did investigate the viability of the airstrip on blocks 1 and 2 and called upon Mr Veint to grant the easement. Dr Teece then filed his Court proceeding to protect his position. It was a mutual decision to stay the Court proceeding and it was anticipated the stay would remain for a period of years. It appears neither party was sufficiently concerned to then take steps to resolve the matter. Mr Veint’s evidence is that the caveat did not matter to him because he was never going to sell Arcadia Station. The extent to which Mr Veint acquiesced in the delays that occurred is relevant in an assessment of the equities in this case.28
[55] It was held in Eastern Services Ltd that equity will be reluctant to defeat an equitable interest by mere inaction. Mr Veint says there is more than inaction as he is prejudiced by the delay. He is 82 years old, about to retire from active farming, unable to complete the sale of his farm and facing a claim for penalty interest. Against that, this is not a case where Dr Teece raised the issue of the easement unexpectedly at the eleventh hour, nor is it a case where there is prejudice to an innocent and unknowing purchaser. Under the agreement for sale and purchase between Mr Veint and The Station at Waitiri Ltd, there is an acknowledgment of the caveat and the interest claimed by it. There is nothing in the agreement to the effect that the easement was subject to dispute or would not be registered or as to how the caveat would be treated before or upon settlement. Importantly, also, in correspondence between the parties’ respective solicitors in April 2020, there is at least an inference that Mr Veint was prepared to recognise Dr Teece’s right to an easement. Then in July 2020, Mr Veint’s solicitors indicated that settlement was only being held up by Dr Teece’s failure to consent to the registration of an unrelated water easement.
[56] Given the terms of the agreement for sale and purchase between Mr Veint and The Station of Waitiri Ltd it is not clear how The Station at Waitiri Ltd can justify its refusal to settle. Mr Whiteside submits I should not attempt to reach any concluded view on that matter. He argues I am still entitled to weigh in the balance the question of prejudice arising due from its refusal to settle. Mr Mills submits it is not necessary for me to make any finding on the matter to conclude that I am not satisfied that
28 O’Connor v Hart [1983] NZLR 280 at 292 (CA).
Dr Teece’s legitimate interests will not be prejudiced by the removal of the caveat. It is sufficient, he submits, that it is arguable on the unambiguous words of the agreement that the easement interest claimed by Dr Teece would not be a bar to settlement.
[57] I accept that the refusal of The Station at Waitiri Ltd to settle is prejudicial to Mr Veint. Where the responsibility for that lies is uncertain. Dr Teece can legitimately argue that since 2003 his position as to his entitlement to the easement has been clear and Mr Veint should, as it appears he may have intended to do, contract with The Station of Waitiri Ltd on terms that recognised Dr Teece’s rights. Both Counsel were agreed I should not come to a view as to whether The Station at Waitiri Ltd was entitled to refuse to settle due to the caveat. For present purposes, however, it has not been shown that The Station at Waitiri Ltd is justified in its refusal to settle or that such prejudice as Mr Veint may suffer by its refusal can fairly be attributed to unreasonable delay on the part of Dr Teece in pursing his rights.
[58] It is also argued that Mr Veint has suffered prejudice because, with the passage of time, his memory is not as sharp as it was 24 years ago and that contemporary documents relevant to the dispute will have been lost or destroyed. While I accept this is possible the argument was not developed and the factual basis for it is largely speculative.29
[59] Mr Veint says the caveat provides no practical advantage to Dr Teece because he will never be able to build on the Paradise Block, has no use for the existing airstrip, and will not be able to extend and develop the existing airstrip to enable him to fly between Auckland and Arcadia Station. He says the easement is worthless as no one does, can or ever will land passenger aircraft on Arcadia Station. It is the case that in the 23 years since acquiring the Paradise Block Dr Teece has never tried to land any aircraft on Arcadia Station. However, there is expert evidence of the development potential of the Paradise Block. Dr Teece also refers to the possible use of the property in association with other properties he has an interest in. I cannot be satisfied that Dr Teece will not require, in the future, use of the airstrip on Arcadia Station in connection with the development or use of the Paradise Block.
29 Eastern Services Ltd v No 68 Ltd, above n 19, at [26]-[28].
[60] There is another factor that weighs in the balance. As was the case in Eastern Services Ltd, there was no attempt to put a discrete monetary value on the easement, but the correspondence shows that it was a matter of great importance to Dr Teece in deciding to purchase the Paradise Block. The uses to which the Paradise Block may be put may be enhanced with access to an airstrip on Arcadia Station. The legal right to use the airstrip may, therefore, be of significant monetary value.
[61] I am not satisfied that the balance of the equities in this case are such that Dr Teece can have no reasonable expectation of obtaining specific performance of the agreement to grant him the easement.
Rule 15.2 High Court Rules
[62] Under rule 15.2, the Court may make an order dismissing or staying a proceeding as it thinks fit if a plaintiff fails to prosecute all or part of the proceeding to trial and judgment. Mr Whiteside submits given Dr Teece’s complete disinterest in pursuing any entitlement to an easement, a strike out application of his Court proceeding would succeed.
[63] Mr Whiteside referred to the principles applicable under r 15.2 summarised by Eichelbaum CJ in Lovie v Medical Assurance Society NZ Ltd that:30
[T]he applicant must show that the plaintiff has been guilty of inordinate delay, that such delay is inexcusable, and that it has seriously prejudiced the defendant. Although these considerations are not necessarily exclusive, and at the end one must always stand back and have regard to the interests of justice, in this country, ever since NZ Industrial Gases Ltd v Andersons Ltd [1970] NZLR 58 it has been accepted that if the application is to be successful, the applicant must commence by proving the three factors listed.
[64] The overriding consideration on an application under r 15.2 is whether justice can be done between the parties despite the delay. Despite Mr Veint’s age and the possibility that with the passage of time memories of potential witnesses fade and documents are lost, I am not satisfied justice cannot be done between these parties. Factors that I have discussed above in relation to delay and prejudice are relevant here
30 Lovie v Medical Assurance Society NZ Ltd [1992] 2 NZLR 244 (HC) at 248.
also. Further, generally the Court will not strike out a proceeding before the claim is statute barred.31 No submissions were presented that that is the case here.
Conditions of maintaining the caveat
[65] I am satisfied Dr Teece has a reasonably arguable case for the interest he claims in Arcadia Station pursuant to the caveat. I am not satisfied that the legitimate interests of Dr Teece will not be prejudiced by the removal of the caveat. The caveat should be sustained in those circumstances.
[66] As a condition of sustaining the caveat, Dr Teece would usually be required to pursue diligently his Court proceeding to establish his entitlement to the easement. Furthermore, a caveator may be required to provide a suitable undertaking to pay such damages as the Court considers fit to award in the event that the interest claimed by the caveat is not ultimately sustained.32 My preliminary view is that such conditions should be imposed in this case. As I have not heard from Counsel on the subject of conditions I will reserve leave to apply if agreement cannot be reached.
Result
[67] There shall be an order that pending further order of the Court, caveat no 5812927.1 lodged against Record of Titles OT16A/772, OT16A/774 and OT18D/1140 shall not lapse.
[68] I would expect that Counsel will be able to agree on the terms of any conditions but, if not, Mr Veint may apply for the imposition of conditions on the making of the order in [67] above. Mr Veint may do so by memorandum within 21 days and Dr Teece shall have 14 days to reply. Subject to any contrary submissions from Counsel, I would expect to deal with that matter on the papers.
31 See Mead v Day [1985] 1 NZLR 100 (CA) at 105.
32 Raiser Developments Ltd v Trefoil Properties Ltd (2008) 9 NZCPR 161 (CA).
[69] If Counsel cannot agree on costs, memoranda may be filed within 21 days with 14 days to respond. I will determine costs on the papers. Memoranda are to be no longer than five pages.
O G Paulsen Associate Judge
Solicitors:
MDS Law, Christchurch Berry & Co, Christchurch
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