WT Trustee Company Limited v Cato
[2014] NZHC 1084
•21 May 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-493 [2014] NZHC 1084
UNDER the Land Transfer Act 19 52 IN THE MATTER
of an application for an order that caveat
9615955.1 against dealings not lapseBETWEEN
WT TRUSTEE COMPANY LIMITED Applicant
AND
BRUCE HILLIER CATO, GILLIAN SARAH LAWRIE and RICHARD GRAHAM COMPTON
Respondents
Hearing: 20 May 2014 Appearances:
R E Harrison QC and W D Woodd for Applicant
D J G Cox for RespondentsJudgment:
21 May 2014
JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 21 May 2014 at 1 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Solicitors: Boyle Mathieson, Auckland
Rennie Cox, Auckland
Counsel: R E Harrison QC, Auckland
WT TRUSTEE COMPANY LTD v CATO [2014] NZHC 1084 [21 May 2014]
[1] The Applicant (“WT”) seeks a stay of execution of a (results) judgment that I
gave on 9 May 2014.1
In that judgment I declined to make an order maintaining
caveat 9615955.1 (“caveat”) lodged by WT against the Respondents’ (“trustees”)
property on Waiheke Island (“the property”). The trustees oppose the granting of a stay.
Background
[2] WT lodged its caveat on the ground that it has a binding agreement dated
12 January 2014 to purchase the property from the trustees for $750,000 (“agreement”). The agreement has been signed by two of the trustees, Ms Lawrie and Mr Cato, but not by the third, Mr Compton. WT’s case was/is that, in the circumstances, the signature of the third trustee was not required. The trustees denied the existence of the agreement on the ground that Mr Compton’s signature was required. I accepted that submission and declined WT’s application accordingly.
[3] WT proposes to appeal my decision and makes its application for stay pursuant to Court of Appeal (Civil) Rules 2005, r 12(3). I have received affidavit evidence relevant to the stay from Mr Nixon, WT’s principal, and from one of the trustees, Ms Lawrie.2
[4] There is no dispute that the matters to be considered in determining whether to grant a stay pending appeal are:3
(a) whether the appeal may be rendered nugatory by the lack of a stay; (b) the bona fides of the applicant as to the prosecution of the appeal;
(c) whether the successful party will be injuriously affected by the stay;
(d) the effect on third parties;
1 WT Trustee Company Ltd v Cato [2014] NZHC 963; and WT Trustee Company Ltd v Cato [2014] NZHC 994.
2 Affidavit of S R Nixon sworn 13 May 2014; Affidavit of G S Lawrie sworn 19 May 2024; and
Affidavit of S R Nixon sworn 20 May 2014.
3 Yan v Mainzeal Property and Construction Ltd (in rec and liq) [2014] NZCA 86 at [25].
(e) the novelty and importance of questions involved; (f) the public interest in the proceeding;
(g) the overall balance of convenience; and
(h) the apparent strength of the appeal.
[5] The considerations in (d), (e) and (f) above do not arise in the present case.
Nugatory
[6] WT submits that its appeal may be rendered nugatory if a stay is declined and the caveat lapses. I accept that WT would not be able to purchase the property if the caveat were to lapse and the trustees were to transfer the property to a third party prior to determination of the appeal.
[7] Counsel for the trustees submits that the refusal of a stay would not render the appeal nugatory. As appears below, WT has not commenced proceedings, whether for specific performance or otherwise.
[8] Specific performance is a discretionary remedy and, as counsel for the trustees submits, the Court may withhold an order for specific performance if it considers damages would be a suitable remedy.
[9] Counsel for the trustees submits that, although it is commonly assumed that damages will not be a suitable remedy if a purchase of property is at stake, that
assumption is more readily displaced if the purchase takes place against a
commercial backdrop.4
Counsel submits that this case is one of a corporate
purchaser seeking to acquire a property for commercial gain. Counsel relies on evidence that WT’s principal, Mr Nixon, is a [director] of a firm of chartered accountants and a director of and shareholder in many companies with
“Investments” or “Trustee” in their name.
4 Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 at 317.
[10] Counsel also submits that the trustees will be able to meet any award of
damages against them. If the property were sold for $750,000, Ms Lawrie’s
evidence is that the trustees would have clear funds of $285,000.5
be greater on a sale at more than $750,000.
The sum would
[11] In his affidavit in reply, Mr Nixon acknowledges that he is an investor in property but states that the property was intended as a holiday home for his family and that it was not to be bought for the purpose of making a monetary profit.6
[12] To conclude on this point, I accept that there is a risk WT’s appeal will be rendered nugatory if a stay is not granted, but I also accept that the trustees would have funds available to meet any award of damages.
Bona fides
[13] Counsel for WT undertakes to prosecute WT’s appeal expeditiously and he is optimistic that a hearing before the Court of Appeal might be obtained within two months. The hearing date will be a matter for the Court of Appeal but I accept that WT proposes to act expeditiously.
Whether the successful party will be injuriously affected
[14] In the affidavit she swore on 19 May 2014, Ms Lawrie (one of the trustees) gives evidence of the effect of the delay on the trustees. She and her fellow trustee and husband, Mr Cato, are in their 80s. Ms Lawrie states that it was apparent to them last year that they should move to a retirement village as the property was becoming too much for them to manage.
[15] In late 2013 the trustees and Mr Cato entered into an agreement to purchase a unit in a retirement village, with each to pay half of the purchase price ($352,500 each). The agreement was conditional on the trustees entering into an unconditional agreement for the sale of the property by 31 March 2014, as the trustees were to
meet their share of the purchase price from the proceeds of sale of the property.
5 Affidavit of G S Lawrie, above n 2, at [11].
6 Affidavit of S R Nixon sworn 20 May 2014, at [3] and [4].
[16] Despite the dispute between the parties, the trustees and Mr Cato confirmed the agreement in respect of the unit by the due date. They have since settled the purchase and moved in. Pending resolution of this dispute, the trustees have borrowed their share of the purchase price from a member of Mr Cato’s family. As counsel for WT submits, there is no evidence that the trustees are paying interest on the borrowings but for myself I would not have thought that was a matter that counted in WT’s favour. In my view it is a matter that counts in favour of the property being sold and the borrowings being repaid without further delay.
Balance of convenience
[17] WT has known since mid January 2014 that the trustees disputed the existence of a binding agreement. It is also apparent from Mr Nixon’s evidence in the substantive proceeding that he knew the trustees were selling so that they could acquire an interest in a retirement unit. Despite that, WT has not yet commenced proceedings for specific performance or offered an undertaking in damages.
[18] In his most recent affidavit, Mr Nixon states that WT was advised that it should wait to tender settlement before commencing proceedings, that WT tendered
settlement on the due date (14 May 2014) and that it was declined.7
Counsel advises
that WT will commence proceedings for specific performance forthwith. On the matter of the undertaking counsel makes the point that provision of this is not mandatory (as it is for interim relief) and that there is no evidence that the trustees
have requested an undertaking.
[19] Whatever the explanation, the consequences of WT’s delay should not be visited on the trustees. The parties are now more than four months on, and WT has still not commenced its proceedings or volunteered to meet any losses that its caveat
might be causing.
Merits
[20] Not surprisingly, there is a difference between counsel as to whether there is merit in an appeal.
7 Affidavit of S R Nixon sworn 20 May 2014, at [6].
[21] As a general rule, all registered proprietors must execute an agreement if they are to be bound to sell. The effect of that general rule in this case would be to require Mr Compton’s execution of the agreement before it could bind the trustees.
[22] Counsel for WT relied on two arguments at the hearing before me on WT’s application to maintain the caveat.
[23] WT’s first argument was that the trust deed provided that a “decision” of the majority of trustees would be final and binding on all. The issue was whether, in executing the agreement, Ms Lawrie and Mr Cato had made a decision to sell or whether they had made a decision to sell if Mr Compton agreed to do likewise. On the evidence before me I considered it was the latter.
[24] Neither party filed evidence from the two real estate agents involved, one of whom (on Mr Cato’s and Mr Compton’s evidence) was to, and did, request Mr Compton’s execution of the agreement. Counsel for WT submits that no view can be reached as to the merits of its appeal in the absence of the agents’ evidence.
[25] I accept that the evidence of the agents may be relevant. Counsel for WT was critical of the trustees’ failure to provide affidavit evidence from the agents, given that they were appointed by the trustees. That criticism is misplaced. It was open to WT to seek evidence from the agents if it wished and it was open to both parties to rely on High Court Rules, r 9.75 if the agents refused to provide an affidavit.
[26] WT’s second argument was that Ms Lawrie and Mr Cato had ostensible or apparent authority to bind Mr Compton. I dismissed that argument because any such authority must emanate from the principal, and there was no evidence to that effect.
[27] To conclude, I have reservations as to the merits of any appeal on the evidence at the substantive hearing but treat the point as “neutral”.
Conclusion
[28] For me the most significant matters are the effect of a stay on the trustees and WT’s delay in commencing for specific performance. Both of these count against granting a stay and I decline to do so.
[29] WT must pay the trustees’ costs and disbursements on this application on a
2B basis. As requested by counsel for WT, these orders are to lie in Court until
3 pm, 23 May 2014.
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M Peters J
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