Yarrow v Tennent
[2017] NZHC 1275
•12 June 2017
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2017-404-000590
[2017] NZHC 1275
BETWEEN PAUL STEVEN YARROW
Applicant
AND
PETER DAVID TENNENT AND GRANT HASSALL AS EXECUTORS OF THE ESTATE OF MELVA DOREEN YARROW
Respondents
Hearing: 12 June 2017 Appearances:
P S Yarrow the Applicant in person
ITF Hikaka and L Clews for the Respondents
Judgment:
12 June 2017
ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
P S YARROW v P D TENNENT AND G HASSALL AS EXECUTORS OF THE ESTATE OF MELVA DOREEN YARROW [2017] NZHC 1275 [12 June 2017]
[1] On 2 May 2017 Lang J directed this matter be heard today and ordered that the applicant’s three caveats not lapse, over three parcels of land at two addresses, over 23 Riemenschneider Street, Manaia (the Manaia property) and 72 Messenger Terrace, Oakura, Taranaki.
[2] Since then those caveats have lapsed because the applicant did not notify the Registrar-General of Land of the order, as he was required to do under s 145A of the Land Transfer Act (Act).
[3] The applicant is a lay litigant. He says he was unaware of his obligations to notify the Registrar-General of Land.
[4]Presently the caveats have lapsed and the titles of the properties are now clear.
[5] In the circumstances, and appropriately it seems to the Court, the respondents are content to treat this hearing as if it is an application for leave to lodge a second caveat in respect of the claimed interest under s 148 of the Act. It is clear from the directions of Lang J than an opportunity be provided to the applicant to prove his claim of a caveatable interest.
[6] It is the respondents’ position that leave should not be granted to lodge a second caveat because they say the underlying caveat is not sustainable and the threshold for leave to lodge a second caveat is not met.
[7] The Manaia property is subject to a sale and purchase agreement. Earlier and while marketed for sale it had been offered to the applicant and, separately, to his brother John Yarrow but neither have made an offer of purchase. The respondents have confirmed that the net proceeds of sale of the property will remain to be held by the estate and will not distributed pending resolution of other Family Protection Act 1955 and Law Reform (Testamentary Promises) Act 1949 claims.
Background
[8] The respondents are executors of the estate of Melva Doreen Yarrow (estate). Noel and Melva, the parents of the applicant and John, were married and jointly owned the Manaia property and when Noel died in 2008 ownership of that property passed by survivorship to Melva. Melva acquired the Oakura property in July 2003.
[9] Melva died on 10 August 2015 and probate of her estate was granted on 15 October 2015 with Rosemary Tennent and Michael Finnigan appointed as executors. On 23 December 2015 the respondents were appointed as replacement executors.
[10] Mr Tennent deposes that the Manaia property was deteriorating and advice was taken regarding the cost of remedial works and whether that would increase the value of the property. When placed on the open market an offer of purchase was received and has been accepted. The sale cannot proceed if the caveats are in place.
[11] The executors have confirmed the net sale proceeds will be held and not dispersed until the family proceedings are resolved.
[12] Although the Oakura property is not on the market and the executors have no plans to sell it presently, they are of the view that there is no basis for the caveat over that property.
[13] The applicant’s application to sustain caveats was opposed and continues to be opposed by the respondents.
[14]By his caveats the applicant claims an interest on the properties:
As security holder pursuant to an unregistered mortgage under an Agreement with the registered proprietor Peter David TENNENT and Grant HASSALL dated 3 May 2011.
[15] It is Mr Tennent’s evidence that there was no agreement between the respondents and the applicant on 3 May 2011 and that in any event, neither respondent was the registered proprietor of any of the properties in May 2011 for Melva Yarrow was then alive and was the registered proprietor of those properties.
[16] By his application dated 5 April 2017 to sustain his caveats the applicant claims:
(a)A Deed of Family Arrangement dated 23 December 2009 (DOFA) was signed by himself, the estate of his father Noel, ‘and other family and charitable trusts and companies’.
(b)The essence of the DOFA was the equalisation of payments to him of his overpayment of shares for the NZ Group of Yarrows companies.
(c)The overpayment was estimated to be $10M but now is estimated to be
$29.5M.
(d)On 3 May 2011 clause 3.25 of the DOFA was activated and that activation entitled the applicant to register caveats on the properties held by Noel’s estate at Manaia and Oakura.
(e)Caveats over the properties were duly lodged.
[17] It is the applicant’s claim that clause 3.25 of the DOFA provides him with “the right of an equitable share mortgage over the assets and a caveatable interest until the matters are heard under the arbitration clause 3.25 and determined. Clause 3.26.3 are the powers provided the arbitrator to resolving a dispute under the DOFA”.
[18] The applicant says the properties hold a significant personal value and meaning to him, and that an award of damages would be insufficient.
[19]His application concludes with a statement:
I am involved in other significant litigation against the trustees and directors of all of the signatories to the DOFA and only seek to ensure that all parties are treated fairly, legally, lawfully and morally including myself.
[20] Attached to the applicant’s affidavit dated 5 April 2017 is a copy of the DOFA and the names of some 14 parties are noted on the header page. These include:
(a)The applicant and some three other interests bearing his name;
(b)The Estate of Noel Henry Yarrow;
(c)Melva Doreen Yarrow;
(d)The Noel and Yarrow Charitable Trust;
(e)Various Yarrow companies; and
(f)Southern Cross Investments Limited.
[21] The DOFA notes at clause 2.1.2 that the Deed of 9 May 2003 gave Noel power to decide which of his sons Paul and John Alfred Yarrow would receive control of Yarrows (the Bakers) Limited (YTB), Yarrows Holdings Limited (YHL) and Southern Cross Investments Limited (SCIL) and their respective subsidiaries and controlling entities (collectively the Yarrow Group).
[22] The 9 May 2003 DOFA provided that the trustees of the Riemenschneider Trust No.2 (RT2) would estimate the collective financial disadvantage suffered by the interests of the brother missing out on control compared to the interests of the brother receiving control and RT2 would procure the discretionary trusts controlling various Yarrow Group interests in order to make an “equalising distribution” to equalise the net financial benefits each of the brothers was to receive.
[23] The DOFA recorded that control of the Yarrow Group be given to John by him buying 74 per cent of the voting shares in YTB and YHL during the 2003 – 2004 period when in the same period the applicant acquired the remaining 26 per cent of those voting shares.
[24] The DOFA recorded that those differences led to John and the applicant signing a Heads of Agreement (HoA) dated 27 May 2005 whereby John agreed he and his trusts would sell their entire interest in the Yarrow Group to Paul and his trusts and this purchase was settled on 14 July 2005.
[25] The DOFA then refers to the provisions of Noel’s Will. The life interest in realty was bequeathed to Melva. There were bequests including $1M to Melva and
$16.43M to various relatives and charities including a legacy of $2M each to John and to the applicant.
[26]The Will also made reference to the DOFA equalising distribution provision.
[27] The DOFA records the applicant’s assertion he had been induced to enter into the HoA dated 27 May 2005 and to pay $45M on the basis of misrepresentations made by or on behalf of John and that he commenced proceedings in the New Plymouth High Court in February 2008 seeking damages of more than $2M from John.
[28] The DOFA records it was Noel’s belief when signing his last Will on 21 December 2007 that his estate assets would total $24M leaving a residuary estate of
$7.57M after payment of legacies.
[29]The DOFA noted:
(a)Melva’s deteriorating health and that her affairs were in the hands of an enduring power of attorney.
(b)The parties want to settle litigation by providing a contribution to redress any of the losses asserted by the applicant.
(c)The DOFA recorded that in the outcome of the realisation and redistribution of assets that the applicant and his family trust would receive $9M in full and final settlement of their claims which did not affect the applicant’s entitlement to his $2M legacy.
[30] The applicant says since he has determined that the amount owing to him should be $29.5M an amount he said was confirmed by a share valuer and therefore because of the incorrect figures used by the DOFA to calculate the applicant’s entitlement he is permitted by other provisions in the DOFA to bring the claim he has. Activation of those rights he says are preserved by the DOFA and entitles him to register caveats over the properties held by Noel’s estate.
[31]The applicant says those issues are presently before an Arbitrator.
Notice of opposition
[32]The executors claim:
(a)The applicant has no unregistered mortgage.
(b)There was no agreement between the executors and the applicant on 3 May 2011.
(c)The executors were not the registered proprietors of the property on 3 May 2011 of any of the land over which the applicant has lodged his caveat.
(d)Clauses 3.25 and 3.26 of the DOFA do not create any entitlement to register caveats over any of the properties.
(e)Melva Yarrow was alive and was the registered proprietor of the properties on 3 May 2011.
[33] In brief it is the executors’ position that there is no clause in the DOFA providing any entitlement to register a caveat much less caveats over property held by the Melva Yarrow estate.
Considerations
[34] It is the applicant’s position that the DOFA provides the right to arbitrate in respect of any dispute the applicant identifies as being “as to debt and liability in obligations within the Yarrow Group and related Yarrow Family Trusts”.
[35] In the Court’s view even if those provisions could be read that widely, they would not found the basis for an interest in the caveated land.
[36] The applicant says his claims are sustainable on “equitable grounds” because he claims an entitlement to an equalisation of payment and monetary legacy from his father’s estate. However, and as counsel for the respondents submits, that does not give him an interest in any of the land held by his mother’s estate.
[37] The applicant claims promises were made that Melva Yarrow would leave the Oakura property to him. The Court accepts the submissions of the executors that this does not form a basis to sustain a caveat and at best they provide a ground for a Law Reform (Testamentary Promises) Act claim.
[38] Likewise claims under the Family Protection Act 1955 do not of themselves form the basis upon which a caveat can be sustained; and neither do the arbitral proceedings provide him with any interest in the caveated land. Claims against the Melva Yarrow estate do not give a right to lodge a caveat. The property in question became Melva’s upon the death of Noel. It could not therefore be part of Noel’s estate that was subject to DOFA considerations.
[39] Moreover the executors have undertaken that the proceeds of the sale of the Manaia property will not be distributed until the Family Protection Act 1955 and Law Reform (Testamentary Promises) Act 1949 claims are resolved and therefore there is no need for the caveats to prevent the distribution of funds being misplaced.
Summary
[40] The applicant has not established a reasonably arguable case to sustain the caveats. He has no interest in the land presently.
Judgment
[41]The applicant’s claims of a caveatable interest are dismissed.
[42]The applicant shall pay the respondents’ costs on a 2B basis as applied for.
Associate Judge Christiansen
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