ORMOND v PONGAROA LAND COMPANY LIMITED [2018] NZHC 238

ORMOND v PONGAROA LAND COMPANY LIMITED [2018] NZHC 238 [23 February 2018]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYI TE KŌTI MATUA O AOTEAROAAHURIRI ROHECIV-2018-441-4[2018] NZHC 238BETWEEN ARALEAJ ORMONDApplicantAND PONGAROA LAND COMPANY LIMITEDRespondentHearing: 21 February 2018 (by AVL)Counsel: R McCutcheon for ApplicantR O'Connor and K Osborne for RespondentJudgment: 23 February 2018JUDGMENT OF ASSOCIATE JUDGE JOHNSTONIntroduction[1] This is an application pursuant to Part 8 of the Land Transfer Act 1952 for anorder that a caveat not lapse. The caveator and applicant is Araleaj Ormond, and theregistered owner of the property in question and respondent is Pongaroa LandCompany Ltd.[2] The applicant's caveat was registered on 6 December 2017. On 6 January 2017the respondent applied to the Registrar of Lands for the caveat to lapse. The Registrarthereafter notified the applicant of this application which triggered the tight statutorytimeframe requiring the applicant to notify the Registrar that an application was beingmade for an order that the caveat not lapse within 14 days and then obtain and serveon the Registrar such an order within a further 28 days.[3] The applicant filed and served this proceeding seeking such an order on7 February 2018.[4] Associate Judge Smith convened a teleconference on 12 February 2018, at theconclusion of which he made an interim order sustaining the caveat pending furtherorder, and set the application down to be heard at 10.30 am on 21 February 2018. HisHonour also issued timetabling directions that, amongst other things, obliged theapplicant to file and serve any further affidavit evidence by 15 February 2018.[5] The applicant did not file and serve further affidavit evidence by that date. But,the day prior to the hearing, her solicitors emailed to the Registrar seven furtheraffidavits.[6] When the case was called, an objection was raised by Mr O'Connor to thefurther affidavits filed and served in support of the application being read. Theobjection was based on three broad grounds:(a) first, that these affidavits had not been filed and served within thetimeframe set by Associate Judge Smith;(b) second, that they were all irregular to one extent or another, beingvariously unsworn, not properly sworn, or not compliant with aspectsof the High Court Rules 2016;(c) third, that the respondent would be prejudiced by having insufficienttime to consider and reply.[7] Having heard argument, I allowed the affidavits to be read. Essentially, myconclusion was that the potential prejudice to the applicant that would result fromexcluding them outweighed the potential prejudice to the respondent that would resultfrom their being allowed in. Mr O'Connor expressly declined to apply for anadjournment.[8] It is well settled that in an application to sustain a caveat pending finalresolution of the applicant's claim, the applicant has the burden of establishing that ithas a reasonably arguable claim to a proprietory interest in the land.1 To use theterminology of s 137(1) of the Act, the applicant must: be beneficially interested in, the land or estate or interest, by virtue ofany unregistered agreement or any instrument or transmission, or of anytrust expressed or implied, or otherwise Background[9] The affidavit evidence contains a good deal of material concerning the familybackground. No useful purpose would be served by outlining this in detail. Asummary will suffice.[10] John Davies Ormond was an immigrant to this country who arrived here in theearly 1860's. He had at least one child, George Canning Ormond (George Ormond I).The family was obviously very industrious and successful because, by the time of TheGreat War, it owned significant land holdings on Mahia Peninsula in Hawkes Bay.George Ormond I had no fewer than sixteen children. His eldest child wasGeorge Edward Ormond (George II). He had another son named Andrew GordonOrmond (Andrew Ormond I). Primogeniture appears to have prevailed within thefamily at the time because the land owned by the family passed from John Ormond toGeorge Ormond I and down his line through at least two further generations:George Ormond II and George Ormond III.[11] Over the years George Ormond I's descendants sold parcels of the land. On23 December 1993 such family land as remained was sold to the respondent. Theevidence is not clear as to the details of this transaction, but there is no suggestion thatthe transaction itself is challengeable in any way. George Ormond III is the majorityshareholder and the sole director of the respondent.[12] Andrew Ormond I, to whom reference has already been made, had a son by thename of Andrew Gordon Ormond (Andrew Ormond II). Andrew Ormond II was the1 See Sim v Lowe [1988] 1 NZLR 656, NBNZ v Gun City Wellington (unreported), High Court,Christchurch, Master Hansen, 22 April 1994 and Paugra Holdings (in Liquidation) vHarvestfield Holdings [2014] NZCA at [34].father of six children, including the applicant (and Andrew Gordon Ormond(Andrew Ormond III)).The Applicant's Case[13] The basis upon which the applicant asserts a beneficial interest in the land ispleaded by her in these terms:My grandfather Andrew Gordon Ormond [Andrew Ormond I] paidconsideration to his father's [George Ormond I's] estate for the land (or someof the land; a good part of it ("the property")) contained in the certificate oftitle or Identifier 450429 of the Hawkes Bay Land Registration District.[14] She says that because of " difficulties with the solicitor "Andrew Ormond I's interest in the property was never registered, and that it "instead passed down the family line of George Edward Ormond [George Ormond III],the director and a shareholder of the registered proprietor and respondent PongaroaLand Co ". Finally, she says that "[t]he family line of George Edward Ormond[George Ormond III] has on a number of occasions over the years acknowledged myfamily's interest in the property, to the extent (and my family) have an acknowledgedcestui que trust interest in the property that has followed it."[15] So in short, the applicant's case is that Andrew Ormond I bought and paid forthe land in question (or some significant proportion of it), thereby becoming thebeneficial owner, that George Ormond II and every subsequent legal owner, includingthe respondent, acquired legal title with notice of that beneficial interest. On that basis,she says that she now enjoys that beneficial interest.Discussion[16] In my judgment, this argument suffers from two insuperable difficulties; thefirst evidential, the second legal.[17] The affidavit evidence going to the issue of whether there was any completedtransaction whereby Andrew Ormond I acquired a beneficial interest in the land is farfrom compelling.[18] Mr McCutcheon draws my attention to the assertions in the affidavits of theapplicant and her siblings to the effect that there had been such arrangements. In fact,some of the seven deponents say that Andrew Ormond I bought the land from hisfather's (George Ormond I's) estate, and others, including the applicant herself, saythat he bought it from his older brother, George Ormond II, but I do not place greatweight on that inconsistency.[19] If any arrangements were contemplated, discussed or put in place, then thisoccurred about seventy years ago, around the time of the Second World War, and longbefore the applicant or any of her siblings were born. Plainly their evidence in relationto any such dealings is hearsay, and in some cases double or triple hearsay —intergenerational hearsay one might say. As Mr McCutcheon submits, that does notmean that it is inadmissible. But it certainly means it is evidence that I am obliged totreat with considerable caution.[20] Second, Mr McCutcheon points to the minutes of the meetings of the trusteesof George Ormond I's estate. These certainly refer to the possibility of someagreement between the trustees and Andrew Ormond I concerning land, but they donot go much further than that, and they are by no means clear as to what exactly wascontemplated. They fall well short of a statement that there was any agreementbetween the trustees (or George Ormond II) for the sale of any particular land toAndrew Ormond I. Even if such an arrangement was contemplated, the minutes donot confirm that it was implemented.[21] Third, Mr McCutcheon refers to the evidence of the applicant and her siblingsto the effect that over the years Andrew Ormond I and his descendants have lived onand farmed some of the land, which he submits is evidence of an arrangement pursuantto which Andrew Ormond I acquired the land.[22] It is common ground that Andrew Ormond I and his descendants have indeedlived on and farmed at least some of the land, and continue to do so.[23] But there are two points about that which undermine the applicant's contentionthat this is significant. The first is that if indeed George Ormond II and his descendantsraised no particular objection over the last 70 years or so to Andrew Ormond I and hisdescendants living on and farming the land, whilst that might suggest the existence ofsome sort of earlier arrangement, it is equally consistent with close familyrelationships and an unwillingness on the part of George Ormond II and hisdescendants to disrupt those relationships. The second and more telling point is thatthere is in fact evidence that the descendants of George Ormond II took steps toformalise arrangements by way of a lease. In particular, Mr O'Connor pointed to aletter dated 23 November 2009 written by solicitors acting for descendants ofGeorge Ormond I which seems expressly to deny any right on the part of thedescendants of Andrew Ormond I to occupy the land.[24] Finally, Mr McCutcheon refers me to the evidence of Ratua Ormond, thewidow of the late Andrew Ormond II, and a number of the other deponents, to theeffect that over the years that the descendants of George Ormond I have expresslyacknowledged some sort of right on the part of the latter to the land. Although thisevidence is of course self-serving, and is denied by the respondent's equallyself-serving evidence, I do not dismiss it altogether, and, for present purposes, I amprepared to accept that things have been said over the years by members of theGeorge Ormond side of the family to members of the Andrew Ormond side that mighthave resulted in the later believing that they enjoyed some entitlement to the land. Butthe discussions reported by the deponents ars equally consistent with a willingness onthe part of one side of the family to facilitate the wishes of the other side, as opposedto an acknowledgement of any sort of legal entitlement on the part of the latter.[25] In his submissions on behalf of the respondent, Mr O'Connor made the obviouspoint that if indeed there had been a formal transaction involving the sale and purchaseof the land between either the trustees of the George Ormond I estate, orGeorge Ormond II, on the one hand, and Andrew Ormond I, on the other hand, andthat Andrew Ormond I had in fact — as his descendants now assert — bought and paidfor the land, then there would be evidence supporting this. As he said, aMr Chamberlain, who is referred to in the minutes of the meetings of the trustees ofGeorge Ormond I's estate, and who was both a trustee and the solicitor who appearsto have acted for the family on property transactions, might be thought to have hadgenerated trust account records of any such dealings, which of course would besupported by banking records. No attempt appears to have been made to ascertainwhether any such records survive.[26] At the conclusion of his submissions, Mr O'Connor suggested that whilst theremay have been some consideration given to a transaction at the relevant time, theinformation about this that has passed down through three generations of the AndrewOrmond I family, and is now reflected to one extent or another in the seven affidavitsbefore the Court, is wholly unreliable. I agree.[27] In the end, I am far from satisfied that the applicant is able to make out even areasonably arguable case that Andrew Ormond I acquired a beneficial interest in theland that would be recognised by the law.[28] As already foreshadowed, there is a second point.[29] If the applicant had been able to make out a reasonably arguable case to theeffect that Andrew Ormond I acquired a beneficial interest in the land around the timeof the Second World War, the issue would then become how that translates into abeneficial interest on her part capable of supporting her caveat.[30] The applicant's case appears to proceed on the glib assumption that any suchbeneficial interest on Andrew Ormond I's part passed down the family line as a matterof course. It is perhaps possible to understand how that assumption might be madewithin the family, but of course, as a matter of law, there is no foundation for it.[31] In order for the applicant to establish a reasonably arguable case that she enjoysany beneficial entitlement that Andrew Ormond I may have acquired, she would haveto establish that at law that entitlement passed from Andrew Ormond I to her.[32] There is no evidence before me upon which I could conclude that that is thecase.[33] Indeed, the evidence is that one of the applicant's siblings, Johanna Ormond,lodged a caveat against this land in 2012, asserting the same right, and in exactly thesame terms, that is asserted by the applicant in this proceeding. There is also evidencethat another of her siblings has recently filed a further caveat, and that yet another, oneAndrew Ormond III, is threatening to do so. So in short, at least three, and possiblyfour, individuals assert the same right as is asserted by the applicant.[34] In my judgment, the applicant is unable to make out a reasonably arguable casethat she enjoys a proprietary right of any sort in the land which is the subject matter ofthe caveat.Conclusion[35] The application that the caveat not lapse is declined.Costs[36] The parties have not, of course, addressed costs issues at this point.[37] My preliminary view is that the respondent is entitled to costs on a 2B basis.[38] In the course of argument, Mr O'Connor submitted that the applicant's lodgingof a caveat and commencement of this proceeding, against the backdrop of her sister'searlier caveat, and having regard to her other sister's recent caveat, constitutes anabuse of process, and that that might be relevant to costs. I do not accept thatsubmission. Even although I have reached a contrary conclusion, I accept that theapplicant genuinely believed that she had a legitimate proprietary interest in the land,and the caveat procedure exists to enable people to test and, if valid, protect suchinterests.[39] I invite counsel to confer on costs, and my expectation is that they will be ableto resolve them without further assistance from the Court.[40] If, however, that does not prove to be the case, memoranda may be filed and Iwill deal with costs.Associate Judge JohnstonSolicitors:Peter McCutcheon, Auckland for applicantBramwell Bate, Hastings for respondent