GAVIN JOHN HILLARY V THE ATTORNEY-GENERAL OF NEW ZEALAND AND THE REGISTRAR-GENERAL OF LAND HC CHCH CIV-2012-409-000741

GAVIN JOHN HILLARY V THE ATTORNEY-GENERAL OF NEW ZEALAND AND THE REGISTRAR- GENERAL OF LAND HC CHCH CIV-2012-409-000741 [21 September 2012]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2012-409-000741[2012] NZHC 2462BETWEEN GAVIN JOHN HILLARYPlaintiffAND THE ATTORNEY-GENERAL OF NEWZEALAND AND THE REGISTRAR-GENERAL OF LANDDefendantsHearing: 20 September 2012Appearances: G J Hillary, Plaintiff - appears in personK M Muller and A B Sintenie for DefendantsJudgment: 21 September 2012JUDGMENT OF ASSOCIATE JUDGE MATTHEWSIntroduction[1] In this proceeding Mr Hillary sues the Attorney-General and the Registrar- General of Land under s 172 of the Land Transfer Act 1952. His claim arises from the events surrounding the resolution of relationship property issues between him and his wife after their separation in 1997. The events are summarised in a judgment of this Court in G M Todd & Ors v Hillary and A P Duncan & Ors.1 Mr Hillary says that he has been deprived of his share of two properties in Queenstown because of the registration of other parties as owners of the land. He claims compensation from the Crown of $5,800,000 plus interest at 11 per cent per annum from December 2001.[2] In January 2008 Mr Hillary was adjudicated bankrupt on the application of his wife for non-payment of a sum owing to her under an order of the Family Court.1 G M Todd & Ors v Hillary and A P Duncan & Ors HC Dunedin CIV-2005-412-00029415 June 2007, Venning J.Mr Hillary claims a sum to be determined by the Court to cover the harm he suffered, given that he was, he says, solvent when adjudicated bankrupt.[3] The Attorney-General says that the claim is statute-barred by s 180 of the Land Transfer Act 1952 as it was brought more than six years after the date when the right to bring the action accrued. He says that the properties were transferred in 2001 and 2002 respectively and at the latest Mr Hillary was aware by 30 March 2005 of the existence of his right to make a claim. The Attorney-General also says that the grounds for the claim are unclear in the statement of claim, so it does not comply with r 5.26 of the High Court Rules which requires it to show the nature of the claim and give sufficient particulars of the plaintiff's cause of action. The Attorney- General seeks an order striking out the statement of claim and dismissing the proceeding.Relevant provisions of the Land Transfer Act 1952[4] Section 172 of the Land Transfer Act 1952 provides, to the extent relevant:Any person –(a) ...(b) who is deprived of any land, or of any estate or interest in land, through the bringing of the land under the Land Transfer Acts, or by the registration of any other person as proprietor of that land, or by any error, omission, or misdescription in any certificate of title, or in any entry or memorial in the register, or has sustained any loss or damage by the wrongful inclusion of land in any certificate as aforesaid, and who by this Act is barred from bringing an action for possession or other action for the recovery of that land, estate, or interest –may bring an action against the Crown for recovery of damages.[5] The case for Mr Hillary is based on the proposition that he has been deprived of his interest in the two properties in Queenstown which he formerly owned with his wife, as a company called Norcross Investments Limited became registered as the proprietor of that land as a result of errors within the Family Court, and by solicitors acting for him, and solicitors acting for his wife.[6] Section 180 of the Land Transfer Act provides:180 Limitation of actions against the Crown(1) No action for recovery of damages as aforesaid shall lie or be sustained against the Crown unless the action is commenced within the period of 6 years from the date when the right to bring the action accrued; but any person being under the disability of infancy or unsoundness of mind may bring such an action within 3 years from the date on which the disability ceased.(2) For the purposes of this section, the date when the right to bring an action accrued shall be deemed to be the date on which the plaintiff becomes aware, or but for his own default might have become aware, of the existence of his right to make a claim.Background facts[7] In December 1999 Mr Hillary's wife, Ms Itagaki filed an application for orders determining matrimonial property issues, in the Family Court at Alexandra. It was heard by Judge Blaikie on 13 February 2001. His decision was issued on 18 June 2001. The Judge made various orders and asked counsel for Ms Itagaki to submit a draft order for sealing. A short time later an order was sealed. Over ensuing months various steps were taken by both sides in relation to their property which are fully recorded in the judgment of Venning J. Notably, on 12 November 2001 Mr Hillary sold the Brisbane Street property for $370,000 to one Henry Norcross or nominee. In due course that sale was completed. Mr Hillary and Ms Itagaki signed a transfer in favour of Norcross Investments Limited, the nominee of Mr Norcross, on 23 January 2002 and it was duly registered shortly thereafter. The Park Street property was also sold to Norcross Investments Limited, the transfer for this property being signed by Ms Itagaki on her own behalf, and by the Registrar of the Family Court on behalf of Mr Hillary, pursuant to the court order dated 30 August 2001. It is the registration of these transfers that Mr Hillary relies on for his claim that he is entitled to compensation under s 172(b).[8] Mr Hillary has a number of reasons for regarding the transfers as fraudulent. It is not necessary to summarise them in detail; suffice it to say that they include the fact that the transfer of the Park Street property was made pursuant to a court order which has subsequently been found to have been sealed in terms which aremanifestly incorrect, his concerns about the actions of Ms Itagaki's solicitors and inparticular their role in the conduct of the litigation and the sealing of the order, his concern about the role of his own solicitors whom he regards as having substantial conflicts of interest at the relevant time, and the fact that he was adjudicated bankrupt on proceedings instigated in the name of Mrs Itagaki on 15 January 2008 when he was not insolvent.[9] All of these issues and a number of others are raised in the 140 paragraphs of the statement of claim, which counsel for the Attorney-General describes, with considerable justification, as incoherent. However, they do not fall for determination in this judgment. The sole issue to be decided on this application is whether Mr Hillary's claim against the Attorney-General is statute-barred by s 180 of the Land Transfer Act 1952.The case for the Attorney-General[10] Ms Muller submits that the cause of action accrued prior to 5 April 2006, the date six years prior to the filing of this claim. She submits that the limitation period in s 180 is triggered either when the plaintiff first becomes aware of the right to make a claim, in the sense of having actual knowledge, or when the plaintiff first might have become aware of, or discovered the right to, make a claim but for his or her own default.2[11] In relation to actual knowledge, Ms Muller relies on the analysis in Melville- Smith v Attorney-General,3 where Hammond J said that actual knowledge in s 172(b) requires knowledge of the harm sustained, knowledge that the harm was attributable in some degree to the conduct of another, and knowledge of the identity of the person to whom the conduct is attributable.[12] Ms Muller submits that a number of documents in evidence show that Mr Hillary had actual knowledge before April 2006.[13] Ms Muller notes, however, that the cause of action is also deemed to accrue on the date on which Mr Hillary might have become aware of the existence of his2 Registrar-General of Land v Burmeister [2012] NZCA 340 at 31 and 52.3 Melville-Smith v Attorney-General [1996] 1 NZLR 596 at 602 (HC).right, but for his own default. On this alternative ground counsel refers to theRegistrar-General of Land v Burmeister where, at [47], the Court said that thestandard against which "default" is assessed is a standard reflecting thecharacteristics of the fraud victim in the circumstances he or she finds herself in.The case for Mr Hillary[14] The majority of the submissions made by Mr Hillary both in writing and in court were directed at the grievance he very clearly feels in relation to the events surrounding the resolution of matrimonial property issues with Mrs Itagaki, and the ultimate registration of Norcross Investments Limited as proprietor of the land in question. It was necessary to try and guide his attention to the issue which the Attorney-General has raised by this application, namely the state of his knowledge in relation to his right to make a claim, as at 5 April 2006. On this subject he refers to two facts. First, it was not until 7 January 2007 when he laid a complaint with the police in relation to the removal from the land of a house, by an unknown party, that he learned that one James Macalister was a shareholder in Norcross Investments Limited. This caused him concern, because Mr Macalister is the son of the founder of the firm which acted for him in relation to the matrimonial property proceedings, and that firm also acted, he said, for the local council on issues relating to rezoning of the land which substantially increased its value. As far as I could gather, Mr Hillary feels that Mr Macalister, and the firm of solicitors, had somehow acted together to ensure that Mr Macalister gained from that increase in value, instead ofhim. It seems that he thinks that it was Mr Macalister's involvement with Norcross,which he says he did not know about until January 2007, that made him come to the view that there had been a fraud. Prior to that all he knew was that the transfers of the land were to Norcross Investments Limited.[15] Secondly, Mr Hillary draws my attention to two versions of the sealed order of the court, one of which has handwritten entries on it, and the other is without those entries. He says he only became aware of this alteration to the sealed order of the court on 17 February 2006 which meant that he only had a very short time to make a claim in relation to there being a fraud, before time expired in April that year.Mr Hillary seemed to accept, however, that he obtained this knowledge outside the period of six years before the proceeding was issued, even if only slightly so.Discussion[16] The two properties in question were transferred to Norcross Investments Limited in 2002. Nine subsequent documents disclose the state of Mr Hillary'sknowledge of his right to bring a claim under s 172 prior to 5 April 2006. In chronological order, these are:a) On 31 March 2003 Mr Hillary lodged a caveat against the title to the Park Street property, which was the property transferred by an instrument signed by the Registrar of the Family Court to Norcross Investments Limited, that being one of the steps on which Mr Hillary relies for his case. The caveat claims an interest thus:The Caveator claims that the registered proprietor Norcross Investments Limited holds an estate in fee simple in the above described land upon a constructive trust for the Caveator as beneficial owner.b) On 29 July 2003 Judge Inglis QC issued his judgment finding that the sealed order did not correctly state the effect of the judgment of Judge Blaikie on division of matrimonial property. This judgment was plain in its terms. The Judge acknowledged the losses Mr Hillary may have suffered, though he noted that they were beyond the scope of matrimonial property division proceedings.c) On 3 September 2003 Detective Davenport of the Waitakere CIB wrote to Land Information New Zealand, Otago Office, enclosing a brief on a complaint made by Mr Hillary and said:At this stage, I would seek to confirm details surrounding the transfer oftitles of the two properties from Mr HILLARY's perspective, togetherwith correspondence between LINZ and the purchaser (and/or his/her solicitors) detailing the difficulties of the transfer of title. This may impact directly in the investigation, and the possibility of charges, which may be brought.In the summary of the complaint, Mr Hillary is described as the complainant. It is sufficient for present purposes to record that it raises a number of issuesconcerning the actions of Ms Itagaki's solicitors, the execution of the transferof title under signature of the Alexandra Family Court Registrar, and a range of allegations involving a party described as Ramsey and the role of that party in relation to the transfers of the properties. Specific reference is made to the judgment of Judge Inglis.d) On 12 December 2003 Mr Hillary visited the office of LINZ in Christchurch. His discussions there led to an email from Anna Thomson, the Processing Centre Manager of LINZ in Christchurch to the Registrar-General of Land, Mr Muir, on 12 December which included the following:We had a customer by the name of Gavin Hillary in the centre at lunchtime. He was alleging an issue of fraud against the above title that he had an historical interest in.The situation appears from the manner in which it was described by Mr Hillary to me as more a complex legal issue that (sic) the police currently have an interest in.It seems the land (2 Queenstown properties) has been transferred by Order of the District Court to another party and Mr Hillary allege (sic) this was carried out fraudulently. (he was implying that the judge and or other court staff were fraudulent).We have carried out a check of the documents here and it appears that registration was carried out appropriately by our staff.He advised that he has discussed this with you in the past ?? The issue relates back to August 2002.e) After some further emails the legal advisor at the Dunedin Processing Centre of LINZ emailed Mr Muir and said:This matter has come to my attention and I can advise that I corresponded with Nicholas Davenport of Waitakere Police CIB in September this year. I have all the correspondence and background on file if required. It was my view that LINZ staff had registered all documents appropriately and I briefed John accordingly as fraud was alleged.f) On 27 May 2004 Ms L Dalziel, the MP for Christchurch East, wrote to the then Attorney-General, the Hon Margaret Wilson, setting out certain of thefacts surrounding Mr Hillary's properties, asking for an independent inquiryinto his case, and indicating that the only other recourse she could think of would be for him to petition Parliament.g) On 28 October 2004 Mr Hillary wrote to Mr Muir of LINZ advising that thejudgment of Judge Inglis, and a subsequent judgment of Judge O'Dwyer,were to be heard on appeal by the High Court on 15 November 2004. He asked Mr Muir to place a Registrar's caveat on the property to preventdisposal of it to an innocent purchaser before the appeal could be heard. He referred to title of the property having been obtained by fraud. Mr Muir replied on 9 November 2004 noting that he was aware of Mr Hillary'sallegations concerning the titles and the Family Court Order, and of police investigations into these matters. He indicated that he had found no evidence of a connection between Norcross Investments Limited, and a company to which it had transferred the land, Domicile Development Limited, the current registered proprietor. Mr Muir noted that although Mr Hillary had allowed a caveat he had lodged on the titles to lapse, allowing the transfer to Domicile Development Limited to be registered, he nonetheless accepted "that thereare disturbing elements to the case and [I] am prepared to lodge my caveat onthe register until the High Court's judgement becomes available". The Registrar lodged a caveat citing as its ground "for the prevention of fraud orimproper dealing".On 16 December 2004 Mr Muir advised Mr Hillary that having read the decision of Fogarty J he was satisfied that there were no grounds for the caveat on the register to be retained, and he had therefore signed a withdrawal of it which would be processed that day.h) On 30 March 2005 Mr Hillary wrote to Mr Muir thanking him for his letter of 16 December 2004 and commenting on the High Court judgment. Heinformed Mr Muir "I will be making a claim under the Land transfer Act1952 for compensation should you choose not to reinstate your caveat". In46 numbered paragraphs Mr Hillary set out the basis on which he thought that claim was justified. He concluded his letter:In summary, if you choose to ignore the evidence before you and fail to prevent the disposal of this property, the tax payer will pay. Turning a blind eye and pretending that this is not happening on your shift will not make it go away. Civil action has been before the courts for over a year now and eventually this fraud and those that have contributed will be exposed.If you have already taken action to have this situation rectified, please let me know.i) On 8 April 2005 Mr Muir replied, setting out in some detail his position, as Registrar-General of Land. He declined to register a caveat on the title, and said:16. If, despite the above comments, you consider you have grounds for claiming compensation under the Land Transfer Act 1952, you may avail yourself of the process outlined in section 173 of the Act.17. However, I would suggest that you take legal advice on the scope of compensation under the Act, before taking any further action.With respect to the Registrar-General it would seem that the reference to s 173 should have been a reference to s 172, as s 173 contains requirements for notice of a pending claim.[17] These documents establish the following facts:a) In January 2002 Mr Hillary signed a transfer to Norcross Investments Limited of one of the properties, which is part of the actions he regards as establishing a fraud. By March 2003 he had formed the view that the transferees of the properties held them on constructive trust for him.b) On or about 29 July 2003 Mr Hillary received the judgment of Judge Inglis clearly enunciating major concerns with the sealed judgment issued by the court, as it did not reflect the terms of the judgment upon which it was supposed to have been based. By this point, Mr Hillary knew that the properties had been transferred to Norcross Investments Limited, and he knew that the harm he sustained as a result was attributable, at least in part,to the actions of the court and/or Ms Itagaki's solicitors. The three elementsidentified by Hammond J in Melville-Smith v Attorney-General were satisfied.c) By September 2003 Mr Hillary was sufficiently concerned about the situation, and aware of the facts giving rise to it, to lay a complaint with the police. In December of the same year he raised these issues with LINZ at a visit to the Christchurch office. In May 2004 he took it up with his Member of Parliament. In October 2004 he took the matter up more formally with the Registrar-General in correspondence and did so again in March 2005. He outlined the facts giving rise to his claim in detail and made clear reference to claiming compensation. In April 2005 he received a detailed response from the Registrar-General and an indication that compensation could be sought under the Land Transfer Act.[18] On the basis of this analysis of the documents in evidence I am satisfied that Mr Hillary knew well before April 2006 of the existence of his right to make a claim.[19] Mr Hillary submitted that his bankruptcy should be taken into account as a disability preventing him bringing the claim earlier. However, the only disabilities referred to in s 180 are those of infancy or unsoundness of mind. Mr Hillary cannot rely on his bankruptcy for this reason. Quite apart from that, he was declared bankrupt on 15 January 2008, well over two and a half years after he was fully aware of his right to bring a claim; indeed by then had threatened to do so.[20] As noted, Mr Hillary also said he was not aware of the involvement of Mr James Macalister in the affairs of Norcross Investments Limited until 2007 and, accordingly, it was not until then that he had knowledge of the fraud. On this submission, I make two findings. First, Mr Hillary was well aware as long ago as 2002 that the transferee of the land was Norcross Investments Limited and he could have easily found out that Mr Macalister was a director and shareholder of that company by conducting a company search, or having his solicitors conduct one for him. It was well within his power to find out this fact from that time onwards.[21] Secondly, Mr Macalister's involvement is but one element of the facts whichMr Hillary says give rise to his claim, and the other facts were assembled by him for the police, LINZ, his Member of Parliament, and for the Family Court and the High Court, years earlier. I agree with Ms Muller when she submitted that, in any event, it was not necessary for Mr Hillary to know of Mr Macalister's involvement withNorcross Investments Limited when his claim is based principally on the wrongful transfer of one of the properties because of the incorrect terms of the sealed order of the Alexandra Family Court. Mr Hillary said that he needed knowledge of this additional detail in order to know that something had gone wrong, as he put it – but the history of the complaints he made, established by the documents to which I have referred, discredits this submission.Outcome[22] I am satisfied that this claim has been brought outside the limitation period set out in s 180 of the Land Transfer Act 1952. For that reason it is an abuse of process within r 15.1 of the High Court Rules, which empowers the Court to strike out all or part of the pleading, in this circumstance, and to dismiss the proceeding.[23] The proceeding is dismissed.[24] The defendant is entitled to costs. Section 174 of the Land Transfer Act 1952 provides:174 Liability of plaintiff for costsIf in any such action judgment is given in favour of the Crown, or the plaintiff discontinues or becomes nonsuit, the plaintiff shall be liable to pay the full costs of defending the action; and those costs, when taxed, shall be levied by the Crown by the like process of execution as in other actions.Because of this provision, I reserve costs for further submissions, but would otherwise have awarded costs to the defendant on a 2B basis. The defendant may file and serve submissions within seven working days if an award of costs under s 174 is sought. If that occurs Mr Hillary is to file and serve submissions in response within a further seven working days. I will then make a decision on costs on the papers. Both sets of submissions are limited to a maximum of five pages. In theevent the defendant does not file a submission seeking costs pursuant to s 174, a memorandum is to be filed instead, confirming that, and costs on a 2B basis will then be ordered._______________________J G MatthewsAssociate Judge____________________________________________________________________Solicitors:Plaintiff – Mr G J Hillary, 194 Fitzgerald Avenue, Christchurch. Email: gavinhillary@xtra.co.nzCrown Law, P O Box 2858 / DX SP20208, Wellington. Email: kristina.muller@crownlaw.govt.nz