WATHERSTON v KAIKOURA PASTORAL INVESTMENTS LTD [2015] NZHC 2429

WATHERSTON v KAIKOURA PASTORAL INVESTMENTS LTD [2015] NZHC 2429 [6 October 2015]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV-2015-442-000013[2015] NZHC 2429BETWEEN RICHARD JOHN SCOTTWATHERSTONFirst ApplicantAND ROCKY PEAKS CONTRACTING LTDSecond ApplicantAND KAIKOURA PASTORALINVESTMENTS LTDRespondentHearing: 30 September 2015Appearances: J Moss and R Lynn for ApplicantsDCJ Russ for RespondentJudgment: 6 October 2015JUDGMENT OF DUNNINGHAM JIntroduction[1] Rocky Peaks is a 237 hectare farm property in North Canterbury. It was bought by Mr Watherston from Charles Upham VC in 1988 and Mr Watherston and family have lived there ever since.[2] Unfortunately, Mr Watherston got into financial difficulties. In May 2013 Mr Watherston's personal property was placed into receivership by PGG Wrightson Limited (PGGW) and PGW Rural Capital Limited. As part of the realisation of Mr Watherston's assets, the receivers sold Rocky Peaks to Mr Blair Thompson on 20 December 2013. In due course, Mr Thompson nominated the respondent, Kaikoura Pastoral Investments Limited (KPIL), as purchaser and title transferred to KPIL on 19 March 2014.[3] However, Mr Watherston says there was an agreement between him and Mr Thompson which gave Mr Watherston an option to purchase Rocky Peaks back. In reliance on that agreement, Mr Watherston lodged a caveat on the titles to Rocky Peak in February 2015. KPIL then triggered the process for removal of the caveat and Mr Watherston and the second applicant sought an order under s 145A of the Land Transfer Act 1952 that the caveat not lapse.1[4] In a decision dated 31 August 2015, Associate Judge Matthews declined the application.2 First he held that on the correct interpretation of the contract, it was an option to purchase shares in a company which was to hold Rocky Peaks, and was not in an interest in land which was capable of registration and therefore of supporting a caveat.[5] Second, he found that, even if that were not the case, the option was unenforceable for non-compliance with s 24 of the Property Law Act 2007 which requires the terms of the agreement to be recorded in writing and signed by the party against whom the contract is sought to be enforced. There was no evidence Mr Thompson signed the agreement.[6] The Judge, therefore, did not go on to address the further arguments raised by KPIL, which included that the caveat should not be sustained in the exercise of theCourt's discretion, even if Mr Watherston had demonstrated a reasonably arguable case for the interest claimed.[7] Mr Watherston has lodged an appeal of that decision. In addition, because KPIL had given evidence that it was selling the property to Mr David Croft, Mr Watherston applied for an order:(a) that caveat 9985942.1 over the property at certificates of title MB1B/817 and MB53/177, commonly known as 661 Hundalee Road, State Highway 1 (the property) not lapse pending appeal of the1 While Mr Watherston and Rocky Peaks Contracting Limited are both applicants, there was no suggestion that Rocky Peaks Contracting Limited was in a different or better position from Mr Watherston in pursuing the stay application and, for convenience, I will generally refer to Mr Watherston as the applicant for the balance of this decision.2 Watherston v Kaikoura Pastoral Investments Ltd [2015] NZHC 2084.decision of His Honour, Associate Judge Matthews in this matter of 31 August 2015.[8] That application is opposed by KPIL, primarily on the grounds that it will be injuriously affected by the stay and, given the impecuniosity of Mr Watherston and his inability to exercise an option to purchase (if, in fact, one existed), the overall balance of convenience favours the application for stay being declined.[9] It is that application that the following decision determines.Legal principles relevant to an application for stay[10] Rule 20.10(1)(b) of the High Court Rules makes it clear that an appeal does not operate as a stay of enforcement of any judgment or order appealed against. However, r 20.10(2) empowers the Court, on application, to:(a) order a stay of enforcement of any judgment or order appealed against; or(b) grant any interim relief.It is in reliance on the High Court Rules that this application is made.[11] The relevant principles relating to stay applications are well established and were not in dispute. The Court of Appeal recently laid out those principles in Keung and Ors v GBR Investment Limited.3 Delivering the judgment of the Court, Ellen France J, citing earlier decisions of both that Court and the Privy Council, stated:4In determining whether or not to grant a stay, the Court must weigh the factors "in the balance" between the successful litigant's rights to the fruits of a judgment and "the need to preserve the position in case the appeal issuccessful". Factors to be taken into account in this balancing exerciseinclude:(a) whether the appeal may be rendered nugatory by the lack of a stay;3 Keung and Ors v GBR Investment Limited [2010] NZCA 396, [2012] NZAR 17.4 At [11] (footnotes omitted).(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 party;(e) the novelty and importance of questions involved;(f) the public interest in the proceeding; and(g) the overall balance of convenience.That list does not include the apparent strength of the appeal but that has been treated as an additional factor.[12] The fact that an appeal is rendered nugatory, or even that no relief may ultimately be available as a result of the decision of the Court, is not determinative of the stay application.5 However, I accept that the need to preserve the position in case the appeal is successful is a primary consideration. This was reflected in the Court of Appeal's decision in New Zealand Insulators Ltd v ABB Ltd,6 where the Court adopted the following statement by Buckley LJ in Minnesota Mining and Manufacturing Co v Johnson and Johnson Ltd (No. 3):7The object, where it can be fairly achieved, must surely be so to arrange matters that, when the appeal comes to be heard, the appellate court may be able to do justice between the parties, whatever the outcome of the appeal may be. Where an injunction is an appropriate form of remedy for a successful plaintiff, the plaintiff, if he succeeds at first instance in establishing his right to relief, is entitled to that remedy upon the basis of thetrial Judge's findings of fact in his application of law. This is, however, subject to the defendant's right of appeal. If the defendant in good faithproposes to appeal, challenging either the trial judge's findings or his law,and has a genuine chance of success on his appeal, the plaintiff's entitlementto his remedy cannot be regarded as certain until the appeal has been disposed of.How did the claimed caveatable interest arise?[13] It is necessary to briefly retrace some of the factual background before settingout the parties' positions. The document relied on by Mr Watherston as creating the caveatable interest, was dated 20 December 2013 (the 2013 Agreement). It is in the following terms:5 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [13]-[15].6 New Zealand Insulators Ltd v ABB Ltd (2006) 18 PRNZ 459 (CA) at [13].7 Minnesota Mining & Manufacturing Co v Johnson and Johnson Ltd (No. 3) [1976] FSR 139 (CA) 144-145.20 December 2013Agreement betweenRichard Watherston (RW) and Gaire Thompson (Thompson PropertyGroup/TPG)In exchange for TPG undertaking to pay P.G.G.W $1.9 million to buy Rocky Peaks with settlement on 28th February, RW will undertake to work with Gaire Thompson (GT) for the best outcome for both parties, to complete the sale to a new J.V.C (Joint Venture Company)-Any net proceeds from the sale of wool and livestock less agreed living costs also to be paid to debt reduction.-RW will sign over complete financial control and any interest in plant and livestock subject to the receivership plus 80% of his shares in Kowhai Banks Dairy (the dairy farm).-RW will continue to farm and manage the properties (including overseeing the dairy farm) in a good husband like manner for which he will receive a negotiated management allowance.-RW and his brother, the other 50% shareholder in the dairy farm will fully consult with GT re dairy operations and the proposed commercial development of part of the dairy farm adjoining SH1 and the Inland Road.-RW and TPG are to negotiate an ongoing company structure for the operation and ownership based on funds available and 40% holding in the dairy farm.-RW and family to have first right of refusal to purchase shares back in either enterprise.-RW and family to have the right to buy back 100% of the Rocky Peaks Property.This agreement is to be signed prior to G.T submitting the offer for Rocky Peaks.Gaire Thompson Richard Watherston[signed] 20/12/13If you have any questions about this letter please contact me.[14] The reference to Kowhai Banks Dairy is relevant. This is a farm which is located near Kaikoura and has frontage onto both State Highway One and the Inland Kaikoura Road. It is owned and farmed in partnership by two companies, Okarahia Downs Limited and JNW Property Limited. These companies are respectivelytrustees of Mr Watherston's and his brother's family trusts.8 It has been a long time goal of the partnership between the trustees to develop a business park area on part of this farm which fronts onto the two highways. However, it requires significant8 Okarahia Downs Limited is the sole trustee of the Redwood Trust. JNW Property Limited is a trustee of the Black Watch Trust.capital investment to complete and the partnership has not been able to raise that capital on its own.[15] It seems the original proposal recorded in the December agreement was that Mr Thompson, on behalf of Thompson Property Group (TPG) (which appears to be aglobal term for all Mr Thompson's property owning companies), would have bought 80 per cent of the shares in Okarahia Downs Limited and then been involved in developing the business park. However, that has not proceeded. Mr Thompson has instead decided to invest elsewhere, and KPIL now wants to sell Rocky Peaks (the purchase of which was funded by 100 per cent borrowing), so TPG is in a better financial position in respect of its other property investments.[16] Mr Watherston sees this as a failure of Mr Thompson to honour the terms of the agreement, and, as a result, the trustees have had to try and progress thesubdivision for the business park without Mr Thompson's investment.[17] Unfortunately, there are still a number of steps to take before the business park land is a saleable proposition. The steps which are still to be completed are:(a) a subdivision consent still needs to be obtained;(b) a resource consent for a truck stop is required; and(c) NZTA approval is required for a road safety plan into the subdivision.The land, with all these approvals in place, then needs to be sold to a suitable buyer.[18] Mr Watherston has given evidence that his brother James, who is one of the directors of another trustee in the Kowhai Dairy partnership, JNW Property Limited,has "agreed in principle", that the sale proceeds from the subdivided business parkland could be used to purchase Rocky Peaks or be lent to a new entity to purchase Rocky Peaks. However, Mr Watherston properly observes that "we still of courseneed to work out the formal structure and the numbers of what will happen".[19] It is in these circumstances that Mr Watherston applies for a stay so that the caveat is not removed in the interim while he pursues his appeal of Associate JudgeMatthews' decision. KPIL opposes that.The applicants' position[20] The applicants submit that this is a clear case where an appeal would be rendered nugatory if the stay was not granted. It would mean that Rocky Peaks would be sold to the current purchaser and there would be no point in pursuing the appeal. Mr Watherston emphasises that Rocky Peaks contains his family home and business. He has a sentimental connection to it and made certain undertakings about its management to the former owner, Mr Upham, from whom he purchased the property. These considerations simply cannot be measured, or compensated for, by way of damages.[21] His counsel submits that I should take into account that Mr Thompson is:[I]n breach of an agreement to sell Rocky Peaks to Mr Watherston and his family, having frustrated Mr Watherston and his family's ability to do so by also being in breach of an agreement to buy the interest of Mr Watherston'sfamily trust's share in the Kowhai Banks Partnership.[22] Mr Watherston also declares that he is diligently prosecuting the appeal. The appeal has been filed and an application has been made to put it on the fast track procedure. It is scheduled to be heard early in February 2016 or, if possible, as a back-up fixture in November this year.[23] In terms of the claimed adverse effects on KPIL of a stay, he submits:(a) The affidavit from a rural real estate agent which says that the value of the property may be decreasing on the present market is no more than a bald assertion from this witness who has not qualified himself as an expert witness, nor has he provided anything substantive to back this up, such as a recent decline in sales figures. There is therefore nothing to suggest that the property will not hold its value, nor that there will not be another potential buyer if Mr Croft withdraws his interest.(b) While Mr Thompson and his banker have filed affidavit evidence suggesting that the inability to Rocky Peaks is impacting on the relationship his various companies have with the bank, including thatit is adversely impacting on the "financial covenants tested by the banks", there is no real explanation as to what this actually means orwhat the consequences are. It can be assumed from this that there is no immediate or specific adverse consequence likely to arise.(c) The purchase that an associated company of Mr Thompson wants to make in the North Island is settling on 1 October 2015 so does not appear to be conditional on settlement of Rocky Peaks on 7 October 2015.[24] In summary, while there are claimed possible adverse effects, none are of such strength or certainty that they should tell against granting the stay.[25] In terms of effects on a third party, the applicants dispute that Mr Croft is unlikely to pursue purchasing Rocky Peaks if the stay is granted and look for an alternative rural property. Mr Watherston says it is worth noting that Mr Croft clearly wants the property as he was the under bidder for the property when it was sold by the receivers to Mr Thompson in 2013. Given his sustained interest it cannot be assumed that he will disappear as a purchaser if the stay is granted for the few months until the appeal is resolved.[26] All these matters, says Mr Watherston, feed into the balance of convenience. He says the property is his family's home and business and is unique to them, and his current inability to repurchase Rocky Peaks is a consequence of Mr Thompson'sbreach of his agreement to purchase into the Kowhai Banks partnership.[27] By contrast, while there might be some financial detriment to the respondent,it will be "relatively minor" when considering the stay is only sought for a matter of months while the appeal is dealt with.[28] In response to KPIL's assertion that it has already offered Rocky Peaks to Mr Watherston to purchase and he has not exercised that option, he again reiterates that that is a consequence of the breach of the 2013 agreement. He accepts he is in personal receivership, and that he cannot exercise the option because it is the property of the receivers, but he says that is a "red herring". The receivers have notsaid that they would abandon the option. The option is not just for the benefit of Mr Watherston, but for his family. The receivers have indicated they are prepared to end the receivership and there is no reason why the receivers would want to exercise the option and buy Rocky Peaks back for a higher price than they sold it for.[29] For all these reasons, Mr Watherston says the stay should be granted.KPIL's position[30] The respondent's submissions in response say that the sale of Rocky Peaks would not deprive the applicants of the "value" of a successful appeal as they wouldstill have the ability to:(a) seek damages for any losses; or(b) purchase another farm property (if they have the resources to do so).[31] In terms of how KPIL will be injuriously affected by this stay, Mr Thompson gives evidence that the property is fully funded by the bank, and the funding cost alone to the respondent of retaining Rocky Peaks exceeds $156,000 per annum, with interest alone costing $100,000 per annum. There are also outgoings of rates and insurance. That in turn is adversely affecting other companies in the TPG and the relationship with its bankers is being harmed.[32] KPIL also relies on the evidence of Mr Ben Turner, an experienced rural realestate agent who gives evidence that the rural market is experiencing "a significant degree of caution from purchasers" and, Rocky Peaks is in a "less desirable region"so its value is likely to be static or diminishing. Given the hearing from the Court of Appeal is unlikely to be heard until the first part of 2016, KPIL will have continuing commitments to its bank and will likely face a more difficult market in which to tryand achieve another sale if the appeal is unsuccessful but the sale to Mr Croft is thwarted.[33] In terms of the effects on third parties, KPIL relies on its evidence from Mr McGrath, its account manager with the ANZ Bank, who describes Rocky Peaksas a "drain on TPG", that is "adversely impacting" on the financial covenants reliedon by the bank. KPIL also points to there being a "genuine, sincere buyer" forRocky Peaks who is able to complete the purchase but who will not wait indefinitely and says that he is entitled to certainty.[34] KPIL also suggests the public interest supports the judgment being implemented, because to do so "upholds the administration of justice" and "promotes compliance with the law and legal obligations".[35] However, the primary grounds for opposing the grant of a stay rely on considerations of the balance of convenience allied to the lack of strength of the appeal. KPIL points to the fact that, on 23 June 2015, Mr Watherston was offered the opportunity to purchase Rocky Peaks at a price equal to that which KPIL could get on the open market and that offer has not been accepted. Furthermore, Mr Watherston has not paid rent or outgoings on Rocky Peaks for an extended period and is now heavily indebted to KPIL.[36] While Mr Watherston relies heavily on the sale of his alleged interest in the Kowhai Banks Dairy property, that property is owned by the trustees of two trusts and not by him. Furthermore, there are still numerous obstacles to be overcome before funds are realised, including obtaining the subdivision consent, the resource consent for the truck stop and NZTA approval for traffic management. There is no reliable timetable for completion of the development. Furthermore, the property would then need to be sold at a price that yields sufficient funds to purchase Rocky Peaks and, while Mr Watherston remains in receivership, the receipt of any funds by him would need to be accounted for to the receiver. Consequently, there is no certainty about the timeframe in which realisation of those funds could be achieved and furthermore, there is no certainty about whether sufficient funds would be achieved. While Mr Watherston provides evidence that, when subdivided, the landon which the proposed business park could be developed would be worth $3,500,000 to $4,000,000, there is no evidence about what it will cost to undertake the development and therefore no certainty of what level of profit, if any, there will be from the development.[37] KPIL also casts doubts on the strength of the appeal saying it is extremely weak. For all these reasons it says the balance of convenience strongly favours KPIL.Discussion[38] Despite KPIL's submissions, I accept that declining a stay of the judgmentwill render Mr Watherston's appeal nugatory. Mr Watherston is not seekingdamages, but the opportunity to reacquire Rocky Peaks which his family have continued to live on while it has been in KPIL's ownership.[39] However, as has been observed in a number of cases, the fact that an appeal may be rendered nugatory is not determinative of the matter.9 That said, I accept that it would be an unusual case where it was held that a failure to grant a stay would render the appeal nugatory and yet an application for stay is declined. There must be some other factor that is so forcibly in favour of the party resisting the stay, that thepractical negation of the applicant's appeal rights is warranted. The question is whether this is such a case.[40] Turning then to the other considerations identified in Dymocks and Keung, I first address the two which have no material impact on the present application.The bona fides of the applicant as to the prosecution of the appeal[41] While KPIL was critical of the time it took Mr Watherston to file his appeal, the appeal is filed and an application to have it heard under the fast track procedure has been sought. I am satisfied that Mr Watherston is prosecuting his appeal with reasonable diligence, and this does not tell against the grant of a stay.9 Cousins v Heslop [2007] NZCA 377, (2007) 18 PRNZ 677.The novelty and importance with the questions involved[42] Neither party suggested that novel or important questions arose in these proceedings, nor do I consider there is any public interest aspect to the proceedings which warrants the stay applied for.[43] That leaves the factors which, to varying degrees, do weigh in my consideration of whether to grant the stay.Will the respondent (successful party) be injuriously affected by the stay?[44] Having regard to Mr Thompson's evidence, there can be no doubt that there are holding costs in retaining the property which would not be fully funded, even if rent was being paid by Mr Watherston. However, KPIL says the current arrears in rental are around $150,000, so the position is clearly worse for KPIL, than would be the case if Mr Watherston was meeting the rental payments.[45] Mr Thompson's evidence is that the poor performance of Rocky Peaks is adversely impacting on other companies in the TPG and its relationship with the bank is being harmed. This raises the prospect of ANZ reviewing the TPG and potentially increasing the interest rates charged to the group. The bank officer with responsibility for the affairs of the TPG, Mr McGrath, says that Rocky Peaks hasbeen a poorly performing asset and is a drain on the property group which "creates concerns for both the bank and the client".[46] However, I accept Mr Watherston's submissions that this affidavit does nothing more than suggest it would be desirable for the TPG to dispose of Rocky Peaks because it is a net drain on the TPG investments. It does not go so far as to suggest an imminent and concrete threat to the viability of KPIL, or the wider TPG. Rather, it sees the sale of Rocky Peaks as having "a positive impact on TPG's financial covenants".[47] Thus, I accept there is an injurious but not catastrophic effect on the respondent if a stay is granted. It will be required to meet the financial cost of ongoing retention of Rocky Peaks. Normally, that could simply be met by requiringthe applicant for the stay, providing undertaking as to damages. However, in thiscase that is not feasible as Mr Watherston's personal assets are in receivership and the evidence of the receivers, which is not challenged, is that the receivership is likely to continue for some time. Furthermore, as at the date of the most recent six monthly report, prepared in accordance with s 24 of the Receiverships Act 1993, Mr Watherston remained indebted to PGGW and PGW Rural Capital Limited in the sum of $1,860,579. There is clearly no prospect of Mr Watherston providing an undertaking as to damages, which would be the usual way of addressing the adverse effect on the respondent.[48] KPIL also raises a concern that if the present agreement for sale and purchase is cancelled because the caveat is not lifted, then there may be difficulties in securing an alternative purchaser in the future for the same sum. However, the evidence on this point is speculative at best. I accept Mr Moss's submission that the evidence as to trends in this part of the rural property market is not fully qualified as opinion evidence, nor is the basis for the real estate agent's opinion provided to the Court. This claimed injurious effect is therefore of no material consequence to my decision.Effect on third parties[49] The primary third party who would be affected if a stay was granted is Mr Croft who has agreed to purchase the property from KPIL for $2,280,000 plus GST (if any). He was the under-bidder for the property at the time it was purchased by KPIL. The current contract is a contract that was renegotiated since the decision of Associate Judge Matthews and the date for settlement of the contract is 7 October 2015. Mr Croft gives evidence that he is keen to have this matter resolved and he needs to have certainty. He says he is not willing to wait indefinitely and will move on and seek an alternative farm property if he cannot complete a purchase on the current contractual terms.[50] Mr Moss expressed some scepticism about whether Mr Croft would give up on Rocky Peaks if there was a further delay caused by the stay, given he has maintained interest in the property between when it was sold to KPIL in late 2013 and now. I am simply not in a position to judge whether Mr Croft will abandon hisdecision to purchase Rocky Peaks but it must, on the affidavit evidence, be accepted as a possibility. However, I accept that there will be inconvenience to Mr Croft if a stay is granted. He will either have to extend the settlement date again for a number of months to await the outcome of the appeal, or he will have to begin looking for an alternative rural property. While those matters are relevant to my consideration, they do not, in my view, on their own justify declining a stay.Strength of appeal[51] The parties are clearly at odds over the strength of the appeal. Mr Moss did not press the strength of the appeal but, referring to the grounds of appeal, said they could not be dismissed as unarguable. He stressed that the Associate Judge did not have to make findings on the interpretation of the agreement, but simply whether the applicants had established a reasonably arguable case that cl 7 of the agreement was an option to acquire land. Similarly, the Judge did not have to determine whether the option was unenforceable under s 24 of the Property Law Act, but simply whether it was arguable that it was enforceable in the factual circumstances, as Mr Watherston presented them.[52] KPIL's response was that the conclusions of the Associate Judge were based on a "careful and reasonable" assessment of the evidence. The applicant bore theonus of proving that it was arguable that there was an option relating to the sale and purchase of land and the applicant simply failed to discharge that onus. Furthermore, because the Judge found there was not an option relating to the sale and purchase of land, he did not go on to consider the exercise of the discretion and those, in KPIL's submission, clearly precluded the retention of the caveat.[53] I accept that, where the meaning of a disputed contractual provision is plain and it is unnecessary to resort to the factual matrix to assist with interpretation, a decision on whether an agreement discloses a reasonably arguable caveatable interest can be made in the context of a s 145A application. However, where there are factual disputes which will require resolution at trial, including what objectively wasmeant and understood by the parties when the agreement was entered into, then that will not be able to be resolved in an application to sustain a caveat.10[54] In the circumstances, I am not prepared to reject Mr Watherston's points on appeal as unarguable. They may involve mixed questions of fact and law which have a bearing on the interpretation of the clause relied on to support the caveatable interest. However, it has to be said that there are multiple deficiencies in the drafting of the agreement relied on, including in terms of identification of the parties which are bound by it, and this could never be an appeal which could be described as having high prospects of success. More importantly, even if Mr Watherston succeeded in establishing a reasonably arguable case, there remains the issue ofwhether the caveat should be sustained in the exercise of the Court's discretion. Thatquestion is considered in the following discussion over where the balance of convenience lies.Balance of convenience[55] In light of the above discussion, the decision as to whether to grant a stay comes down to considerations of where the balance of convenience lies. It is on this count that KPIL makes its strongest submissions. It points out that, on 23 June 2015, it offered to sell Rocky Peaks to the applicants for $2,280,000 plus GST (if any), and the applicants have not, nor can they, accept that offer.[56] Given Mr Watherton's impecuniosity, his ongoing receivership, and hisindebtedness to KPIL for unpaid rental, there is no prospect, in the near future, that Mr Watherston (or the second applicant) would have funds to complete the option that Mr Watherston is seeking to enforce.11[57] Mr Moss accepted that that was the position. However, he said that should be seen in the context of the agreement where he says KPIL has breached its agreement to acquire shares in and become the half owner of, Kowhai Banks Dairy and so10 Bethell v Rickard [2013] NZCA 68.11 Mr Watherston explains the second applicant was incorporated by him after KPIL acquired Rocky Peaks to be the vehicle for completing the purchase of Rocky Peaks. It has no assets. In any event, as it was not in existence at the time of the alleged agreement, nor was it referenced in the agreement, I can see no basis on which it could claim a caveatable interest independently of Mr Watherston."Mr Thompson, through the respondent, should not be allowed to walk away from these obligations simply because Mr Thompson's circumstances seem to have changed, to the detriment of the Watherston family losing their unique home andbusiness through this breach".[58] In submissions, Mr Moss elaborated that his clients understood the 2013 agreement to require an exchange between the trustee of the family trust, Okarahia Downs Limited, and KPIL, which would see the family trust owning Rocky Peaks and (presumably) Mr Thompson or TPG owning 80 per cent of the shares in Okarahia Downs Limited, and therefore having a 40 per cent interest in the Kowhai Banks Dairy Farm property.[59] However, there is a disconnect between this alleged agreement and the caveatable interest which is sought to be sustained. The alleged agreement requires a third party, Okarahia Downs Limited, to sell or exchange shares with Mr Thompson or the TPG in exchange for Rocky Peaks (or shares in an entity that holds Rocky Peaks). There are no proceedings on foot alleging breach of that agreement between those parties, and the suggestion that an agreement to that effect has been breached is clearly disputed by KPIL (and it is unclear how KPIL is bound by this agreement in any event having only come into existence after the agreement was entered into).[60] The only basis upon which the applicants can maintain the caveat is on the ground set forth in the caveat. That is limited to an "interest as purchaser under anoption to purchase granted to the caveators in writing by the registered proprietorthrough an agent of the registered proprietor and dated December 2013". Thesecond applicant is not a party to the agreement relied on and was not in existence at the time. It cannot assert a caveatable interest. Mr Watherston relies on the alleged option to purchase that was offered to him on 23 June 2015 and it is clear that he could not then, nor could he now, exercise that option to purchase. The caveat does not refer to, or rely on, an agreement to exchange Okarahia Downs Limited's 80 percent shares for ownership of Rocky Peaks.[61] I am satisfied that Mr Watherston has been given the benefit of the option to purchase that he sought to secure and was unable to exercise that option.Furthermore, he remains in a position where he is unable to exercise that option for the foreseeable future. For that reason, even if the appeal were arguable, and the caveat sustained, Mr Watherston would not be in a position to exercise that option to purchase. Indeed, if the trustee, Okarahia Downs Limited, did forward Mr Watherston funds to complete the purchase, that would simply become the property of the receivers to go towards reducing the $1,800,000 debt Mr Watherston still owes.[62] Finally Mr Watherston cannot provide an undertaking to meet the damages that KPIL will sustain if he pursues his appeal but is ultimately unsuccessful[63] For these reasons, I am satisfied the balance of convenience weighs heavilyin the respondent's favour, particularly as, even if reasonably arguable, Mr Watherston, on his own admission, cannot exercise the option to purchase that he seeks to enforce.[64] It would be unfair to the respondent to delay its ability to sell the property for at least several more months, when there is no reason to believe Mr Watherston will be in any better a position to exercise the interest alleged, at that future point in time. The application is therefore rejected.[65] The respondent is entitled to 2B costs.Solicitors:J Moss Barrister, ChristchurchGCA Lawyers, ChristchurchFletcher Gautier Moore, Nelson