BURMEISTER v REGISTRAR-GENERAL OF LAND [2014] NZHC 2033

BURMEISTER v REGISTRAR-GENERAL OF LAND [2014] NZHC 2033 [26 August 2014]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYCIV-2008-470-000912[2014] NZHC 2033IN THE MATTER of the Land Transfer Act 1952AND IN THE MATTER of a claim for compensation pursuant tos 172 of the Land Transfer Act 1952BETWEEN KENNETH SIDNEY BURMEISTER andVALERIE JOAN BURMEISTERPlaintiffsAND REGISTRAR-GENERAL OF LANDDefendantHearing: on the papersCounsel: D Chesterman for PlaintiffsJR Burns for DefendantJudgment: 26 August 2014JUDGMENT OF ASHER J(Quantum of damages)This judgment was delivered by me on Tuesday, 26 August 2014 at 3.00pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors/Counsel:Sharp Tudhope, Tauranga.D Chesterman, Auckland.Crown Law, Wellington.Introduction[1] In the decision of 1 April 2014, judgment was entered in favour of theBurmeisters who were entitled to compensation from the Registrar-General of Land.1The entitlement arose because the Burmeisters were barred by the Land Transfer Act1952 from bringing an action for recovery. The determination of the quantum ofcompensation was reserved for further submissions. The parties have now filedthose further submissions.[2] Section 179 of the Land Transfer Act 1952 sets out the measure of damages when compensation is payable under s 172(b). Section 179 provides:179 Measure of damagesNo person shall, as against the Crown, be entitled to recover any greater amount for compensation in respect of the loss or deprivation of any land, or of any estate or interest therein, than the value of that land, estate, or interest at the time of that deprivation, together with the value of the messuages and tenements erected thereon and improvements made thereto (if any) prior to the time of that deprivation, with interest at the rate of 5 percent per annum to the date of judgment recovered.[3] In the judgment of 1 April 2014, a submission from Mr Chesterman that the Burmeisters should be awarded the full amount required to discharge the ASBBank's mortgage over their property, registered as a consequence of a fraud of theO'Briens and Mr Geoffrey Clayton, was rejected. It was concluded that the plainwords of the section applied and the amount of compensation was limited by thewords of the section.2 The consequence of this conclusion is that the Burmeisterscan only recover compensation from the Crown based on the value of the land, estateor interest at the time of the deprivation, together with the value of anyimprovements. Section 179 operates as a cap on the amount payable, limiting it tothe value of the land and improvements at the stated time.Date of deprivation and value of deprivation[4] Mr Chesterman for the Burmeisters and Mr Burns for the Registrar-General agree that the Burmeisters' deprivation occurred when the ASB Bank's mortgage1 Burmeister v Registrar-General of Land [2014] NZHC 631.2 At [68].was fraudulently registered by the O'Briens on 14 November 2001. It is also agreedthat the market value of the Burmeisters property at that date was $215,000.[5] It is not in dispute that the market value of the property today is much morethan that sum, probably $420,000. The amount presently owed to the ASB Bank isapproximately $641,000. That being the amount required to clear the title of themortgage, it seems likely that, subject to any credit for monies received from theO'Briens or associated entities, the Burmeisters loss at its highest is that $641,000,together with any general damages.[6] However, on the interpretation of s 179 in the judgment of 1 April 2014 theBurmeisters cannot recover either of the higher sums (the current market value or theamount owed under the mortgage), and are limited by their entitlement under thatsection to the value of the land and improvements at 14 November 2001.[7] The parties have agreed that this issue is to be determined on the papers.Submissions[8] Mr Chesterman for the Burmeisters submits that in light of the 1 April 2014 judgment the Burmeisters are entitled to the full value of the land and improvements as at the date of deprivation on 14 November 2001. This is $215,000, together withinterest at the rate prescribed by s 179 of five per cent from that date to the date ofhearing of $134,374.98, a total of $349,374.98.[9] The Burmeisters received a $7,000 initial payment and weekly payments of afurther $19,000 after the fraud was implemented. Mr Chesterman submits that thosemonies received should not be deducted from the $215,000 plus interest and shouldbe accounted for if at all between the Burmeisters, and the O'Briens and Mr Claytonwho were the fraudsters. He points out that because of the limit placed by s 179 theBurmeisters will not recover anything like the amount they owe to the ASB Bank,and have lost much of the market value of their property in any event because ofinflation. He submits that s 179 does not create a discretion to reduce damages, andthe formula it imposes should be strictly applied. If there is a discretion it should beexercised in favour of the Burmeisters.[10] Mr Burns for the Registrar-General relies on statements by Professor Sim inhis article The Compensation Provisions of the Act to the effect that the common lawprinciples for assessment of damages apply to a s 179 calculation.3 He also relied onAustralian observations to the effect that any damages under the Western Australianequivalent of s 179 must be damages commensurate with the loss sustained.4[11] He submitted that s 179 expressly provided that the amount of $215,000 wasthe equivalent in monetary terms to the land and should be treated therefore ascommensurate with the starting point of the damages entitlement. He also submittedthe Burmeisters, in addition to receiving the weekly payments totaling $19,000 andlump sum of $7,000, received an additional lump sum of $15,000. He argued thatthe plaintiffs had never disclosed their bank statements showing the amounts theyhad in fact received, and this was a further factor supporting a reduction of the$15,000 as the circumstances of the receipt of that amount were unclear. Hesubmitted that the Burmeisters had been dilatory in initiating proceedings against theRegistrar-General and that they were not entitled to interest over the full period sinceNovember 2001.Discussion[12] Section 179 is headed "Measure of damages". A person is entitled to recovercompensation in respect of the loss or deprivation of land and improvements, but astatutory limit is imposed capping the amount for which the Crown can be liable tothe value of the land and improvements as defined.[13] I see no basis for inferring that a new damages regime is created by s 179 as suggested by Mr Burns. That would involve a two-stage process where first the starting point is the value of the land and improvements, and second deductions are made from that starting point in relation to monies received. The words of thesection do not support such an interpretation and it would in my view run contrary towhat the legislature intended.3 PBA Sim The Compensation Provisions of the Act in GW Hinde (ed) The NZ Torrens System Centennial Essays (Butterworths, Wellington, 1971), 138 at 157.4 Transfer of Land Act 1893 (WA), s 201.[14] Section 179 was intended to limit liability by imposing a cap oncompensation. Presumably when the section was drafted in the nineteenth centurythe present inflationary movements in the value of land were not anticipated and itwas seen as a fair formula. I have commented on the rigidity of the section.5 Itoperated as a cap on compensation that was otherwise payable. However, it was notintended to substitute an entirely new regime for calculations of loss. It was to placea cap.[15] The approach adopted by the Registrar-General is contrary to the approachadopted by Professor Sim. Professor Sim referred to restitutio in integrum and thatthe ordinary common law principles relating to damages apply.6 A claimant is to beput in the same position as far as money can do it as if the wrong complained of hadnot been done. Griffiths CJ in Registrar of Titles v Spencer adopted the sameapproach, stating that:7 damages [should be] commensurate with the loss sustained, that is tosay, [the plaintiff] is to be put in the same position, so far as money can do it,as if the wrongful act complained of had not been done.[16] So the orthodox assessment of loss is made and then the cap is applied. If theBurmeisters were put in the same position so far as money could do it as if they hadnot been defrauded, they would be entitled to compensation to the value of the ASBBank's mortgage, the sum of approximately $641,000. Only by receiving that sumand paying out the mortgage could they be returned to the position they previouslyenjoyed of owning the home mortgage-free. It is clear that their entitlement todamages is well in excess of $215,000.[17] To accept the defendant's submission that $215,000 is the equivalent inmonetary terms to the value of the land that the Burmeisters have been deprived of,and for deductions for amounts received to be made from that figure, would be toinsert an artificial concept into the calculation of loss, that would run against theordinary principles of the award of damages. So that $215,000 as the starting pointfor deductions would be a fiction. It is a far more satisfactory to view s 179 as not5 Burmeister v Registrar-General of Land, above n 1, at [68].6 PBA Sim, above n 3, at 157.7 Registrar of Titles v Spencer (1909) 9 CLR 641 at 645 (HCA).creating a new damages regime, but simply providing a cap on the quantum of damages that are calculated otherwise in the usual way.[18] The Land Transfer Act's compensation provisions are in themselves anacknowledgement of the detriment that can arise under the Torrens system when theprovisions of the Act prevent a plaintiff from challenging subsequent registrations.Section 172 provides mitigation against the harshness of that scheme by providingfor compensation from the Registrar-General. There would seem to be no policyreason for the legislature to then allow for deductions that might reducecompensation beyond the statutory cap when the actual loss already exceeds the capeven taking the deductions into account. The cap in s 179 is the only limit on theordinary principles of compensation.[19] The Burmeisters loss, even taking into account the payments they received,far exceeds $215,000. Therefore their recovery should be $215,000. There shouldbe no deductions.The deductions[20] I go on to consider whether the deductions sought by the Registrar-Generalshould be made, if the primary submission that deductions can be made from the$215,000 had been upheld. It was proven and accepted by the Burmeisters that thelump sum of $7,000 and the weekly payments of $19,000 were received. Theywould be deducted. The Registrar-General argued that the Burmeisters received afurther lump sum of $15,000. Mr Burns for the Registrar-General strongly submittedthat the evidence was this amount was received.[21] The evidence does not support this submission. Mr Burmeister in hisevidence in the trial last year stated that he received the $7,000 and $19,000payments, but stated he had not received the $15,000 lump sum. He was notchallenged on this assertion in cross-examination. For this reason only the assertionthat there would be a further $15,000 deduction is not accepted.[22] Moreover, in Burmeister v O'Brien I concluded that the total received by theBurmeisters was $7,000 and $19,000.8 No mention was made of $15,000. Thesubmission of the Registrar-General effectively contradicts that finding. The partieshad agreed prior to the hearing in this proceeding on 7 November 2013 that all thefindings in the Burmeister v O'Brien decision would be accepted for the purposes ofthese proceedings. It was not therefore open for the Registrar-General to assert thatthis further $15,000 should be deducted.[23] I also record that I do not accept the Registrar-General's submission that theBurmeisters failed to discover relevant bank accounts in relation to the paymentsthey received. The Burmeisters provided full discovery and there was no complaintabout the discovery until 25 November 2013. Prior to that counsel had filedmemoranda recording that there were no outstanding discovery issues. TheBurmeisters have provided satisfactory evidence indicating that they were not able torecover the bank statements. They were not challenged in cross-examination on thebank statements or their efforts to obtain them.[24] The Crown has raised an issue about the payment of rates and insurance. Again, this is not an issue on which Mr Burmeister was questioned in cross-examination, and I do not consider the payments for rates and insurance can bechallenged in submissions at this late stage.Interest[25] The Registrar-General argues that the Burmeisters interest claim should be reduced because they delayed the initiation of a claim against the Registrar-General and were guilty of delays.[26] It is stated in s 179 that a claimant is entitled to recover compensation as setout " with interest at the rate of 5 percent per annum to the date of judgmentrecovered". Given the formulaic nature of s 179 this would appear to be an absoluteentitlement. There is no suggestion in the words themselves that the interest rate is8 Burmesiter v O'Brien HC Tauranga CIV-2005-470-396, 1 December 2009.discretionary. The position can be contrasted to that in the High Court Rules where aCourt is specifically given a discretion.9[27] I have already construed s 179 as setting out a cap, and rejected the submission for the Burmeisters that it should be interpreted sympathetically to aclaimant to allow the full recovery of damages and compound interest.10 The sectionmeans what it says. Interest is at five per cent. There is nothing to indicate astatutory intention to provide a discretion to award less than the five per cent. It is aconservative interest rate if compared to the interest rate provided for in the HighCourt Rules of 7.5 per cent.11[28] Section 179 provides that the loss is to be calculated at the "time of [the] deprivation with interest to the date of judgment recovered". The plainmeaning would appear to be that interest is calculated with the date of deprivation asthe start date and the date of judgment as the end date. Thus, the Burmeisters areentitled to recover that amount of interest for that period. There is no provision foran inquiry as to their actions in the intervening period.[29] Even if there was a discretion I would not have reduced the time period for the calculation of interest, as Mr Burns has suggested. Undoubtedly the Burmeisterscould have acted with more alacrity at times. However, they had been subjected to acomplex fraud, and they were of modest commercial and litigation experience. Afterthey fully understood they had been defrauded they issued proceedings.[30] There is no onus on plaintiffs to bring an action against the Registrar-Generalwithin any particular time, providing it is within the six year limitation period. In the2005 proceedings that the Burmeisters issued they joined seven parties, one of whichwas the ASB Bank. If they had succeeded against the ASB Bank no furtherproceedings would have been necessary and the Registrar-General would have beensaved considerable time and cost.9 High Court Rules, r 11.27(2) and s 87(1) of the Judicature Act 1908.10 Burmeister v Registrar-General of Land, above n 1, at [63]–[71].11 High Court Rules, r 11.27(2) and s 87(3) of the Judicature Act 1908.[31] The Registrar-General was asked to join the substantive civil proceedings inNovember 2008 and declined to do so. Further, the Registrar-General did not agreeto abide the factual findings in the earlier Burmeister v O'Brien judgment untilshortly before the hearing in November 2013. One of the reasons for the delay wasthat the Registrar-General raised a limitation point against the Burmeisters, and afteran adverse judgment in this Court appealed that issue to the Court of Appeal.12 Thisextended the time for trial by approximately 18 months.[32] Therefore, I do not see any particular fault on the Burmeisters part in theconduct of this litigation that would have warranted a shorter period for thecalculation of interest, even if I had a discretion to do so.Result[33] The defendant is to pay the plaintiffs as compensation in damages unders 179 of the Land Transfer Act the sum of $215,000 together with interest at five percent of $134,374.98, a total of $349,374.98.[34] I reserve the question of costs on this issue, but hope that as with costs inrelation to the earlier hearing the parties will resolve the matter...Asher J12 Registrar-General of Land v Burmeister [2012] NZCA 340, (2012) 13 NZCPR 504.