MARIO ENRICO ZAMBUTO AND MARK ALEXANDER PELDMANIS V KENSINGTON PARK HOLDINGS LIMITED HC AK CIV 2010-404-002869

MARIO ENRICO ZAMBUTO AND MARK ALEXANDER PELDMANIS V KENSINGTON PARK HOLDINGS LIMITED HC AK CIV 2010-404-002869 23 July 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2010-404-002869UNDER the Land Transfer Act 1952 IN THE MATTER OF an application under section 145A that Caveat Notice 7950360.1 registered against Titles 418030 and 416032 not lapse BETWEEN MARIO ENRICO ZAMBUTO AND MARK ALEXANDER PELDMANIS Plaintiffs AND KENSINGTON PARK HOLDINGS LIMITED Defendant Hearing: 22 July 2010 Appearances: P Sills for the Plaintiffs N Penman-Chambers for the Defendant Judgment: 23 July 2010JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on 23.07.10 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar DateSolicitors/Counsel: P Sargent, Sargent Law, Auckland – sargent@sargentlaw.co.nz P Sills, Barrister, Auckland – paul.sills@paulsills.co.nz C Bryant, Hesketh Henry, Auckland – Christina.bryant@heskethhenry.co.nz N Penman-Chambers, Hesketh Henry, Auckland – Nicola.penman-chambers@heskethhenry.co.nz[1] The plaintiffs have applied to sustain their caveat over Kensington Park Holdings Limited's (KPHL) property, it having applied to the Registrar-General of Land for the caveat to lapse. Another company Kensington Properties (NZ) Limited (KPNZ) agreed to purchase property at Orewa and nominated the plaintiffs to complete that purchase. At that time an associated company of KPNZ, Kensington Park Properties Limited (KPPL) owned adjoining land and had plans for a residential property development on the adjoining land and wanted to include the plaintiffs' property as part of that development. [2] The plaintiffs' claim KPNZ could not at that time raise sufficient finance to fund the purchase. Hence the plaintiffs agreed to raise the necessary finance to complete the purchase of the Orewa property. [3] The arrangements between the plaintiffs and KPNZ/KPPL included execution of a deed. It contained two covenants given by KPPL which the plaintiffs claim directly affected the value of the Orewa property. The covenants concerned a height restriction and a right-of-way and service easement over the KPPL's adjacent property. The easement was to be granted in the event KPPL defaulted on its obligation to purchase the Orewa property from the plaintiffs. [4] The plaintiffs' claim the precise location of the right-of-way was not recorded in the deed. Mr Zambuto deposes that the plaintiffs agreed with KPPL that the easement would run across the adjacent property to the nearest public road. [5] The plaintiffs registered a caveat over the defendant's property "in order to protect our position". [6] The plaintiffs' affidavit evidence details events including the placing of KPPL into receivership. The ensuing events included receiving a request from the receiver's solicitors to withdraw the caveat. The plaintiffs refused to do so. Discussions and negotiations followed. In around June 2009 the receivers entered into an agreement to sell KPPL's property to interests controlled by Mr John Sax. This was completed in the name of KPHL (the defendant) under Mr Sax's control.[7] Negotiations with Mr Sax failed to provide an agreement over the delineation of the right-of-way. In April 2010 a letter from KPHL's solicitors disputed the validity of the interests protected by the caveat and led to the application to the Registrar for the caveat to lapse. [8] In its opposition to the plaintiffs' application KPHL claims: (a) That the plaintiffs do not have an interest that is capable of sustaining a caveat because the property was transferred to KPHL free of any interest held by the plaintiffs; because the alleged right-of-way is insufficiently defined by the deed; and because the height restriction does not give rise to any interest; (b) That a caveatable interest did not exist at the time the caveat was lodged; and (c) The balance of convenience lies in favour of the lapse of the caveat. [9] Mr Sax deposes that the proposed right-of-way referred to in the deed was "extremely vague". The deed did not identify where the right-of-way would be, what type of right-of-way was involved and who would cover the cost to forming and maintaining it. [10] Mr Sax contends that he had made it clear to the plaintiffs that KPHL would not agree to the proposed right-of-way. He said the receivers and their lawyer told the plaintiffs and he at a meeting that the BNZ would not agree to the plaintiffs' proposal to satisfy their claims because they did not think the easement in the deed was valid or binding and they doubt whether any purchaser of the property would accept the right-of-way proposed by the plaintiffs. [11] When this matter was called in the chambers list on 3 June 2010 Associate Judge Doogue directed a fixture of a half day be scheduled for 18 August 2010. Before then the plaintiffs' submissions and bundles were to be filed and served no later than 10 August 2010.[12] On 15 July 2010 the plaintiffs filed an interlocutory application seeking orders for particular discovery. Mr Zambuto's affidavit filed in support explains that when the receivers of KPPL tendered the adjacent property for sale the tender documentation included detail about the plaintiffs' caveat. Although KPHL and Mr Sax did not apparently participate directly in the tender process, Mr Zambuto believes they or their agents reviewed the tender documentation including reference therein to the caveat. Likewise he deposes there were extensive discussions between the plaintiffs and the solicitors for the receivers and for KPHL concerning formalisation of covenant conditions. He says at one point these almost achieved an agreement. In short he has good reason he says to believe that Mr Sax and KPHL were well aware of the covenants which bound the owner of the adjacent property to the plaintiffs. This, despite Mr Sax's apparent claims to the contrary and despite the claim in the notice of opposition that the plaintiffs did not have an interest capable of sustaining a caveat. [13] The application for particular discovery asserts the documents requested are relevant to a consideration of issues before the Court. It is submitted that any documents that go to KPHL's awareness of the caveat prior to the purchase of the property are relevant and asserts those documents are in the possession, power and control of KPHL. [14] Bearing in mind the impending fixture the Court scheduled the discovery application for call in the chambers list before me on 22 July 2010. As it happens sufficient time was available to hear the application. Of equal importance was the fact that the application should be heard in time so that if it were granted any obligations of KPHL prescribed there under could be completed to ensure the scheduled fixture could proceed. Therefore and over Ms Penman-Chambers' objections I directed the matter be argued when it was called before me. [15] In advance of the hearing Ms Penman-Chambers filed a memorandum for KPHL. By it Ms Penman-Chambers submitted the application was misconceived because:(a) Leave was required for the making of any interlocutory application; and (b) Particular discovery was only available after general discovery had been provided. [16] Understandably the memorandum records a complaint that having only been served with the application five working days prior KPHL was still considering whether any affidavit in opposition was required. [17] In the outcome of my discussions with counsel I determined that leave would be granted to the plaintiffs to apply for the discovery in question because I was satisfied that the effort involved in meeting compliance would be relatively minimal and that the number of documents likely to surface in that outcome would be few. According I ordered: (a) That by 30 July 2010 KPHL shall file and serve on the plaintiffs a verified affidavit stating whether the following documents or any document of that class is or has been in KPHL's possession, custody or power, and if it has been but is no longer in KPHL's possession, custody or power, when KPHL parted with it and what has become of it, namely: (i) Documents provided by the receivers of KPPL or their agents to KPHL (or its agents or related companies) wherein there is reference to the plaintiffs' caveat; (ii) Correspondence between the receivers and KPHL's solicitors between 1 May 2009 to 15 October 2009 relating to the plaintiffs' caveat or their interest arising under the deed; (iii) All correspondence and documents in relation to the location of the plaintiffs' right-of-way for the period 1 – 12 June 2009;(iv) A copy of the sale and purchase agreement signed between the receivers and KPHL or related parties entered into on or about 12 June 2009; (v) Notes and emails if any relating to the meeting between Mr Peldmanis, Greg Langton and Ralph Beavan on 19 May 2009.Reasons[18] The Court was concerned that the scheduled fixture be met. Procedural issues concerning the ability of the plaintiffs to file its particular discovery application can be met upon leave being granted which, upon oral application before me was given. There is sufficient time for reasons already indicated to enable KPHL to provide the affidavit of documents concerned. If the documents exist they certainly have relevance notwithstanding the purpose of the Court's enquiry will be to determine whether or not there is a reasonably arguable case for the existence of a claim of interest and if there is, whether the caveat should or should not remain. In that context I accept there may be good reason to believe that discovery will assist in that determination. [19] Above I have detailed the form of order made. The Court expects that upon the plaintiffs' request KPHL will forthwith provide copies of any discovered documents requested.Associate Judge Christiansen