MISSION TRUSTEE ONE LIMITED AND MISSION TRUSTEE TWO LIMITED AS TRUSTEES OF THE MISSION TRUST V CHANCERY (1999) LIMITED HC AK CIV 2007-404-004808

MISSION TRUSTEE ONE LIMITED AND MISSION TRUSTEE TWO LIMITED AS TRUSTEES OF THE MISSION TRUST V CHANCERY (1999) LIMITED HC AK CIV 2007-404-004808 24 August 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-004808UNDER section 145 of the Land Transfer Act 1952 BETWEEN MISSION TRUSTEE ONE LIMITED AND MISSION TRUSTEE TWO LIMITED AS TRUSTEES OF THE MISSION TRUST Applicant AND CHANCERY (1999) LIMITED Respondent Hearing: 23 August 2007 Counsel: S Judd for applicant A Galbraith QC and J Anderson for respondent Judgment: 24 August 2007 at 1720JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application that caveat not lapse]Solicitors: Phillips Solicitors, PO Box 23 649, Auckland for applicant Fitzherbert Rowe, PO Box 11 016, Palmerston North for respondent[1] The applicant has registered caveats against titles registered in the respondent's name and which, for the purpose of this judgment, will be referred to as "the Chancery car park land". [2] The Chancery car park land was part of land in Central Auckland known as the Chancery Plaza and retail area and Chancery car park. [3] A dispute now exists between the parties who, with their various interests, were involved in a joint venture to develop the Chancery land. [4] The respondent made application to the Registrar General of Land to lapse the caveats. The Registrar General issued a notice to the applicant pursuant to s 145A of the Land Transfer Act 1952. The applicant makes this application for an order that the caveats not lapse. [5] The application was given a first date of hearing for 23 August 2007. A detailed notice of opposition and affidavit in opposition was filed and served on 20 August 2007. Mr Judd, in a six-page memorandum, sets out significant matters which he submitted need to be the subject of at least one affidavit in reply. He therefore seeks: a) An interim order that the caveat not lapse pending further order of the Court; b) A direction that affidavits in reply be filed within twenty-one days; and c) The allocation of a ½-day fixture to argue the application. [6] I was able to establish with counsel: a) their availability to attend a one-day fixture (the extra time being required due to what is an expanding file both in terms of volume of material and issues) on 23 October 2007 at 10am or such earlier time after 1 October 2007 as the Registrar is able to notify counselb) that the affidavits in reply could be filed and served by 13 September 2007; c) that submissions and other documents, which are referred to in r 251A for use in opposed interlocutory applications which are frequently used as the basis for directions in opposed caveat applications, could be filed and served by the applicant by 20 September 2007 and by the respondent by 27 September 2007; and d) that the application would be ready for hearing shortly after the filing of that last set of documents. [7] In the scheme of things, the above arrangements should be sufficient pending a substantive fixture for the application.. One additional matter was raised by Mr Galbraith. He submitted that the order sought by Mr Judd be made subject to a condition that the applicant give an undertaking as to damages. [8] Mr Galbraith referred to the form of undertaking ordered by Fogarty J inGrace Pacific Ltd v Troon & Anor HC INV CIV 2004-425-000289 18 June 2004. In that judgment His Honour records: a) that a notice had been received by the applicant on 17 May 2004; and b) that an application had been made to lapse the caveat and that had resulted in the application that the caveat be sustained. [9] It is self-evident from the judgment that His Honour was resolving the application on the merits and not, as I am, simply dealing with the position up until the time when a fixture can be made. It is also evident from the judgment that the order was made against a background that the Court had been advised that, but for the caveat, a contract in respect of the subject land was due to be settled on 30 June 2004. The notice was obviously given so that the defendants could meet their contractual obligations to provide clear title.[10] I need not further review the case save to say that the undertaking which His Honour ordered is referred to [29] of the judgment where His Honour said:The plaintiff has volunteered an undertaking as to damages in the following terms:- The Plaintiff will abide by any order that the Court may make in respect of damages: a. That are sustained by any other party through the making of the order that the Caveat not lapse until further order of the Court; and b. That the Court decides the Plaintiff ought to pay.[11] The first defendant opposed the terms of the undertaking and submitted that it was wholly inadequate to protect it from very substantial losses likely to occur. The first defendant sought added security by way of personal guarantees and undertakings from the directors. His Honour noted that there was conflicting authority as to whether or not it is appropriate for a caveator to be liable to damages when legitimately pursing an interest. He said that he would not grant an undertaking as to damages which presumes that should the plaintiff's action fail that it would be liable for damages by reason of having lodged a caveat. He observed that there was sufficient protection available to the first defendant in any event because the substantive issues were going to be tried on 29 and 30 June 2004 and that the continuation of the caveat could be reviewed at the end of the trial or later. Accordingly, he found that the form of undertaking that had been offered was sufficient in the circumstances. [12] Mr Galbraith submitted that an undertaking in the interim was appropriate in this case. He sought to convince me that the applicant's case was a weak case and that there was some real doubt as to whether the interest which was claimed by the applicant would, in fact, be found to be a proprietary interest which might support a caveat. In substance, of course, he was simply emphasising the requirements of s 137 of the Land Transfer Act 1952, namely that the caveator must be able to show that he or she is entitled to, or beneficially interested in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or a transmission or of any trust expressed or implied.[13] Mr Judd opposed my making any interim order subject to a condition that an undertaking as to damages be given. He submitted that as there was no immediate prejudice in the evidence so far presented to the Court by the existence of the caveat there was, in fact, no reason to go any further than s 146 of the Land Transfer Act 1952 provided. In short, he submitted that the statutory liability created by s 146 was sufficient protection in the interim period pending determination of this application at a fixture. [14] It is difficult to come to any firm view on the merits of this application where the reply evidence is still to be filed. Because the time before the fixture is reasonably short, I do not regard this as a serious problem in the disposal of this matter. [15] No doubt the jurisdictional basis for making an order subject to a condition that an appropriate undertaking as to damages be given will be examined by counsel in their submissions in depth when this matter is determined at the fixture. Wallace J in Holmes v Australasian Holdings Ltd [1988] 2 NZLR 303 at 312-313, having noted the divergent views in the High Court and that the Court of Appeal in Holt v Anchor Management Ltd [1987] 1 NZLR 108 had not resolved the matter, nevertheless concluded that in an appropriate case a registered proprietor should have the ability to claim damages on a wider basis than the statutory ground provided by s 146. That view was followed by Barker J in BP Oil NZ Ltd v van Beers Motors Ltd [1992] 1 NZLR 211. [16] My view is that the Court does have a discretion in appropriate circumstances to require an undertaking as to damages and certainly has jurisdiction to add conditions where an order sustaining a caveat is made. [17] In the exercise of that discretion the Court will: a) Have regard to the statutory remedy provided by s '146 of the Land Transfer Act 1952 and determine if that gives adequate protection;b) If required, look for a solution which best protects the competing positions of the parties; c) If specific prejudice is evident, impose an appropriate condition that minimises the prejudice; and d) Particularly where the period before a full review of the matter can be undertaken, provide for an additional review in the short term to deal with any new or emerging prejudice. [18] What became apparent to me as I heard counsel was that a partial solution to the problem could be met by extending the caveat pending further order and by reserving leave to the respondent to apply on 24 hour' notice to vary the order by attaching a condition which required the giving of an undertaking as to damages if the circumstances revealed specific prejudice by the caveat's continued existence.Orders[19] Accordingly, I order as follows: a) Caveat No. 7414020.1 lodged against the land in titles NA 133B/825 and NA133B827 (North Auckland Land Registry) and Caveat No. 7416411.1 lodged against the land in title NA133B/828 (North Auckland Registry) shall not lapse pending further order of the Court but subject to the condition that the respondent may, on twenty-four hours' notice seek a review of this order should specific prejudice to the respondent be evident; b) The substantive application shall be allocated a one day fixture at 10am on 23 October 2007 or such earlier date as the Registrar shall advise counsel after 1 October 2007; c) Affidavits in reply shall be filed and served no later than 13 September 2007;d) R 251A as specifically modified by this direction shall apply to this application and the applicant's documents, including a case book of the application, notice of opposition and all affidavits which is paginated and indexed shall be filed and served by 20 September 2007 and the respondent's documents shall be filed and served by 27 September 2007.Costs[20] Costs in relation to this application are reserved and shall be determined on the disposal of the substantive application. _____________________ JA Faire Associate Judge