P S YARROW v P D TENNENT AND G HASSALL AS EXECUTORS OF THE ESTATE OF MELVA DOREEN YARROW [2017] NZHC

P S YARROW v P D TENNENT AND G HASSALL AS EXECUTORS OF THE ESTATE OF MELVADOREEN YARROW [2017] NZHC 1275 [12 June 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2017-404-000590[2017] NZHC 1275BETWEEN PAUL STEVEN YARROWApplicantAND PETER DAVID TENNENT ANDGRANT HASSALL AS EXECUTORSOF THE ESTATE OF MELVA DOREENYARROWRespondentsHearing: 12 June 2017Appearances: P S Yarrow the Applicant in personITF Hikaka and L Clews for the RespondentsJudgment: 12 June 2017ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN[1] On 2 May 2017 Lang J directed this matter be heard today and ordered that theapplicant's three caveats not lapse, over three parcels of land at two addresses, over23 Riemenschneider Street, Manaia (the Manaia property) and 72 Messenger Terrace,Oakura, Taranaki.[2] Since then those caveats have lapsed because the applicant did not notify theRegistrar-General of Land of the order, as he was required to do under s 145A of theLand Transfer Act (Act).[3] The applicant is a lay litigant. He says he was unaware of his obligations tonotify the Registrar-General of Land.[4] Presently the caveats have lapsed and the titles of the properties are now clear.[5] In the circumstances, and appropriately it seems to the Court, the respondentsare content to treat this hearing as if it is an application for leave to lodge a secondcaveat in respect of the claimed interest under s 148 of the Act. It is clear from thedirections of Lang J than an opportunity be provided to the applicant to prove his claimof a caveatable interest.[6] It is the respondents' position that leave should not be granted to lodge a secondcaveat because they say the underlying caveat is not sustainable and the threshold forleave to lodge a second caveat is not met.[7] The Manaia property is subject to a sale and purchase agreement. Earlier andwhile marketed for sale it had been offered to the applicant and, separately, to hisbrother John Yarrow but neither have made an offer of purchase. The respondentshave confirmed that the net proceeds of sale of the property will remain to be held bythe estate and will not distributed pending resolution of other Family Protection Act1955 and Law Reform (Testamentary Promises) Act 1949 claims.Background[8] The respondents are executors of the estate of Melva Doreen Yarrow (estate).Noel and Melva, the parents of the applicant and John, were married and jointly ownedthe Manaia property and when Noel died in 2008 ownership of that property passedby survivorship to Melva. Melva acquired the Oakura property in July 2003.[9] Melva died on 10 August 2015 and probate of her estate was granted on 15October 2015 with Rosemary Tennent and Michael Finnigan appointed as executors.On 23 December 2015 the respondents were appointed as replacement executors.[10] Mr Tennent deposes that the Manaia property was deteriorating and advice wastaken regarding the cost of remedial works and whether that would increase the valueof the property. When placed on the open market an offer of purchase was receivedand has been accepted. The sale cannot proceed if the caveats are in place.[11] The executors have confirmed the net sale proceeds will be held and notdispersed until the family proceedings are resolved.[12] Although the Oakura property is not on the market and the executors have noplans to sell it presently, they are of the view that there is no basis for the caveat overthat property.[13] The applicant's application to sustain caveats was opposed and continues to beopposed by the respondents.[14] By his caveats the applicant claims an interest on the properties:As security holder pursuant to an unregistered mortgage under an Agreementwith the registered proprietor Peter David TENNENT and Grant HASSALLdated 3 May 2011.[15] It is Mr Tennent's evidence that there was no agreement between therespondents and the applicant on 3 May 2011 and that in any event, neither respondentwas the registered proprietor of any of the properties in May 2011 for Melva Yarrowwas then alive and was the registered proprietor of those properties.[16] By his application dated 5 April 2017 to sustain his caveats the applicantclaims:(a) A Deed of Family Arrangement dated 23 December 2009 (DOFA) wassigned by himself, the estate of his father Noel, 'and other family andcharitable trusts and companies'.(b) The essence of the DOFA was the equalisation of payments to him ofhis overpayment of shares for the NZ Group of Yarrows companies.(c) The overpayment was estimated to be $10M but now is estimated to be$29.5M.(d) On 3 May 2011 clause 3.25 of the DOFA was activated and thatactivation entitled the applicant to register caveats on the propertiesheld by Noel's estate at Manaia and Oakura.(e) Caveats over the properties were duly lodged.[17] It is the applicant's claim that clause 3.25 of the DOFA provides him with "theright of an equitable share mortgage over the assets and a caveatable interest until thematters are heard under the arbitration clause 3.25 and determined. Clause 3.26.3 arethe powers provided the arbitrator to resolving a dispute under the DOFA".[18] The applicant says the properties hold a significant personal value and meaningto him, and that an award of damages would be insufficient.[19] His application concludes with a statement:I am involved in other significant litigation against the trustees and directorsof all of the signatories to the DOFA and only seek to ensure that all partiesare treated fairly, legally, lawfully and morally including myself.[20] Attached to the applicant's affidavit dated 5 April 2017 is a copy of the DOFAand the names of some 14 parties are noted on the header page. These include:(a) The applicant and some three other interests bearing his name;(b) The Estate of Noel Henry Yarrow;(c) Melva Doreen Yarrow;(d) The Noel and Yarrow Charitable Trust;(e) Various Yarrow companies; and(f) Southern Cross Investments Limited.[21] The DOFA notes at clause 2.1.2 that the Deed of 9 May 2003 gave Noel powerto decide which of his sons Paul and John Alfred Yarrow would receive control ofYarrows (the Bakers) Limited (YTB), Yarrows Holdings Limited (YHL) and SouthernCross Investments Limited (SCIL) and their respective subsidiaries and controllingentities (collectively the Yarrow Group).[22] The 9 May 2003 DOFA provided that the trustees of the Riemenschneider TrustNo.2 (RT2) would estimate the collective financial disadvantage suffered by theinterests of the brother missing out on control compared to the interests of the brotherreceiving control and RT2 would procure the discretionary trusts controlling variousYarrow Group interests in order to make an "equalising distribution" to equalise thenet financial benefits each of the brothers was to receive.[23] The DOFA recorded that control of the Yarrow Group be given to John by himbuying 74 per cent of the voting shares in YTB and YHL during the 2003 – 2004period when in the same period the applicant acquired the remaining 26 per cent ofthose voting shares.[24] The DOFA recorded that those differences led to John and the applicant signinga Heads of Agreement (HoA) dated 27 May 2005 whereby John agreed he and histrusts would sell their entire interest in the Yarrow Group to Paul and his trusts andthis purchase was settled on 14 July 2005.[25] The DOFA then refers to the provisions of Noel's Will. The life interest inrealty was bequeathed to Melva. There were bequests including $1M to Melva and$16.43M to various relatives and charities including a legacy of $2M each to John andto the applicant.[26] The Will also made reference to the DOFA equalising distribution provision.[27] The DOFA records the applicant's assertion he had been induced to enter intothe HoA dated 27 May 2005 and to pay $45M on the basis of misrepresentations madeby or on behalf of John and that he commenced proceedings in the New PlymouthHigh Court in February 2008 seeking damages of more than $2M from John.[28] The DOFA records it was Noel's belief when signing his last Will on 21December 2007 that his estate assets would total $24M leaving a residuary estate of$7.57M after payment of legacies.[29] The DOFA noted:(a) Melva's deteriorating health and that her affairs were in the hands of anenduring power of attorney.(b) The parties want to settle litigation by providing a contribution toredress any of the losses asserted by the applicant.(c) The DOFA recorded that in the outcome of the realisation andredistribution of assets that the applicant and his family trust wouldreceive $9M in full and final settlement of their claims which did notaffect the applicant's entitlement to his $2M legacy.[30] The applicant says since he has determined that the amount owing to himshould be $29.5M an amount he said was confirmed by a share valuer and thereforebecause of the incorrect figures used by the DOFA to calculate the applicant'sentitlement he is permitted by other provisions in the DOFA to bring the claim he has.Activation of those rights he says are preserved by the DOFA and entitles him toregister caveats over the properties held by Noel's estate.[31] The applicant says those issues are presently before an Arbitrator.Notice of opposition[32] The executors claim:(a) The applicant has no unregistered mortgage.(b) There was no agreement between the executors and the applicant on3 May 2011.(c) The executors were not the registered proprietors of the property on3 May 2011 of any of the land over which the applicant has lodged hiscaveat.(d) Clauses 3.25 and 3.26 of the DOFA do not create any entitlement toregister caveats over any of the properties.(e) Melva Yarrow was alive and was the registered proprietor of theproperties on 3 May 2011.[33] In brief it is the executors' position that there is no clause in the DOFAproviding any entitlement to register a caveat much less caveats over property held bythe Melva Yarrow estate.Considerations[34] It is the applicant's position that the DOFA provides the right to arbitrate inrespect of any dispute the applicant identifies as being "as to debt and liability inobligations within the Yarrow Group and related Yarrow Family Trusts".[35] In the Court's view even if those provisions could be read that widely, theywould not found the basis for an interest in the caveated land.[36] The applicant says his claims are sustainable on "equitable grounds" becausehe claims an entitlement to an equalisation of payment and monetary legacy from hisfather's estate. However, and as counsel for the respondents submits, that does notgive him an interest in any of the land held by his mother's estate.[37] The applicant claims promises were made that Melva Yarrow would leave theOakura property to him. The Court accepts the submissions of the executors that thisdoes not form a basis to sustain a caveat and at best they provide a ground for a LawReform (Testamentary Promises) Act claim.[38] Likewise claims under the Family Protection Act 1955 do not of themselvesform the basis upon which a caveat can be sustained; and neither do the arbitralproceedings provide him with any interest in the caveated land. Claims against theMelva Yarrow estate do not give a right to lodge a caveat. The property in questionbecame Melva's upon the death of Noel. It could not therefore be part of Noel's estatethat was subject to DOFA considerations.[39] Moreover the executors have undertaken that the proceeds of the sale of theManaia property will not be distributed until the Family Protection Act 1955 and LawReform (Testamentary Promises) Act 1949 claims are resolved and therefore there isno need for the caveats to prevent the distribution of funds being misplaced.Summary[40] The applicant has not established a reasonably arguable case to sustain thecaveats. He has no interest in the land presently.Judgment[41] The applicant's claims of a caveatable interest are dismissed.[42] The applicant shall pay the respondents' costs on a 2B basis as applied for.Associate Judge Christiansen