SELL v REGISTRAR-GENERAL OF LAND [2013] NZHC 1219

SELL v REGISTRAR-GENERAL OF LAND [2013] NZHC 1219 [28 May 2013]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2013-412-303[2013] NZHC 1219UNDER Sections 132 and 133 of the Land TransferAct 1952BETWEEN CECIL WILLIAM SELL AND FRANCESMARGARET SELL (AS TRUSTEES OFTHE C W AND F M SELL FAMILYTRUST)ApplicantsAND REGISTRAR-GENERAL OF LANDRespondentHearing: 23 May 2013(By way of telephone conference)Appearances: N O'Malley for the ApplicantsG Gardner and A Jacobs for the RespondentJudgment: 28 May 2013RESERVED JUDGMENT OF FOGARTY JIntroduction[1] This is an application for the removal of the endorsement "no survivorship"from a certificate of title.[2] The registered proprietors of the property are C W and F M Sell, who own the land as trustees on behalf of beneficiaries of a trust established by a Deed. The trustees state that the trustees have the power to sell any part of the real property forming part of the trust fund in such manner as the trustees feel fit. They have entered into a sale and purchase agreement, due for settlement originally on 31 May 2013, now postponed to 14 June because of this case.[3] The notation "no survivorship" was placed after their names as registeredproprietors on the title by their solicitors, as part of a precaution to ensure that anyone in the firm or outside the firm dealing with the property will know that Mr and Mrs Sell are trustees.[4] The applicants' solicitors consider that they are entitled to prepare amemorandum of transfer in the usual way, and submit it to the Registrar-General of Land for registration. The Registrar-General of Land's view is that because of the notation "no survivorship" the transfer requires the sanction of this Court. This isthe reason for the application.[5] My first impression on receiving the application was that the applicants'solicitors were correct in believing that the sanction of the High Court was not required. I invited the Registrar-General of Land to make submissions as to why it was required. Written submissions have been received and exchanged, and I have had an oral hearing.Whether the Registrar-General of Land should be joined as a respondent[6] This application is an originating application, governed by part 19 of the High Court Rules.1 The Court has a discretion as to whether or not to join any other parties.2 These particular applications are rare, as the "no survivorship" notation isnot used much.[7] The position of the Registrar-General of Land is that this transfer does require the sanction of the High Court. The Registrar-General of Land, however, is not opposing the High Court granting it sanction. For this reason, I do not think it is necessary to join the Registrar-General of Land as a party. I have, however, been assisted by the submissions of the Registrar-General of Land provided by counsel.[8] I have given consideration to joining the Registrar-General of Land as a respondent, in order to give the Registrar-General of Land the right of appeal. The appeal right would only be exercised to clarify whether or not the sanction of the1 See r 19.2(l).2 See rr 19.11 and r 7.9.High Court was needed, not whether or not the High Court should sanction the transaction. In other words, to settle the law, but not the outcome. The outcome, however, is important. Because if the Registrar-General of Land will not register the transfer prior to the settlement date the sale will be lost. This has been confirmed to me by counsel for the applicants.[9] I am also comforted by the fact that the law on land transfer is subject to reform. There is a Land Transfer Bill. I do not know if it has been introduced intothe House. But this rarely used procedure of entry of "no survivorship" is notproposed to be continued in the new Bill. Equally, if there is anything in this judgment that warrants a reconsideration, or reform of the law, there is ample opportunity for that to be addressed in the Bill.The order[10] This application is successful. The Court makes these orders:(1) Sanctioning the removal of the endorsement "no survivorship" fromComputer Freehold Register Identifier OT17B/114 in the Otago Registration District.(2) It dispenses with advertising.(3) It dispenses with service.(4) No costs will be awarded.Reasons for the orders[11] The problem posed in this case is caused by ambiguity in the text of ss 131 and 132 of the Land Transfer Act 1952. These sections are to be found in part 8 ofthe Act, dealing with "transmissions, trusts, caveats and powers of attorney", and under the heading "Trusts". There are seven sections under that heading; five of them are relevant to this case, and I set them out:128 No entry of trusts to be made on register except as authorised(1) Except as provided in section 129 in relation to public reserves and other public lands, no entry shall be made in the register of any notice of trusts, and no such entry, if made, shall have any effect. For the purposes of this subsection a provision in any instrument to the effect that a person executing the instrument assumes liability only to the extent of any estate or interest of which he is a trustee shall not be deemed to be a notice of trust.(2) Trusts affecting land under this Act may be declared by any deed or instrument; and that deed or instrument, or a duplicate or attested copy thereof, may be deposited with the Registrar for safe custody and reference, but shall not be registered.130 Transferor may apply for entry of "No survivorship" on registerUpon the transfer of any land, estate, or interest under this Act to 2 or more persons as joint proprietors, the transferor may insert in the memorandum oftransfer or other instrument the words "No survivorship", and the Registrarshall note the same in the register, and also enter the said words upon any certificate of title issued pursuant to that transfer.131 Trustees registered as joint proprietors may similarly applyAny persons registered as joint proprietors of any land, estate, or interest under this Act may, by writing under their hands, authorise the Registrar toenter the words "No survivorship" upon the grant, certificate of title, or other instrument evidencing their title to that estate or interest, and also upon the duplicate of that instrument.132 Effect of entryAfter any such entry has been made and signed by the Registrar in either case as aforesaid it shall not be lawful for any less number of joint proprietors than the number then registered to transfer or otherwise deal with the land, estate, or interest without obtaining the sanction of the High Court.133 Procedure for obtaining order(1) Before making an order giving any such sanction, the court shall, if it seems requisite, cause notice of intention so to do to be advertised in the Gazette and in at least 1 newspaper published in the locality in which the land is, and shall appoint a time within which any person interested may show cause why such an order should not be issued.(2) Thereupon the court in such an order may give directions for the transfer of the land, estate, or interest to any new proprietor or proprietors, solely or jointly, with or in the place of any existingproprietor or proprietors and may order the removal of the words "No survivorship" from the grant, certificate of title, or other instrumentevidencing the title of the registered proprietors, or may make such order in the premises as the court thinks just for the protection of thepersons beneficially interested in the land, estate, or interest, or in the proceeds thereof.(3) Upon deposit of a duplicate of the order with the Registrar he shall make such entries and perform such acts as may be necessary for the purpose of giving effect to the order[12] The Registrar-General of Land is of the view that entry of the words "no survivorship" upon the certificate of title constrains that title for use thereafter onlyfor registered proprietors of the same number as initially registered holding the property as tenants in common.[13] The number remains the same because of the phrase "for any less number of joint proprietors" appearing in s 132.[14] The applicants' solicitor and counsel, Mr O'Malley, submits that thealternative meaning is that the entry of the words "no survivorship" is a qualificationon the title of the joint proprietors of land who authorised the Registrar to so enterthe words. It is a qualification of "their title to that estate", as those words appear ins 131. The qualification operates in s 132, "to prevent any less number of joint proprietors", here any one of them, from registering a transfer without first obtainingthe sanction of the High Court, but, as they are both seeking to sign the transfer, s 132 applies and there is no need for sanction.[15] I am told that the Registrar-General of Land has deliberately taken a cautious approach, and so prefers the first interpretation.[16] One of my initial concerns when faced with this ambiguity is that the Court would only have the jurisdiction to make an order if it was satisfied that the Registrar-General of Land's interpretation was correct. Secondly, in that event, theappropriate remedy would be a declaration, rather than an order.[17] Part of my thinking in that regard was as to the normal constitutional convention that in legal proceedings involving the Crown and Crown agencies, the Court does not make orders by way of decrees of future performance, but rather declares the law and expects the executive government to conform to the law.[18] However, on a closer reading of s 133, it is quite plain that the jurisdictiongiven to the High Court is unusual. It is referred to as "the sanction" of the HighCourt. Second, it provides in s 133 for the making of "an order giving any such sanction".[19] The fact that the Court has been given an order to give directions to the Registrar-General of Land is reinforced by subsection (2) which uses again the word"order" and the phrase "may give directions". It also includes the general power tomake such orders as the Court thinks just for the protection of the persons beneficially interested in the land, estate or interest or in the proceeds thereof.[20] I am satisfied that the wording of s 133(2) requires a liberal reading. It is clearly drafted so the Court can make such order and directions as is appropriate in the interests of the persons beneficially interested in the land. These persons have a direct and material interest in the settlement of this sale. I am satisfied that it is appropriate to use the jurisdiction. It exists to make orders sanctioning the transaction, and giving directions to the Registrar-General of Land which have the effect of securing the performance of this contract. This is a transaction which the Registrar-General of Land does not oppose, whether or not the Registrar-General of Land agrees with the interpretation of ss 131 and 132. In that regard, this Court is giving comfort to the Registrar-General of Land, is "sanctioning" the transaction, and, to remove any doubt, is ordering the removal of the words "no survivorship"from the certificate of title.[21] The Registrar-General of Land's preference is to interpret ss 131 and 132 tothe effect that once a "no survivorship" notation is entered upon the title, it stays with the title until removed by sanction of the High Court, no matter even if all of the registered proprietors who first asked for the notation to be made are the same persons executing a memorandum of transfer as transferors. The reason for the Registrar-General of Land preferring this interpretation seems to me to be twofold:(1) There are a number of cases in the High Court where the High Court has examined the interests of beneficiaries in the context of alsoexamining an application to remove the "no survivorship" notation onthe title.(2) Section 90(3) of the Land Transfer Act provides:90 Transfers and creation of easements, etc, by registered proprietor...(3) A transfer instrument must be executed by—(a) the registered proprietor of the estate or interest; and(b) if an easement or profit à prendre is created or surrendered, or the transfer contains covenants binding on that party, the person who is to take the interest; and(c) if an easement is reserved, the transferee.The Registrar-General of Land considers that, because that provision already exists, Parliament must have intended s 132 to have more work to do. Just to explain that a little more. If there are two proprietors on a title and no more, and one of them dies, the surviving proprietor can execute a declaration of survivorship, producing a death certificate, and have the title amended so as to be the sole proprietor. Similarly, if there are two names on the title with the notation "as tenants in common" and one of them dies, then there can be an application for transmission of the deceased person's estate to a third person, supported by the probate instrument, and that person's nameregistered on the title as having an estate in common with the surviving proprietor. In any event, a transfer instrument must be executed by the registered proprietor(s) of the estate of interest. So it was never going to be possible for a lesser number than the total number of registered proprietors on the title to produce a transfer and require the Registrar-General of Land to execute it. Therefore, s 132 must have some more work to do.[22] Re Denniston and Hudson3 concerned an application for appointment of a new trustee in place of one of the original trustees and proprietors, Mr Denniston. Mr Denniston and Mr Hudson were two trustees of the Commercial Travellers' andWarehousemen's Association of Otago, in whom all property was required to be3 Re Denniston and Hudson [1940] NZLR 255.vested. The trustees applied to have the land brought under the Land Transfer Act 1915, and have a certificate of title issued in their names as joint tenants, with thewords "no survivorship" entered on. This was duly done. Mr Denniston then died. Probate of his will was granted to the Trustees, Executors, and Agency Company New Zealand Limited. The surviving trustee applied to have the Perpetual Trustees, Estate, and Agency Company Limited appointed as trustee of the said piece of land in lieu of Mr Denniston, and, coupled with that application, another application fordeletion of the words "no survivorship" from the title. Smith J directed the papers tobe served on the District Land Registrar, and had the benefit of argument from him, without, I note, joining him as a party. Smith J then said:4The entry of the words "No survivorship" upon the certificate of title canonly be made where two or more persons are registered as joint proprietors; see ss 131 and 132. The effect of the entry appears in s 133, which provides that after such entry it shall not be lawful for any less number of joint proprietors than the number then registered to transfer or otherwise deal with the land without obtaining the sanction of the Supreme Court or a Judge thereof. This restriction indicates the existence of a trust. That is also shown by s 134(2), which requires that in the making of its order the Court shall protect the persons beneficially interested.He then cited some Australasian authority, quoting from Hogg's Registration of Title to Land Throughout the Empire, where the author said, at page 162:The entry in fact operates merely as notice of the existence of a trust, and not as a restraint on alienation by all the joint owners.[23] The Judge went on to say that the language of s 133 cannot be described as clear and simple. The rest of the reasoning of the Judge is addressing the context of this case, where one of the joint proprietors had died. He was particularly focussed on whether or not the sanction of the Court was required for the registration of any transmission.5 He examined the function of the Court to protect persons beneficially interested in the trust, by finding that under the Association's rules the trustee shouldbe a member of the Association. It recalled here the proposal was to replace the deceased trustee member with a trustee company.4 At 256.5 See 258.[24] I turn to the decision of Barker J in Re Bayly.6 In this case, there were two trustees, a sheep farmer and a harbour board secretary. One of the trustees, the harbour board secretary, died. After his death, it was thought appropriate that a public accountant be appointed as a trustee in his stead. It was also thought necessary for the Court to approve the registration first of a transmission of the property to the surviving trustee alone, and then a memorandum of transfer from thesurviving trustee to the new trustee, and, to that end, to remove the "no survivorship"clause which was on the title.[25] Barker J did not agree. Rather, he found the Court could make an order to sanction the transmission of trusteeship from the deceased trustee to the new trustee, despite the notation, and without requiring the unwieldy notice requirements referred to in s 133(1).[26] Again, the facts of this case are not particularly helpful. As with the case ofDenniston and Hudson, essentially the Court was dealing with the problem of transition after the death of one of the trustees. In the course of the Re Baylydecision, the Judge noted the lack of Court decisions available for guidance.7[27] Moving to the 21st century, we come to the judgment of Heath J in Atkinson and Borman v Registrar-General of Land.8 This was an application under s 132 of the Land Transfer Act 1952, and under ss 64 and 64A of the Trustee Act 1956. A husband and wife and their accountant held two certificates of title as trustees on behalf of a family trust. The husband died. Probate was granted in favour of his wife. The surviving trustees, that is the wife and the accountant, then entered into an agreement for sale and purchase of one of the properties. The trust had originallyhad the "no survivorship" notation on the certificate of title. Therefore, they appliedto have this removed.[28] There can be no doubt that s 132 is triggered because here is a lesser number of registered proprietors applying. There was no dispute as to whether it did apply.6 Re Bayly (1985) 2 NZCPR 363.7 At 366-367.8 Atkinson and Borman v Registrar-General of Land HC Whangarei CIV-2003-488-90, 4 September 2003.In order to regularise problems caused by the wife's status, both as trustee and aperson interested in the use of proceeds of sale, an order varying the terms of the trust was being sought.[29] Last year, in Re Brown,9 Whata J dealt with an application under s 133 to enable the two applicants as surviving trustees of the Hazel Brown Family Trust to be registered as registered proprietors of the land to enable them to dispose of it, in the winding up and distribution of the trust. There had originally been three trustees. One of them had died, and as a result an application was made to register the transmission to the surviving joint owners. This had been prevented because of theLand Registry records having a notation on the title, tagged as "no survivorship".[30] Again, this is a different problem from that addressed here. Whata J did not analyse the problem. Having been satisfied that there were no problems interfering with the interests of the primary beneficiaries of the trust, he made the order as moved.[31] Counsel before me agreed that there is no record of there being any case where the original trustee proprietors have sought to exercise a power of sale, and present a transfer by themselves (not being any lesser number), decided by the HighCourt, except one case which was approved by a "note" of a High Court Judge. Thatcase is in the application of Williams v The Brenzlaw Trust Limited.10 The trusteessold the land. Approval was sought for the removal of the words "no survivorship".It was granted without reasons by Simon France J.[32] Where one of a group of trustees dies there can be issues as to whether it is in the interests of the beneficiaries for the trust to be operated by the remaining, say, sole trustee, or as to the identity of the new trustee to be appointed. Those are relatively confined issues. They do not involve the Court judging the merit of the transaction itself, namely, whether or not a property should be sold, and if it has been sold on reasonable terms.9 Re Brown [2012] NZHC 2081.10 Williams v The Brenzlaw Family Trust Limited HC Wellington CIV-2012-485-158, 4 April 2012.[33] But where, as here, there is no change in the registered proprietors, and the registered proprietors are simply exercising the express power of sale, an argument justifying the need for the sanction of the Court to the exercise of the power of sale entails asking the Court to judge in some way the merit of the sale. Counsel for the Registrar-General of Land had to agree that that was the consequence of the interpretation of the section that they were advancing.[34] Such a consequence would not be readily embraced by the High Court. It is important to keep in mind s 128. That section reflects a longstanding policy position in Torrens systems, that it is not the function of the Torrens Statute to supervise trusts. The Judges of inherent jurisdiction are the guardians of trusts, assisted by statutes enacted from time to time to clarify or extend their powers, such as we have here in New Zealand the Trustee Act.[35] In my view, a telling reason why the interpretation taken by the Registrar- General of Land is wrong, is that it casts upon the High Court a function which has traditionally been ruled out and, so far as it goes, is clearly ruled out by s 128 of the Act, a companion section.[36] Ultimately, the Registrar-General of Land's argument falls back on s 90(3). Indeed, this was a major plank of the argument presented to the Court. It is true that you can argue reasonably that s 132 is not necessary because s 90(3) always requires all registered proprietors to execute a transfer instrument. I think, however, that Mr O'Malley was right to argue that s 90(3) is simply an operational provision. It is erroneous to call s 90(3) in aid in order to justify an interpretation that ss 132 and 133 must be given more work for the Court than that set out in s 128.[37] The function of the "no survivorship" notation is to alert persons dealing withthe Land Registry to the fact that the registered proprietors are trustees. The"sanction" of the Court is intended to be limited to changes in the number, and soidentity of the proprietors.[38] For these reasons, I think that the Registrar-General of Land has had an unduly conservative policy as to the application of ss 132 and 133.Conclusion[39] On these facts, the Registrar-General of Land does not oppose the making of the order. In that context, he seeks the comfort and sanction of the order. It is appropriate by reason of the ambiguity, and the absence of any occasion in which the High Court has had to confront squarely the ambiguity that, in this instance, the powers given by statute to the High Court in ss 132 and 133 be exercised. It is for these reasons that the orders set out above in [10] are made by this Court.Solicitors:Crown Law Office, WellingtonO'Malley & Co, Balclutha