FRENCH v DOLBEL [2023] NZHC 91

FRENCH v DOLBEL [2023] NZHC 91 [7 February 2023]IN THE HIGH COURT OF NEW ZEALANDROTORUA REGISTRYI TE KŌTI MATUA O AOTEAROATE ROTORUA-NUI-A-KAHUMATAMOMOE ROHECIV-2022-463-10[2023] NZHC 91BETWEEN SALLY-KAE NOELENE FRENCHPlaintiffAND LINDSAY GLENN DOLBELDefendantHearing: 16 November 2022 at 2:15pmAppearances: Scott McKenna for the PlaintiffMichelle Urquhart/Fraser Wood for the DefendantJudgment: 7 February 2023JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR[application for removal of caveat from title]This judgment was delivered by me on 7 February 2023 at 3:00pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:McKenna King Dempster (Scott McKenna), Hamilton, for the PlaintiffTompkins Wake (Fraser Wood/Michelle Urquhart), Rotorua, for the DefendantIntroduction[1] These proceedings involve a claim by the plaintiff, Ms French, to enforce anagreement for sale and purchase of a property belonging to the defendant, Mr Dolbel.[2] Ms French lodged a caveat on the title to the property on 26 July 2022 (Caveat11771811.1) (the Caveat), lodged on the title to Lot 9 Deposited Plan South Auckland11090, being the property at 5 Harakeke Road, Murupara (the Property).[3] Mr Dolbel opposes the plaintiff's claim and says that he did not sign the saleand purchase agreement.[4] Ms French has now been charged by the Police with forgery relating toMr Dolbel's alleged signature on the sale and purchase agreement. These proceedingsare to be stayed pending resolution of those criminal charges.[5] Mr Dolbel has asked the Court to remove the Caveat from the title to theProperty.Background[6] On 2 July 2022, Mr Dolbel applied for the Caveat on the title to the Propertyto lapse. On 26 July 2022, Ms French applied to the High Court to sustain the Caveat.Those proceedings are brought under CIV-2021-463-60 (the Caveat Proceedings).[7] On 21 February 2022 Lang J released a minute in the Caveat Proceedingsrecording his view that, given the factual disputes involved in this matter, the mostappropriate way forward was to make an order sustaining the Caveat on the terms thatMs French file proceedings seeking specific performance of the agreement for saleand purchase. On 22 February 2022, Lang J released a further minute making an order,by consent, sustaining the Caveat and directing that Ms French file proceedings forspecific performance.[8] On 8 March 2022, Ms French filed the application for specific performancethereby initiating these proceedings.[9] On 17 June 2022, Mr Dolbel made an application for security for costs whichwas set down for a hearing on 7 October 2022. On 4 October 2022, in the interim,Ms French made an application for a stay of the proceedings. On 7 October 2022 aconference was held and counsel for Mr Dolbel did not oppose the stay theseproceedings but requested that if the proceedings are stayed the Caveat on the Propertybe removed. At that hearing I indicated that the proceedings will be stayed pendingthe outcome of the criminal charges against Ms French, and directed that submissionsbe filed by each of counsel in relation to the Court's jurisdiction to remove the Caveat,and if the Court has jurisdiction, whether the Caveat should be removed. Counsel forMr Dolbel filed submissions dated 20 October 2022 and counsel or Ms French filedsubmissions in response dated 26 October 2022.Mr Dolbel's submissions[10] Ms Urquhart, for Mr Dolbel, submits that there are two issues to be determinedby the Court:(a) In the event the Court orders the stay of these proceedings, does theCourt have jurisdiction to order removal of the Caveat?(b) If so, do the circumstances justify an order for removal of the Caveat?[11] Ms Urquhart then summarises the statutory provisions set out in ss 142 and143 of the Land Transfer Act 2017 (the Act). She then refers to the judgment ofWinkelmann J in Philpott v Noble Investments Ltd1 setting out the principles thatgovern the application to sustain caveats.1 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].[12] Ms Urquhart then refers to two passages from Blanchard J's judgment inStewart v Kaipara Consultants Ltd,2 again setting out the criteria relating to sustaininga caveat.[13] Ms Urquhart then makes a number of submissions regarding the availability ofspecific performance and refers to a number of authorities to support her submissions.Does the Court have jurisdiction to remove the Caveat?[14] Ms Urquhart submits that the Caveat Proceedings are still on foot. She submitsthe Caveat has not been removed as Land Information New Zealand (LINZ) has notreceived a final order from the Court under s 143(7) of the Act and Mr Dolbel'sapplication to LINZ to remove the Caveat remains unresolved. Ms Urquhart submitsthat Ms French's submission that Mr Dolbel must make a further application to LINZto lapse the Caveat ignores the fact that the Caveat Proceedings remain on foot, and asecond application is not required.[15] Ms Urquhart also rejects Ms French's submission that Mr Dolbel must makean originating application under High Court Rules 19.2 on the same basis. She submitsthat the Caveat is already subject to the Caveat Proceedings which have not beendecided or withdrawn and therefore remain on foot. She submits that because theCaveat Proceedings are extant and a final order under s 143(7) of the Act has not beengiven by the Court to LINZ, the Court retains the residual discretion to remove theCaveat as described in Philpott v Noble Investments Ltd.3 She submits therefore thatthe Court does have the jurisdiction to lapse the Caveat if it can be shown that it willnot prejudice Ms French's alleged interest in the Property.Do the circumstances justify the Court exercising its discretion to remove the Caveat?[16] Ms Urquhart submits that Ms French will not be prejudiced by removal of theCaveat if she is ultimately successful in these proceedings as she can be alternativelycompensated by damages. Ms Urquhart submits that there are no sentimental reasons2 Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55 at [22].3 Above n 1.why specific performance is the only remedy that can address Ms French's interest inthe Property, as she no longer lives in Murupara and is happily settled in Te Awamutuwith her fiancé. Ms Urquhart submits that Ms French has no emotional ties to theProperty through family ownership, whakapapa, or other emotional links and thebelongings she left at the Property have been there since 2018 and she has not returnedto collect them. Ms Urquhart submits that should Ms French succeed in enforcing thedisputed sale and purchase agreement, she is highly unlikely to return to the Propertyand would therefore not enjoy any specific aspect of the Property itself. Accordingly,Ms Urquhart submits that this means that Ms French's election of specific performanceis not the only remedy available and damages, in this case, would be an appropriateremedy if she succeeded in her claim.[17] Ms Urquhart submits that there are several factors which count againstMs French obtaining specific performance:(a) There would be no difficulty in deciding a value for compensatorydamages. Any competent valuer could establish what the Property wasworth at the time of the disputed sale and purchase agreement or at anypoint in the future.(b) There would be no issue with enforcing a judgment for damages againstthe defendant as he has other properties. In contrast, enforcing thedisputed sale and purchase agreement would be difficult given there isan undisputed sale and purchase agreement on the Property with a thirdparty, complicating any transfer to Ms French.(c) The conduct of Ms French herself does not support her application forspecific performance. She took several years to raise this matter whilefailing to mention it in any previous proceedings in relation to theProperty. She has already been convicted of crimes in relation to herconduct towards Mr Dolbel and has now been charged with fraud inrelation to the sale and purchase agreement at issue in theseproceedings.[18] Ms Urquhart also submits that Ms French's claim has little merit for thefollowing reasons:(a) Ms French has now been charged with fraud in relation to the signingby Mr Dolbel of the alleged sale and purchase agreement.(b) The Court has already indicated it views her case as having "significantcredibility issues" – Lang J's minute of 24 March 2022 at [4].(c) Ms French is unable to provide any credible documentary evidence ofher claims.(d) The sale and purchase agreement was not mentioned in any of herTenancy Tribunal hearings against Mr Dolbel.(e) Ms French appears to be relying solely on alleged witness evidence butone of these witnesses (Ms Cross) has given contradictory evidence ofher involvement.[19] Ms Urquhart submits that Mr Dolbel will be unfairly prejudiced if the Caveatis not removed and cites the following reasons:(a) Mr Dolbel is unable to deal with the Property whilst the Caveat remainsand whilst the Property is one of three he owns, he lives in one, hisdaughter lives in the other, and the Property does not have a permanentdwelling on it. It is also the subject of a sale and purchase agreementwhich is currently being delayed because of Ms French's ongoingrefusal to remove the Caveat. Mr Dolbel wishes to realise the value ofthe Property to supplement his Government pension and release someof his capital.(b) Mr Dolbel is the victim of many of Ms French's dishonesty convictionsand this has had a significant impact on him, both financially andemotionally.[20] Weighing all these factors, it is submitted by Ms Urquhart that Ms French willnot be prejudiced by the removal of the Caveat as she will be able to be compensatedby way of damages should she be ultimately successful. Conversely, Mr Dolbel willbe unfairly prejudiced by the sustaining of the Caveat as he cannot deal with thisProperty for an unknown period of time pending completion of the criminalproceedings against Ms French.[21] Finally, Ms Urquhart submits that if the Court was minded to remove theCaveat but require a sum to be lodge as an alternative protection for Ms French, thencounsel proposes that if the Caveat is removed the Property could be sold andfollowing deduction of the costs of subdivision, preparation, marketing and sale of theProperty, the net proceeds of sale could be lodged with the Court until the proceedingsare resolved.Ms French's submissions[22] Scott McKenna, for Ms French, submits that it is not clear what legal basisMr Dolbel is relying on to remove the Caveat. He submits that removal of the Caveatand lapse of the Caveat are two separate distinct matters and each occur pursuant to aseparate and distinct statutory provision.[23] Mr McKenna submits that the two statutory provisions by which a caveat canbe removed from a title are:(a) An application for removal of a caveat, pursuant to s 142 of the Act2017;(b) The lapse procedure as provided for in s 143 of the Act;Removal of the Caveat[24] Mr McKenna submits that to remove the Caveat under s 142, an originatingapplication under r 19.2 of the High Court Rules must be made. In this instance,Mr Dolbel has not made any originating application, therefore the power conferred onthe Court under s 142 cannot be exercised by the Court in these proceedings.[25] He submits that s 142 provides the Court with a discretion as to whether toremove the caveat, but that discretion can only be exercised if the required originatingapplication has been made.Lapse of the Caveat[26] Mr McKenna submits that the procedure for lapse of a caveat is set out in s 143and, in accordance with that procedure, the Court is empowered to make an order thatthe caveat not lapse (s 143(4)) or make an order that the caveat lapse (s 143(5)).[27] Mr McKenna submits that the application that a caveat does not lapse must bemade by originating application under r 19.2. An originating application under thatsection has been made by Mr Dolbel, however not in these proceedings but in theCaveat Proceedings. In response to that application, Lang J made an order on22 February 2022 that, by consent, the Caveat not lapse. Mr McKenna submits it isunclear from the wording of Lang J's minute whether the order was intended to beinterim or final. If the order is interim then it could be revisited pursuant to s 143(7)although this is not relevant in the present proceedings as any appeal to the Court'spowers under s 143(7) would need to be made in the Caveat Proceedings.[28] Finally on this point, Mr McKenna submits that it would be inappropriate forthe Court to issue an order removing the Caveat in the present proceedings when theremoval should be properly dealt with under the Caveat Proceedings.Residual discretion to remove the Caveat[29] Mr McKenna submits that as neither of the statutory powers by which theCourt may remove a caveat (ss 142 and 143 of the Act) are available to the Court inthese proceedings, the issue is whether or not the Court is empowered to remove acaveat in the absence of a statutory provision empowering it to do so, pursuant to theCourt's "residual discretion". Mr McKenna submits that the Court does not havepower under the "residual discretion" to remove the Caveat and he submits that thecases of Philpott v Noble Investments Ltd and Stewart v Kaipara Consultants Ltd¸44 Above n 1 and n 2.relied upon by Mr Dolbel are not authority for the proposition the Court hasjurisdiction to remove the Caveat. He submits that the Philpott decision was an appealof a decision by the High Court, sustaining a caveat pursuant to s 143, and Stewart vKaipara Consultants Ltd involved an application to remove a caveat under s 142. Hesubmits that any discussion of a discretion in those cases refers to discretion grantedby those sections and the cases do not provide authority to establish the Court has adiscretion to remove the Caveat other than in accordance with one of those sections.[30] Mr McKenna submits that a caveat is a creature of statute, and a caveat canonly be registered pursuant to the provisions of the At and therefore an inherentjurisdiction cannot be relied on to deal with matters that only exist as a consequenceof a statutory scheme. He submits the Court is given a discretion to remove the caveatunder those sections 142 and 143 of the Act, and that discretion is placed withinstatutorily imposed bounds so as to limit the extent to which the discretion riskscreating uncertainty. He submits that Mr Dolbel is asking the Court to set aside thestatute and free that discretion from the bounds placed on it by the relevant sections ofthe Act. He submits the Court is not empowered to do this.[31] Finally, Mr McKenna submits that if any order is to be made to remove theCaveat, that this must be made under an application made under the CaveatProceedings. It is not appropriate for the Court to consider the Caveat in theseproceedings as there are other extant proceedings on foot relating to the identical issue.Analysis[32] The issues to be decided in this judgment, as correctly framed by Ms Urquhart,are:(a) Does the Court have jurisdiction to order the removal of the Caveat?(b) If so, do the circumstances justify an order to remove the Caveat?[33] In my view, Mr McKenna's submission that the Court does not havejurisdiction in these proceedings to remove the Caveat is correct. The CaveatProceedings are separate proceedings and the application to remove the caveat isshould have properly been brought in the Caveat Proceedings.[34] In my view Mr McKenna's submissions are correct, that the Caveat is acreation of the Act and the discretions to remove or sustain the Caveat under s 142 ands 143 of the Act can only be exercised in accordance with applications in relation tothose sections made as originating applications under r 19.2 of the High Court Rules.I do not accept Ms Urquhart's submission that the Court has a residual discretion toremove the Caveat and the authorities relied on in her submissions (Philpott v NobleInvestments Ltd and Stewart v Kaipara Consultants Ltd) are not authority for theproposition that the Court has a residual discretion under ss 142 and 143 of the Act.[35] Accordingly, I am of the view that the Court does not have jurisdiction to orderremoval of the Caveat under these proceedings. It is open to Mr Dolbel to make anapplication under the Caveat Proceedings to have the Caveat removed or lapsed.If so, do the circumstances justify an order to remove the Caveat?[36] Due to the conclusion I have reached at [35], the Court does not havejurisdiction to remove the Caveat under these Proceedings. Consequently it is notnecessary for me to express a view on whether these circumstances would justify anorder to remove the Caveat if the Court had jurisdiction. I leave this issue to bedetermined should Mr Dolbel make an application in the Caveat Proceedings.Orders[37] I make the following orders:(a) The proceedings are stayed until the outcome of the criminalproceedings against Ms French are determined.(b) The Caveat registered against the Property is sustained until a furtherorder of the Court is made in the Caveat Proceedings.(c) Costs are reserved...Associate Judge Taylor