S K TUIPULOTU and T TUIPULOTU and N TUIPULOTU v ZIKI INVESTMENTS (PROPERTIES) LIMITED [2014] NZHC 1770

S K TUIPULOTU and T TUIPULOTU and N TUIPULOTU v ZIKI INVESTMENTS (PROPERTIES) LIMITED [2014] NZHC 1770 [29 July 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2014-404-001512[2014] NZHC 1770BETWEEN SIONE KALAPU TUIPULOTU andTEVITA FEOFAAKI KI HE KAKATOOE FAKAMOUI TUIPULOTU andNASIU TUIPULOTUApplicantsAND ZIKI INVESTMENTS (PROPERTIES)LIMITEDRespondentHearing: 29 July 2014Appearances: N King for the ApplicantsF Pereira for the RespondentJudgment: 29 July 2014ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN[1] The applicants apply for an order that their caveat over the respondents adjacent property does not lapse.[2] The applicants have owned and occupied their property at 72 Franklyne Road, Otara (the front property) since July 2007. They purchased the property from the respondent, the owner of the adjacent 72A Franklyne Road, Otara property (the rear property). Since June 2006 the rear property has been owned and rented out by the respondent. Mr and Mrs Ram are directors of the respondent.[3] Regarding the applicants purchase from the respondent Mr S K Tuipulotu deposes, inter alia:(a) When they purchased the front property the rear property too was for sale; each being the subject of listing reports with Barfoot & Thompson Real Estate Agents.(b) The listing report for the rear property noted it had a single carport. The front property was listed as having "garage garaging, carport garaging".(c) The garage is located at the end of the driveway across the front property, there being no driveway access to the garage from the rear property.(d) Mr Tuipulotu is a lawn moving contractor and the reason he bought the house was because the garage would provide a place to store and maintain his equipment.(e) The rear property did not sell but was tenanted by the respondents to other occupiers.(f) Since the applicants have owned the front property they have continued to use the garage without claim or objection from the respondent or their tenants.(g) The front property was the only dwelling upon the land before it was subdivided in about 2001. The subdivision plan showed the garage in question to have existed and was being used in conjunction with the front property dwelling, prior to subdivision.(h) The respondent sold the front property to the applicants having advertised it as containing the garage the applicants believed they were acquiring when they purchased the front property. The sale advertisement indicated the garage was included with the sale of the front property; that throughout the garage has been fenced into the front property and can only be accessed from the front property.[4] In opposition to the application, Mr Ram for the respondent deposes the garage in question is located on the rear property as the Land Titles confirm. Mr Ram has drawn the garage upon a copy of the Land Title to show its location. He says there was never an understanding or agreement to sell the garage to the applicants, that their continued use of that garage has been by default. He said thesale of the front property was "handed over" to a real estate agent to market for sale;that the agent arranged advertisements for the property and sales and purchases were handled by lawyers acting for the parties.[5] Regarding Mr Tuipulotu's claim that "the agent confirmed to sell the garage"Mr Ram responds that the agreement for sale and purchase does not contain any suchpromise. He says it was Mr Tuipulotu's responsibility to check the title and torequisition title to include the garage on the title but that this was not done.[6] Mr Ram says the respondent has been unable to sell the property and has incurred loss and inconvenience as a result of the applicant's caveat. He says there isanother agreement for sale which could not proceed whilst the applicants caveat remained lodged.[7] Mr Ram asserts there is no evidence indicating the garage was included in the sale and he annexes a copy of the agreement for sale and purchase which confirms the area of land comprised in the sale of the front property to the applicants.[8] Mr Ram says the front and rear properties were the respondent's investment; that neither he nor Mrs Ram ever "stayed" on it, but that it was rented out andmanaged by a professional property manager. Mr Ram says that had he known that the applicants had assumed the property was sold with the garage that he would havetaken steps "to remove this Illusion when settlement of the sale was done in 2007".Legal principles[9] The principles for sustaining a caveat are set out in Botany Land Development Limited v Auckland Council1:1. The burden of establishing that the applicant has a reasonably arguable case for the interest claimed is upon the caveator;2. The caveator must show an entitlement to, or beneficial interest in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission, or of any trust expressed or implied as set out in s 137 Land Transfer Act 1952;3. The summary procedure involved in an application of this nature is wholly unsuitable for the determination of disputed questions of fact; an order for removal of the caveat will not be made unless it is clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so;4. When an applicant has discharged the burden upon the applicant, there remains a discretion as to whether to remove the caveat, which will be exercised cautiously;5. The Court has jurisdiction to impose conditions when making orders.The dispute[10] The applicants say they purchased the front property because it included the garage required for their business purposes, and because it was advertised as being sold with that garage. They say the garage appears to be part of their land for it is fenced off from the rear property and there is no access from the rear property to it.1 [2014] NZCA 61.[11] Only relatively recently when the respondents advertised the rear property for sale did the applicants see that the garage was advertised for sale with the rear property.[12] For the respondent Mr Pereira submits that the boundaries between the properties were drawn and fenced prior to the applicants purchasing the front property. Therefore Mr Pereira submits there can be no mistake in the contract. He said the respondent did not object to the use of the garage by the applicants but, there apart, did not convey to the applicants that the garage was theirs. Rather he submits the applicants were fully aware that the garage was only being allowed to be used and was not actually sold with the front property.[13] Mr Pereira submits that at best the applicants' case might amount to "somesort of tenancy rights on the garage but not proprietary rights". Therefore theapplicants have merely had a licence to occupy; an interest that Mr Pereira submits is not capable of supporting a claim of a caveatable interest.Considerations[14] The issues involve the boundaries of the respective properties.[15] The respondents claim its registered proprietary interest in the land upon which the garage is located, is paramount as s 165 of the Land Transfer Act confirms.[16] The respondent says it has no liability if the applicants purchased the land believing it contained the garage, when it did not. The respondent says there was aresponsibility upon the applicants to "check the boundaries".[17] In the Court's view there is a need for further factual enquiry; that claims of proprietary right may not exclude claims of common or mutual mistake under the Contractual Mistakes Act 1977, or misrepresentation under the Contractual Remedies Act 1979. Upon the information available to the Court claims of constructive or equitable interests may be provable.[18] A sale advertisement describes the front property as being sold with garaging– a clear reference to the garage which is the subject of the parties' dispute.[19] The respondent blames the applicants and their representatives for any errors that may have occurred in the sale and transfer process. On the other hand the evidence suggests that no one examining the property would have contemplated the boundary as being anywhere other than it appeared to be – within an area fenced off and appearing to be part of the front property.[20] Mr Ram deposed that had he known that the applicants believed the garage was theirs then he would have taken steps "to remove this illusion".[21] However Mr Ram also says the rear property was an investment property. If that was so then one asks why the respondent was not maximising its investment by charging rent for its use.[22] Some inquiry is needed into the making of the listing report, and whether it isthe Agency's practice to prepare those using information provided by the vendor, and whether those reports are shown to, or are signed off by a vendor, before being available for viewing.Conclusions[23] The applicants claim may provide a caveatable interest in the rear property which could provide specific relief against the land in the rear property; that such relief may be available under the Contractual Mistakes Act 1977 or the Contractual Remedies Act 1979.[24] There seems to be a significant factual dispute going back to the time when the property was purchased by the applicants in 2007.[25] The Court accepts an arguable case for the caveat has been provided. The Court concludes the caveat should remain until the merits of the matter can be tried by a substantive proceeding.[26] The Court directs the applicants to file and serve their substantive proceeding by 12 September 2014. In the circumstances service will be effective if provided atthe offices of the respondent's current solicitors.[27] Failing the filing and service of the applicants' new proceeding, leave shall bereserved to the respondent to request the discharge of the applicants' caveat. Such arequest is to be scheduled for call in the first available caveat list thereafter.Judgment[28] The applicants' application to sustain their caveat is granted.[29] The respondent is ordered to pay costs to the applicants on a 2B basis together with disbursements approved by the Registrar. The Court certifies for a halfday's hearing upon this application.Associate Judge Christiansen