SOLOMONA V SOLOMONA HC AK CIV-2011-404-3668

SOLOMONA V SOLOMONA HC AK CIV-2011-404-3668 [30 May 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-3668[2012] NZHC 1195UNDER the Land Transfer Act 1952IN THE MATTER OF an application to remove caveatno.7921407.1 (North Auckland LandRegistry) pursuant to section 143 of theLand Transfer Act 1952BETWEEN TRENTHAM MOKOTALO SOLOMONAApplicantAND MAHINE MAHAKEHETAUSOLOMONARespondentHearing: On the papersAppearances: A W Johnson for ApplicantC R Andrews for RespondentJudgment: 30 May 2012JUDGMENT OF ASSOCIATE JUDGE BELLThis judgment was delivered by me on ...... 30 May 2012 ...... at ......4:00pm ......pursuant to Rule 11.5 of the High Court Rules....................................Registrar/Deputy RegistrarSolicitors:Martelli McKegg, Auckland, for ApplicantEmail: awj@martellimckegg.co.nzMcVeagh Fleming, Auckland, for RespondentEmail: candrews@mcveaghfleming.co.nzCase Officer:Mel.Libre@justice.govt.nz[1] The substantive proceeding is an application to remove a caveat under s 143 of the Land Transfer Act 1952. On 16 April 2012, Associate Judge Christiansen gave directions to the parties to file memoranda on the issue whether the applicant has standing to bring the application. Memoranda have been filed. I am deciding this case on the papers.[2] The caveat is lodged against identifier 48C/1047, the title to the property at 36 Dryden Street, Grey Lynn, Auckland. On 28 August 2008 the respondent registered a caveat against the title alleging a constructive trust. The applicant requires the caveat to be removed so that he can enforce an agreement with his brother, Charles Solomona. The agreement provides for the sale of the property and the division of proceeds. The caveat prevents that agreement being enforced. The respondent has raised the objection that the applicant does not have a registered interest in the property at 36 Dryden Street, Grey Lynn, and accordingly does not have standing to apply under s 143.[3] The members of the Solomona family who figure in this proceeding are: the father, Floyd, who died July 1983; the mother Mahine, the respondent; and their sons, Charles and Trentham (the applicant). This is not the first case in which Trentham has come to court. Here is an extract from the decision of Associate Judge Sargisson in Solomona v Solomona, which sets out the background: 1[10] Some years ago the two brothers and their father, Mr Solomona, co- owned the Dryden Street property. All three were registered as joint proprietors on the title of the property, and remained so after Mr Solomona passed away in July 1983. The title (certificate of title NA48C/1047) remained unchanged for some eighteen more years. In 2002, a memorial was entered on the title recording that Mrs Solomona's (sic)2 interest of Mr Solomona had passed to the two brothers by way of survivorship and they became the joint registered proprietors.[11] Several years passed, and in a deed dated 20 February 2006, thebrothers agreed that Charles was to purchase Trentham's half interestin the property. Charles became the sole registered proprietor when Trentham transferred his interest in the property to Charles in March1 Solomona v Solomona HC Auckland CIV-2010-404-1247, 27 May 2011.2 The father's interest passed by survivorship to the sons.2006, pursuant to the agreement. But Charles failed to perform his side of the bargain and pay the agreed to purchase price. In order to resolve the impasse Trentham commenced this proceeding on 11 June 2008.[12] Meanwhile on 28 August 2008, Mrs Solomona, the brothers' mother,lodged a caveat (identified as caveat number 7052688.1) against the title to the property claiming an interest in the property under a constructive trust. Her apparent position is that on the death of her husband, Mr Solomona, she became entitled to a beneficial share of the property and that the share has been subject to a constructive trust ever since his death in 1983.[13] On 11 September 2009, the brothers attended a judicial settlement conference, though Mrs Solomona did not. In a settlement agreement of the same date, the brothers agreed that Charles wouldpay a reduced price for Trentham's share of the property and raisethe funds to make payment, either by using the property as security or by selling the property if unable to raise the necessary funds. Charles was to have until 31 January 2010 to put the home on the market.[14] Under the agreement, the brothers also agreed to recognise that Mrs Solomona has an interest in the property. To recognise this, Trentham agreed to place $50,000 of the sum generated from the sale of his interest into trust for her.[15] Again Charles did not perform his side of the bargain. At achambers hearing on 10 February 2010, counsel advised on Charles'behalf that Charles now considered the settlement agreement to be unlawful.[4] Trentham began a proceeding seeking an order for specific performance of the settlement agreement of 11 September 2009. Charles was duly served, but took no steps. Associate Judge Abbott gave Trentham an order for specific performance against Charles on 11 May 2010. Under that judgment, the property at 36 Dryden Street was required to be put on the market and auctioned if not sold within two months. Charles was to pay Trentham the sum of $210,000 from the proceeds of sale. Leave was reserved to apply for further orders to give effect to the order for specific performance.[5] Charles applied to set aside the order for specific performance. Associate Judge Sargisson granted the setting aside application, mainly on the ground that thecaveat in favour of Mahine prevented Charles complying with the court's order. Associate Judge Sargisson was not required to consider the merits of Mahine'scaveat.[6] In setting aside the summary judgment, she also said:It is a matter for Trentham, on advice from counsel, to decide how he should deal with the question of the validity or invalidity of the interest claimed in the caveat, and the possible removal of the caveat. Plainly, any proceeding challenging the caveat will have to be served on Mrs Solomona.[7] This proceeding followed.[8] While Mahine had lived at 37 Dryden Street for many years, more recently, as she has aged, she has moved into a rest home. She does not have capacity to understand the effect of proceedings, to receive advice or to give instructions for the conduct of proceedings. A litigation guardian has been appointed to represent her interests.[9] Trentham had a registered interest in the property until he transferred his interest to Charles in 2006 under the deed of 20 February 2006. Since then, Trentham has not had any registered interest in the property. In September 2006, Trentham lodged his own caveat against the title. The interest he claims under hiscaveat is "as unpaid vendor under an agreement for sale and purchase dated 20 February 2006 made between the caveator as vendor and Charles John Muti Solomona as purchaser being the registered proprietor to the land in the abovementioned title".[10] The question of standing to apply under s 143 arises because Trentham does not have a registered estate or a registered interest in the property. Section 143 of the Land Transfer Act says:143 Procedure for removal of caveat(1) Any such applicant or registered proprietor, or any other person having any registered estate or interest in the estate or interest protected by the caveat, may, if he thinks fit, apply to the High Court for an order that the caveat be removed.(2) The Court, upon proof that notice of the application has been served on the caveator or the person on whose behalf the caveat has been lodged, may make such order in the premises, either ex parte or otherwise, as to the Court seems meet.[11] For Mahine, it is submitted that Trentham does not come within any of the persons entitled to apply under s 143. He is not "any such applicant" (a reference toa caveator under s 136, referred to in s 142). He is not a registered proprietor. He does not have a registered estate. He does not have a registered interest in an estate. He does not have an interest protected by his mother's caveat. It is also submittedthat if any interest, including an unregistered interest in the land, were to give standing to make an application under s 143, that section would relevantly say:or any other person having any registered estate or any interest in the estate or interest protected by the caveat...[12] In support, the decision of Clifford J in Gill Construction Co Ltd v Morgan is cited:3[22] Applications to remove a caveat are made under s 143 of the Land Transfer Act. To apply to remove a caveat under that section a person must be:a) an applicant to bring land under the Land Transfer Act;b) the registered proprietor; orc) any other person having any registered estate or interest in the estate or interest protected by the caveat.[23] to apply under s 143 to remove this caveat, the applicant musttherefore qualify as "any other person having any registered estate or interest in the state or interest protected by the caveat".[24] The term "estate or interest" is defined in the Land Transfer Act tomean "every estate in land, also any mortgage or charge on land under this Act". The interest represented by the caveat not being anestate in land, or a mortgage on land, it is necessary that it qualify as a charge on land for the applicant to be in a position to apply under s 143.Other cases supporting the approach advocated for Mahine are: Boswell v Francis,4Re Stewart & Co ex parte Piripi Te Maari (No.2)5 (a case under s 144 of the Land Transfer Act 1885), and Emslie v Genuine Investments Ltd (In Liq).6 In Boswell v Francis, Cooke J said:3 Gill Construction Co Ltd v Morgan (2009) 10 NZCPR 317 at [22] – [24].4 Boswell v Francis [1974] 2 NZLR 488 per Cooke J at 490.5 Re Stewart & Co ex parte Piripi Te Maari (No.2) (1892) 11 NZLR 745.6 Emslie v Genuine Investments Ltd (In Liq) (2005) 7 NZCPR 161 at [139].As to standing, the more natural meaning in their context of the words of s 143(1) "Any such ... registered proprietor ..." appears to me to be anyperson who is the registered proprietor of the land at the time of theapplication under that section. The immediately following words "or anyother person having any registered estate or interest in the estate or interestprotected by the caveat" support the view that the legislation is giving a summary remedy to persons currently on the register. Grammatically it ispossible, by reason of the word "such", to read s 143(1) as referring to theperson who was registered proprietor and received notice when the caveat was lodged, and as giving him a right to apply to the Court no matter whether or not he is still the registered proprietor. But it is improbable that Parliament so intended. It is also improbable that Parliament would have meant to deny the remedy to a person who has become registered proprietor since the caveat and notice – a situation which could arise with the consent of the caveator under s 147.[13] Against the wording of s 143 and those cases, the applicant submits that he has standing as he has an interest in the property, even though not a registeredinterest. In support, Brooker's Land Law is cited:7Section 143 allows a registered proprietor, or other affected applicant or any person having an interest in the land, to apply to the High Court for an order that the caveat be removed.[14] Re Stewart & Co is distinguished because s 144 of the Land Transfer Act 1885 is in different terms from s 143 of the Land Transfer Act 1952. Under the old s 144, standing to apply to remove a caveat was limited for present purposes to the registered proprietor.[15] The applicant also relies on provisions under Torrens legislation in some Australian states, such as s 74MA(1) of the Real Property Act 1900 (NSW) and s 89A of the Transfer of Land Act 1958 (Vic.). These provisions allow a wider class of people to have standing to apply to remove a caveat.[16] The applicant also submits that anyone with standing to lodge a caveat under s 137 should likewise have standing to apply for removal of a caveat under s 143. Section 137(1)(a) says:137 Caveat against dealings with land under Act(1) Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person—7 Land Law (online looseleaf ed., Brookers) at 2.9.01.(a) claims to be entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or ...[17] The applicant also points out that the applicant cannot trigger the remedies under s 145 or 145A of the Land Transfer Act because that procedure can be initiated only by the registered proprietor of an estate or interest in the land.[18] I regret that I am unable to accept the arguments for the applicant. With due respect to the learned authors of Brookers' Land Law, the text adds a gloss which does not correctly reflect the clear meaning of the words in s 143. There is a consistent line of cases in New Zealand holding that persons without a registered interest in the land or an interest protected by the caveat do not have standing to apply. The fact that some Australian statutes allow a wider group to apply forremoval of caveats simply highlights the point that New Zealand's Land TransferAct has a more restricted class.[19] Similarly, I am unable to assimilate the people entitled to lodge caveats under s 137 with the people entitled to apply to remove caveats under s 143. Section 137 expressly refers to claims to be entitled to, or to be beneficially interested in land by virtue of unregistered agreements or instruments or trusts, "or otherwise". A right tocaveat arises because the caveator does not necessarily have a registered interest in the land but wishes to have an unregistered interest protected. On the other hand, s 143 allows the procedures under that section to be used only by those who are expressly described there - and that does not extend to those with unregistered interests in the land.[20] It is also necessary to consider whether the applicant has an interest in the land, even if I were to accept the interpretation that he contends for.[21] Despite the terms of his caveat, the applicant accepts that he does not have an interest in the property under the agreement of February 2006 once he had transferred his interest in the land to his brother. Any vendor's lien has been abolished - s 67 of the Property Law Act 2006. The decision of the Court of Appealin Gordon v Treadwell Stacey Smith8 is authority that once a purchaser has obtained title, a vendor no longer has a caveatable interest in the land.[22] However, the applicant submits that under the settlement agreement of September 2009, he has an interest in the land arising out of his entitlement to a part of the proceeds of sale. His submission is that the proceeds of sale can be traced back to rights in the property itself.[23] Land Law in New Zealand9 makes it clear that a right to share in the net profits from the sale of land is not normally a caveatable interest.10 The text goes on to say that the true construction of the relevant documents may nevertheless disclose an intention to confer an interest by way of trust or charge.[24] There is nothing in the wording of the settlement agreement of September 2009 which discloses such an intention. The settlement agreement provided for Charles to pay the applicant the sum of $210,000 by 31 October 2009. The provision for payment does not confer any interest in the land. The agreement goes on to provide for the sale of the property. There is a provision that Mahine has an interest in the property or the sale proceeds of $50,000. There is no corresponding provision for the applicant to have any interest in the property. It is simply left to inference that he will be paid the sum of $210,000 out of the proceeds of sale.[25] Accordingly, I conclude that the applicant does not have standing to apply for removal of the caveat under s 143 of the Land Transfer Act. Even if I were to accept his interpretation, I find that he does not have any interest in the land. He has an interest only in the proceeds of sale. His application under s 143 is dismissed for lack of standing.[26] This conclusion does not mean that the applicant is altogether without a remedy. Section 143 provides a summary procedure for the removal of a caveat. It may be open to the applicant to seek relief directed at obtaining the removal of the8 Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281 (CA).9 Hinde, McMorland & Sim Land Law in New Zealand (looseleaf ed., LexisNexis) at 10.010(o).10 The authorities include Merbank Corporation Ltd v Price (1978) 1 NZCPR 24 at 27 perMcMullin J; Aegean Developments Ltd v Love HC Auckland M.1620-IM99, 17 March 2000,Robertson J.caveat by taking an ordinary proceeding, rather than an application under s 143. It might, for example, be open to the applicant to seek an injunction requiring the respondent to remove her caveat. I have not heard argument on this point. I raise it as a matter for the parties to consider.[27] It is now more than six years since the applicant sold his interest in 36 Dryden Street to Charles. While the applicant has taken legal proceedings, the evidence shows that he has been prepared to negotiate and compromise with his brother to achieve a workable solution. The evidence also shows a consistent record of Charles not carrying out the settlements he enters into. I invite the applicant to request the Registrar to convene a case management conference for this proceeding, and also the proceeding Solomona v Solomona CIV-2010-404-1247, to see whatdirections need to be given to resolve the applicant's claims.[28] I invite the parties to confer as to costs. If they are unable to agree, memoranda may be filed and I will decide costs on the papers.__________________R M BellAssociate Judge