WAYNE SEYMOUR CHAPMAN AS TRUSTEE OF THE GALLAGHER RABSON FAMILY TRUST V CASINO PROPERTIES LIMITED HC WN CIV-2012-485-162

WAYNE SEYMOUR CHAPMAN AS TRUSTEE OF THE GALLAGHER RABSON FAMILY TRUST V CASINO PROPERTIES LIMITED HC WN CIV-2012-485-162 [13 February 2012]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2012-485-162[2012] NZHC 137IN THE MATTER OF Section 143 of the Land Transfer Act 1952BETWEEN WAYNE SEYMOUR CHAPMAN ASTRUSTEE OF THE GALLAGHERRABSON FAMILY TRUSTApplicantAND CASINO PROPERTIES LIMITEDFirst RespondentAND ALAN FREDERICK POPE ANDMALCOLM EDWARD RABSONSecond RespondentsAND MALCOLM EDWARD RABSONThird RespondentHearing: 13 February 2012Counsel: N H Whalley, counsel for ApplicantPeter Collins representing Casino Properties LtdM E Rabson in person for second and third respondentsN Levy, counsel for Ms GallagherJudgment: 13 February 2012ORAL JUDGMENT OF MACKENZIE J[1] This proceeding before this Court is an application, by the applicant as trustee of the Gallagher-Rabson Family Trust, to remove three caveats which had been lodged by the first, second, and third respondents respectively, against a property at 21 Sunset Parade, Plimmerton.[2] The application was heard and determined by Simon France J in a judgment delivered on 8 February 2012.1 He ordered the removal of the three caveats but directed that the proceeds of sale of the property were to be held on trust pending the outcome of an application by Mr Rabson for leave to appeal to the Supreme Court against the judgment of the Court of Appeal in relationship property litigation between the parties.[3] Ms Gallagher has filed an application for the removal or variation of that part of the order which requires the funds to be held in trust in the meantime.[4] The background is quite complex and I will describe it very briefly and sufficiently only to explain my reasoning in this decision. The Gallagher-Rabson Family Trust is the owner of the property at 21 Sunset Parade, Plimmerton, as well as two other properties. In the relationship property litigation, to which I have referred, the position has been reached that the Court of Appeal made a number of orders. Relevant for the present purposes are an order that the trustee should sell the Plimmerton property and another of the properties at Raumati South to best advantage. The trustee was then directed to pay the proceeds of sale of those two properties, after deduction of expenses, to Ms Gallagher against her entitlement to relationship property.[5] Mr Rabson has made application for leave to appeal to the Supreme Courtagainst the Court of Appeal's judgment.[6] One of the issues in the relationship property litigation was: what, if any, allowance should be made for funds expended by Mr Rabson, or entities associated with him, in renovations? The Court of Appeal, in its judgment delivered on 20 December 2011, said:2Our concern is that Mr Rabson should not be left out of pocket for capital accretion to the properties attributable to renovations paid for out of his separate property. The proper place for Mr Rabson to provide evidence to substantiate his claims was in the High Court. He did not do so. Neither was there any evidence in this Court. Thus we are not in a position to make a1 Wayne Seymour Chapman as trustee of the Gallagher Rabson Family Trust v Casino PropertiesLtd HC Wellington CIV-2012-485-162, 8 February 2012.2 Rabson v Gallagher [2011] NZCA 669 at [24]-[25].determination of the extent to which Mr Rabson should be reimbursed. Weare reluctant to let these proceedings drag on any further. Mr Rabson's clearposition at the hearing in this Court was that he was not willing to submit to the trustee to make a determination on which, if any, renovations he was entitled to recover on. He now seeks to revisit the issue and take a position at odds with his position at the hearing. We cannot allow that. Our judgment was that the orders were to be quashed, the issue is what should now replace them.The orders we make should be carried out without regard to the renovationscarried out by Mr Rabson. However, they do not affect the GRFT's liabilityto Mr Rabson, or to the MRFT or his various companies, for expenditure after the transfer of the relevant property to the GRFT where there is documentary evidence of such expenditure, to the extent that this expenditure can be shown to have increased the value of the properties. This may result in delay for the trustee in implementing the final order we make below to wind up the GRFT. However, we stress that all other orders shouldbe carried out to the fullest extent possible, notwithstanding Mr Rabson'sclaim, to avoid delays in Ms Gallagher receiving the benefits of the judgment in her favour. Mr Rabson will need to make a clearly documented claim to the GRFT trustee for the amounts claimed, with evidence of the expenditure incurred. It is not necessary for this Court to make formal orders for that to occur. Accordingly, no orders will be made to replace Wild J's[9](3) and [9](4)(b)(i).[7] Before that judgment had been delivered, three caveats against dealings had been lodged under s 137 of the Land Transfer Act 1952. By those caveats, the first, second, and third respondents respectively seek to protect sums claimed for improvements made to the property or contributions to the purchase of the property.[8] The applicant, the trustee of the Gallagher-Rabson Family Trust, had entered into an unconditional agreement for sale and purchase of the Plimmerton property to be settled on 10 February 2012. On 26 January 2012 the applicant was given notice of the caveats which had been lodged on 2 December 2011. The matter was heard by Simon France J on 7 February 2012, and as I have indicated, he delivered judgment on 8 February 2012. The effect of his judgment was to remove the caveats but require that the sale proceeds be held in trust.[9] The difficulty which that presents to Ms Gallagher, is that she had been living in the Plimmerton property and had entered into a contract to purchase another home in reliance upon receipt of the funds payable under the Court of Appeal order. She has an unconditional contract for the purchase of a property in Levin which she isunable to settle unless the funds from the sale of the Plimmerton property are madeavailable to her as the Court of Appeal's order requires.[10] That is a matter which was appears not to have been fully known to Simon France J when he heard the matter. In his judgment he noted that he was aware that she had entered into an agreement to purchase a property in anticipation of receiving the proceeds of sale and that she would need to apply on notice to vary the orders which he made, but it does not appear he was aware of the full circumstances.[11] Ms Gallagher has made application in accordance with that indication in Simon France J's judgment.[12] The first question that I need to address is the status of Ms Gallagher in this proceeding. She is not presently a party to the proceedings. She was not a necessary party to the application to remove the caveats, although she was apparently aware of the proceedings, but not in circumstances which enabled her counsel to take an active part, or seek to take an active part, in the hearing before Simon France J.[13] It is clear that she is directly affected by the order which Simon France J made because the direction to hold the funds in trust until the application for leave to appeal to the Supreme Court is determined has the practical effect of operating as a stay of the Court of Appeal's decision that the funds should be paid to Ms Gallagher on the sale of the Plimmerton property.[14] I am satisfied that Ms Gallagher is a necessary party to the present proceedings. Ms Levy has made an oral application for her joinder under r 4.56 of the High Court Rules. In the circumstances as I have described them I consider that she is a necessary party. The matter needs to be dealt with urgently and I make an order for joinder on that oral application.[15] I come then to the merits of the application. As I have said, an order for the removal of the caveats has already been made. It is not for this Court to revisit the question of the correctness of that order. But, because it was made having regard tothe order for stay, which was concurrently made, I have considered it appropriate to re-examine for myself the question of whether there is an arguable case for the continuation of any of the three caveats.[16] A caveat may be lodged under s 137 of the Land Transfer Act 1952:(1) Any person may lodge with the Registrar a caveat against dealings in any land or estate or interest under this Act if the person—(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;[17] The position concerning the expenditures which the caveators sought to protect is complex and I need not deal with it in any detail. The properties, including the Plimmerton property, were previously held by the Malcolm Rabson Family Trust of which the second respondents are the trustees, and was transferred to the Gallagher-Rabson Family Trust in May 2005. The claims on which the caveats are based relate to expenditure which was substantially carried out prior to that transfer. There could, it seems clear, be no claim to a registered interest which would impact on the title of the trustee of the Gallagher-Rabson Family Trust for monies expended on the properties prior to that transfer. Furthermore, none of the claims would, as they are formulated in the material before me, provide a basis for a claim to a registered interest in the land, as opposed to an in personam claim. Accordingly, I consider that the claims to a caveatable interest in the land were weak and there was and is no arguable case for the continuation of the caveats. Accordingly, I agree with the conclusion of Simon France J that the caveats should be removed.[18] I have felt it necessary to describe my own views on that question because the strength or otherwise of the claim to a caveat is relevant to the question of whether any interim protection should be granted. Because there is, in my view, no seriously arguable claim to a caveatable interest, the claims which are presently before this Court do not, in my view, give rise to a basis upon which some interim protection of the caveators should be granted.[19] The question of any stay of the Court of Appeal decision is a matter for the Court of Appeal or for the Supreme Court. It is not appropriate for this Court on the present applications to grant some relief which would affect the operation of the orders which the Court of Appeal has made.[20] The effect of the present requirement that the proceeds of the sale of thePlimmerton property be held in a solicitor's trust account does, as I have indicated,constitute a de facto stay of the second part of the order which the Court of Appeal made, that is that the proceeds be transferred to Ms Gallagher, when the first part of the order has already been implemented and cannot be stayed.[21] The consequence is that if the stay made by Simon France J remains in place the home which Ms Gallagher hitherto occupied will be sold and she will be unable to purchase the home which she intended should replace it. I do not consider that it is appropriate for this Court to continue an order which would have that effect.[22] The rights or otherwise of Mr Rabson to have his interests in the property recognised have been addressed by the Court of Appeal in the way that I have described. It may be that further litigation to determine those rights would be necessary. But this litigation is not the appropriate vehicle for consideration of that nor does it justify disturbing the orders which the Court of Appeal had made.[23] Ms Levy had submitted that an alternative to the removal of the requirement that the funds be held in trust would be that the trustee of the Gallagher-Rabson Family Trust be authorised to advance the proceeds to Ms Gallagher, on an interest free mortgage, sufficient to meet her commitments to purchase.[24] I do not think that it is appropriate to give such a direction. If such a direction were appropriate, I consider that that is something that should be done by the Court of Appeal or by the Supreme Court: by the Court of Appeal in variation of its order, or by the Supreme Court as a condition relating to the application for leave to appeal.[25] For these reasons, there will be order varying the order made in para [26] of Simon France J's judgment requiring that the proceeds of the sale of 21 Sunset Parade, Plimmerton, are to be held in trust, in an interest bearing trust account by Buddle Finlay solicitors, pending the outcome of the application by Mr Rabson for leave to appeal to the Supreme Court. That order is removed.[26] In other respects the orders made by Simon France J remain.[27] Ms Levy seeks costs on the present application. In the circumstances I consider that costs should follow the event. There will be costs on a 2B basis for thepresent application and today's hearing."A D MacKenzie J"Solicitors: Buddle Findlay, Wellington, for ApplicantM E Rabson, WellingtonPeter Collins, Casino Properties LimitedNicolette Levy Barrister, Wellington