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High Court of New Zealand Decisions |
Last Updated: 16 April 2018
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV 2015-416-000008
[2018] NZHC 607 |
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BETWEEN
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HIKURANGI FOREST FARMS LIMITED
Plaintiff
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AND
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NEGARA DEVELOPMENTS LIMITED
Defendant
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Hearing:
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7-11 August 2017
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Counsel:
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D Hurd and B Comer for Plaintiff
T Cunningham-Adams and T Bloy for Defendant
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Judgment:
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5 April 2018
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JUDGMENT OF DUFFY J
This judgment was delivered by me on 5 April 2018 at 2.30 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors/Counsel:
Dawson Harford Partners, Auckland D G Hurd, Parnell
Evolution Lawyers, Glenfield
HIKURANGI FOREST FARMS LTD v NEGARA DEVELOPMENTS LTD [2018] NZHC 607 [5 April 2018]
Introduction
[1] Hikurangi Forest Farms Limited (Hikurangi) seeks to enforce an unregistered interest it claims in pine trees that were growing on land owned by Negara Developments Limited (Negara). Hikurangi planted the trees in reliance on a “give- and-take” arrangement between it and a former owner of Negara’s land. Hikurangi now seeks to maintain this arrangement against Negara.
[2] Negara relies on its indefeasibility of title as registered proprietor of this land, and therefore claims it owns the trees free of any interest held by Hikurangi.
[3] This case is about whether Hikurangi’s unregistered interest could survive the sale of the land to Negara. It raises questions involving the principle of indefeasibility of title and how claims based upon existing unregistered interests can be brought against a purchaser of the subject land.
[4] The relevant law at the times the material events occurred has now been repealed.1 However, it continues to apply for the purposes of this proceeding.2
Background
[5] Give-and-take arrangements are a feature of rural landholdings in New Zealand. They represent a pragmatic response to the fact the terrain between two neighbouring rural properties may not readily lend itself to the erection of a fence precisely on the legal boundary. Rural boundary fences are commonly made of wire, which is more effective for stock retention and easiest to run in long straight lengths on relatively level ground. Thus, there is a preference for placing these fences along a ridge-line or on terrain that best allows for them to be stock-proof, rather than for them to follow a sharply contoured legal boundary line. Accordingly, rural boundary fences can deviate from the legal boundary lines. Further, because rural boundary
2 See ss 17, 18 and 21 of the Interpretation Act 1999.
fences can run for some considerable distance, there may be a number of these deviations, each of which results in one landowner losing the use of some land to its neighbour (the “give”) or conversely gaining the use of some of its neighbour’s land (the “take”), depending upon where the fence-line is placed.
[6] Usually give-and-take arrangements work to both neighbours’ advantage as the trouble and expense of having the fence-line run precisely along the legal boundary may not be worthwhile. This is particularly so when the gains (the take areas) more or less equal the losses (the give areas). Provided the advantages continue these arrangements are likely to run smoothly without those affected being much troubled by the legal implications of their arrangements. But if matters change these arrangements can then become troublesome, which is what has happened here.
[7] Because give-and-take arrangements are generally not registered on a property’s certificate of title, anyone relying on them holds no more than what is at best an unregistered interest. Should the ownership of one block of land change and the new owner refuse to recognise the arrangement those who are reliant upon it face the difficulty of enforcing an unregistered interest against the new registered proprietor.
The tree planting
[8] In 1983 Hikurangi purchased 1120 hectares of rural land at Gisborne. The neighbouring 1337 hectare block of land, Waingaromia Station, was owned by Donald Stock together with his wife Annette and other members of the Stock family.3 Like many boundary fences in the district, the boundary fence between the two blocks of land, which had been in place for many years, was not fully aligned with the legal boundary.4 In all there were five separate areas of land which lay outside the legal boundary. Some were to the benefit of Waingaromia Station and others were to the benefit of Hikurangi. At trial these areas were referred to as Areas A to F.
3 These owners will be referred to hereafter as the Stock family.
4 It was believed to have been in place since the 1960s.
[9] When Hikurangi purchased its land Area C and F represented Waingaromia Station land on Hikurangi’s side of the boundary fence, whereas Areas A, B, D and E represented Hikurangi land on the Waingaromia Station side of this fence.5 The material area in this proceeding is Area C, part of which is also adjacent to Tuahu Road. The bulk of Waingaromia Station land was and still is (post subdivision of the property) on one side of Tuahu Road while Area C and other small portions of the property are on the other side of this road. A copy of the certificate of title showing the property as it was when owned by the Stock family is attached to this judgment. Also attached is a map (prepared for the trial) which shows the various marked give- and-take areas.
[10] After Hikurangi purchased its land it began clearing the land and planting a pine forest. In 1984, where Hikurangi’s land abutted Area C, it planted pines right up to the fence-line, thus planting on Area C. Pruning of the trees in Area C and the adjacent Hikurangi land (now known as the Te Marunga forest) was carried out in 1984, 1989 and 1991. Then the same trees were thinned sometime between October and November 1992 and again in early December 1992. Seemingly little if any hands- on attention was then paid to those trees until the early 2000s when pre-harvest assessments were done in 2001 and 2008.6
The Stock family sell Waingaromia Station
[11] In July 1992, the Stock family sold Waingaromia Station to SB Developments Limited (SB Developments) and title passed on 9 December 1992. Scott Funnell was sole director and a significant shareholder of this company. Then in August 1996 SB Developments transferred Waingaromia to Negara Developments Limited (Negara). Mr Funnell at all material times was and still is the sole director of Negara and the trustee of a trust holding shares in Negara.
[12] At the time SB Developments purchased Waingaromia Station approximately 1000 hectares of the 1337 hectares was planted in trees. The company intended additional plantings.
[13] In March 2006 Negara subdivided Waingaromia Station into eight titles. The subdivision titles which were sold included Areas B, D and E, which means Negara would have lost use of those areas from then on.7 The remaining land held by Negara (the Negara land) included land which abutted Area C and Area A, the latter being the only remaining “take” area from Hikurangi that was still available to Negara.
[14] Hikurangi seemingly had little contact with SB Developments about the trees in Area C. There was one telephone discussion between Hikurangi and Mr Funnell in 1993 regarding the grant of a forestry right for Area C. The outcome of this discussion is disputed.8 Then in 2012 Hikurangi commenced steps to enable the harvest of the trees in Area C, and Hikurangi’s adjacent land. In November 2012, Hikurangi sought and obtained (in January 2013) from the Gisborne District Council resource consent for the felling of the trees. In June 2013 two of Hikurangi’s employees met with Mr Funnell to discuss the planned harvesting operation. The outcome of this meeting is also disputed.9 There was a further pre-harvest assessment of the trees in August 2013.
[15] Then in September 2013 there was an exchange of communications between Hikurangi and Negara in which Hikurangi maintained a right to harvest the trees in Area C. Negara refuted that right, and warned Hikurangi any intrusion on Area C would be treated by Negara as trespass. Nothing then happened until 2015 when Hikurangi began harvesting the subject trees. Negara immediately acted to stop this happening. Ultimately Negara issued a legal trespass notice on 16 February 2015. Attempts by Hikurangi to preserve the value of the trees, (now felled and lying on the ground) came to nothing. The parties are now agreed those trees have no value. Following those unfruitful discussions Hikurangi commenced this proceeding against Negara.
8 It is addressed in greater detail at [94] herein.
9 See discussion at [128] herein.
Hikurangi’s claims
[16] Give-and-take fence-line arrangements have no generally recognised legal status that readily allows for rights of enforcement.10 Instead a person seeking to enforce such arrangements must find an available cause of action that best fits with the facts of the specific give-and-take arrangement in issue. The outcome will then turn on whether the facts of the particular case establish the chosen cause of action.
[17] Hikurangi contends the subject fence-line give-and-take arrangement is in the nature of an equitable profit à prendre. However, such characterisation adds nothing to the strength of Hikurangi’s claims, all of which depend upon Hikurangi proving the requisite factual and legal elements of its chosen causes of action.
[18] Hikurangi brings the following causes of action against Negara: fraud under the Land Transfer Act 1952; equitable estoppel; constructive trust; breach of the give- and-take arrangements; a declaration trespass notices issued by Negara are invalid and a claim for relief under s 323 of the Property Law Act 2007.
Give-and-take arrangements between Hikurangi and Donald Stock
[19] Give-and-take arrangements are seemingly a feature of rural life. If the parties are agreeable they will work, but they have no discrete status in law. Their enforceability hinges on whether the circumstances can be successfully fitted into an available cause of action. If they are unrecorded, the likely cause of action will be in equity.
[20] Hikurangi contends there was a give-and-take arrangement in place for the areas known as A through to F when it purchased its property, and that it discussed the continuation of this arrangement with Donald Stock, who was the point of contact for the Stock family. Hikurangi’s evidence is that: (a) it only planted pines in Area C once it knew the give-and-take arrangement for that area would continue; (b) the arrangement permitted Hikurangi to do all that was necessary to manage and harvest
10 See York v Vincent [1898] NZGazLawRp 9; (1898) 17 NZLR 292 (CA) whilst the common law and statute law have developed over time since this case was decided the general characterisation of give-and-take fence-lines remains accurate.
those trees. No written record of this arrangement was ever made, nor was any reference to it ever registered on the certificate of title of Waingaromia Station.
[21] Mr Stock is now deceased. His widow, Annette Stock, who gave evidence for Negara, disputed Hikurangi’s account on the ground Mr Stock “nearly always told” her what was happening on the farm and he never mentioned agreeing to a give-and- take arrangement with Hikurangi. However, under cross-examination Mrs Stock did accept the fence line running through Area C did not sit on the legal boundary, that it was an old fence, and a give-and-take arrangement had long existed for Area C.
[22] Mrs Stock also accepted under cross-examination that there was nothing about Hikurangi discussing a give-and-take arrangement for Area C with Mr Stock which made it unlikely he would have agreed to it, and for him to have done so without telling her.
[23] The removal of scrub and then the planting of trees in Area C to the actual fence-line must have been readily apparent to the Stocks. Mrs Stock accepted as much. The fence-line bordered Tuahu Road, which they would have driven up and down many times.
[24] Mrs Stock first moved to Waingaromia Station when she married Mr Stock in the early 1970s. She only acquired a legal interest in the property in November 1984. I do not think anything in relation to her knowledge of give-and-take arrangements turns on when she became a legal owner of Waingaromia Station. I expect that as Mrs Stock said in her evidence, Mr Stock would have shared his farming concerns with her from early on in their marriage because she was his wife and they were living at Waingaromia Station.
[25] I am satisfied from Mrs Stock’s evidence that Mr Stock never mentioned to her the give-and-take arrangement continuing with Hikurangi for Area C. However, I have reached this view because I find it more probable than not that this give-and-take arrangement was then a matter of little concern. Area C was visible from Tuahu Road, so it would have been obvious to Mr Stock when Hikurangi began clearing scrub and then planting pines there. Had he not been agreeable to this happening I expect he
would have taken some action against Hikurangi and discussed the matter with Mrs Stock. A further prompt for such reactions would have been in 1989 and 1991 when Hikurangi pruned the Area C trees along with pines on Hikurangi land abutting Area C. However, when Mrs Stock gave evidence she never mentioned Mr Stock reacting to these events, which suggests to me they passed without Mr Stock paying them any attention. Such silence on Mr Stock’s part is consistent with him knowing about and accepting Hikurangi’s use of Area C.
[26] Accordingly, I find it more probable than not that when Hikurangi planted its pines in Area C it did so in accordance with a give-and-take arrangement that Hikurangi and Donald Stock adhered to while the Stock family owned Waingaromia Station. Further, the appearance of this arrangement suggests to me there was enough to support Hikurangi acquiring an enforceable interest in the Area C trees by the law of equitable estoppel.11
Sale of Waingaromia Station
[27] When a purchaser of land becomes a registered proprietor he or she will usually acquire an indefeasible title against any unregistered interests in that land.12 However, fraud against the holder of an unregistered interest in land will defeat indefeasibility of title.13
[28] Section 182 of the Land Transfer Act 1952 provides:
182 Purchaser from registered proprietor not affected by notice
Except in the case of fraud, no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall be required or in any manner concerned to inquire into or ascertain the circumstances in or the consideration for which that registered owner or any previous registered owner of the estate or interest in question is or was registered, or to see to the application of the purchase money or of any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding, and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.
12 See s 62 of the Land Transfer Act 1952, now repealed which applied at the time.
13 See s 182 of the Land Transfer Act 1952.
[29] Fraud under s 182 requires dishonesty in the form of actual knowledge of the unregistered interest, and includes wilful blindness as to its existence. Regarding wilful blindness, a purchaser’s notice of the factors that go to support an unregistered interest will not be sufficient; instead there needs to be proof the purchaser: (a) knew about those factors, but failed to draw the necessary inferences from them; or (b) knew enough to put an honest purchaser on enquiry but failed to make such enquiry.14 Constructive knowledge is insufficient to establish fraud under s 182.15
[30] However, s 182 only covers the period up to registration and not afterwards. Following registration, imputed or constructive knowledge may be enough to support the existence of an unregistered interest in the subject land.16 Thus, a purchaser of land who obtains registration is treated differently from an existing registered proprietor when it comes to proof of an unregistered interest in the subject land.
[31] Fraud will also be established where there is proof a purchaser obtained registration with the intent to defeat an unregistered interest.17
Hikurangi’s claim under s 182
[32] Hikurangi claims that Mr Funnell as director of SB Developments purchased Waingaromia Station with knowledge of its unregistered interest in the Area C trees.18 Hikurangi further claims that this knowledge, overlaid with additional knowledge, was later transmitted to Negara when it purchased Waingaromia Station from SB Developments. On this basis Hikurangi claims the two purchases were fraudulent in terms of s 182 and therefore Negara cannot deny Hikurangi’s interest in the Area C trees.
[33] Mr Funnell denies he had the requisite knowledge at the relevant time.
14 See Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZGazLawRp 32; [1923] NZLR 1137 at 1177 and see discussion in Elizabeth Toomey New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at 2.5.06
15 See New Zealand Land Law at 2.5.06. Parliament has made plain the exclusion of constructive notice in s 6 of the Land Transfer Act 2017.
16 In those circumstances whether imputed or constructive knowledge will be sufficient will turn on the legal requirements to establish the particular interest.
17 See Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101 (PC) at 106-107.
18 Under s 2 of the Land Transfer Act 1952 trees are part of land.
[34] For the fraud exception in s 182 to apply, the time when a purchaser gained knowledge of an unregistered interest is crucial, because this knowledge must be present before registration occurs. Knowledge gained after registration of pre-existing unregistered interests cannot remove indefeasibility of title.19
[35] The claim under s 182 is only against Negara.20 To succeed Hikurangi must prove that its unregistered interest first survived the sale from the Stock family to SB Developments, and then the sale from that company to Negara. If Hikurangi cannot do that it is left with having to prove a fresh similar interest has arisen between it and either SB Developments or Negara, depending upon when the new interest is alleged to have arisen. Negara accepts that as the sole director of both companies Mr Funnell’s knowledge is attributable to each company.
[36] Hikurangi will have no difficulty proving whatever knowledge Mr Funnell had passed on to Negara. The difficulty for Hikurangi is with the first step: proof of what Mr Funnell knew about its unregistered interest before SB Developments became the registered proprietor of Waingaromia Station. If Hikurangi cannot prove Mr Funnell knew about the unregistered interest then, registration will have defeated its interest, meaning SB Developments will have acquired indefeasible ownership of Area C and the trees within it. Absent the later creation of a similar right, Hikurangi will have lost all rights to the Area C trees.
Mr Funnell’s knowledge of the give-and-take arrangements in 1992
[37] It was common ground between the parties that in principle give-and-take arrangements existed in the Gisborne area and other rural areas where the terrain made fence-line adherence to legal boundaries impractical. However, Hikurangi took the view give-and-take arrangements could apply to forested land, which necessarily entailed a degree of permanence to their duration given the longevity of those plantings. Whereas Mr Funnell saw give-and-take arrangements as more akin to loosely made informal arrangements applicable to pastoral farming or cropping, which
19 However, if a newly registered purchaser subsequently engages in a way that equity would recognise as enabling another to make an equitable claim in relation to the purchaser’s land the principle of indefeasibility provides no protection.
20 Negara is the present registered proprietor; SB Developments has been struck off the Companies register.
allowed for them to be undone with relative ease, if so required. Accordingly, Negara saw Hikurangi’s claim to the Area C trees as different from a simple give-and-take fence-line arrangement because the claim necessarily entailed Hikurangi having irrevocable harvest rights to those trees as well as an irrevocable right to access them whenever it wanted to.
[38] Mr Funnell denies he knew about the give-and-take arrangements between Hikurangi and the Stock family around the time SB Developments acquired Waingaromia Station. The property was purchased in July 1992, the sale went unconditional in August 1992 and title was transferred on 9 December 1992. The Stock family held possession until 27 December 1992, so it was after that when Mr Funnell moved onto Waingaromia Station. Even then, because he had business interests elsewhere, he was not always present at Waingaromia Station.
[39] Mr Funnell’s evidence was that Mr Stock, with whom Mr Funnell dealt, never told him about any give-and-take arrangements with Hikurangi. The sale and purchase agreement made specific provision for ownership of all trees on Waingaromia Station to vest in the purchaser. The certificate of title showed no registered interest in favour of Hikurangi. So far as Mr Funnell knew, on transfer all trees within the legal boundaries of Waingaromia Station became the property of SB Developments.
[40] Hikurangi has no direct evidence to refute Mr Funnell’s evidence. Instead it relies on opinion evidence from persons familiar with give-and-take arrangements in the locality and elsewhere as well as circumstantial evidence from which it invites the Court to infer that around the time SB Developments acquired Waingaromia Station Mr Funnell must have known those arrangements applied to the subject areas.21
[41] Negara did not challenge the expertise of Hikurangi’s expert witnesses Bruce Cowper and Michael Colley. Mr Cowper is a registered valuer specialising in rural properties including forestry. Mr Colley is a forestry consultant. Both explained in some detail reasons for give-and-take arrangements and how they work in practice, why they are common and, therefore, well understood in the Gisborne locality. They each went on to opine that the existence of a give-and-take arrangement for Area C
21 The expert witnesses opine on what a prudent purchaser would realise.
which gave Hikurangi ownership of those trees would have been apparent to Mr Funnell, or at least to a prudent purchaser, when Mr Funnell purchased Waingaromia Station for SB Developments.
[42] Some of Hikurangi’s expert evidence addressed what Mr Funnell was likely to have known about the give-and-take arrangements sometime after SB Developments became the registered proprietor of Waingaromia Station. This evidence could only be relevant to the s 182 question if it could be established inferentially that such knowledge was earlier known to Mr Funnell at a time prior to registration. However, there is no evidential basis to support such an inference. Accordingly, the only relevance of this evidence is: (a) in relation to Hikurangi’s equitable claims that a new give-and-take arrangement had arisen between it and either SB Developments or Negara at some later time; and (b) the overall impression this evidence gives of the experts’ reliability and credibility. Regarding the latter, the experts tended at times to become advocates for Hikurangi’s case. I consider this affects the weight that can be placed on their evidence, which is why I will address the wider scope of their evidence here.
[43] In Mr Cowper’s opinion at the time of purchase Mr Funnell would have known about the give-and-take arrangements, particularly those applying to Area C. Mr Cowper based this view on a series of indicators that he says would have been apparent to Mr Funnell. First, the general practice of purchasers to identify legal boundaries in relation to fenced areas and the general knowledge and acceptance at the time of give-and-take arrangements. Secondly, the relevant certificate of title and survey documents available in 1992 as well as earlier aerial photographs and maps clearly show the deviation between the legal boundary running beside Area C and the actual fence-line, as well as Tuahu Road. Thirdly, there were Conservation Forest Agreements (CFAs) in place between the Stock family and the Gisborne District Council which were later replaced in 1993 with new agreements between the same Council and SB Developments. Mr Cowper surmises that, given the benefits of these agreements to a landowner, at the time of purchase SB Developments would have carried out due diligence to gain a better of understanding of the areas that were planted and were yet to be planted under those agreements. Those areas did not include Area C. However, Mr Cowper then contends (by way of argument) that as
part of the due diligence process a prudent purchaser would also identify other areas of the forest that were not included in the CFAs, of which Area C was one. Mr Cowper also contends (again by way of argument) that the fact the Area C trees were not included in a CFA suggests they were treated differently from other trees on Waingaromia Station, which is another indicator that should have prompted Mr Funnell to make further inquiry as to their ownership.
[44] A final indicator for Mr Cowper of the different status of the Area C trees was that when SB Developments gave a forestry right to Samnic Forest Development Services Limited (Samnic) the affected areas followed the CFAs, which did not include the Area C trees. This forestry right was given to Samnic in 1994, thus it post- dates registration.
[45] Mr Colley’s evidence was much the same as that of Mr Cowper regarding give- and-take areas. He considered the same material as Mr Cowper and came to the same conclusions. He also said that at the time of purchase by SB Developments the trees in Area C would have been eight years old, which would make them around 10 metres tall and therefore an obvious feature on the landscape. He opined those trees would have been obviously part of Hikurangi’s Te Marunga forest because the Area C trees would have merged seamlessly with the adjoining trees, all of which were planted at the same time as the Area C trees, pruned and thinned at the same time, and together they comprised a 175 hectare stand. Thus, it would have been obvious the Area C trees were part of a give-and-take arrangement.
[46] Mr Colley also opined that within two years of the 1992 purchase date the Area C trees and the Te Marunga forest trees would have been given a final pruning and thinning, which was work that would have been obvious, given Area C’s proximity to Tuahu Road and Area A.22 However this opinion does not fit with Hikurangi’s factual evidence. Its general manager, Paul Ainsworth, referred to Hikurangi’s records in his evidence which showed for the Area C trees the last pruning was in November 1992 and the last thinning was in December 1992. Other evidence from Hikurangi is that this thinning occurred on or about 1 December 1992. Accordingly, Mr Colley’s
22 Area A was “take” land used by Waingaromia Station.
opinion about activity post-1992 that would have alerted SB Developments Ltd to work on the Area C trees is not supported by Hikurangi’s factual evidence.
[47] Mr Colley also commented on the significance of the Area C trees not being included in valuation reports SB Developments Ltd obtained in 1993 and 1994. Those valuations referred to tree crops planted in 1989 to 1992, whereas the Area C trees were planted earlier in 1984. Mr Colley refers to Mr Funnell’s explanation for this, which is that the valuations were prepared to ascertain the value of the forestry rights SB Developments was giving to Samnic. Mr Colley offers a contrary explanation for the Area C trees’ exclusion: namely, because it was common practice not to include trees planted on areas that were regarded as “taken” by a neighbouring property owner. One of the valuations was said to be for fire insurance and Mr Colley said that a valuation obtained for that purpose would generally include all trees.
[48] Mr Colley then addressed the management of the Area C trees. Mr Colley said it was surprising and unusual for a forestry company not to manage its trees. Further, there was a spike in the price of pruned logs during 1992 and 1993 which spurred pruning activity. The unspoken suggestion here is that if SB Developments owned the Area C trees one could expect that company to prune those trees during the 1992 – 1993 years. However, this argument, advanced by an expert witness, loses traction when it is realised no thinning or pruning was being done by Hikurangi on the adjacent trees in the Te Marunga forest during 1992 and 1993. By then Hikurangi’s own evidence shows that after 1 December 1992 nothing was done to the Area C trees or the adjacent trees until much later in 2001. Accordingly, no adverse inference can be drawn from SB Developments Limited’s failure to prune or thin the Area C trees. Based on Hikurangi’s own evidence, by the time SB Developments was in possession of Waingaromia Station there was no call for any pruning or thinning of the Area C trees. Further, I do not consider any failure on the part of SB Developments’ to extract maximum financial profit from the trees during this time to be indicative of it accepting that it did not own them. SB Developments was free to manage Waingaromia Station as it saw fit, including choosing when or if to prune the trees within it. The fact that it may not have done so with prudence and efficiency, in relation to the standard set by Mr Colley, does not mean very much.
[49] Mr Colley’s evidence culminated in him opining that on the basis of the afore going circumstances the “only logical conclusion, knowing where the legal boundary lies is that the trees in Area C did not belong to [Waingaromia] Station and that they were likely to be managed under a give and take arrangement”.
[50] Paul Ainsworth, the general manager of Hikurangi, also gave evidence about his experience in the forestry industry including his experience of give-and-take arrangements of which he said Hikurangi has a number with different land owners. His evidence was consistent with that of Mr Colley. In addition, Mr Ainsworth described the visual effect of pruning which he said ended with branches left on the ground where they fell. He opined that the fact trees were pruned would be obvious to anyone driving down Tuahu Road at the time and for some months afterwards.
[51] Mr Funnell disputes Hikurangi’s evidence. Under cross-examination he pointed out the overall size of Waingaromia Station (1337 hectares) in comparison with Area C (approximately 1.3 hectares). He also said that 1000 hectares of the property were already forested by the Stock family. There was nothing which alerted him to the Area C trees being different from the rest of the forested parts of the property. The sale and purchase agreement between SB Developments and the Stock family expressly provided that all trees on the property would form part of the purchase, and he believed this to be true.
[52] I am not persuaded by Hikurangi’s experts regarding their views on how the full extent of Hikurangi’s give-and-take arrangements for Area C would have been apparent to Mr Funnell before registration of the change of ownership. First, I do not find their opinions plausible. Secondly, their willingness to advocate for Hikurangi leads me to doubt their reliability and credibility as expert witnesses.
[53] The certificate of title for Waingaromia Station shows Tuahu Road, various parts of which run through the property. It is usual in New Zealand for rural land to be fenced along a roadway. Accordingly, when the certificate of title showed various parts of the road running through either Waingaromia Station land or Hikurangi land I accept that would inferentially suggest the fence-line close to the road was not following the legal boundary between those two properties. The aerial maps, which
Mr Funnell also admitted seeing, would also have supported this inference. He does not deny this. However, this is as far as such an inference can be taken. It does not necessarily follow that ownership of forestry planted close to the fence-line could be assumed to be part of a give-and-take arrangement. It would be possible for example for a fence-line to be inconsistent with a legal boundary, but for neighbours who were each using the land for forestry to plant to their respective legal boundaries, rather than the fence-lines, which deviated from the legal boundaries. Unlike stock, trees do not need to be confined by fences, which means that when a boundary fence-line deviates from the legal boundary neighbouring forestry owners can ignore the fence-line and plant to their legal boundary. Mr Funnell said this was normal practice. I accept this part of his evidence. It makes sense to me.
[54] Further, give-and-take arrangements that are adopted in pastoral farming and cropping can be readily undone. All that is required is for the parties to fence to the legal boundary. Knowledge of those arrangements would not necessarily lead to knowledge of a give-and-take arrangement of the type Hikurangi asserts here. For this arrangement to work Hikurangi’s right to the trees would need to continue for approximately 30 years. This does not easily lend itself to the flexibility inherent in pastoral give-and-take arrangements.
[55] Regarding the boundary between Waingaromia Station and Hikurangi’s land Mr Funnell said that whilst there was “a small area where some boundaries weren’t right, that the owners may be working to something, but [he] had no idea of what that was”. I have no reason to doubt Mr Funnell’s evidence. It is consistent with the available circumstantial evidence. Nor do I think he was bound to enquire further. The possibility of fence-lines not following legal boundaries was sufficiently commonplace, and so he was entitled to take this at face value, without suspecting more may be involved. The knowledge Mr Funnell would have gained from the relevant legal documents, aerial maps and the general lay of the land was not in my view sufficient to inform him that trees growing on Area C were planted by Hikurangi, and that Hikurangi retained an interest in those trees which allowed it to harvest them when the time came.
[56] Area C is approximately 1.3 hectares in size which is a very small area of land in comparison to the size of Waingaromia Station. Mr Funnell was buying the property without the help of an agent. It was the first large property of that type which he had bought acting alone. Had Mr Funnell looked closely at Area C he may have realised the trees there were much the same in age and height as those planted on the adjoining Hikurangi land, which could have indicated the trees were planted at the same time. This could suggest all the trees were planted by the same entity, which would be consistent with them all being planted by Hikurangi. But it could also suggest that the two landowners had worked together to clear what was previously native scrub and plant the entire area with pines. In any event, there is no evidence that Mr Funnell ever looked that closely at Area C, nor is there any reason to think he would have done so. Large tracts of Waingaromia Station were planted in pines. SB Developments was buying the property because of the existing plantings and to plant additional trees. I expect it would have been interested in areas covered by CFAs because those brought real benefits to a property owner. There is nothing to suggest Mr Funnell’s attention would have been particularly drawn to Area C as distinct from the rest of the property. With a property of 1337 hectares there would have been a lot for any purchaser to take in let alone someone acting without expert assistance.
[57] The Area C trees were approximately eight years old in 1992. The time for harvesting them was decades away. I would not expect them to catch Mr Funnell’s attention. There were many other trees planted on the property (approximately 1000 hectares of planting). In such circumstances, I would think the Area C trees simply blended into the landscape.
[58] I reject the suggestion in Mr Cowper’s evidence that examination of the CFAs and the fact the Area C trees did not form part of the CFAs would have been sufficient to indicate to Mr Funnell just how different those trees were. There was evidence from Mr Funnell that other pine plantings were outside the CFA areas. Accordingly, the exclusion of the Area C trees was not unique.
[59] There was a further opportunity after purchase, but before registration (9 December 1992) for Mr Funnell to learn about Hikurangi’s use of Area C. This was in late October and early November 1992 when the Area C trees were pruned and
again on or about 1 December 1992 when those trees were thinned. Mr Funnell denies any knowledge of seeing the Area C trees pruned or thinned on those occasions. He admits that after purchase and before taking possession on or about 31 December 1992 he visited the property on limited occasions. On those occasions he said his attention was on other matters. Again, I accept his evidence on this point. At that time when he was relatively unfamiliar with the property there would have been plenty of other issues relating to this large property to engage his attention It is not as if Area C was centre stage.
[60] Moreover, there is no evidence to connect Mr Funnell’s presence on Waingaromia Station with the occasions when the pruning and thinning was carried out, so there is nothing to prove he was present to see this activity taking place. I accept that once this task was completed there would have been discarded trees and branches lying on the ground with their leaves turning brown, which would have been visible. However, in the context of a rural area where there are large numbers of pine plantings I do not consider this would stand out in a way that it could not be missed. He says he did not notice them at the time, and I accept his evidence. Even if Mr Funnell had taken note of the discarded branches it does not necessarily follow that he would have realised this was work done at the instigation of Hikurangi because that company believed it owned the trees.
[61] Hikurangi carries the burden of proving Mr Funnell knew or was wilfully blind about the Area C trees being the subject of a give-and-take arrangement with ownership vested in Hikurangi. I find the expert opinion and the circumstantial evidence it relies upon to be insufficient to discharge this burden. There are other available conclusions more favourable to SB Developments, that are just as if not more probable than the conclusions Hikurangi would have me reach.
[62] Accordingly, I find that at the time of purchase Mr Funnell, and therefore SB Developments, had no knowledge Hikurangi’s trees were growing on Area C as part of a give-and-take arrangement with the Stock family. Nor do I consider this was a necessary inference to be drawn from the circumstances. I have already addressed the existence of other inferences favourable to Mr Funnell. Further, I do not consider that
Mr Funnell knew enough to require him to find out more about Area C. Accordingly, I find there was no wilful blindness on his part.
[63] Further, there are other reasons why I find Mr Funnell to be a plausible and credible witness.
[64] There was much about the way the evidence was presented in this case that is unsatisfactory. Hikurangi made an unsuccessful summary judgment application in 2016. The affidavit evidence that was prepared for that hearing was then used by the parties for the trial. Rather than each witness providing a single brief of evidence that focussed on trial issues the evidence comprised previously used multiple affidavits from some witnesses with the controversy between the parties being actively debated by the various deponents. In a case that essentially turns on its facts this messy approach was unhelpful and did nothing to elucidate what had occurred here.
[65] Further, large tracts of the affidavits were excluded at the trial because they were not admissible evidence. The use of affidavits also meant that the parties did not have all their witnesses available to give evidence in the usual way. Thus, the Court had no opportunity to observe many of the witnesses give evidence or to ask questions of them when clarification of their evidence may have been helpful.23
[66] Finally, the common problem of a witness brief of evidence being written in the writer’s language rather the language the witness would usually use was exacerbated here by the fact the written evidence was in affidavit form for an opposed summary judgment hearing, which meant that when it was prepared no thought would have been given to the prospect the deponent would have been cross-examined on the affidavit’s contents, this being rare in summary judgment hearings. Consequently, some time was taken up cross-examining Mr Funnell along the lines his evidence was inconsistent because he was introducing new evidence for the first time, when in fact this was the first proper opportunity he would have had to give his evidence in his own words. Throughout a prolonged cross-examination Mr Funnell consistently maintained he had no idea Hikurangi had an interest in the Area C trees, nor did
anything at the time suggest otherwise to him, or that him he needed to make further enquiries about those trees.
[67] Despite the difficulties with resolving the evidential conflicts, the following is clear to me: when Mr Funnell’s subsequent conduct is considered he has consistently acted in a way that denies Hikurangi's claimed right over the Area C trees. This supports the view he never knew about Hikurangi’s unregistered right in the first place.
[68] First, in 1993 or 1994 when asked to grant a forestry right over the Area C trees Mr Funnell refused to do so. He also denied recognising Hikurangi had any right to those trees. As I explain later, I believe this denial.24
[69] Secondly, in June 2013 at a meeting with Waiherepe Koia and Jared Moroney, Mr Funnell refused to allow Hikurangi to fell the trees in Area C. I am satisfied this is what occurred because apart from Mr Funnell’s evidence, Mr Koia acknowledged as much under cross-examination.
[70] Thirdly, in the written communications in September 2013 Mr Funnell made it very clear he did not recognise Hikurangi's claim in the Area C trees.
[71] Fourthly, in 2015 when confronted with Hikurangi actually felling the Area C trees, Mr Funnell again asserted his rights in the trees. He did all he could to stay the felling process.
[72] Fifthly, not once has Mr Funnell deviated from rejecting Hikurangi's claim in the Area C trees. Furthermore, not once has Mr Funnell asserted any reliance on the give-and-take arrangements for any of the relevant areas. I acknowledge that persons grazing Waingaromia Station have permitted their stock to access some of the “take” areas, but this did not involve any active assertion of such rights. It just occurred because at times stock grazed on paddocks with fences that did not conform to the legal boundary. Neither SB Developments nor Negara actively exercised rights over the take areas. And in 2006 when Waingaromia Station was subdivided the grassed “take” Areas B, D and E no longer formed part of the block of land that Negara
24 See discussion at [124] herein.
retained, which further indicates Negara’s lack of involvement with or reliance on those “take” areas. All of which indicates to me that the presence of those “take” areas was seemingly viewed by SB Developments and Negara as nothing more than an historical incident that arose from where an old boundary fence-line had been placed.
[73] I consider Mr Funnell’s conduct after the trees were felled is consistent with his earlier conduct. He steadfastly refused to engage with Hikurangi or participate in a plan that would have preserved the trees’ value. In this regard his conduct demonstrates an affronted, angry and stubborn insistence on Negara’s rights in those trees and a general rejection of Hikurangi’s claims to them.
[74] There is nothing about Mr Funnell’s conduct to suggest he is someone who has tried to gain a financial advantage for Negara by intentionally laying claim to trees he knew belonged to Hikurangi. Moreover, I note that in 2013 and 2015 when Hikurangi offered to buy either the Area C land or Negara’s entire land holding Mr Funnell showed no interest in those overtures from Hikurangi. Financial concerns do not seem to have directed his conduct. His conduct reveals a firm belief, held at all relevant times, that Hikurangi has no proper claim to the Area C trees.
[75] Accordingly, I find that at the time SB Developments purchased Waingaromia Station Mr Funnell had no actual knowledge of Hikurangi’s unregistered interest in the Area C trees, and this remained the case up to the time of registration. Further, the circumstances do not support him being wilfully blind to Hikurangi having any such interest.
[76] Hikurangi argued that a prudent purchaser would have known or realised it was necessary to make enquiries about ownership of the Area C trees. However, Hikurangi did not identify any authority for that test. It seems to me to be an attempt to extend the character of knowledge under s 182 to include constructive knowledge of the type that is allowed in equity. I do not equate the prudent purchaser with the honest purchaser test that is usually applied to identify wilful blindness. Throughout I consider that Mr Funnell has acted as an honest purchaser. The fact he never realised what Hikurangi contends he should have, cannot detract from his honesty.
[77] Hikurangi also sought to prove fraud through the form of the sale and purchase contract between the Stock family and SB Developments expressly providing for ownership of the trees on Waingaromia Station to pass to the purchaser.
[78] Under s 2 of the Land Transfer Act 1952 “land” includes “all trees and timber thereon or thereunder lying or being unless specially excepted”. Accordingly, there is no need for an express contractual term stating that ownership of trees planted on land passes to the purchaser. Given the transfer of ownership of trees is automatic on the sale of land I do not see how the inclusion of an express contractual term to that effect could have any additional adverse effect on any existing unregistered interest over affected trees. Because such a term is not necessary to effect transfer of ownership of trees when the land on which they stand is being sold, I do not see how the inclusion of such a term can evidence an intent to defeat any unregistered interest over such trees. Further, such terms are only enforceable against the other party to the contract, namely the vendor. Their purpose is to provide a warranty to the purchaser that there are no unregistered encumbrances or other claims against trees growing on the land for sale. The presence of this term gives the purchaser the security of having a contractual claim against the vendor should the purchaser find itself facing a third party making a claim on the trees. For completeness I note that Hikurangi's statement of claim made no allegation that suggests the sale from SB Developments to Negara was made for the purpose of defeating Hikurangi’s alleged interest in the Area C trees. Accordingly, Negara had no reason to address why that sale occurred, and so it led no evidence on that topic.
[79] Mr Funnell denied any intent to subvert Hikurangi’s interest in the Area C trees. He said he did not ask for an express term warranting ownership of the trees passing to the purchaser. His understanding was that it was something the lawyers acting for SB Developments inserted in the contract. I find this plausible. It looks like a boiler- plating provision to me. I am satisfied the inclusion of this term was not for the purpose of defeating Hikurangi’s interest in the Area C trees.
[80] Hikurangi cannot prove SB Developments’ purchase of Waingaromia Station was fraudulent in terms of s 182. It follows that once SB Developments became registered proprietor of Waingaromia Station it obtained indefeasible title to the
exclusion of any unregistered interest that Hikurangi might have had in the Area C trees by virtue of its earlier arrangements with the Stock family. Further, such interest could not later be resurrected by SB Developments after registration gaining knowledge of the prior arrangement with the Stock family. This means that whatever the give-and-take arrangements might have been between Hikurangi and the Stock family they came to an end when SB Developments became registered proprietor of Waingaromia Station. After that any claim that Hikurangi might have regarding give- and-take arrangements with either SB Developments or Negara would depend upon whether it could establish such arrangements had subsequently and independently come into existence. This necessitates Hikurangi being able to establish its claims in equity.
Hikurangi’s equitable estoppel claim
[81] There is now a single unified doctrine of equitable estoppel in New Zealand.25 The essential elements of which are set out by the Court of Appeal in Wilson Parking New Zealand Ltd v Fanshawe:26
In brief, it must be shown that:
(a) a belief or expectation by [party A] has been created or encouraged by words or conduct by [party B];
(b) to the extent an express representation is relied upon, it is clearly and unequivocally expressed;
(c) [Party A] reasonably relied to its detriment on the representation; and
(d) it would be unconscionable for [party B] to depart from the belief or expectation.
[82] The unified doctrine of estoppel has a variety of manifestations. As Tipping J put it:27
There is a single doctrine of estoppel with a variety of manifestations. For ease of analysis it is convenient to examine the particular ingredients of different
26 Wilson Parking New Zealand Ltd v Fanshawe 136 at [44] cited with approval in Pollard v Pollard
[2016] NZCA 186, (2016) 23 PRNZ 229 at [33].
27 National Westminster Finance NZ Ltd v National Bank of NZ Ltd at 549–550.
manifestations but the underlying conceptual unity of the doctrine is important and should not be overlooked.
[83] The parties accept the relevant legal principles. Their dispute is about the presence or otherwise of the factual ingredients necessary to establish the various manifestations on which Hikurangi relies. These are: (a) estoppel by representation, in the form of Mr Funnell’s knowledge and conduct, which Hikurangi attributes to Negara; (b) estoppel by convention; and (c) estoppel by silence.
[84] Hikurangi has advanced the equitable estoppel claim on the basis it binds Negara to recognise either the unregistered rights Hikurangi acquired earlier on from its give-and-take arrangement with the Stock family or a new such arrangement which arose after either SB Developments or Negara acquired Waingaromia Station. However, reliance on the earlier give-and-take arrangement with the Stock family is now precluded by the findings on the claim under s 182 of the Land Transfer Act.
[85] Thus, unless Hikurangi can establish that new give-and-take arrangements came into effect after the sale of Waingaromia Station in December 1992, its claim in equitable estoppel will fail. In this regard Hikurangi claims that Negara by its conduct, expressly or impliedly represented, encouraged or created in Hikurangi an expectation the parties would or would continue to utilise the old give-and-take boundary as opposed to the legal boundary and that Hikurangi was therefore entitled to fell and remove the Area C trees from Negara’s property once they reached maturity (estoppel by representation).
[86] Hikurangi further claims that Negara’s conduct gave rise to a reasonable assumption shared by both Negara and Hikurangi that the parties would continue to utilise the give-and-take boundary as opposed to the legal boundary and therefore Hikurangi was entitled to fell and remove the trees from Area C once they reached maturity (estoppel by convention). Hikurangi claims that it acted in reliance on this assumption and that Negara had a duty to “speak” if it did not share the same view. However, Negara remained silent, which created in Hikurangi an expectation the parties would continue to utilise the give-and-take boundary as opposed to the legal boundary, and therefore Hikurangi was entitled to fell and remove the Hikurangi trees from Area C once they reached maturity (estoppel by silence).
[87] Further, Hikurangi claims it relied to its detriment on Negara’s representations and/or reasonable expectations and the assumptions created. Hikurangi contends it did this by continuing to invest time and money in the Hikurangi trees, making decisions concerning the overall level of pinus radiata stock required by Hikurangi and allowed Negara to utilise Hikurangi take areas as part of Negara’s farming or other operations. In such circumstances Hikurangi contends it would be unconscionable for Negara to be permitted to resile from its representations or conduct and from the expectations and/or assumptions thereby created. Thus, Negara is estopped from now denying Hikurangi’s ownership of the Area C trees, which it was entitled to fell and remove from Area C.
[88] As with the claim under the Land Transfer Act everything turns on Mr Funnell’s knowledge and conduct at the relevant times.
Use of the give-and-take areas after ownership passed to companies controlled by Mr Funnell.
[89] Given the configuration of the boundary fence-lines, there is no doubt that from the time SB Developments acquired Waingaromia Station this company and later Negara made use of the “take” areas insofar as any stock grazing on Waingaromia Station were free to roam up to the actual fence-lines.28 From the time the Stock family sold Waingaromia Station there is no evidence of Mr Funnell or any other person associated with either SB Developments or Negara engaging with and discussing use of the take areas with Hikurangi. This use continued until Waingaromia Station was subdivided in 2006 by its then owner Negara; after that take Areas B, D and E no longer adjoined land owned by Negara, meaning those areas were then lost to Negara.
[90] I note that Hikurangi has treated the take areas as remaining available to Negara after the subdivision, and Mr Ainsworth said another company associated with Mr Funnell now owns land adjoining one of the take areas. However, this view overlooks the separate legal personality of Negara. Once it ceased to own land adjoining a take area I consider that take area was no longer available to Negara. Accordingly, I accept Mr Funnell’s evidence that after the subdivision of Waingaromia
28 The pastoral areas were informally leased to third parties for grazing.
Station Negara lost access to Areas B, D and E. Despite this change to the balance of the available give-and-take areas, there was no discussion between Negara and Hikurangi.
[91] I am left with the impression that apart from the disputed Area C no-one paid much attention at all to the other give-and-take areas. Any use of them appears to have occurred by default and without any thought being given to such use by either landowner. This may be because they seem to be of little importance. The area of land of each of them is insignificant. Two of them were in either scrub or native bush and were not used by anyone. How Area C was used represented the exception rather than the rule.
Mr Funnell’s knowledge and conduct between 1993 and 1994
[92] Because the claim is made against Negara a primary question is what Negara’s knowledge and conduct was both at the time it purchased Waingaromia Station and afterwards. The answer to this question hinges on what Mr Funnell knew and did at the relevant times. His earlier knowledge and conduct from the time SB Developments purchased Waingaromia Station will also influence how this question is answered.
[93] Mr Funnell says that in 1993 he realised pruning of trees in Area C had been done, but when he then made enquiries of staff on Waingaromia Station he was left with the impression Hikurangi’s contractors had failed to stop at the legal boundary, and therefore they had mistakenly carried this work out. Mr Funnell acknowledged he never contacted Hikurangi about this pruning. His view was there was no need. There was no danger other than of the trees being felled. His evidence is plausible and I have no reason to doubt him. The trees represented a small part of trees on Waingaromia Station land and the work done on them had not damaged them. Once he noted pruning and thinning by Hikurangi he had an explanation for that. Nothing else was going to occur for some time. I can understand him deciding to let matters rest as they were. There is nothing about this occurrence that can support estoppel.
[94] Of greater significance is an event that occurred in either 1993 or 1994 when Hikurangi approached Mr Funnell to acquire a registerable forestry right (forestry
right) for the Area C trees, which was refused. A Hikurangi employee telephoned Mr Funnell and requested a registerable forest right, which necessarily means Mr Funnell was told Hikurangi had planted the trees in Area C and considered it owned them. This much of the discussion is accepted by the parties. The rest is disputed.
[95] Initially, Mr Funnell thought the discussions were with Mr Ainsworth, but he was not then employed by Hikurangi. Mr Funnell said the person he spoke with described the Area C trees as an overplanting by Hikurangi. Mr Funnell said he was offered a payment of $2.00 per hectare, which was not high enough and so he refused to grant a forestry right. He denied there was any discussion about the trees being subject to a give-and-take arrangement.
[96] Mr Funnell was strenuously cross-examined on the question of the alleged “overplanting” as this description of how the trees came to be on Area C was not included in any of his affidavit evidence, which was prepared in opposition of Hikurangi’s summary judgment application. He remembered the caller describing the refusal to grant the forestry right as something that was “not very neighbourly”, which is an expression Hikurangi denies.
[97] Mr Funnell acknowledged that in some respects his memory may have been influenced by the passage of time, nonetheless he maintained the request for a forestry right took him by surprise, which was why he remembered it. He also said he thought the issue was concluded when he refused to grant the forestry right.
[98] Despite strong questioning by Hikurangi’s counsel, Mr Funnell maintained that throughout the discussion he never departed from the stance that ownership of the Area C trees lay with SB Developments. He also said that after the discussion had ended he was left with the belief the forestry rights were refused and he had rejected Hikurangi’s claim to the Area C trees.
[99] Hikurangi’s witness Jan Wisniewski was acting manager and then manager of Hikurangi at the relevant time. He said that in 1993 and 1994 Hikurangi wanted to formalise its plantings on land subject to give-and-take arrangements. He had no
memory of speaking with Mr Funnell, but nonetheless believed it would have been him who did so. Therefore, Mr Wisniewski could only give evidence about how in principle he approached such discussions, which at the time were occurring with a number of Hikurangi’s neighbours. He also gave evidence about how in principle he would have reacted if he had gained the impression Mr Funnell rejected Hikurangi had any rights to the Area C trees.
[100] Mr Wisniewski was sure that he would have commenced any discussion with Mr Funnell by explaining the circumstances in which Hikurangi had come to plant the disputed trees on Area C. This would have included explaining the nature of the give- and-take arrangements made with the previous owners of the property, the Stock family. Mr Wisniewski was certain he would have done this because the existing give- and-take arrangements formed the basis and justification for seeking a forestry right in the disputed trees.
[101] Mr Wisniewski also said he was certain that nothing was said that would have led him to believe SB Developments would not honour the give-and-take arrangement, because had Mr Funnell indicated SB Developments would not continue to honour or abide by the give-and-take arrangements that would have “rung serious alarm bells with [him]”. Also, because other neighbouring land owners were content to abide by existing give-and-take arrangements, Mr Wisniewski was of the view that had the discussion gone the way Mr Funnell outlined, it would have been memorable.
[102] Mr Wisniewski said it was a “ridiculous notion” that he would have just walked away from a conversation where the give-and-take rights were disputed and done nothing about this. Mr Wisniewski believed that he must have been satisfied with the outcome of the discussion, because otherwise he would have taken immediate steps to have Hikurangi secure its legal rights to the trees. In this regard Mr Wisniewski said that Hikurangi was then owned by Fletcher Challenge Forests and therefore part of the Tasman Forestry group, which had “massive areas” of land subject to give-and-take arrangements. Any threat to rights to trees under those arrangements would have been taken very seriously and certainly challenged by the Tasman Forestry Group. However, he did not outline what those steps would have involved.
[103] Mr Wisniewski also rejected Mr Funnell’s evidence that Hikurangi offered payment for the forestry right, because it was contrary to usual practice to make such an offer on a first approach. If there was going to be a formal arrangement with payment there would have been a formal negotiating process, which did not occur.
[104] Following the telephone discussion Hikurangi was granted no forestry rights over Area C. Mr Funnell made no record of the discussion and seemingly neither did Mr Wisniewski. Hikurangi sent no written communications to SB Developments outlining the discussion. To all intents and purposes matters seemingly continued as they had done before.
[105] Obviously, Hikurangi did not get its forestry right. However, the evidence of Mr Wisniewski would, if accepted, be sufficient to establish that from then on Mr Funnell knew Hikurangi claimed enforceable rights to the Area C trees and Mr Funnell was prepared to recognise those rights, which would go some way to satisfy the requirements for equitable estoppel to arise. However, there would still be issues regarding reliance and unconscionability.
[106] Mr Wisniewski’s evidence contradicts Mr Funnell’s account of the telephone discussion. A major difficulty for me with Mr Wisniewski’s evidence is that he was not cross-examined. Mr Hurd for Hikurangi referred to this when cross-examining Mr Funnell.
[107] Section 92 of the Evidence Act 2006 imposes certain cross-examining duties as well as setting out what the Court should do when there has been a failure to comply with the section’s requirements. Section 92(1) provides that a party must cross- examine a witness on significant matters that are relevant, are in issue and that contradict the evidence of the witness, if the witness could reasonably be expected to be in a position to give admissible evidence on those matters.
[108] Here the evidence of Mr Wisniewski is no more than an attempt on his part to describe to the Court what his practice was at the time when he was discussing give- and-take arrangements and acquiring forestry rights with other persons.
Mr Wisniewski openly admits he cannot give direct evidence about what transpired during the telephone discussions with Mr Funnell.
[109] Indeed, there is only the evidence of Mr Wisniewski’s usual practice to establish he was the person who spoke to Mr Funnell. Departures from usual practice can occur, for all sorts of reasons. Strict adherence to usual practice is not the norm. It is difficult to say now if the conversation actually was with Mr Wisniewski, which could account for some of the differences between Mr Wisniewski’s view of how the conversation would have gone and Mr Funnell’s memory of how it went.
[110] Nonetheless, there were aspects of Mr Wisniewski’s common practice that were at odds with what Mr Funnell had to say about his memory of the discussion. It would have been better if Mr Wisniewski had been cross-examined on those matters, because there are aspects of his evidence that may have been clarified by cross- examination. However, that did not happen.
[111] Sub-section 92(2) provides that where there has been an omission to comply with cross-examination duties the Judge has certain options available to him or her, the relevant choices here being: to admit the contradictory evidence on the basis the weight to be given to it may be affected by the fact that the witness who may have been able to explain the contradiction was not questioned about the evidence; or to exclude the contradictory evidence.
[112] Because I am not facing two contradictory accounts of actual events, but rather one remembered account of events versus an opposing witness’ memory of what his common practice would have been, I see no proper basis for excluding Mr Funnell’s evidence. Rather I think I need to assess his evidence in the light of Mr Wisniewski’s evidence and then determine the degree of weight which I can give to Mr Funnell’s evidence, having regard to the fact that Mr Wisniewski testimony has not been challenged.
[113] Memories of a discussion in either 1993 or 1994 between Mr Funnell and Hikurangi's representative, who may have been Mr Wisniewski, allow for confused
impressions. The tricks memory can play, and people’s inability to recall accurately what happened more than 20 years ago, have to be taken into account.
[114] For Mr Funnell the telephone discussion came as a surprise. Given I accept his evidence that he knew nothing before then about Hikurangi’s claim to the Area C trees I can accept he was surprised by the call. Because this was the first time he learned Hikurangi claimed an interest in the Area C trees and it was the only time Hikurangi sought a forestry right from him, I accept he would have some recall of the discussion.
[115] On the other hand, Mr Wisniewski properly acknowledges he has no recall of the discussion. He expects he made the telephone call because he was engaged in the exercise of securing forestry rights for Hikurangi around that time, and he had made approaches to persons whose “give” areas were used by Hikurangi. All he can now do is outline his memory of his usual practice at the time and attempt to surmise the steps he would have taken had Mr Funnell made it clear he rejected all Hikurangi’s claims to the Area C trees. However, what a witness thinks he would have done more than 20 years earlier may be different from what he did do then.
[116] I have trouble accepting Mr Wisniewski’s account of how the discussion would have gone. I find it odd that Mr Funnell would reject giving Hikurangi a forestry right yet lead Mr Wisniewski to believe Hikurangi could take the Area C trees under a give- and-take arrangement. If he was happy for the trees to be removed under that arrangement, why not grant a forestry right?
[117] I consider it notable that after the telephone discussion Hikurangi made no further contact with Mr Funnell. Hikurangi would have me infer that this silence shows it was satisfied with the outcome of the discussion, which necessarily means the discussion confirmed its belief in the give-and-take arrangement for Area C. However, I consider other inferences are equally available.
[118] At the time Mr Wisniewski rang Mr Funnell other calls were made to other persons with whom Hikurangi considered it had “give-and-take” arrangements. This suggests to me that by then Hikurangi wanted greater certainty for its forestry on what
for it were “take” areas. Mr Cowper, who is Hikurangi’s expert witness, says that “take” areas generally only become an issue close to harvest time, and that forestry companies are reasonably proactive in securing forestry right agreements for “take” areas. This suggests to me that despite all that Hikurangi has said in evidence about the common use of give-and-take arrangements by forestry companies they prefer forestry right agreements, which is understandable given that those agreements are registerable on a land title.
[119] Mr Cowper also says that when areas are too small to implement a forestry right agreement the default is to revert to historic give-and-take arrangements, which is what he incorrectly surmises occurred with Area C. Obviously, the approach by Mr Wisnieswki shows that Hikurangi thought it worthwhile to go to the trouble of obtaining a forestry right agreement for Area C, which suggests it wanted better security for Area C. In such circumstances, once Hikurangi learned Mr Funnell would not grant a forestry right, if he had been prepared to recognise and respect an existing give-and-take arrangement, I find it hard to accept that Hikurangi would then be content to rely on a single oral discussion with him. Instead, I would expect Hikurangi to have taken steps to document the outcome by a follow-up letter recording how the discussion had ended. For a company like Hikurangi, which has large forestry holdings, is well funded and employs professionally qualified managers, to start out wanting the certainty of a forestry right, have that rejected and then take no further steps to record an oral confirmation of an existing give-and-take arrangement strikes me as odd. I do not find this plausible.
[120] Hikurangi’s silence and inaction after the telephone discussion seem to me to be more consistent with Hikurangi perceiving the discussion to have been unfavourable to it both in terms of refusal of the forestry right and because Mr Funnell claimed the Area C trees as belonging to SB Developments. Faced with such an attitude one available approach would have been for Hikurangi to take no further action. At the time, little if any work was required on the Area C trees until their harvest. It would simply have been a matter of letting things lie still for the moment. The adoption of such an approach is consistent with the fact Hikurangi did not follow up the telephone discussion with any written communication to confirm the give-and- take arrangement.
[121] Whilst leaving matters in abeyance may not have been a good outcome for Hikurangi, from its perspective during 1993 and 1994 time was on its side. The Area C trees would not be ready for harvest for approximately 20 years. Hikurangi was buying neighbouring properties, and therefore the possibility of it buying Waingaromia Station must have been real to it. Leopold Jelinak, another Hikurangi witness who was present during the time the Stock family were on Waingaromia Station said that Hikurangi had a history of purchasing neighbouring properties. It had looked at purchasing Waingaromia Station from the Stock family, but they could not agree on a price. Given Hikurangi's history of purchasing neighbouring farms, and its seeming ability to do so, purchasing Waingaromia Station or the Area C land must have seemed a possible way of dealing with the Area C trees. Indeed, this was a solution that Mr Ainsworth attempted when he later engaged with Mr Funnell.
[122] Mr Wisniewski refutes Mr Funnell’s evidence that Hikurangi’s price was too low by saying Hikurangi would not have offered to pay for a forestry right agreement when it already had rights to remove the trees under a give-and-take arrangement. However, that overlooks the greater benefits that come with having a legal right that can be registered on a land title. Such benefits are also likely to incur costs by way of some payment for those rights. It is hard to see why Hikurangi went to the trouble of seeking forestry right agreements (not just from Mr Funnell according to Hikurangi’s evidence) if they gave no greater benefits than an undocumented give-and-take arrangement. I find this evidence implausible.
[123] Furthermore, for Mr Funnell to have given the impression during the telephone call that he recognised Hikurangi’s claim to Area C flies in the face of every other interaction Mr Funnell has had with Hikurangi over the Area C trees.
[124] Accordingly, despite no cross-examination of Mr Wisniewski, and therefore the impact this has on the weight I attach to this aspect of Mr Funnell’s evidence, the surrounding circumstances and other relevant evidence from Mr Funnell lead me to prefer Mr Funnell’s evidence about the telephone discussion to that of Mr Wisniewski.
[125] It follows that I find the telephone discussion ended with Mr Funnell: (a) denying Hikurangi the forestry right it sought from him; and (b) informing Hikurangi
it had no proper claim to the Area C trees. I find that as matters then stood Mr Funnell believed Hikurangi had no right to the Area C trees and there was nothing that would necessarily prompt him to make any further enquiry on that. Nor do I consider there is any basis for finding he should have made further enquires.29 As to the latter, even if I did find a reasonable person would have made further inquiries, and therefore realised Hikurangi claimed rights in the Area C trees, such finding of constructive knowledge would not be enough later, (if attributed to Negara), to strip that company of the protection of ss 62 and 182 of the Land Transfer Act 1952. I accept Mr Funnell’s knowledge can be attributed to Negara. However, if the level of that knowledge did not, in terms of s 182, constitute actual knowledge of the rights Hikurangi claimed in the Area C trees, transfer of Waingaromia Station to Negara would have resulted in Negara acquiring an indefeasible title.
[126] Because nothing further happened that Mr Funnell knew about until the 2013 meeting with Mr Koia and Mr Moroney, it follows that when Negara took ownership of Waingaromia Station in 1996 it did so with no knowledge of Hikurangi claiming rights in the Area C trees.
Mr Funnell’s knowledge and conduct in 2013
[127] After the telephone discussion in either 1993 or 1994 there is no evidence of anything happening regarding the Area C trees until 2001 and then again 2008 when on those occasions Hikurangi carried out pre-harvest assessments of those trees at the same time as the adjoining Te Marunga forest trees. This involved Hikurangi staff being on site and painting numbers on certain trees. Hikurangi maintains anyone who was in the locality would have seen what was happening. Mr Funnell maintains he never saw this work being carried out on the Area C trees. In any event there is nothing about this work at the time it was done that could rise to a new equitable estoppel.
[128] Matters came to a head between the parties in 2013. In June 2013 there was a meeting at Waingaromia Station between Mr Funnell and Hikurangi’s employees
29 Because the telephone discussion happened during the time SB Developments was the registered proprietor, like any other legal owner of property, insofar as an equitable claim may require only proof of the legal owner having constructive notice or constructive knowledge of circumstances giving rise to that claim such notice or knowledge was also absent.
Mr Moroney and Mr Koia. Mr Moroney and Mr Koia went there to discuss Hikurangi’s planned harvesting operations along the boundary of the two properties, which involved building a skid road on Hikurangi’s land. Mr Moroney was Hikurangi’s harvest manager. Mr Koia was Hikurangi’s operations manager. Mr Funnell said they discussed Hikurangi's plans to construct a road and skid site near the boundary of the land. He says neither the ownership of the Area C trees nor the give-and-take arrangement was discussed at the meeting, but that he did make it clear that Negara did not and would not consent to Hikurangi entering the land and harvesting the trees. Mr Koia and Mr Moroney said Mr Funnell told them he wanted the parties to return to their legal boundaries once the trees were harvested. Mr Funnell denies saying this.
[129] Mr Koia’s recall of the meeting in June 2013 with Mr Funnell was that the purpose was to discuss Hikurangi's planned harvesting of its Te Marunga forest in the Area C trees, including a road and landing or skid site which would be necessary to stockpile the felled trees and then remove them. Mr Koia recalled Mr Moroney producing a map that showed the legal boundary, and the give-and-take areas between Waingaromia Station and Hikurangi.
[130] Mr Koia said that the give-and-take arrangements in place were discussed, in particular Area C. He recalled Mr Funnell saying he did not “want Hikurangi to harvest any of the trees on [the Negara] side of the legal boundary”. Mr Koia said in response he pointed out to Mr Funnell he was using areas of Hikurangi’s land for grazing under give-and-take arrangements. He said Mr Funnell acknowledged this, but said he was not grazing the land rather his lessee was. Mr Funnell denies saying this. It is hard to know what to make of this statement from Mr Koia, which is factually incorrect in relation to the “take” Areas B, D and E. By 2013 those “take” areas were no longer adjoining land owned by Negara and had been like that since 2006. Mr Koia did not recall any further discussion about legal ownership of the trees. However, Mr Koia did concede under cross-examination that when he left the meeting his understanding from Mr Funnell was that Hikurangi was not to fell the Area C trees:
A. Yes. ... not to fell those trees.
[131] Mr Koia made a file note of the meeting afterwards. The file note records Mr Funnell saying that once Hikurangi had completed harvesting the trees he wanted to return to the legal boundary. Mr Koia said his file note of the discussion was correct. He also recorded no undertaking was given by Hikurangi that it would not harvest trees on Mr Funnell’s side of the legal boundary.
[132] In answer to questions from the Court regarding the evidence about Mr Funnell saying Hikurangi was not to harvest the trees, but also saying that once the trees were harvested he wanted to return to the legal boundaries Mr Koia acknowledged he did not think about who was going to harvest the trees before the return to the legal boundary:
Q. Who did you think was going to – the way Mr Funnell was talking about it, when he was talking about the trees being harvested, who did you think he meant doing the harvesting, Hikurangi or him? Or did you not think about it?
A. I didn’t think about it. All I did was listen to what his request was.
[133] Mr Moroney also gave evidence regarding the discussion in June 2013. He said he showed Mr Funnell an A1 sized map of the area which showed the planned harvest area, also the legal boundary between Hikurangi’s property and Negara’s property and the trees in Area C. Also depicted were the planned road and skid site that was to come up to Tuahu Road on Hikurangi's side of the legal boundary, which was be used for loading out the harvested logs. Mr Moroney said he explained to Mr Funnell the Area C trees had been planted by Hikurangi, and therefore Hikurangi intended to harvest them as part of the larger harvesting operation at the Te Marunga forest. Mr Moroney confirmed Mr Koia’s evidence that Mr Funnell said he did not want Hikurangi to harvest any of the trees on his side of the legal boundary. Mr Moroney also confirmed Mr Koia’s evidence that it was Mr Koia who then pointed out to Mr Funnell the way the give-and-take arrangement had been operating, which included grazing livestock on Hikurangi's “taken” land.
[134] Mr Moroney said Mr Funnell referred to the purchase of Waingaromia Station from the Stock family having included all trees on that land. Mr Moroney said the discussion then started to get a little agitated, and because he and Mr Koia were not there to debate boundaries and ownership he decided to move the conversation along by discussing the harvesting process. Mr Moroney’s view was that by the end of the conversation it was agreed by all that once the harvest had been completed the parties would return to the legal boundary. Notwithstanding Mr Funnell and Mr Koia’s evidence on this topic, Mr Moroney says he came away from the discussion believing it was agreed that Hikurangi could harvest the Area C trees.
[135] The file note Mr Koia made after the meeting was given to Mr Ainsworth. Then in August 2013 Hikurangi carried out a further pre-harvest assessment of the Te Marunga trees and the Area C trees. Nothing further happened until 2 September 2013 when Mr Ainsworth sent a letter to Negara giving notice of Hikurangi’s intention to enter on to Negara’s property and fell the Area C trees. The letter asserted Hikurangi’s right to the Area C trees under the give-and-take arrangement and confirmed that Hikurangi was agreeable to returning to the legal boundary after it had completed harvesting the trees. The letter also contained Hikurangi’s offer to discuss purchasing the Area C land and Negara’s land if Mr Funnell was interested in selling to Hikurangi. This was the first time Hikurangi had made written assertion of its rights in the Area C trees.
[136] The following day, 3 September 2013, Mr Funnell sent Mr Moroney a strongly worded email referencing the 1993 to 1994 forestry right discussion when he refused to grant Hikurangi a forestry right, and advising that any attempt by Hikurangi to enter Area C and harvest the disputed trees would be regarded by Negara as trespass and theft. In the email Mr Funnell said he was “astonished” at Mr Ainsworth’s letter. He also said the letter was “totally different” to the discussions he had with Mr Moroney (and Mr Koia) at Waingaromia Station. The email ended with Mr Funnell requesting Hikurangi to send him documentary proof of Hikurangi’s claimed right to Area C.
[137] On 5 September 2013 Mr Moroney emailed Mr Funnell seeking further information regarding the 1993/1994 forestry right discussion. Later the same day Mr Funnell emailed Mr Moroney requesting the legal basis for Hikurangi's asserted
right to the Area C trees. This is where evidence of the communications between the parties in 2013 stopped. Nothing appears to have happened between them until 2015.
[138] The discussion in 2013 between Mr Funnell, Mr Koia and Mr Moroney may have led to confused understandings of what occurred. When they met Mr Funnell believed the Area C trees were Negara’s, whereas Mr Koia and Mr Moroney believed otherwise. Mr Funnell had no cause either to doubt his belief. There is no reason why Mr Koia and Mr Moroney would have doubted what they learned from Hikurangi about ownership of the trees. They must have been surprised by Mr Funnell’s opposing view point. They had gone to the meeting to discuss accessing trees they believed to be Hikurangi's only to learn Mr Funnell objected to this happening. Given the surprise each may have had with the other’s position and the increased agitation which developed it is perhaps no wonder each may have left the meeting still with some confusion and a different impression of the outcome.
[139] Nonetheless, both Mr Funnell and Mr Koia (when under cross-examination) were of the view the meeting ended with Mr Funnell making it clear the Area C trees were not to be removed by Hikurangi. Mr Moroney has a different view of the meeting. I have already found Mr Funnell to be a reliable and credible witness. I have no reason to doubt Mr Koia’s evidence given under cross-examination. Accordingly, I prefer the evidence of Mr Funnell and Mr Koia to that of Mr Moroney. Moreover, I note Mr Moroney’s acknowledgement that he and Mr Koia were not there to talk about who had rights to the trees and when Mr Funnell moved to that topic Mr Moroney attempted to steer him away from it, which suggests to me Mr Moroney may not have been giving a lot of attention to that topic.
[140] Hikurangi argued that a refusal to allow the trees to be harvested is inconsistent with saying that after harvest there would be a return to the legal boundary, which therefore provided reason to disbelieve Mr Funnell when he said he refused to allow Hikurangi to harvest the trees. I do not think that is so. Someone was going to harvest the Area C trees, if not Hikurangi then Negara. If Mr Funnell did say something about a return to the legal boundaries (and has now forgotten doing so) he may have stipulated a return to the legal boundaries as a way of ensuring the future situation was clear cut. I can see him doing that as well refusing to allow Hikurangi to harvest the
trees. If the parties understood there was to be a return to the legal boundaries (presumably extinguishing all give-and-takes) that would make matters clear for the future.
[141] In any event, little turns legally on what was said at the meeting in June 2013 because later in September 2013 Mr Funnell made it very clear in written communications to Hikurangi it was not to remove the Area C trees.
Mr Funnell’s knowledge and conduct in 2015
[142] On 11 February 2015 Hikurangi commenced felling trees in the Te Marunga forest, including the Area C trees. The same day, Gurvin Campbell on behalf of Negara issued a verbal trespass notice to Hikurangi's contractors. Between 12 February and 16 February 2015 Hikurangi made further attempts to fell the Area C trees. All attempts were obstructed by Mr Funnell and Negara’s farm manager. On 16 February 2015 Negara issued a trespass notice to Hikurangi, which stopped any further attempts to fell the remaining trees.
[143] On 18 February 2015 Mr Ainsworth emailed Mr Funnell proposing the parties come to an arrangement whereby the value of the disputed trees could be realised and held on trust pending resolution of the dispute. Hikurangi’s offer to purchase either Area C or all of Negara’s land was renewed. The next day, 19 February 2015 there was a follow up email from Hikurangi to Negara emphasising the need to act quickly to allow the trees to be utilised if extract maximum value was to be extracted from them with the proceeds held in trust until a resolution was achieved. On 20 February Mr Funnell emailed Mr Ainsworth reminding him of the trespass notice and for Hikurangi to keep out of Area C. The email implicitly rejected Hikurangi's proposal. Matters then rested until 1 April 2015 when Hikurangi issued this proceeding. The Area C trees remained where they fell. They have not been touched since and it was common ground at the trial they were no longer salvageable, and therefore of no value.
General comments on Mr Funnell’s evidence
[144] Hikurangi went to some effort to show Mr Funnell’s evidence to be inconsistent and therefore unreliable and lacking in credibility. However, I consider Mr Funnell’s evidence to be more nuanced than Hikurangi would have me believe.
[145] On the topic of give-and-take areas he did not as Hikurangi suggests reject these arrangements entirely. Instead, he acknowledged these arrangements can occur between neighbouring farms where a fence-line does not run along the legal boundary. What he rejected was the idea such arrangements can be transposed to a situation where one party uses the take area for a commercial forest and the other does not. This view is understandable. Forests in New Zealand generally work on a thirty-year cycle. A lot can happen between neighbouring blocks over that time. The circumstances that originally give rise to a give-and-take arrangement can change. Ownership of either or both affected blocks of land can change. Land use on either or both blocks of land can change. The factors that may have supported a legally enforceable give-and-take arrangement can change to the extent it will no longer be capable of enforcement.30 Mr Cowper said as much when he said “take” areas can become an issue close to harvest time. I find it difficult to see how loose informal arrangements over fencing that work for pastoral farming or cropping can be generally applied to forested land, especially when only one of the parties uses a “give” area in this way.
[146] Hikurangi made much in cross-examination of Mr Funnell saying Mr Wisniewski had not mentioned give-and-take arrangements during the 1993/1994 telephone discussion. Mr Funnell said Mr Wisniewski had referred to an “overplanting” in Area C. Mr Funnell had not used this word before in his affidavits. I do not place any weight on that. As mentioned earlier affidavits are prepared by lawyers. The deponents swear to the truth of the contents. That does not mean the contents are expressed exactly how a deponent might express himself or herself.
[147] Secondly, Hikurangi attempted to present Mr Funnell’s reference to “overplanting” as something that was entirely inconsistent with the tenor of either Mr Funnell or Mr Wisniewski’s affidavit evidence. However, that is not the thrust of
30 See legal discussion [7] herein.
what Mr Funnell said. When I asked him to clarify if he meant an accidental overplant he replied he did not know if it was accidental or not all he knew was that Area C was an overplant. This is an accurate statement of what had occurred insofar as it describes trees being planted over the boundary line. Taken in context there was nothing inconsistent with what Mr Funnell was saying. He may have remembered more of the discussion that referred to the trees being planted over the boundary than the basis for that happening. He may have understood this as an “overplant” and then mistakenly attributed the word to Mr Wisniewski.
[148] From Mr Funnell’s perspective I cannot see him being too interested in what the Stock family had agreed with Hikurangi, as an explanation for how the trees came to be in Area C. From his perspective SB Developments had purchased Waingaromia Station on terms that gave it legal ownership of all trees on that land. As far as he was concerned Hikurangi had no claim to the Area C trees. If give-and-take arrangements were mentioned I do not think Mr Funnell would have paid much attention to that topic, which may also explain why he did not remember them being mentioned. For this reason, I am not troubled by his denial of the discussion including reference to the give-and-take arrangements.
General comments on Hikurangi’s evidence
[149] On the other hand, there are some unexplainable silences in Hikurangi's evidence. I have already referred to Hikurangi’s failure to follow up after the discussion in 1993/1994 about the forestry right agreement.
[150] Then there is Hikurangi’s apparent inaction between 2013, when Mr Funnell gave it clear written notice he refuted the give-and-take arrangements on which Hikurangi relied, and 2015 when Hikurangi commenced felling the Area C trees. It had resource consent to fell the trees by January 2013. In the light of Mr Funnell’s written communications in 2013, I would have expected Hikurangi to do something more before it felled the Area C trees. Why it simply waited until 2015 and then acted as it did is hard to fathom. Hikurangi did not address this in its evidence-in-chief.
[151] Mr Ainsworth offered some explanation under cross-examination when he said he had not seen Mr Funnell’s 3 September 2013 email until he received the trespass
notice in 2015. Mr Ainsworth said that was when Hikurangi engaged lawyers. He described the trespass notice as something that was “totally unexpected”. By 2015 Mr Moroney had ceased working for Hikurangi, and the email was discovered when Mr Ainsworth and others searched Mr Moroney’s old email account with Hikurangi. Mr Ainsworth said he knew something about the discussion between Mr Moroney and Mr Funnell in 2013 because Mr Moroney had reported to him, but he did not recall Mr Moroney informing him that Negara would treat removal of the Area C trees as a trespass. I find this surprising because it is obviously significant information that would have been of interest to Hikurangi.
[152] When Mr Moroney was cross-examined about receipt of Mr Funnell’s 3 September 2013 email he said:
At some stage I would have reported to Mr Ainsworth, because that was normal practice. We had management meetings, so yes.
When Mr Moroney was asked whether he showed Mr Ainsworth the email the response was:
I don’t know if I showed him this exactly, no I can’t answer that. But we would have discussed it, I’m sure.
[153] Mr Moroney’s answers under cross-examination seem to me to accord with usual business practice. Mr Ainsworth, as general manager of Hikurangi, was senior to Mr Moroney. Mr Ainsworth had written the letter of 2 September 2013 to Mr Funnell which was sent via email attachment by Mr Moroney to Mr Funnell. At the time Mr Moroney was the Health, Safety and Environmental manager for Hikurangi. Given that Mr Moroney had been charged with responsibility for emailing Mr Ainsworth’s letter to Mr Funnell, I would have expected Mr Moroney to report back to Mr Ainsworth when he received Mr Funnell’s response the next day, particularly about something like a trespass threat. In such circumstances I find it inexplicable that Mr Moroney would have omitted making reference to Mr Funnell’s statement that removal of the Area C trees would be regarded by Negara as an act of theft and trespass.
[154] Accordingly, I have difficulty accepting Mr Ainsworth’s evidence that he did not know about the threat of trespass from Negara until 2015 when the written trespass notice was issued. Given Mr Moroney’s evidence that it was normal practice for him to report to Mr Ainsworth, when it came to something like the 3 September 2013 letter from Mr Funnell, which was a direct response to Mr Ainsworth’s letter of 2 September 2013, I consider Mr Moroney would have made a full report. Accordingly, I have serious reservations about Hikurangi’s evidence on this topic.
[155] Why Hikurangi did nothing until it felled the trees in 2015 remains a mystery to me. By September 2013 it had sufficient information to warrant it taking some action, in particular, seeking legal advice as to its circumstances.
Legal consequences of evidence findings on the equitable estoppel claim
[156] On the disputed issues, I have preferred Mr Funnell’s evidence to the evidence of Hikurangi. This means Hikurangi cannot establish the factual foundations for its equitable estoppel claim.
[157] As a purchaser with no knowledge of Hikurangi’s claim to an unregistered interest in the Area C trees Negara would have taken registration with the full protection of indefeasibility given to it by ss 62 and 182 of the Land Transfer Act 1952. Accordingly, the claim in equitable estoppel can only apply to Negara’s conduct post- registration, which was in 1996.
[158] However, after 1996 there is nothing Hikurangi can point to as proof there was some statement or conduct by Negara that led Hikurangi to believe or expect it could harvest the trees in Area C. The earlier representations and conduct of Mr Stock cannot bind Negara.
[159] Secondly, Hikurangi contends it relied on a mutual assumption the parties would, or would continue to, utilise the give-and-take boundary as opposed to the legal boundary; and Hikurangi was therefore entitled to fell and remove the Hikurangi trees from the Negara property once they reached maturity.
[160] However, whilst their conduct may have been consistent with the first part of the alleged mutual assumption neither the facts nor the law support the second part. Hikurangi cannot prove the existence of a mutual assumption on the part of it and Negara regarding the alleged rights to harvest the Area C trees.31 This would require proof that both parties were thinking the same, they both knew the other was thinking the same and each had expressly or implicitly agreed the basis of their thinking would be the basis of their arrangement.32 All of which is absent here.
[161] Moreover, there is nothing in the way that either SB Developments or Negara conducted itself in relation to the give-and-take areas overall that supports any representation or mutual assumption that either company saw itself as having acquired an enforceable equitable interest in the take areas and Hikurangi having acquired an enforceable equitable interest in the give areas. Nor does those companies’ silence add anything to a possible estoppel. An estoppel can arise from one party’s silence in the face of the other party acting to its detriment, but for that to occur the silent party must know about what the other party believes and is doing in reliance on that belief. Here, for the reasons already given no such knowledge (actual or constructive) on the part of Mr Funnell can be established, there is no factual foothold to support it.33
[162] Mr Funnell has acknowledged that sometime between purchase and registration he became aware the legal boundaries of Waingaromia Station did not always align with the actual fence-lines. There is the fact that from the time Negara took ownership the existing fence-lines remained in place, so that pastoral “take” areas were used by persons grazing Waingaromia Station land until 2006 when that land was subdivided. Also, Area F seemingly remained a “give” area available to Hikurangi, although little was said in evidence about the use of this area. So, to this extent for those areas nothing changed after the sale to Negara. Each party passively went along with this situation insofar as no-one raised any need for change. This could suggest a mutual assumption (to be inferred from each party’s passivity) that those areas would be used in the same way they had been before the sale to Negara.
31 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [68].
32 Vector Gas Ltd v Bay of Plenty Energy Ltd at [68].
33 Once either SB Developments or Negara became registered proprietors of Waingaromia Station proof of knowledge required to establish any equitable claim against either of them could be achieved through constructive or imputed notice if that was all that equity required.
[163] However, with Area C ownership of trees planted by Hikurangi in 1984 passed to SB Developments on registration. There was no fence on the legal boundary, but given this land was used for forestry there was no need for such a fence because there was nothing to be confined within the legal boundary of Waingaromia Station. From the time SB Developments became registered proprietor all that happened was that trees, which by then were owned by SB Developments, were growing on land owned by SB Developments. This is what Mr Funnell knew at the relevant time. Later in 1996 ownership of those trees passed to Negara on it becoming registered proprietor of the land on which those trees grew. Accordingly, the idea that after the sale by the Stock family Area C was still a “give” area is legally incorrect. Registration of new proprietors had cancelled that. After they were registered nothing was done by Hikurangi in relation to Area C that could resurrect this land’s status as a “give” area. By then Area C was no longer a “give” area.
[164] What in fact was happening after registration of the new proprietors was each party proceeded on different assumptions. Hikurangi assumed the trees still belonged to it, and so it let the trees continue to grow on Area C until harvest. SB Developments and later Negara assumed it owned the trees and so it too let the trees continue to grow until harvest. Because at the relevant times the trees were just being left to grow to maturity no-one was doing anything in relation to them.
[165] Thus, no belief or expectation on the part of Hikurangi was created or encouraged by Negara, or by its predecessor SB Developments. Absent such belief or expectation there was nothing on which Hikurangi could rely to its detriment and nothing that could be unconscionably departed from.
[166] After Negara acquired Waingaromia Station the only representation or conduct which Hikurangi identified was the alleged agreement of Mr Funnell at the June 2013 meeting to Hikurangi harvesting the Area C trees. I have rejected this happening. But even if it did nothing turns on this. There is no evidence Hikurangi did anything in reliance on any such agreement between June 2013 and early September 2013. After that on two occasions (3 and 5 September 2013) Mr Funnell emailed Hikurangi rejecting their claim to the Area C trees. Absent reliance and before revocation, any representation given or mutual assumption created could be later revoked.
[167] Thirdly, Hikurangi’s evidence regarding reliance does not relate to the time when Negara owned Area C. The bulk of expenditure and other effort relating to the trees was made by Hikurangi when the Stock family owned Waingaromia Station. Hikurangi’s own evidence is that after the thinning in early December 1992 nothing was done to the trees until 2001 and 2008, which was no more than a pre-harvest assessment. Those pre-harvest assessments are not enough to demonstrate reliance that supports an estoppel. The same applies to the 2013 pre-harvest assessment.
[168] Hikurangi also said through its witness Mr Wisniewski that had it known Mr Funnell rejected its claim to the Area C trees it would have sought to assert its legal rights to those trees earlier on. However, it never identified what it would have done. The findings I have reached satisfy me it had no legal rights that it could have asserted earlier on. This is not a case where a party had a legal remedy which it has yielded by failing to resort to it earlier on in reliance on a representation from the other party. In short, Hikurangi could never have enforced its alleged rights against either SB Developments or Negara.
[169] One case that is marginally similar to the present case is Halliday v Bank of New Zealand.34 The Hallidays sold a farm which contained several forestry blocks. The trees were expressly not included in the sale of the farm, but were to remain in the ownership of the vendors (the Hallidays). The Bank of New Zealand (BNZ) held a registered mortgage over the farm. It was advised of the agreement relating to the trees on two separate occasions. The vendors (the Hallidays) later lodged a caveat against the title to the land, claiming an interest pursuant to their agreement with the purchasers regarding the forestry rights. The purchasers eventually defaulted in their mortgage payments to the BNZ, and so the BNZ wished to conduct a mortgagee sale. It applied to the Court to have the Hallidays’ caveat removed.
[170] The BNZ argued that its interest as mortgagee was indefeasible. Mallon J recognised that this did not prevent a claim in equity. Citing Hinde McMorland & Sim on Land Law in New Zealand,35 she commented:36
34 Halliday v Bank of New Zealand [2012] NZHC 3099, [2013] 1 NZLR 279.
35 Hinde McMorland & Sim on Land Law in New Zealand (loose-leaf ed, LexisNexis) at [9.052].
36 At [55].
A claim in personam can be made by a party who can establish against the registered proprietor a recognised cause of action at law in equity that involves unconscionable conduct relating to the land. It is here that I consider the Hallidays’ claim, that the Bank is estopped from asserting that the trees are not chattels, is relevant. For the Hallidays it is submitted that estoppel by convention applies. The Bank's submissions did not address this. They focussed instead on the question of whether the trees were a chattel, whether the forestry right agreement was enforceable, and the indefeasibility of the mortgagee's power of sale.
[171] Mallon J then went on to consider whether the Hallidays had an arguable claim to the unregistered interest they claimed. She held that BNZ had actual knowledge of the Hallidays’ unregistered interest in the trees, given that an employee of BNZ was explicitly told of the agreement at the time of the purchase and later when it carried out a valuation of the property. Mallon J commented:37
It is arguable that there was a common understanding between the Bank (arguably at least through Mr Connor), the [purchasers] and the Hallidays, that the Hallidays owned the trees. The Hallidays acted in reliance on that common understanding to their detriment when they incurred the on-going costs in managing the trees after the farm was sold. It is arguable that it is now unconscionable for the Bank to exercise the power of sale without recognising the (arguable) common understanding.
[172] Mallon J declined to remove the caveat, as she found the Hallidays had an arguable claim to the trees. The judgment demonstrates how equitable estoppel fits into the indefeasibility argument. However, where Halliday differs from the present case is in the fact the BNZ actually knew the Hallidays retained an interest in trees on land they had sold. Their interest was further protected by the Hallidays lodging a caveat to protect their interest. Moreover, the Hallidays acted in reliance on the common understanding by incurring expenditure on the trees. Given all the circumstances it is understandable Mallon J found it would be unconscionable for the BNZ to go back on that understanding.
Constructive trust
[173] The fundamental elements underlying a constructive trust is that one party has been unjustly enriched by the efforts of another party in circumstances where it would be unconscionable to allow the enriched party to retain all the benefits of the
37 At [57].
enrichment.38 Thus, if party A improves party B’s land equity may hold that party B holds the land or an interest in the land on trust for party A. However, before equity does this it needs to be shown that the enriched party knew what was happening and allowed it to happen. This is where Hikurangi's constructive trust claim fails for much the same reasons the equitable estoppel claim has failed. The claim relies on proof that: either Mr Funnell knew Hikurangi had planted Area C while it was owned by the Stock family and any rights this conduct gave rise to survived the sale from the Stock family; or Mr Funnell knew and allowed Hikurangi to do something after the sale from the Stock family that improved the value of Area C. Without this the constructive trust claim cannot succeed. The factual findings I have already made mean this claim cannot succeed.
Breach of the give-and-take arrangements
[174] With this claim Hikurangi needs to establish a contractual basis for the give- and-take arrangements which was transferred to SB Developments and later Negara on those companies acquiring Waingaromia Station.
[175] In its closing address Hikurangi acknowledged this claim faced legal problems. The factual findings that I have made in relation to the application of s 182 of the Land Transfer Act 1952 and the equitable estoppel claim also create problems for Hikurangi here.
[176] Any contract between Hikurangi and the Stock family regarding give-and-take arrangements could not survive the effect of s 182 of the Land Transfer Act 1952. To enforce those arrangements against Negara, Hikurangi would have to establish a new contract arose after Negara acquired Waingaromia Station. There is no factual basis for such a contract. Moreover, the Area C trees are part of the land on which they grow.39 With this claim Hikurangi is essentially claiming a contractual right over the Area C land, which should therefore have been recorded in writing.40 Everything about this claim is misconceived.
38 See discussion in Hayward v Giordani [1983] NZLR 140 (CA) at 147.
39 Land Transfer Act 1952, s 2.
Claim for declaration the trespass notice issued by Negara is of no effect
[177] Hikurangi claims the trespass notice issued by Negara is invalid and of no effect. Hikurangi’s failure to establish its other claims means this claim must also fail.
Claim under s 323 of the Property Law Act 2007
[178] Hikurangi claims in the alternative that the Area C trees are a wrongly placed structure under s 321 of the Property Law Act 2007, and so it claims relief under s 323 of that Act.
[179] Under s 4 of the Property Law Act 2007 “structure” includes any “plantation”. Hikurangi argues the Area C trees are a plantation and therefore a structure for the purposes of ss 321 and 323.
[180] However, s 367(3)(b)(ii) of the Property Law Act 2007 provides that no alteration in the law affected by this legislation affects anything done or suffered before 1 January 2008. Here even if the trees were a wrongly placed structure (which Negara denies) they were put in place in 1984, which seems to me to be the time for making the assessment. However, that places what occurred outside the ambit of s 367(3)(b)(ii).
[181] Because the Property Law Act 1952, which applied at the time, does not treat a plantation (or for that matter any trees) as a structure there is no possibility of relief under that legislation continuing to be available despite repeal.
[182] Accordingly, the claim for relief under s 323 of the Property Law Act 2007 must fail.
Negara’s counterclaim
[183] Negara makes two claims against Hikurangi: (a) a claim in the tort of trespass;
(b) a claim for a declaration that Hikurangi has committed the offence of trespass under the Trespass Act 1980. The focus of the claim is on Hikurangi’s actions in 2015 when it entered Area C and felled the trees.
[184] Negara contends that Hikurangi’s actions have caused Negara to lose the value of the felled trees and the harvesting process has damaged Area C to the point where this land is presently unusable. The felled trees need to be cleared and disposed of.
[185] Regarding the tortious claim, Negara seeks relief in the form of compensatory damages for $45,000 for the lost opportunity to harvest the trees; compensatory damages of $60,456 (or such sum as the Court determines) for damage caused to Area C; and an unspecified sum of exemplary damages.
[186] Hikurangi has defended these claims on the grounds it was entitled to enter Area C and harvest the trees under its give-and-take rights.
Trespass in tort
[187] The elements and purpose of the tort of trespass are explained in The Law of Torts in New Zealand.41 Trespass is an unjustified direct interference with land in the possession of another. The purpose of the tort is: (a) to compensate for the harm suffered; (b) to recognise and vindicate private property rights; and (c) to punish and deter wilful acts of interference. There is no mens rea element in the tort of trespass. An innocent or mistaken trespass is still an actionable trespass, although it will be reflected in a lower damages award than would be given for the intentional commission of this tort. Because trees are part of land any interference with trees growing on land is a trespass to land.
[188] In the present case, the rejection of Hikurangi’s claims to an unregistered right in the Area C trees means it has no defence to the trespass claim. Its actions in 2015 when it entered Area C and felled the trees amount to trespass. The key issue here is the quantum of damages.
[189] Trespass to land does not require proof of damage. Here there is measurable loss. First, as to the felling of the trees Negara says it has lost $45,000 through being denied the opportunity to harvest and sell the trees. This figure is less than Hikurangi claimed for the loss of the trees. Its assessment of loss was between $60,289.48 and
$ 61,318.38 with the higher sum including compensation that was paid to a contractor who was unable to “load-out”. At the hearing Negara accounted for its estimate being lower on the ground Hikurangi, as a big forestry company, could command better prices for its logs than could Negara.
[190] Hikurangi never pleaded failure to mitigate loss as part of its defence to the counterclaim. Thus, there was no argument on whether failure to mitigate loss is available in a trespass to land claim. Where a damages claim is based upon physical damage to the land or as is the case here trees grown commercially on the land it is hard to see why a plaintiff should not be under a duty to mitigate loss.
[191] The stance taken by Negara is a good example of a failure to mitigate loss. Whilst I can understand Negara’s attitude to Hikurangi by 2015, plaintiffs should act in an economically rational way when it comes to dealing with commercial loss. However, Hikurangi’s omission to plead Negara’s failure to mitigate loss means it is not for consideration.42
[192] Hikurangi did not dispute Negara’s quantification of the loss of value in the trees. The sum sought is less than Hikurangi claimed for the same loss. I am satisfied Negara is entitled to recover $45,000 in damages for the loss of the trees.
[193] Next, there is making good the damage to Area C from the felling process. At the hearing the idea that Hikurangi, which has the necessary equipment, could enter Area C and tidy it so it could be used again for forestry was mooted. The other option would be for Negara to engage a contractor to do the job with the costs borne by Hikurangi. I consider the parties should have the option of considering further whether Hikurangi could attend to this exercise. This does not mean that Negara must work with Hikurangi. If Negara does not want to do so it should obtain estimates of what it would cost a third party to carry out this exercise.
42 Geest plc v Lansiquot [2002] UK PC 48 [2003] 1 LRC 616 at 622-623; Roper v Johnson (1873)
L.R 8C. P. 167.
[194] Regarding the claim for exemplary damages in Wright v Bhosale Hinton J recognised the longstanding common law principle that a Court may award exemplary damages in appropriate circumstances:43
Exemplary damages may be appropriate where the defendant’s conduct is so serious as to be deserving of punishment and where compensatory damages are not sufficient for his purpose.
[195] Her Honour went on to cite the threshold endorsed by the majority of the Supreme Court in Couch:44
Outrageousness is not a satisfactory sole criterion. The concept lacks objective content and does not contain sufficient certainty or predictability. Exemplary damages should be confined to torts which are committed intentionally or with subjective recklessness, which is the close moral equivalent of intention.
[196] The Court of Appeal upheld Justice Hinton’s assessment, noting further that:45
Plainly the focal point of the inquiry is not the committing of the tort per se (whether in negligence or otherwise), but the subjective appreciation of the risk of wrongful harm.
[197] In Peng v Li Justice Fogarty adopted the following three-step assessment from
Couch:46
(a) Has there been commission of an actionable tort?
(b) Did the perpetrator act sufficiently outrageously?
(c) Was the perpetrator at least subjectively-reckless?
[198] Here the tort of trespass was committed.
[199] From the time of the telephone discussion in either 1993 or 1994 Hikurangi knew Mr Funnell had refused it a forestry right over Area C. I have rejected evidence it believed he agreed to follow the give and take arrangements agreed with the Stock family, so it cannot rely on that belief.
43 Wright v Bhosale [2015] NZHC 3367, [2016] NZAR 335 at [142].
44 Couch v Attorney-General (No 2) [2010] NZSC 27, [2010] 3 NZLR 149 at [178].
45 Wright v Bhosale [2016] NZCA 593, [2017] NZAR 203 at [53].
46 Peng v Li [2015] NZHC 2323 at [163].
[200] From 3 and 5 September 2013 when Mr Funnell emailed Hikurangi asserting Negara’s ownership of the Area C trees Hikurangi was on notice that at the very least its claim to those trees was disputed. I consider the emails Mr Funnell sent to and received by Mr Moroney to be sufficient notice to Hikurangi of this state of affairs. I have expressed my concerns about Mr Ainsworth’s evidence that he did not know about those emails until 2015. Mr Moroney was the person charged with the task of emailing Mr Ainsworth’s letter to Mr Funnell. In such circumstances, I consider it was reasonable for Mr Funnell to reply to Mr Moroney by email and this was sufficient to place Hikurangi on notice.
[201] Then there is what occurred in 2015 when Hikurangi started felling the trees on 12 September 2015. Negara objected the same day but the felling continued until Negara took steps to physically stop the felling process and then issued a legal trespass notice. Against that background I consider Hikurangi did act outrageously.
[202] Hikurangi appears to me to have acted in a misguided fashion that was perhaps influenced by its dealings with its other neighbours, who were ready to recognise give and take arrangements. There may also have been a reluctance to acknowledge the legal fragility of give-and-take arrangements. Nonetheless, given the facts as I have found them to be I consider that it was subjectively reckless for Hikurangi to continue to assert ownership of the Area C trees up to the time the legal trespass notice was issued.
[203] Mr Funnell had been involved with Waingaromia Station from late December 1992. The fact the land was sold in 1992 cannot have passed without notice by Hikurangi. When Negara subdivided Waingaromia Station in 2006 that must also have been obvious to Hikurangi. Apart from the contacts identified in evidence in 1993 or 1994, then in 2013 and later 2015 there was seemingly no contact between Hikurangi on the one hand and the companies with which Mr Funnell was involved on the other. Given Hikurangi was relying on an undocumented and unregistered give-and-take arrangement I consider Hikurangi should have done more than it did to ascertain whether it still held any rights in the Area C trees. To let matters simply run on, as Hikurangi seemingly did, also strikes me as reckless. I do not consider Negara had to take any steps to confirm its ownership of the Area C trees because as a registered
proprietor of land without knowledge of Hikurangi’s claims there was no reason for Negara to make such inquiries. Accordingly, I find Negara is entitled to an award of exemplary damages.
[204] In assessing the quantum of exemplary damages, I find the principles outlined by Hammond J in McDermott v Wallace to be helpful:47
(a) The claimant must be the victim of punishable behaviour;
(b) There should be moderation in making awards;
(c) The means of the parties should be considered;
(d) Other awards to the claimant are relevant;
(e) Regard must be had to the imposition of any criminal penalty;
(f) The conduct of the parties is relevant, including that of the claimant.
[205] Taking into account the quantum of damages referred to in the schedule in McDermott v Wallace and the recent decisions of this Court which have applied Hammond J’s principles I consider a sum somewhere in the vicinity of $5000 to
$10,000 would be appropriate.48 There may need to be some adjustment for inflation from Hammond J’s schedule, which was written in 2005. Accordingly, I consider an award in the sum of $7500 is a proper recognition of what occurred here.
Criminal trespass
[206] Courts have traditionally proceeded with great caution when exercising the discretion to issue declarations on whether certain conduct amounts or will amount to the commission of a criminal office or not. This is because to make such a declaration risks usurping the function of the criminal court (including the function of a Judge or a jury to find the facts).49 Accordingly, the discretion is sparingly exercised.50
47 McDermott v Wallace [2005] NZCA 144; [2005] 3 NZLR 661 (CA) at [94]- [102].
48 J v J [2013] NZHC 1512; Jensen v Rameka [2014] NZHC 1720.
49 See Ambrose v Attorney-General [2011] NZHC 1654; [2012] NZAR 23 (HC) at [36]; Application by Telephone Information Ltd HC Auckland M1233/93, 13 December 1993; R v Sloan [1989] NZHC 406; [1990] 1 NZLR 474 (HC).
50 Burrell Demolition Limited v Wellington Regional Council CA161/01, 18 March 2002 at [15].
[207] Here Negara seeks a declaration that Hikurangi has committed a trespass under the Trespass Act 1980. However, the actual trespassers are the persons who went onto Area C and felled the trees. I acknowledge they may have done so at Hikurangi’s direction. However, it is not clear to me if someone can be a party to trespass in the way s 66 of the Crimes Act 1961 imposes criminal liability on persons who fit the description of being parties to an offence. Negara has not addressed this issue.
[208] In circumstances where Negara seeks the Court to make an order that is outside the usual I consider it is incumbent on Negara to provide a well-reasoned argument to show why the Court should do so. Here Negara has provided no argument for why its tortious action in trespass is not sufficient to deal with Hikurangi’s trespass. There is no argument to show how a registered company that has done no more than direct natural persons to carry out a trespass can be declared to have contravened the Trespass Act. There is no argument to explain why any question of criminal trespass cannot be left to a criminal court to determine. It was for Negara to establish the circumstances of the trespass it suffered are so exceptional that they warrant this Court departing from the usual cautious approach to make the declaration now sought. Negara has not done so. Accordingly, I decline to make such declaration.
Summary
[209] Before SB Developments and later Negara became registered proprietors of Waingaromia Station, Mr Funnell had no knowledge of Hikurangi’s claimed unregistered interest in the Area C trees, nor was he wilfully blind to such interest. Accordingly, registration of SB Developments and later Negara defeated any unregistered interest that Hikurangi may have previously had in those trees. Furthermore, on registration ownership of trees growing on Area C became vested in the registered owners.
[210] Nothing Mr Funnell did after registration could create for Hikurangi any fresh interest in the Area C trees, either by way of equitable estoppel, constructive trust or contract.
[211] The Area C trees are not a wrongly placed structure in terms of s 321 of the Property Law Act 2007 and so no relief is available under s 323 of that Act.
[212] Negara is awarded compensatory and exemplary damages.
[213] Hikurangi’s actions in entering Area C and attempting to harvest the trees constituted a trespass in tort which gives rise to total damages in the sum of $52,500 as well as the eventual quantum for damages in respect of the damage done to Area C.
[214] Negara’s application for a declaration Hikurangi has committed a criminal trespass is declined as the circumstances are not exceptional and so do not warrant this court usurping the function of a criminal court to deal with contraventions of the Trespass Act.
Result
[215] Hikurangi’s claims against Negara are dismissed and judgment on those claims is entered for Negara.
[216] Negara’s counterclaim in the tort of trespass against Hikurangi is successful and judgment is entered for Negara on that claim.
[217] Negara is awarded compensatory damages in the trespass claim in the sum of
$45,000.
[218] The parties have leave to adduce further evidence and submissions on quantifying the damage which removal of trees by Hikurangi has done to Area C.
[219] Negara is awarded exemplary damages in the sum of $7500.
[220] Negara’s application for a declaration Hikurangi has committed a trespass under the Trespass Act is declined and on that application judgment is entered for Hikurangi.
Costs
[221] Negara sought indemnity costs. However, until delivery of judgment the parties have not been well placed to make submissions on costs.
[222] The general principle is that costs follow the event.
[223] Awards of increased or indemnity costs are made where justified. Here the claims by Hikurangi were well within the jurisdiction of the District Court. This is relevant to an award of costs in this Court. If the parties are unable to agree costs between themselves I consider I shall be better informed regarding costs if the parties file memoranda on costs. Negara should file its memorandum within 10 working days of delivery of this judgment with Hikurangi having a further 10 working days to file its submissions in response. Negara may file submissions in reply if those are required.
Duffy J
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