Bethell v Rickard [2013] NZCA 68 (22 March 2013)

Last Updated: 27 March 2013

IN THE COURT OF APPEAL OF NEW ZEALAND

CA215/2012 [2013] NZCA 68

BETWEEN VICTORIA ELIZABETH BETHELL Appellant

AND CHRISTINE ANNE RICKARD Respondent

Hearing: 11 March 2013

Court: Harrison, Stevens and Priestley JJ

Counsel: S A Grant for Appellant R J Thompson for Respondent

Judgment: 22 March 2013 at 11.30 am

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The appellant must pay the respondent costs for a standard appeal on a band B basis (plus an allowance for increased costs with an uplift of 25 per cent) and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Stevens J)

Introduction

[1] The issue in this appeal is whether Peters J erred in making an order that a caveat not lapse.[1] We have concluded that the appeal is without merit and should be dismissed for the reasons that follow.

Background

[2] The dispute concerns a 10 acre block on a farm of some 815 acres. The farm is located on the southern side of Bethells Road, west of Auckland. It has been owned by the Bethell family for many generations.
[3] John Bethell died on 10 December 1985. Under his will his son Ross became the registered proprietor of the farm subject to cls 7 and 8. Those clauses related to the respondent, Christine Rickard, who is Mr Bethell’s daughter and Ross’ sister. Clause 7 directed the executors that:

... a portion of the land contained in [the farm property] and comprising ten (10) acres more or less together with the camp and shop buildings thereon (if any) is to be and is hereby let to ... [Ms Rickard] during her lifetime at an annual rental of ONE DOLLAR ($1.00) ...

[4] The effect of cl 7 was to grant Ms Rickard a life interest in a portion of the farm property comprising 10 acres more or less together with any camp and shop buildings thereon.
[5] Clause 8 directed the executors as follows:

8. I DIRECT that the area of land behind the McKAY sub-division be divided so that the following areas are transferred to the person named hereunder:-

(a) Ten acres to ... [Ms Rickard] being the same land referred to in Clause 7 herein and if so sub-divided [off] my main block Clause 7 need no longer have any effect.

...

[6] Thus cl 8 required the executors to subdivide and then transfer to Ms Rickard 10 acres of the farm property behind the McKay subdivision. If the area was subdivided off the main block, the life interest conferred by cl 7 would be extinguished.
[7] The will also contained in cl 9 a devise of property comprising 2.5 acres (Lot 5) that had been sub-divided into sections to be sold with the residue of the proceeds being held on trust in equal shares for the four children including Ross and Ms Rickard.
[8] Relevant to the provision for the transfer of the 10 acres of farm property to Ms Rickard in cl 8 and the bequest relating to Lot 5 in cl 9, the testator provided in cl 10 as follows:

10. If after a period of three months from the Grant of Probate in my Estate approvals for the sub-divisions in Clause 8 herein have not been given whether or not the Executors have lodged applications or even instructed a surveyor or approached the Council then I DIRECT my land property be distributed as follows:-

(a) to my son ROSS McKAY BETHELL my farm property comprising 815 acres absolutely.

...

(c) to my daughter [Ms Rickard] my 2.5 acres (Lot 5) and half the sale proceeds from the sale of my remaining sub-division sections.

...

[9] The implementation of the above provisions of the will plainly created difficulties for the executors/trustees. The three month time limit in cl 10 passed without the approvals for the subdivisions in cl 8 being obtained. Additionally, doubts arose about the construction of parts of the will. Accordingly the beneficiaries and the executors/trustees decided in October 1987 to enter into a deed of family arrangement (the deed).
[10] The purpose of the deed is set out in the preamble as follows:

AND WHEREAS doubts have arisen as to the construction of the Will and it is alleged by the Beneficiaries and Trustees that the operation of the said Will may not provide the Beneficiaries with the bequests as the Beneficiaries understood the Testator intended each of the Beneficiaries to receive

AND WHEREAS it is the express wish of all the Beneficiaries that the Testator’s testamentary wishes be altered or modified as set out herein in place of the provisions of the said Will as Probated.

[11] Clause 6(i) of the deed related to Ms Rickard and provided as follows:

6. THAT the ... will shall be amended/clarified as set out herein:

(i) That ... Ross ... shall receive the principal farm property more particularly described in Certificate of Title 6B/653 subject to [Ms Rickard] being entitled to call for, at any time, an allotment up to 10 acres in the area known as the camping grounds near the main road and ... Ross ... shall sign any such survey plans, Memorandum of Transfer or other documentation to enable ... [Ms Rickard] to receive the said area, subject to the local authority’s approval provided that such approval can be obtained at any time during the period of the joint lives of ... [Ross and Ms Rickard].

[12] There is no dispute as to the general location of the camp ground area. However, it transpires that the area of the camp ground itself comprises five or six acres, not 10. What is in dispute is whether cl 6(i) entitled Ms Rickard to 10 acres of farm property in the vicinity of the camp ground area, or whether she is instead entitled only to the five or six acres that make up the camp ground area. Legal proceedings have been filed in the High Court to determine this, and related, issues.
[13] There is some uncertainty as to when Ms Rickard first called on Ross for her entitlement. It is possible that this occurred in about 1999.[2] However, by 2005 both Ross and Ms Rickard had instructed solicitors.
[14] On 23 June 2005 Ms Rickard lodged a caveat against the entire farm property. On 22 September 2005, Ross’ lawyers suggested that she withdraw that caveat and replace it with a caveat restricted to the area of the land claimed by Ms Rickard. This new caveat, which is the subject of this appeal, was lodged on 12 September 2006.
[15] In May 2007, Ms Rickard obtained resource consent from Waitakere City Council to subdivide the farm property into two lots, one being the 10 acre area claimed by Ms Rickard, and the other being the balance of the farm property.
[16] Ross died in October 2008. His widow, Victoria Bethell (Mrs Bethell), is now the registered proprietor of the land in her capacity as trustee and executrix of his estate.
[17] A complicating factor is that Ross’ former wife, Maria, lives in a house situated on the 10 acre block in question. In 2004, Ross agreed that Maria was entitled to a life interest in the house and its curtilage.
[18] It was against this background that Ms Rickard brought an application in the High Court seeking an order that the caveat lodged on 12 September 2006 not lapse.

High Court decision

[19] Before Peters J, Ms Rickard contended that she had a caveatable interest in the full 10 acres of land and that this interest arose from cl 6(i) of the deed. Mrs Bethell argued that Ms Rickard did not have a caveatable interest. First, it was submitted that cl 6(i) only entitled Ms Rickard to the five or six acre camp ground area. Peters J rejected this argument, finding that Ms Rickard had an arguable case that cl 6(i) entitled her to 10 acres of land. The Judge held:[3]

On the first issue, I am satisfied that the applicant has an arguable case that clause 6(i) entitles her to 10 acres, provided it is in the camp ground area. The principal arguments in favour of the applicant’s construction of clause 6(i) are first that the clause entitles the applicant to call for an allotment “up to 10 acres”. It was open to the parties to provide that the applicant might call for an allotment of the camp ground area, and no more or less, if that was what they intended. In addition, and as counsel for the applicant submitted, an entitlement to 10 acres is consistent with clause 8 of the will and with the life interest that clause 7 of the will conferred, and perhaps still confers, on the applicant.

[20] Second, Mrs Bethell submitted that Ms Rickard did not have a caveatable interest at the time she lodged her caveat. That is because the caveat was lodged in September 2006 but Ms Rickard did not obtain resource consent until May 2007. Peters J found that this was not fatal to Ms Rickard’s claim because she had lodged the caveat in its present form in 2006 at the suggestion of Ross’ solicitors.[4] At that point there was no suggestion that any issue would be taken as to the lack of resource consent to subdivide. Accordingly, it was arguable that Mrs Bethell was now estopped from relying on lack of resource consent at the relevant time.
[21] Ms Rickard challenges both findings on appeal to this Court.

Relevant law

[22] This Court has held that in order to sustain a caveat, the caveator must show a reasonably arguable case in support of the interest claimed.[5] An order for removal will not be made unless it is “patently clear” that the caveat cannot be maintained either because there was no valid ground for lodging it or because the ground upon which it was lodged no longer applies.[6] In circumstances where there is conflict between the affidavits, the Court will generally prefer the evidence of the caveator.
[23] Despite this, the Court retains a discretion to remove the caveat if removal will not prejudice the interests of the caveator.[7]

Ground 1: Interpretation of cl 6(i) of the deed

Submissions of the parties

[24] For Mrs Bethell, Ms Grant submitted that the High Court erred in finding that Ms Rickard had a reasonably arguable case under the deed for an entitlement to 10 acres of land. Ms Grant submitted on her behalf that, because there were no disputes of fact for resolution in this proceeding, the High Court should have determined the meaning of cl 6(i) of the deed.[8]
[25] Her submission was that the High Court on an application to remove a caveat, with the benefit of affidavits from both sides and provision of all relevant documents, was in as good a position as it would have been following trial to determine the correct construction of cl 6(i). She advanced two reasons in support of her proposed interpretation. First, the plain and ordinary meaning of cl 6(i) is that Ms Rickard’s entitlement is limited to the area within the camping grounds. Secondly, Ms Rickard’s construction cannot be correct because if the area she is entitled to is 10 acres, the words “up to” and the phrase “camping grounds area” would both be rendered otiose. Accordingly, counsel submitted that Ms Rickard has claimed an interest wider than that which she is entitled. For that reason the caveat is defective and should lapse.[9]
[26] Mr Thompson for Ms Rickard rejected the claim that cl 6(i) of the deed can only reasonably be interpreted as entitling her to call for an area of land the size of the campgrounds. He argued that the clause, read in isolation, can reasonably be interpreted to mean that she is entitled to an area of land of up to 10 acres in the vicinity of the area known as the camping grounds. He submitted that it would be inappropriate to allow the caveat to lapse at this stage because there are factual disputes particularly relating to the background and context that require resolution at trial. These include the provisions made in the will and what was meant by the wording used in the deed. In order to interpret cl 6(i) the Court will require reference to the background events leading to the execution of the deed and the detail of those events is not yet before the Court.

Our assessment

[27] As discussed, the test for sustaining a caveat requires only that the caveator establish a reasonably arguable case in support of the interest in land claimed. This test recognises that applications to maintain a caveat are not the appropriate forum to determine genuinely disputed questions of fact or law.[10]
[28] We reject Ms Grant’s submissions. We are satisfied that Ms Rickard has a reasonably arguable case that cl 6(i) of the deed entitles her to 10 acres of land to be located in the area known as the camping grounds. We agree with the reasons given by Peters J as set out at [19] above. We would only add that it may be significant that the drafter in cl 6(i) used the phrase “in the area” rather than “within the area”. Moreover, the existence of the “drop dead” provision in cl 10 of the will is unlikely to change the position regarding Ms Rickard’s interest under the deed. At the very least the meaning of the clause is ambiguous.
[29] We also agree with the submission advanced by Mr Thompson that it will be important to consider background events leading to the execution of the deed in order to be able to construe the meaning of cl 6(i). The trial court will need to assess the “background knowledge which would reasonably have been available to the parties”.[11] An application for removal of a caveat is a summary procedure to determine the arguability of a claim and not its merits, which is the function of a trial. We accept that in some cases the meaning of a disputed contractual provision will be plain and it is unnecessary to resort to extraneous circumstances. If so, a removal order effectively determining the final issue may be appropriate.
[30] However, in a case involving devises of land under a will, subsequently varied by a deed of family arrangement, the matrix of fact, famously referred to by Lord Wilberforce,[12] is likely to have particular relevance. Where a contractual provision is capable of conflicting interpretations, it will be important for the Court at trial to “be aware of ... all the facts or circumstances known to and likely to be operating on the parties’ minds”.[13] Ms Rickard’s claim clearly falls into that category. The trial judge will need to be particularly cognisant of contextual matters relating to the family and personal circumstances affecting the parties.
[31] Accordingly we consider that there will be factual disputes which will require resolution at trial including what objectively was meant and understood by the trustees and the family when the wording in cl 6(i) of the deed referred to Ms Rickard’s entitlement. Certainly from Mrs Bethell’s perspective the case could not be described as clear cut in her favour. We therefore dismiss this ground of the appeal.

Ground 2: No caveatable interest as any interest was conditional and the condition was not complied with

Submissions of the parties

[32] Ms Grant submitted that the Judge erred in finding that Ms Rickard had an arguable case for the interest claimed on the basis that she had obtained the necessary resource consent. Ms Grant contended that the requirement to obtain resource consent was a condition precedent to Ms Rickard’s right to call for an interest in the land. The condition was for Ross’ benefit, to ensure that the land could be transferred immediately and that Ross would be able to exercise oversight as to the form of the resource consent. Accordingly, until such time as the resource consent was obtained, Ms Rickard had a personal covenant only, and therefore had no caveatable interest in the land.[14]
[33] Ms Grant submitted that, as resource consent had not yet been obtained when the caveat was lodged in 2006, Ms Rickard did not have a caveatable interest in the land. Further, the relevant caveatable interest must exist at the time when the caveat is lodged; a future or contingent interest cannot be relied on.
[34] A subsidiary argument advanced by Ms Grant was that the caveat, in relation to an area of land of around 10 acres, had overreached the caveator’s entitlement. She submitted that an area of land of no more than six acres related to the campground site should have been included in the caveat. The excessive claim made the caveat invalid.
[35] Mr Thompson disputed that Ms Rickard’s, caveatable interest was conditional and did not arise until she had actually obtained resource consent. He argued that, on a correct view of cl 6(i), the only relevant “condition precedent” was the calling of the entitlement. Once Ms Rickard had taken that step, she had an equitable and caveatable interest in the 10 acres pending the approval of the local council. Mr Thompson contended that Mrs Bethell’s argument is based on an incorrect view of Philpott v NZI Bank Ltd. In that case, the bank, unlike Ms Rickard, had never called for its entitlement. The Court found that no equitable interest existed and Mr Philpott was free to deal with the properties. Thus that case is clearly distinguishable from the present appeal.
[36] Furthermore, Mr Thompson submitted that there is no proper basis for Mrs Bethell to claim the resource consent condition was not satisfied. Ross was required to co-operate and do everything necessary to effect the transfer. Mrs Bethell cannot now rely on Ross’ own breaches of the deed and subsequent death to argue that Ms Rickard lost a caveatable interest.

Our assessment

[37] We reject the submission that Ms Rickard had no caveatable interest on the basis that any interest was conditional and the condition was not complied with. The deed provided for the allotment of up to 10 acres of farm land which Ms Rickard was entitled “to call for, at any time”. To facilitate such allotment Ross was required to sign such survey plans, memorandum of transfer or other documentation to enable Ms Rickard to receive the land. Clause 6(i) added the words “subject to the local authority’s approval, provided that such approval can be obtained at any time during the period of the joint lives of [Ross and Ms Rickard]”.
[38] The requirement that Ms Rickard was to “call for” the allotment does not assist Mrs Bethell. By the time the caveat was lodged in September 2005, it seems clear that the call requirement had been met and that condition satisfied.
[39] Neither does the case of Philpott v NZI Bank Ltd assist Mrs Bethell. There Mr Philpott was the registered proprietor of certain land and entered into banking terms which entitled the bank to require an “alternative or additional security for the bank”. The bank lodged caveats against property owned by Mr Philpott claiming an estate or interest as mortgagee by virtue of the banking terms. This Court held that the caveats should be removed on the basis that the bank had no interest in the land until it requested and required security over the land concerned. Thus the case is entirely distinguishable from the present whereby cl 6(i) entitled Ms Rickard to call, at any time, for an allotment up to 10 acres of farmland. The fact that such allotment was subject to co-operation and the signing of documentation by Ross, and subject to approval by the local authority, did not alter the fact that Ms Rickard had at the very least an equitable interest in land.
[40] Although we do not need to resolve the point, we see merit in Mr Thompson’s submission that the condition relating to local authority approval is aptly characterised as a condition subsequent. In any event the presence of the condition in cl 6(i) does not mean that the interest is not capable of sustaining a caveat.
[41] We reject Ms Grant’s submission that the caveat is invalid because it claimed an area of land greater than six acres. Whether Ms Rickard is entitled to land amounting to 10 acres will only be determined at trial. There is no merit in the point. Her interest in the land of whatever size should be protected in the meantime.
[42] For completeness we would add that under cl 7 of the will Ms Rickard acquired a life interest in 10 acres of farmland. We note that the deed does not purport to deal directly with that life interest. We consider it is arguable that the life interest arising under cl 7 of the will was itself a sufficient basis for sustaining the caveat.
[43] We would only add that we disagree with the Judge’s suggestion that an estoppel argument was available to Ms Rickard to prevent Mrs Bethell from relying on a lack of resource consent at the relevant time.[15] On our view of the interest in land arising under cl 6(i) of the deed, the issue of estoppel simply does not arise. Any question about Ross’ conduct will fall for determination according to the principle that a contractual wrongdoer cannot use his breach as a ground for refusing a claim by the other party.

Result and costs

[44] For the reasons set out above, the appeal must be dismissed.
[45] As to costs, Mr Thompson sought increased costs on the basis that the appeal was entirely without merit. He submitted that it was always necessary for the issues raised in the proceeding to be determined at trial and that, in the meantime, the caveat must be sustained in order to protect Ms Rickard’s position.
[46] We agree that increased costs are appropriate. The Judge was clearly correct to make an order sustaining the caveat. The appeal should never have been brought.
[47] In our view it is appropriate to award the respondent costs against the appellant for a standard appeal on a band B basis (plus an allowance for increased costs with an uplift of 25 per cent) and usual disbursements.

Solicitors:
Davenports, Auckland for Appellant
Patterson Hopkins, Auckland for Respondent

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[1] Rickard v Bethell [2012] NZHC 411.
[2] Rickard v Bethell, above n 1, at [21].
[3] At [27].
[4] At [30].
[5] Sims v Lowe [1988] 1 NZLR 656 (CA).
[6] Ibid at 659–660.
[7] Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA).

[8] Citing Field v Fitton [1988] 1 NZLR 482 (CA) at 491 and Shell Oil New Zealand Ltd v Wordcom Investments Ltd [1992] 1 NZLR 129 (CA).
[9] Citing New Zealand Mortgage Guarantee Co Ltd v Pye [1979] 2 NZLR 188 (SC).

[10] See Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994) 6 TCLR 88 (CA) as cited in Elizabeth Toomey “Caveats” in Tom Bennion and others New Zealand Land Law (2nd edition, Brookers, Wellington 2009) 249 at [4.5.05(1)].

[11] Boat Park v Hutchinson [1999] 2 NZLR 74 (CA) at 82 adopting the language of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromich Building Society [1998] 1 WLR 896 (HL) at 912–913.

[12] Prenn v Simmonds [1971] 1 WLR 1381 (HL) at 1384 and Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 (HL) at 997.
[13] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [19] per Tipping J.
[14] Citing Philpott v NZI Bank Ltd (1990) ANZ ConvR 242 (CA).
[15] Rickard v Bethell, above n 1, at [30].