Hodge v Hodge HC Hamilton CIV-2010-419-1070 [2011] NZHC 487 (17 May 2011)

Last Updated: 18 June 2011

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

_{CIV-2010-419-1070}

UNDER Land Transfer Act 1952 Section 145

IN THE MATTER OF an application that Caveat 8317246.1 not lapse

BETWEEN GRAEME HODGE Applicant

AND DAVID JOHN HODGE, GRANT JAMES FLETT AND JOHN BERWICK NICHOLLS

Respondents

Hearing: 11 May 2011

Appearances: Mr P F Gorringe for Applicant

Mr T M Braun for Respondents

Judgment: 17 May 2011 at 4:00 PM

_{JUDGMENT OF ASSOCIATE JUDGE MATTHEWS}

This judgment was delivered by me on 17 May 2011 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

WILSON V ANZ NATIONAL BANK LTD HC AK CIV-2010-404-50025 10 May 2011

[1] This is an originating application for an order that Caveat 8317246 (South

Auckland Registry) not lapse. An interim order was made by Rodney Hansen J on

8 September 2010.

[2] The caveat has been lodged by the applicant to protect his interest as transferee of a strip of land to be surveyed from the respondents’ title over the length of its boundary with the applicant’s adjacent title. The interest was created by a written agreement between the parties covering this, and a number of other matters intended to resolve disputes relating to their affairs, dated 17 July 2009.

[3] The application was set down for a substantive hearing on 18 November

2010. On that day the parties negotiated an agreement on terms by which timely progress would be made with taking the requisite administrative steps to undertake the boundary adjustment and amalgamate the strip of land into the applicant’s title. By mid-2010, the respondents were dissatisfied with what they saw as a lack of progress being made by the applicant in undertaking the required steps to complete the boundary adjustment. For that reason they applied to the District Land Registrar for removal of the caveat and this proceeding ensued. The respondents concerns about lack of progress continued, and the agreement reached on 18 November 2010 contained a list of dates by which certain steps in the boundary adjustment process would be taken, and outcomes achieved. The agreement was recorded in a letter of that date from the respondents’ solicitors to the applicant’s solicitors.

[4] As a result of this agreement, this application was adjourned to a list on

7 June 2011, as the agreed timetable required completion of the boundary adjustment, with resulting titles issued, by 18 May 2011. That has not, in fact, occurred. The respondents had the 7th June call re-scheduled for earlier consideration.

[5] To effect the boundary adjustment, the applicant engaged a firm of surveyors called CKL. CKL provided the timetable contained in the agreement of 18

November 2010. The first step was lodgement of the requisite application at the Hamilton City Council by 7 December 2010. This date was missed, and the application was lodged on 20 December 2010.

[6] The timetable required assessment by the Council to be complete and a certificate of compliance to be granted by 7 February 2011. That was achieved by

26 January 2011. Thus, broadly speaking, the slippage of 13 days in the lodging of the application was caught up in time saved in completing the second step. However, no doubt reflecting a degree of frustration on their part with the applicant’s tardy approach to this project since 2009, the respondents applied to the Court to bring forward a further consideration of this application to sustain the caveat.

[7] Certain terms in the agreement of 18 November 2010 gave them reasons to do so.

(a) Paragraph 2.c, which states that the respondent “agrees that if he fails to complete any of the steps referred to in paragraph 2(a) of this letter by the relevant deadline(s) in that paragraph (time being of the essence), or by any extended timeframe as certified by CKL, he shall remove his caveat forthwith”.

(b) Paragraph 2.a.vi which provides: “The only basis on which any of these timeframes can be extended is if CKL certifies that both it and Graeme Hodge have taken all necessary steps to meet the deadline, but due to matters outside their control the deadline was not able to be met. Complications or delays arising from any related subdivisions are not a ground for an extension. Any extension will be limited to the length of the delay caused by a third party (and Graeme Hodge will take all necessary steps to minimise any such delay). CKL will certify when any delay commences, and when it ends. In providing any certification, CKL will do so on the basis that it is acting for both Graeme Hodge and our clients, (the respondents) with costs to be met by Graeme Hodge.

[8] I was told that CKL declined to certify the delay between 7 December and 20

December 2010 for the application to be lodged at the Hamilton City Council, under this paragraph. Therefore, the respondents consider that the applicant is

contractually bound to remove his caveat. As he has not done so, the Court is asked to revoke the order made in September that the caveat not lapse.

[9] The applicant put before the Court by consent a letter from CKL dated 9 May

2011 setting out the remaining steps required, to completion, with an amended timeline. If all goes to plan title will issue between 25 July 2011 and 5 August 2011. Compliance with this timetable requires other parties, notably the Hamilton City Council and LINZ to undertake their respective tasks within projected timeframes. The original timetable in the agreement of 18 November 2010 scheduled the same steps. Thus, the rationale for the certification process set out in sub-paragraph 2.a.vi can be seen to allow slippage in the timetable caused by others, but at the same time keep the applicant up to the mark.

[10] It was common ground between counsel for the applicant and the respondents that the applicant retains a caveatable interest under the 2009 agreement. The respondents request that the interim order be revoked was based on a submission that the Court has a discretion on the issue of sustaining the caveat and should now exercise this against the applicant. It was argued that the agreement of 18 November

2010 was a binding, supplementary agreement on the process for achieving registration of the boundary adjustment agreed in 2009. It was not suggested, and nor could it be, that in any way the agreement of 18 November 2010 supplanted the

2009 agreement with the potential effect of the caveatable interest having lapsed.

[11] Counsel for the applicant took the inverse position. He recognised that his client was in breach of the timetable without necessarily conceding that he was in breach of the contract, but submitted that the caveat should remain notwithstanding this in order to protect his client’s position, the respondents having made it clear (as their counsel acknowledged to me) that they intend to sell the land over which the caveat is registered.

[12] In Orams Marine (Auckland) Ltd v Ports of Auckland Ltd1 the Court of

_{Appeal said:}

1 (1994) 6 TCLR 88 at 92

The appellant wishes to maintain its caveat ... the approach to this type of application has been settled by this Court in Sims v Lowe ... Other cases in this Court ... confirm that while consideration of the balance of convenience may be required in exceptional cases, once a reasonably arguable case has been established justice will require the maintenance of the caveat.

[13] This approach was further discussed by the Court of Appeal in Pacific Homes

Ltd v Consolidated Joineries Ltd2:

We are of the view that in the dictum in Sims v Lowe Somers and Gallan JJ were concerned with the situation which was then before the Court and were not putting their minds to a situation in which there is no practical advantage in maintaining a caveat lodged by someone who could properly claim a caveatable interest. In such circumstances the Court retains a discretion to make an order removing the caveat, though it was be exercised cautiously. An order will be made for removal only where the Court is completely satisfied that the legitimate interests of the caveator will not thereby be prejudiced. If, on the facts of the case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of money secured over the land or specific performance of an agreement or if the caveator’s interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate for the caveat to be removed notwithstanding that the right to the claimed interest is undoubted.

[14] This residual discretion applies to applications under s 145 – Stewart v

Kaipara Consultants Ltd3.

[15] It will be seen that the scope for exercise of a discretion against sustaining a caveat when the caveator holds a caveatable interest in the land is tightly circumscribed.

[16] In Landco Albany Ltd v Fu Hao Construction Ltd4 the Court of Appeal considered the effect of a term in a contract prohibiting the lodgement of a caveat to protect a caveatable interest, given the statutory regime in relation to caveats set out in the Land Transfer Act 1952. Against the general principle in the law of contracts that parties may contract out of a right conferred by statute, the Court considered

_{whether there may be a public policy limitation on the enforceability of a no caveat}

2 [1996] 2 NZLR 652

3 [2000] 3 NZLR 55

4 [2006] 2 NZLR 174

clause, and determined that such clauses are enforceable as there are reasonable commercial and private reasons why such clauses might be stipulated and accepted by contracting parties.

[17] As noted, a caveat will generally be sustained where a reasonably arguable claim to a caveatable interest is made out – Pacific Homes Ltd v Consolidated Joineries Ltd, (supra). It is clear that if it can reasonably be argued that the caveat was lodged in breach of a contractual term not to do so, this is an element to be taken into account in the overall exercise of discretion by the Court, in considering whether the caveat should be sustained. In my view, the same approach should be taken where there is an arguable breach of contract in failing to voluntarily remove a caveat that has already been lodged. In Landco Albany Ltd v Fu Hao Construction Ltd supra, the Court said at paragraph 52:

Further, whether such a clause might or might not be enforced by a quia timet injunction will involve the exercise of a judicial discretion in light of the circumstances of any particular case. Similarly, circumstances will inform a judicial discretion whether or not to order the removal of a caveat, or to make or decline an order preventing lapsing. And depending on the nature of competing interests, the discretion may be informed by an agreement by the parties against the lodging of a caveat.

[18] Seeking exercise of the Court’s discretion in their favour, the respondents point to their wish to market their property, inaction by the applicant in finalising the process for taking title to the strip of land in question which led to the November

2010 agreement, and the fact that the applicant is in breach of that agreement also.

[19] The applicant has put forward evidence of reasons for delays in recent months including wrong advice about the need to obtain consents from parties who might be affected by the boundary adjustment, and a period of debilitating ill-health during which the applicant was unable to attend to any of his own affairs. The applicant said that the property could still be marketed with the caveat on it, and that the process would now be completed within around four months.

[20] Weighing up all matters before me I exercise my discretion in favour of the applicant. Whilst the material before me does point to considerable delays at various times by the applicant, there have been genuine reasons for some of the delays since

the November agreement, and only a period between around March and the present time remains unaccounted for by those reasons. Whilst there is an arguable case that there has been a breach of the November contract by the applicant, no specific consequence in the form of loss or inconvenience was identified to me. If that breach is established and any loss has flowed from it there are remedies available for breach of contract.

[21] Transfer by the respondents to a third party without notice could defeat the applicant’s interest. No reason was given why the property could not be marketed for sale with the caveat in place.

[22] The discretion is in limited terms as I have said and the law favours retention of the caveat where there is a caveatable interest. I have taken into account all matters which I consider to be relevant to its exercise. I therefore direct that the caveat will continue to be sustained until further order of the Court.

[23] The application is adjourned to a Chambers List on 8 August 2011 at 2.15 pm which is the first Chambers List after the end of the timeline for completion of the conveyancing aspects of this matter, put forward by CKL. I expect the matter to be concluded by then. I appreciate that actions by the Hamilton City Council and LINZ could delay matters but there are to be no delays by the applicant. The applicant cannot rely on the continued exercise of the Court’s discretion in his favour if there are further breaches of the timetable. However, that is a matter for review by the Court if and when the issue arises.

Costs

[24] The respondents sought costs on this review of the order of the Court made in September. Counsel made the point that it would not have been necessary to bring the matter back before the Court had the applicant not been in breach of the November agreement by not removing the caveat as he agreed to do. Counsel for the applicant accepted that the first time limitation in the agreement had been breached, but said that by the time the second way-point was reached, progress was ahead of time. It was in that circumstance that the application was made to the

Court, for this review. Subsequent lapses in the timetable had not occurred when the application was made.

[25] Considering the position overall, it is my opinion that the costs of this review should be reserved.

J G Matthews

Associate Judge

Solicitors:

Harkness Henry, Hamilton

Clyde Law Centre, Hamilton

Counsel:

P F Gorringe, Hamilton