Harrison v Harrison [2014] NZHC 918 (6 May 2014)

Last Updated: 20 May 2014

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000213 [2014] NZHC 918

UNDER	the Land Transfer Act 1952, High Court Rules, Section 99 Judicature Act 1908, Trustee Act 1956
IN THE MATTER OF	To sustain a beneficially interested caveat against dealings with land on trust property purchased out of THE VALERIE GEARD TRUST FUND (a hybrid Family Trust)
BETWEEN	PAULINE JANICE HARRISON and ANGELA JANICE HARRISON Joint Applicants
AND	GRAEME ROSS HARRISON First Respondent
AND	ADRIENNE HARRISON (NEE SEWELL) Second Respondent

Hearing:	5 May 2014
Appearances:	P J and A J Harrison in person No appearance for the First or Second Respondents
Judgment:	6 May 2014

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS [amended pursuant to r 11.10]

[1] On 28 April 2014 the Court ordered that the caveat at issue in this proceeding not lapse until further order of the Court. On 29 April I issued a Minute indicating that the application to sustain the caveat would be heard at 10.00 am today, and at the same time the Court would consider whether the case should be transferred to the High Court at Auckland. That issue arose for the reasons set out in the order dated

_{28 April 2014.}

P J HARRISON and A J HARRISON v G R HARRISON and A HARRISON [2014] NZHC 918 [6 May 2014]

[2] The morning of the hearing I had the benefit of written submissions from the applicants, and heard from them in support of their argument that the caveat should be sustained.

[3] Neither the first nor the second respondent has filed an opposition to the application, nor did either appear. The only steps they took were to arrange for the Auckland Registry of this Court to forward to the Case Officer for this case selected documents from two files in the Auckland Registry of the Court,¹ and to write a letter under the hand of Mrs A Harrison to the Case Officer in Christchurch.

[4] I have read the documents from the Auckland file but I have disregarded the letter dated 24 April 2014. It is not evidence.

[5] It follows that the application to sustain the caveat is unopposed.

[6] Before determining the application I will deal first with the filing of this application in the Christchurch Registry of the Court.

[7] Rule 19.2(l) provides that an application to sustain a caveat must be brought by way of originating application, and r 19.7 provides that a proceeding commenced by originating application is commenced when the application is filed in the proper registry of the court as determined in accordance with r 5.1. Rule 5.1 provides that the proper registry of the court for the purposes of this rule, where there are two or more defendants, is the registry of the court nearest to the residence of the first- named defendant.

[8] Rule 5.1(2) provides that notwithstanding this, if the place where the cause of action sued on, or some material part of it, arose is nearer to the place where the plaintiff resides than to the place where the defendant resides, the proper registry of the court is, at the option of the plaintiff, the registry nearest to the residence of the

_plaintiff.

¹ Harrison v Harrison HC Auckland CIV-2006-404-2003, 6 August 2008 Harrison J and

Harrison v Harrison Minute (No. 2) HC Auck CIV-2012-404-993, 27 March 2013, Toogood J.

[9] Applying these rules, the proper office of the court for the filing of this originating application is the High Court at Auckland, that being the court nearest to the residence of the first respondent. There is no evidence before the Court on which one could reach a conclusion that the cause of action, or a material part of it, arose in Christchurch, which is the court nearest to the place where the applicants reside. In this proceeding the applicants seek only to sustain a caveat; in the caveat the applicants claim an interest as beneficiaries under a trust settled by the late sister of the first-named applicant, Mrs V M Geard, who is the late aunt of the second-named applicant. The trust deed is in evidence. The late Mrs V M Geard is described as residing in Auckland. It was drawn up by an Auckland firm of solicitors. The respondents are the trustees, and they reside in Auckland. It seems that decisions in relation to the trust are made by them in Auckland. The land over which the caveat has been lodged is close to Auckland. There is nothing before me to suggest that any material part of the basis on which the applicants claim an interest in the land in question arose in Christchurch. On the face of it, therefore, it is clear that this proceeding was filed in the wrong registry of the court.

[10] As I have said, however, the respondents have not taken any steps. In this context, specifically, they have not sought to have the application transferred to Auckland, nor has any indication been given that they have not sought to defend the application solely because it has been filed in Christchurch rather than Auckland.

[11] Rule 5.1(4) provides that if it appears to a judge, on application made, that the statement of claim has been filed in the wrong registry of the court, he or she may direct that the statement of claim or all documents filed in the proceeding be transferred to the proper registry. In this rule, reference to the statement of claim must be read as also applying to an originating application. There is no application for an order directing that the application be transferred to Auckland, under r 5.1(4).

[12] Bearing in mind the objective of the High Court Rules recorded in r 1.2, I cannot see any purpose in transferring to Auckland, on my own initiative, an unopposed application to sustain a caveat which will come to an end on the making of the order recorded in this judgment.

[13] I therefore find that the application has been properly filed and turn to consider it.

[14] The interest claimed in the land is said to arise because Mrs P Harrison is a sister of the late Mrs Geard, and the “final beneficiaries” under the trust Mrs Geard set up are “any sibling of the said Valerie Margaret Geard”. Mrs P Harrison, and the first defendant, are the surviving siblings of Mrs Geard. They are also discretionary beneficiaries but Mrs Harrison does not claim her interest in that capacity. Had she

done so the caveat could not be sustained.² A beneficiary who can point to specific

land and claim a beneficial interest in it as a cestui que trust has a caveatable interest.³ A beneficiary may place a caveat over land purchased out of trust property.⁴ The contract for purchase of the land in question is in evidence and shows on its face that the respondents purchased the land as trustees of the trust.

[15] I am therefore satisfied that Mrs P Harrison has an interest in the land capable of sustaining the caveat. Further, Ms A Harrison, her daughter, also has an interest as a final beneficiary under the trust by substitution, in the event of her mother dying prior to the vesting day of the trust property. She too has an interest in the land capable of sustaining a caveat.

[16] For these reasons I am satisfied that the applicants should continue to have the benefit of the protection of their interests which is given by the caveat.

[17] The plaintiffs told me that the applicants had previously lodged a caveat against the title to the land, but it claimed an interest pursuant to the estate of the late Mrs Geard and not an interest pursuant to the trust. Evidently this caveat was removed from the title. I do not have any further detail of exactly what occurred. Section 148 of the Land Transfer Act provides that if a caveat has been removed under s 143, or has lapsed, no second caveat may be lodged by or on behalf of the same person in respect of the same interest except by order of the High Court. It

_{seems clear that the earlier caveat either lapsed or was removed from the title, but on}

² R & I Bank of Western Australia v Anchorage Investments Pty (1992) 10 WAR 59;

_{Patchett & Lammas v Williams HC Blenheim CIV 2005-406-82, 5 October 2005, Miller J.}

³ _{Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA). See generally New Zealand Land}

_{Law 2}^nd _{ed at 4.3(2).}

⁴ Fisher v Mansfield [1997] 2 NZLR 230.

the very limited information presently before me it does not appear that the applicants now claim the interest in the land that they say they claimed in the earlier caveat. The interest now claimed is as beneficiaries in the trust, as I have described. They did not have an interest in the estate, as the residue of the estate was not left to them, but to the trust.

[18] This may be a fine point, but the earlier caveat was not produced in evidence, as noted the defendants do not raise this or any other ground of opposition to the making of the order sought, and on the material before me there is no reason to find that s 148 applies.

[19] It is appropriate, too, to note a further issue which may become relevant if the applicants and the respondents are unable to resolve their differences (a point on which I make a further observation below). The applicants have already sued the respondents in the Auckland High Court, the latest proceeding being filed under CIV-2012-404-993. The only difference in the parties to that claim is that there is a third applicant, Mr B D Harrison.

[20] In that proceeding the present applicants raised substantially the same concerns in relation to the conduct of the respondents as trustees, that they raise in this application. Various remedies are sought including disclosure of trust documentation, removal of the respondents as trustees and appointment of an independent trustee, and the winding up of the trust. However, that proceeding is stayed. The order staying the proceeding was made, as I understand the matter (not having full access to the Auckland file and relying only on the limited selection of documents sent to the Christchurch Registry by the respondents) because the applicants failed to comply with an order made by the Court directing that they give security for costs. They have not appealed that decision. Nor can they commence another proceeding in any registry of this court claiming the same or substantially similar relief on the same or substantially similar bases, because that would be an

abuse of process.⁵ The question of how the respective rights of the applicants and

the respondents in relation to the trust is to be determined by this Court is not before me today, but plainly there are difficulties standing in the way of the applicants.

⁵ Otis Elevator Co Ltd v Linnel Builders Ltd (1991) 5 PRNZ 72 (HC).

[21] At the same time, there is sufficient before me to justify an expression of concern, though I put it no higher than that. The trust deed clearly describes a limited range of discretionary beneficiaries, of whom the first respondent and the first applicant are two, and an even more limited list of final beneficiaries, only the respondent and the first applicant (or in substitution, her daughter). Whenever a trustee and another person are discretionary beneficiaries, there is potential for the personal interest and the fiduciary duty of the trustee to conflict. In this case the context in which this issue arises is a significant level of ill-will between the applicants and the respondents, of very long duration. All trustees are ultimately accountable to this Court for their actions. I go no further at present than expressing my concern that the relationship between the applicants and the respondents may be such that administration of this trust should be put in independent hands. I emphasise that I make that observation solely on the basis of information put before me by the applicants. In the end though, it is not a question of who is right and who is wrong in the breakdown of the relationship. If the relationship has reached the point it appears to have reached, whoever’s fault that may be, a situation may have developed where the first and second respondents cannot, or do not, bring to bear an independent assessment of the respective rights of the first applicant and first respondent as discretionary beneficiaries.

[22] Careful consideration should be given promptly to an appropriate resolution of the issues arising in this estate.

Outcome

[23] I order that Caveat 9612733.1 North Auckland Registry not lapse. [24] There are no issues as to costs.

_{J G Matthews}

Associate Judge