Coumat Limited v Registrar General of Land [2016] NZHC 1911 (17 August 2016)

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BETWEEN	COUMAT LIMITED Plaintiff
AND	THE REGISTRAR GENERAL OF LAND First Defendant ZEST FOR REALTY LIMITED Second Defendant MARCUS NOEL BEVERIDGE TRADING AS QUEEN CITY LAW Third Defendant

Hearing:	15 August 2016
Appearances:	S R G Judd and L M Herbke for Plaintiff N C Anderson for First Defendant R M Dillon for Second Defendant No appearance for Third Defendant
_Judgment:	_{17 August 2016}

This judgment is delivered by me on 17 August 2016 at 2.30 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

COUMAT LTD v THE REGISTRAR GENERAL OF LAND & ORS [2016] NZHC 1911 [17 August 2016]

[1] The plaintiff, Coumat Ltd, issued this proceeding on 3 August 2016. The substantive relief sought against the defendants is a permanent injunction preventing the registration of a caveat over land at Whitford, Auckland, held in two titles by Coumat as the registered proprietor (the land), or an order directing its immediate removal. Coumat also seeks damages against the second and third defendants and costs on an indemnity basis.

[2] On the same day as the proceeding was filed, Coumat applied without notice for an interim injunction prohibiting the defendants from taking any steps to register such a caveat. Coumat claimed that the matter was urgent because, although the District Land Registrar has not yet registered the caveat against the titles to the land, the pending registration has prevented Coumat from settling an unconditional sale of the land pursuant to an agreement entered into on 13 January 2016. Palmer J directed that the application for interim injunction should be dealt with on notice and it was accordingly listed for hearing before me on 15 August 2016.

[3] The application for interim injunction was filed too late in respect of the second and third defendants because they had already lodged a caveat for registration against the land and no further steps from them are anticipated. The application was misconceived insofar as it sought an injunction against the District Land Registrar because the Court cannot issue an injunction against the Crown.¹

[4] Mr Judd, who has only recently been instructed, recognised these difficulties. He filed a memorandum last Friday, 12 August 2016, advising that Coumat was withdrawing its application for an interim injunction against the District Land Registrar. Mr Judd advised that Coumat would seek instead a declaration that Zest has no proper basis for lodging a caveat against the titles to the land.

[5] At the commencement of the hearing on 15 August 2016, Coumat was given leave, by consent, to amend its statement of claim by changing the relief sought from a permanent injunction preventing the registration of the caveat and substituting a

claim for a declaration that the second defendant does not have a proper basis for lodging a caveat against the titles to the land. The substantive claims for damages and indemnity costs remain.

[6] Mr Judd had not formulated any proposed amendment to the interlocutory application listed for hearing. The matter was accordingly stood down to enable him to do that. When the Court reconvened, Mr Judd sought leave to amend the interlocutory application by replacing the application for interim injunction with:

(a) An order for the determination of a separate preliminary issue, namely whether the second defendant has a caveatable interest in the land, under r 10.15 of the High Court Rules.

(b) A final declaration that the second defendant does not have a caveatable interest.

(c) Alternatively, an interim declaration that the Crown ought not to register a caveat against the land pending further order of the Court under s 17 of the Crown Proceedings Act 1980.

[7] Following discussion with counsel, Mr Judd accepted that it would not be appropriate for the Court to grant Coumat’s application for determination of a preliminary issue and then proceed to determine that preliminary issue at this hearing. The second and third defendants had no advance warning that an application for such orders would be considered at this hearing. The third defendant chose not to be represented at the hearing on the understanding that the Court would be considering the application for interim injunction which did not affect it.

[8] However, counsel did not object to an application being considered for the alternative order under (c). Mr Dillon, who is employed by the third defendant as a consultant, confirmed that the third defendant would have no objection to this. Coumat’s application was amended accordingly. Mr Dillon advised that the only further evidence that his client would need to introduce to deal with the new application is one of the certificates of title for the land. This was produced by consent.

[9] It is necessary to summarise the background in order to understand the competing contentions on whether it would be appropriate to grant the interim relief now sought.

$446,775, being commission found to be payable on an earlier sale of the land for

[11] On 13 January 2016, Coumat entered into an unconditional agreement to sell the land to Kerry Ford for $21.5 million.

[12] On 23 February 2016, Zest obtained a charging order over Coumat’s interest

This court orders that [Coumat’s] estate, right, title or interest in possession, remainder, reversion or expectancy (whether vested or contingent) in [the land] are charged with payment of the amount for which [Zest] has obtained judgment...

[13] On 25 February 2016, Zest registered this charging order against the titles to the land but mistakenly referred to the charge holder as “Zest For Reality Limited”.

[14] On 21 March 2016, Zest obtained an interim charging order over the proceeds of the sale of the land by Coumat to Mr Ford.

[15] Zest subsequently instructed its solicitor, the third defendant, to register a discharge of the charging order over the titles to the land. Eric Chase, a director of Zest, explained that he took this step for two reasons. First, he wanted to assist the purchaser to obtain finance for the purchase. Second, he was concerned that the charging order would have no effect anyway because the land had been sold unconditionally prior to the charging order being made. The discharge of charging order was duly registered against the titles to the land on 20 April 2016.

[16] On 28 July 2016, the day before the sale was due to settle, the third defendant lodged a caveat against dealings with the land under s 137 of the Land Transfer Act

9 December 2015 before Associate Judge Christiansen) creating a caveatable interest for [Coumat] over [the titles to the land].

[17] The caveat was subsequently withdrawn and re-lodged on 4 August 2016 with amended wording referring to r 17.54 of the High Court Rules.

[18] A further caveat was lodged by the third defendant on behalf of Zest against the titles to the land on 10 August 2016. The interest claimed in the land was in identical terms to the first caveat.

[19] On the same day, the third defendant lodged a request to withdraw the earlier caveat. This caveat was withdrawn from registration on 11 August 2016.

[20] Mr Judd contends that the Court is able to make an order at this stage declaring that Zest does not have a caveatable interest in the land for the following reasons. First, the charging order over the land was registered after the unconditional sale had been entered into. Accordingly, the equitable interest in the land had passed to Mr Ford. Mr Judd relies on the decision of McMullin J in Firth Concrete Industries Limited v Duncan which held that a vendor who has sold unconditionally has no equity in the land against which a charging order can be

registered.³Second, the charging order over the land was, in any event, discharged.

Third, r 17.48 of the High Court Rules provides that a charging order in respect of land must be registered. This is how notice of the charging order is to be given, not by registering a caveat.

[21] Mr Judd also addressed the Court on balance of convenience issues although he was unsure whether these would still be relevant to the interlocutory application as now amended. He contended that these favour the making of an interim declaration. In particular, he argued that Zest’s position is adequately protected by the interim charging order and a solicitor’s undertaking to pay the judgment sum into Court from the sale proceeds. These would be held in Court pending determination of the appeal and any further order of the Court.

[22] Mr Dillon submits that Zest has an interest in the land. He relies on Gill Construction Company Limited v Morgan & Anor in which Clifford J held that a party with a registered charging order over land has an “interest” in land in terms of s 2 of the Land Transfer Act 1952.⁴Mr Dillon noted the possibility that the sale to Mr Ford might not settle. In that case, the equitable estate would revert to Coumat. For these reasons, Mr Dillon argues that Zest has an interest in the land by virtue of the unregistered charging order and that this is sufficient to support a caveat.

[23] However, Mr Dillon’s principal submission is that interim relief is unnecessary and the statutory procedure under the Land Transfer Act for the registration and removal of caveats should be allowed to take its course. He submitted that damages are an adequate remedy in this case and there is no justification for interim relief. He also argued that relief should be declined because of alleged non disclosure of material facts by Coumat in its initial without notice application. In any event, he argues that Coumat does not even have an arguable case in seeking to contest the caveat.

[24] Mr Anderson advises that the Registrar-General’s preliminary view is that the second caveat does not disclose a caveatable interest and it is likely to be returned to Zest when the matter is processed in the normal course, on or about 18 August 2016.

⁴Gill Construction Company Limited v Morgan & Anor HC Wellington CIV-2009-406-100,

(1) In any civil proceedings under this Act by or against the Crown or to which the Crown is a party or third party the court shall, subject to the provisions of this Act, have power to make all such orders as it has power to make in proceedings between subjects, and otherwise to give such appropriate relief as the case may require: provided that –

(a) where in any proceedings against the Crown any such relief is sought as might in proceedings between subjects be granted by way of injunction or specific performance, the court shall not grant an injunction or make an order for specific performance, but may instead make an order declaratory of the rights of the parties; and

[26] There is a long line of authority indicating that an order declaratory of the rights of the parties under s 17 means a final order, not an interim order. In Underhill v Ministry of Food, Romer J explained why an interim declaration was not available under the English equivalent of s 17:⁵

At the outset, counsel for the Ministry of Food says that this court has no jurisdiction to do what it is invited to do, ie, to make a kind of interim declaration in substitution for the interlocutory injunction which clearly it has no power to grant. He says that when the Crown Proceedings Act, 1947, s 21, refers to the court making a declaration, it refers to a final declaration, and it is an unheard of suggestion that an interlocutory declaration should be made which might be in precisely the opposite sense of the final declaration made at the trial. He says, and I think rightly says, that what is usually done on the hearing of an interlocutory application is to grant some form of temporary remedy which will keep matters in statu quo until the rights of the parties are ultimately found and declared, and that, accordingly, the reference to making a declaration of rights means a declaration at the trial as distinct from a declaration on some interlocutory application. Accordingly, he says that, just as I cannot grant an interlocutory injunction against the defendants, even if in all respects a prima facie case has been made out, I cannot as an alternative make an interim declaration either. In my judgment, that submission is right. I do not think that this court has jurisdiction under s 21 of the Act to make something in the nature of an interim declaration of right which would have no legal effect, and which, as I say, might be the very opposite of the final declaration of right made at the trial after hearing all the evidence and after all the matters in issue had been gone into at length.

Speaking for my part I simply do not understand how there can be such an animal, as I ventured to call it in argument, as an interim declaratory order which does not finally declare the rights of the parties. It seems to me quite clear that in proceedings against the Crown it is impossible to get anything which corresponds to an interim injunction.

... the practice is not to do it: for the simple reason that it is final in its nature and is inappropriate on an interlocutory application which by definition is not final ...

‘interim declaration’. Under existing law only a final and conclusive declaration may be granted by a court. This means that, where the Crown is defendant or respondent, relief analogous to an interim injunction is simply available... For myself, I find absurd the posture of a court declaring one day in interlocutory proceedings that an applicant has certain rights and on a later day that he has not.

However, s 21 of the Crown Proceedings Act 1947 permits only a declaration of the rights of the parties in lieu of an injunction against officers of the Crown and it has been held, in my continued view correctly, that this does not empower the court to grant interlocutory declarations which would be a contradiction in terms.

[31] These authorities were applied in New Zealand by White J in Codelfa- Cogefar (NZ) Ltd v Attorney-General.¹⁰His Honour concluded that while the Courts have recognised that an interim declaration can be made, this would only be appropriate in exceptional cases.¹¹In Fox v Douglas & Ors, Eichelbaum J

_{considered that these authorities should be regarded as conclusive so
far as a court of}

⁸_{Inland Revenue Commissioners v Rossminster Ltd
[1979] UKHL 5; [1980] AC 952 (HL) at 1027.}

¹⁰_{Codelfa-Cogefar (NZ) Ltd v Attorney-General [1981]
2 NZLR 153 (HC) at 160-162.}

first instance is concerned.¹²Heron J reached the same conclusion in West Coast

The difficulty with granting an interim declaration stems from the basic proposition that a declaration is by its nature a final declaration of rights, and logically should not issue in any temporary or provisional way. If rights are to be declared then they must be by way of final decision.

[32] Despite this long line of authority, in Sportsworld Society Incorporated & Anor v Shanahan, Baragwanath J considered that the Court has jurisdiction to make an interim declaration in appropriate circumstances. ¹⁴He described the English authority to contrary effect as an anachronism. This was because r 25.1(1)(b) of the Civil Procedure Rules in the United Kingdom now expressly empowers the Court to grant interim declarations. Baragwanath J drew attention to the Supreme Court of Israel’s decision in Yotwin Engineers and Construction Ltd v State of Israel which reviewed the English authorities and concluded that there is power to make interim declarations in appropriate cases. His Honour also referred to the New Zealand Law

Commission Study Paper 10 Mandatory Orders Against the Crown and Tidying Judicial Review.¹⁵This paper suggested that an interim declaration would be unlikely to deal with substantive rights. However, such orders could be made where it would be appropriate for the Court to declare the terms on which it would have granted an interim injunction if the dispute had been between subjects or where it would be appropriate to guide the parties on how they should conduct their activities

[33] While I accept that an interim declaration can be made in appropriate circumstances, I do not consider that this is such a case for the reasons that follow.

[34] It is useful to commence the analysis by considering whether it would have been appropriate to grant an interim injunction if the Crown was not involved as a

¹³_{West Coast Regional Council v Attorney-General
(1994) 8 PRNZ 44 (HC) at 52.}

¹⁴Sportsworld Society Incorporated & Anor v Shanahan HC Whangarei CIV-2004-488-720,

¹⁵New Zealand Law Commission Study Paper 10 Mandatory Orders Against the Crown and

party and such relief was accordingly available. Coumat has a strongly arguable case for the reasons identified by Mr Judd. However, damages appear to be an adequate remedy. The damages are readily calculable and it has not been suggested that Zest would be unable to meet any award of damages. An interim injunction is seldom granted if damages are an adequate remedy.

[35] On the basis of the indication given by Mr Anderson, the caveat is likely to be rejected within the next few days. However, if it is not rejected, Coumat can apply immediately for an order for removal of the caveat under s 143 of the Land Transfer Act. These are the appropriate statutory procedures for dealing with caveats. In my view, those procedures should not be subverted by seeking interim declaratory relief.

[36] Although worded as an application for an interim declaration, in reality, Coumat is seeking a final determination of the issue as to whether Zest has a caveatable interest in the land. Anything short of a final determination of this issue is unlikely to be of material assistance to the parties. Mr Judd acknowledges that a final determination should not be made at this hearing in the absence of the third defendant. It would also not be fair to Zest because it had no advance warning that a final determination of this issue would be considered at this hearing. This is why leave was declined for Coumat to amend its application to seek proposed orders (a) and (b). On analysis, the order sought under (c) is materially the same. In my view, this is not an appropriate case in which to make an interim declaration as to the rights of the parties.

[37] The application for an interim declaration is dismissed. [38] Costs are reserved.

High Court of New Zealand Decisions

Coumat Limited v Registrar General of Land [2016] NZHC 1911 (17 August 2016)

High Court of New Zealand

Coumat Limited v Registrar General of Land [2016] NZHC 1911 (17 August 2016)