Hikurangi Forest Farms Ltd v Negara Developments Ltd

• Jurisdiction: New Zealand
• Judge: Duffy J
• Judgment Date: 05 April 2018
• Neutral Citation: [2018] NZHC 607
• Docket Number: CIV 2015-416-000008
• Court: High Court
• Date: 05 April 2018

Between

Hikurangi Forest Farms Limited

Plaintiff

and

Negara Developments Limited

Defendant

[2018] NZHC 607

CIV 2015-416-000008

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Equity, Property — application to enforce an unregistered interest it claimed in pine trees growing on land owned by the defendant — the plaintiff had planted the trees in reliance on a “give-and-take” arrangement between it and a former owner of the land — whether the arrangement could survive the sale under s182 Land Transfer Act 1952 (purchaser from registered proprietor not affected by notice) — whether the plaintiff could be a party to trespass under way s66 Crimes Act 1961 (parties to offences) — whether a company can breach the Trespass Act 1980

Counsel:

D Hurd and B Comer for Plaintiff

T Cunningham-Adams and T Bloy for Defendant

JUDGMENT OF Duffy J

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4 The relevant law at the times the material events occurred has now been repealed. 1 However, it continues to apply for the purposes of this proceeding. 2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

Give-and-take arrangements

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

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.

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.

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...