Marsden Resorts Ltd v Shine Family Trustee Company Ltd

• Jurisdiction: New Zealand
• Court: High Court
• Judge: Sussock
• Judgment Date: 16 July 2024
• Neutral Citation: [2024] NZHC 1947
• Year: 2024
• Docket Number: CIV-2023-404-2365

Between

Marsden Resorts Limited

Applicant

and

Shine Family Trustee Company Limited, Gavin William Shine and Raewyn Gail Shine as trustees of the Shine Family Trust

Respondents

[2024] NZHC 1947

CIV-2023-404-2365

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Property — application to sustain a caveat — lease claimed as caveatable interest — whether description of interest on caveat sufficiently certain — whether lease included both buildings and land

Appearances:

JD Savage and EC Macpherson for the Applicant

EJ Taia and JT Wilkinson for the Respondents

The application that the caveat not lapse was granted.

JUDGMENT OF ASSOCIATE JUDGE Sussock

This judgment was delivered by me on 16 July 2024 at 4.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Introduction

1 Marsden Resorts Ltd has applied to sustain its caveat over a property owned by the trustees of the Shine Family Trust.

2 Marsden Resorts operates the Castaways Resort together with a portfolio of accommodation businesses throughout New Zealand. The Shine Family Trust and associated entities (collectively referred to as Shine), 1 formerly owned the Castaways Resort.

3 Shine remains the owner of part of the land on which the Castaways Resort is situated (Shine Land). Shine is also the lessee of Auckland City Council land on which the balance of the Castaways Resort is situated and subleases this to Marsden Resorts (Council Land).

4 The contractual arrangements between the parties are recorded in a suite of contractual documents including:

• (a) the original sale and purchase agreement in relation to the Castaways resort dated 1 March 2018 (Sale and Purchase Agreement);

• (b) a deed of lease over the Shine Land dated 15 June 2018 (Lease); and

• (c) a deed of sublease over the Council Land (Sublease).

5 Both the Sale and Purchase Agreement and the Lease provide that Shine intends to carry out a subdivision on an area of Shine Land demarcated as the “Future Development Area.” A copy of the hand drawn plan attached to the lease and showing the Future Development Area is attached to this judgment.

6 The Lease records that on completion of the subdivision Shine agrees to register the Lease against the new freehold certificate of title on the same terms and conditions as contained in the Lease. The Lease further provides that pending

registration Shine may not sell, transfer, assign or part with possession of “the Property” without the prior consent of the Tenant, not to be unreasonably withheld.

7 The parties have had various disagreements in relation to their respective obligations, some of which are the subject of an arbitration. Marsden Resorts lodged a caveat over the Shine Land on 22 March 2023 concerned that Shine would alienate some or all of its land in breach of its obligations under the Lease (Caveat). Marsden Resorts describes its interest on the Caveat as being “[p]ursuant to a Deed of Lease dated 15 June 2018 between the Registered Owners as Landlord and the Caveator as Tenant.”.

8 The Caveat is over the entire title, consisting of 47.7510 hectares and comprising three lots:

• (a) Lot 150, 153–154 on deposited plan 571922; and

• (b) Lot 209 on deposited plan 571993.

9 Shine served a notice on Marsden Resorts for the Caveat to lapse on 27 September 2023.

10 On 12 October 2023, Marsden Resorts applied to sustain the Caveat.

11 Shine opposes the application to sustain the Caveat on three grounds:

• (a) the Lease does not give Marsden Resorts a right to maintain a caveat over all of the Shine Land;

• (b) the “Future Development Area” does not form part of the leasehold estate such that no caveatable interest can arise; and

• (c) cl 58 in the Lease looks to the future and does not give Marsden Resorts a present caveatable interest.

12 Shine seeks either that the Caveat lapse or alternatively that it is amended, such that it does not lie over Lots 154 and 209, relying on Lu Trustee Ltd v Parkland Infrastruct Ltd. 2 Shine says that as a further alternative, the Caveat should be lapsed to allow a proposed subdivision to take place with Marsden Resorts granted leave to lodge further caveats.

Issues

13 The issues are:

• (a) Does the Lease arguably provide a present interest sufficient for the caveat to be sustained?

• (b) If so, is that interest arguably in all or only part of the Shine Land?

14 I set out the legal principles relating to sustaining caveats before discussing the issues above.

Legal principles — application that caveat not lapse

15 The right to lodge a caveat is provided by s 138 of the Land Transfer Act 2017 (LTA), with the interest claimed required to fall within the interests described in that section. These include that the person claims an estate of interest in the land, “whether capable of registration or not”. 3

16 Section 138 makes it clear that a personal or contractual right is not enough. The caveator must show a current entitlement to a beneficial interest in the land under the caveat. 4

17 Section 138(3) requires the caveat to contain the prescribed information. This is set out in schedule 2 of the Land Transfer Regulations 2018. Relevantly, the caveat must include:

A description of the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty) …

Details of how the estate or interest claimed is derived from the registered owner.

18 The legal principles relating to sustaining a caveat were summarised by the Court of Appeal in Green & McCahill Holdings Ltd v Ara Weiti Development Ltd: 5

[80] The core principles covering applications to sustain caveats under s 143 of the LTA are those set out in this Court's decision in Philpott v Noble Investments Ltd (drawing in turn on our earlier decision in Sims v Lowe): 6

• (a) The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

• (b) It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;

• (c) The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and

• (d) Where an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator's legitimate interest would not be prejudiced by removal.

[83] Although summary process does not permit close engagement with contested facts, the court must still assess the arguability of the asserted case of a proprietary right realistically and interrogate the documentary record. As the Privy Council said in Eng Mee Yong v Letchumanan, a court is not required: 7

… to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.

Does the Lease arguably provide a present interest sufficient for a caveat?

19 Shine submits that Marsden Resorts does not currently have a present interest in the leasehold land sufficient to support a caveat. Counsel refers to a “triggering

point” obliging Shine to register the Lease; and points to steps in cl 58.1 that are required to be undertaken before the Lease may be registered. These steps are that:

• (a) Shine needs to carry out a subdivision of the Future Development Area;

• (b) Shine must complete the subdivision; and

• (c) new freehold certificates of title must be issued.

20 Shine submits that if any of the above steps do not happen, then any right to caveat by Marsden Resorts does not arise. Counsel for Shine says that the circumstances are akin to those in Kilmartin v Monk where the Court held that the caveat could not be sustained on the basis of the equitable mortgage because the equitable mortgage had not yet come into existence as no effective request had yet been made. 8 Shine emphasises that the fact that the parties had agreed to delay registration supports Shine's position that there is no present caveatable interest.

21 Shine further points to cl 58.2 of the Lease which requires Marsden Resorts to pay Shine's reasonable legal costs to register the Lease. Counsel says that if Marsden Resorts refused to pay, then Shine would be justified in refusing to register the Lease.

22 However, unlike in Kilmartin v Monk, the interest that Marsden Resorts currently has prior to registration, an unregistered lease, is already an interest in the land. 9 The Lease therefore currently gives Marsden Resorts an interest sufficient to support a caveat even prior to registration, as a lease does not need to be registered to be an interest in land.

23 Clause 58.3 of the Lease expressly states that pending registration, Shine may not sell, transfer, assign or part with possession of the “Property” without the prior consent of Marsden Resorts, not to be unreasonably withheld.

24 Following the hearing the parties filed further submissions on whether cl 58.3 provided a right to caveat on its own. Because it is settled law that an unregistered lease provides a current right to caveat, I do not need to determine whether cl 58.3 provides a right to caveat on its own.

25 Although neither counsel has been able to find a case considering a similar clause, in my view, cl 58.3 supports there being a present interest in the land as the purpose of a caveat is to protect the caveator's...