Moeke v South Waikato District Council

• Jurisdiction: New Zealand
• Judge: Sargisson
• Judgment Date: 12 September 2019
• Neutral Citation: [2019] NZHC 2282
• Date: 12 September 2019
• Court: High Court
• Docket Number: CIV-2019-463-000050

[2019] NZHC 2282

IN THE HIGH COURT OF NEW ZEALAND

ROTORUA REGISTRY

I TE KМTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2019-463-000050

Between

Ford Benjamin Moeke

Plaintiff

and

South Waikato District Council

Defendant

Appearances:

K J Patterson for the Plaintiff

K Cornege for the Respondent

Contract, Equity, Property — agreement for sale and purchase — owner elected not settle because it resold the land to the respondent — caveatable interest pursuant to a cestui qui trust — applicant had cancelled the contract in a statement of claim for damages — whether a contractual and equitable interest survived cancellation — Land Transfer Act 2017 — Contract and Commercial Law Act 2017

Application by Moeke (“M”) for an order that a caveat not lapse pursuant to s143 Land Transfer Act 2017 (“LTA”) (lapse of caveat against dealings). In October 2018 M entered into an agreement for sale and purchase with the then registered proprietor of the property, Raukawa Iwi Development Limited (“Ruakawa”). The agreement became unconditional and on the settlement date Ruakawa advised M that it had elected not to sell. M issued a settlement notice requiring settlement within 12 working days. Settlement had not occurred because Raukawa had resold the property to the South Waikato District Council (“the Council”). The Council had known that M had a binding contract with Raukawa to buy the property. The Council then entered into an agreement for sale and purchase with a third party. M claimed a caveatable interest pursuant to a cestui qui trust. M had also commenced proceedings against Raukawa and the Council for damages pleading that “the first defendant “made it clear” to the plaintiff that it did not intend to perform the first defendant's obligations under the contract, thereby repudiating the contract. In consequence the plaintiff has cancelled the contract, as is hereby notified”. It was later amended seeking specific performance and damages.

The issues were: whether M had an equitable interest in the property by virtue of a trust; whether M had cancelled the agreement, whether M's contractual interest in the property survived the cancellation of the contract and whether it was reasonably arguable that M's equitable interest in the property survived the cancellation of the contract.

The Court held an unregistered purchaser of land had an interest in land between purchase and settlement sufficient to sustain a caveat. That equitable interest was effectively held in trust by a registered owner who had notice that their registration served to unlawfully defeat the prior claim.

Prior to the final settlement of the agreement for sale and purchase, M had an equitable interest in the land, to some degree.

M had cancelled the contract to purchase the property. The first notice of cancellation was given in the original statement of claim which was served on Raukawa and the Council. Cancellation became effective once the parties had notice of it

It was not possible for M's contractual interest in the property to have remained viable past cancellation. M had cancelled the contract through the notice in the statement of claim. L's election to cancel and claim for damages was freely made. Pursuant to s42(1)(a) Contract and Commercial Law Act 2017 (“CCLA”) (effect of cancellation) any unperformed obligations effectively cease at the moment of cancellation. That included Raukawa's obligation to sell the property to M, which Raukawa had plainly repudiated. When M had sought specific performance in his second statement of claim, it was too late.

Cancellation extinguished an equitable interest. Following the cancellation of the contract, the valid ground that existed justifying his lodging the caveat no longer did so.

An order was given for the caveat to lapse.

JUDGMENT OF ASSOCIATE JUDGE Sargisson

This judgment was delivered by me on 12 September 2019 at 11.30 am pursuant to Rule 11.5 of the High Court Rules.

Deputy Registrar

Solicitors:

Mark Copeland Lawyers, Rotorua

K J Patterson, Tauranga

1 This is an application for an order that a caveat not lapse pursuant to s 143 of the Land Transfer Act 2017.

2 The background is not in dispute.

3 The caveat is number 11417841.1, registered against Title Identifier 8A46B/1142. That is the title for the property located at 10 Dumfries Road, Tokoroa.

4 On 2 October 2018 the applicant, Ford Moeke, entered into an agreement for sale and purchase with the then registered proprietor of the property, Raukawa Iwi Development Limited. It is agreed that the agreement became unconditional and that settlement was to take place on 7 December 2018.

5 On 7 December 2018 Raukawa's solicitors wrote to Mr Moeke and advised that it had elected not to sell. Mr Moeke's solicitors issued a settlement notice requiring settlement within 12 working days. Settlement with Mr Moeke did not occur because Raukawa had resold the property to the respondent, South Waikato District Council. Registration of Raukawa's transfer of its interest in the property to the Council took place on the very day that Raukawa was supposed to settle with Mr Moeke, 7 December 2018. The Council accepts, for the purpose of this proceeding, that it knew that Mr Moeke had a binding contract with Raukawa to buy the property. It says (with scant elaboration) that it acted in the public interest in stepping in, as an alternative purchaser, to defeat the completion of his purchase.

6 On 20 March 2019 the Council entered into an agreement for sale and purchase with a third party. That agreement became unconditional on 14 June 2019 and settlement was due to take place on 26 July 2019. The date for settlement has been extended to 13 September 2019.

7 On 16 April 2019 Mr Moeke lodged his caveat against the title to the property. He claims a caveatable interest pursuant to a cestui qui trust. He contends that he acquired an equitable interest in the property pursuant to the agreement for sale and purchase with Raukawa, and that he was deprived of his right to acquire the property by the fraud of Raukawa and the Council. On this basis he claims an equitable interest in the property sufficient to support his caveat.

8 There is no challenge to the description of the caveat and its adequacy in relation to the interest claimed.

9 On 23 May 2019 Mr Moeke commenced proceedings naming Raukawa and the Council as first and second defendants under CIV-2019–463–46. In the statement of claim he sought relief by way of damages and exemplary damages for breach of contract and conspiracy to defraud against the first defendant, and conspiracy to defraud against the second defendant. Paragraph [13] of the statement of claim pleads:

… the first defendant “made it clear” to the plaintiff that it did not intend to perform the first defendant's obligations under the contract, thereby repudiating the contract. In consequence the plaintiff has cancelled the contract, as is hereby notified.

(emphasis added).

10 At the same time he filed an application for summary judgment on the statement of claim.

11 The documents in opposition to the application for summary judgment were filed on 18 July 2019.

12 On 17 June 2019 Mr Moeke filed an amended statement of claim seeking relief by way of specific performance of the contract with Raukawa, seeking a declaration that the transfer from Raukawa to the Council is void; an order cancelling the registration of the transfer to the Council; and seeking an order that Raukawa specifically perform its agreement with Mr Moeke; or an order pursuant to s 43(3)(c) of the Contract and Commercial Law Act 2017 that the property be vested in him. I take this to be relief by way of an order that the Council transfer the property to Mr Moeke. Additionally, Mr Moeke seeks relief by way of damages to compensate him for the delay in title, and exemplary damages in the sum of $150,000 plus costs.

13 Mr Moeke seeks by way of alternative relief damages of $450,000, interest under the Money Claims Act 2016, exemplary damages and costs.

14 In the amended statement of claim Mr Moeke pleads as follows:

[12] By para 13 of the statement of claim dated 28 May 2019, Ford notified cancellation of the contract.

[13] By its actions of refusing to settle and selling the property to [the Council] and not complying with the settlement notice [Raukawa] repudiated the contract constituted by the first agreement.

[14] Upon [Raukawa's] repudiation, Ford became the beneficiary of a cause of action for specific performance which accrued unconditionally in Ford's favour, notwithstanding the cancellation.

15 I consider the present application requires me to resolve the following questions:

• (a) Did Mr Moeke have an equitable interest in the property by virtue of a trust?

• (b) Is the pleading in para [13] of the statement of claim effective as cancellation by Mr Moeke of the agreement for sale and purchase between himself and Raukawa?

• (c) Did Mr Moeke's amended statement of claim effectively revoke the notice of cancellation in the earlier pleading?

• (d) Even if the pleading is effective as cancellation, is it reasonably arguable that Mr Moeke has nevertheless retained his equitable interest in the property sufficient to sustain a caveat against the Council's title? In other words, does the Council hold an equitable interest on trust for him separate from the contract with Raukawa?

• (e) Alternatively, is Mr Moeke arguably entitled to relief in the form of an order requiring Raukawa or the Council to transfer the property to him, or can he “retrieve” his equitable interest by a vesting order under s 43 sufficient to sustain a caveat?

16 I will begin by setting out the applicable legal approach to sustaining or lapsing a caveat. I will then discuss each issue to the extent that I consider it ultimately determinative.

Caveats — legal principles

17 The pertinent legal principles...