THE COURTS.

New Zealand Mail, Issue 872, 16 November 1888, Page 22

THE COURTS.

COURT OF APPEAL-

Te Ara Takana and others v. McDonald, et UXOR. (Judgment of Prendergast, C.J. Delivered 2Sth September, 1888.) This action is at t'ao suit of six persons of the Maori race, being as to three of them —three out of the six grantees in a Crown grant of 4500 acres of land—as to one other, Enereta, the legally appointed successor of one other of the six grantees, and the remaining two being persons claiming respectively to succeed, but not yet legally appointed to succeed, to the title of the remaining two grantees. The six grantoes were, by law, tenants in common, in shares to be ascertained by the Native Lands Court. The claim arises out of a purchase by one of the defendants, Alexander McDonald, of a large portion of this land when sold, by virtue of a power of sale contained in a mortgage of the land, such purchase being alleged to have been made on the plaintiffs' behalf, or at a time when Mr McDonald held such a fiduciary position, and under such circumstances, that he ought to be treated as having made the purchase not for himself but on behalf of the plaintiffs, or those whose interest in the land they represent, and that the plaintiffs are entitled to redeem the land upon payment of his outlay ; or that—except as to so much of the land as may have been sold to bona fide purchasers without notice —he ought to be declared to hold the same as trustee for the plaintiffs ; and as to the proceeds of such portions as have been sold, that he should account for the proaeods and for any rents received, The other defendant, Mr McDonald’s wife, is made a party because, after the purchase by him, he made a voluntary conveyance to her of a portion of the land. The land had been mortgaged by the grantees to secure loans amounting to £2OOO. The defendant had taken a transfer of the mortgages, and had—under the law in force in New Zealand permitting persons through mortgages tc buy at a sale, under the exercise of the power of sale—bought the land for £SIOO, leaving a balance of £3OOO. At the hearing in the Supreme Court Mr Justice Richmond made an interlocutory decree declaring the three plaintiffs who are grantees entitled to this relief, and also the two plaintiffs who claim to be entitled to succeed to two others or the grantees entitled to the same relief, upon their title to succeed, being declared in the Native Lands Court •; and the sixth (Enereta), not entitled to the same relief, but to be bound by the sale and entitled only to an account of what should be found due to her in resoect of the said balance of £3OOO. Against this decree the defendants appealed to this Court. In the judgment delivered by Mr Justice Richmond in the Supreme Court there is a full and comprehensive statement of the facts, and a detailed reference to the important parts of the evidence. This makes it unnecessary that the facts should.-be repeated here at any length. _ , , , fa my opinion the conclusion arrived at by Mr Justice Richmond as to the position, of confidence and influence held by the defendant towards the grantees _ and their representatives is well supported by the eviindisputable that the defendant held up to the last, the position of advocate of their rights in Nativo lands, and agent in their behalf in the prosecution of claims .thereto, and had been their agent in the mortgage and some other transactions. It was, however, contended on behalf of the defendant that the evidence showed they had in various instances dealt ‘With their . individual interests in the.land Without the advice of, and without reference ~, to, the defendant. Whether this Jie s.o. pr not, the fact that a person—with* •' regard toy .whom occupies a position which gives that

other influence over him—acts in various instances without the advice and without the operation of the influence of that other person, does not in any particular case where there is a transaction between the two, pre" vent the application of those equitable principles which have been established for the protection of persons dealing with others who hold a fiduciary position towards them. Though 1 agree with the conclusion arrived at in the Court below as to the influential and confidential position held by Mr McDonald before the mortgage effected in August, 1876, it is unnecessary to rely upon the state of things previously to that transaction, exoept when the defence lacks, and acquiescence is considered. On the arrangement being made for that mortgage, and the occupation by the defendant of portion of the land at a rent, out of which it was arranged he should keep down the interest on this and an earlier mortgage, Mr McDonald certainly occupied a special position of agency and trust in that particular transaction; and the evidence, I think, shows that it continued. It certainly continued down to, and at, tho time when he purchased the land at auction, I am satisfied that the five owners of this mortgaged land out of the six did look upon Mr McDonald as acting on their behalf, and in their interest, in what he did in acquiring the transfer of the mortgage, and in exercising the power of sale, and were justified in so considering him, and consequently abstained from seeking any other advice or protection. I concur with Mr Justice Richmond iu believing that at this ■ time Mr McDonald was conscientiously acting for the five, in an endeavour to defeat what he believed to be the inequitable conduct of the plaintiff (Enereta), who had succeeded to the interest of one of the grantees, and who was contending that she was under no liability to be charged with any portion of the interest on the mortgages. Mr McDonald's letter of the 20fch January, 1579, to the mortgagee is not capable of any other construction than that Mr McDonald considered himself as acting on behalf of all but Enereta. Enereta had her own adviser—a solicitor (Dr Buffer) —and the proceedings Mr McDonald was taking were certainly intended to bo hostile to her only. Mr McDonald’s conduct alter he had obtained the transfer of the mortgage, and when the arrangement wa3 being made between Messrs. Brandon unde? his instructions, and Messrs. Buffer and Lewis acting for Enereta for the postponement of tho sale, and afterwards when he insisted that the sale should take place, shows conclusively that Vo considered himself to bo authorised to act on behalf of all but ISnerota (see Memorandum sf Agreement of 21st January, ISSO, Exhibit 12; also, Exhibits 13, 14, 15, 16). It is clear that lie acted iu these matters without referring to the live, and without any other person being appointed to act for them, considering, no douot, that he himself had fall authority to act for them. The fact that Mr McDonald did not pay tho purchase money to the Registrar, but considered himself in such a position that 110 could retain that and account for it ; his own evidence as to what took place between him and the Native. 1 ? ;after having purchased the land, he returned from Wrlliugton—all this shows that not only were the five Natives trusting in. him to protect their interests, but justified in supposing that ha was so doing, and that he himself at that time considered hiuisolf tits acting in their interests. If it bo established, as j think it is, that Mr McDonald must be treated U 3 having purchased for the live, aud, as Mr Justice Ric-bmond points out, that they then had a right to redeem by paying him wliat he had advanced, that is, the money he had paid for the transfer of the mortgages and his expenses, tiie question remains whether the conduct of these five has been such as to prevent them from making the claim they now put forward. It is contended that tho lapseof time (from 1881 to 1887), the conduct of tho Natives with regard to tho land since 1881, constitute such lache3 and acquiescence as to disentitle them to relief. Mr McDonald does not deny that he put the alternative to the Natives—that they should either have tho land or the £3OOO balance of the purchase money. Ho denies that at the. time they expressed their wish not to lose the land they arranged with him that the rents of all the portions of the whole block under lease, including that let to him. self on lease, amounting, in all, to over £SOO a year, should be retained by him and be devoted to the repayment of the advance made in saving the laud- that is, the £2OOO mortgage 1110003', interest, aucl expenses. Mr Justice Kichmoad however, conoludes, on the evidence, that the arrangement was made. I see no reason for not arriving at tho same conclusion. Mr Justioo Richmond points out that on cross-examination Mr McDonald admitted the substantial accuracy of Hughes' evidence on this matter. In my opinion the result of tho evidence 13 that there was the arrangement for the payment of the advances out of the rents, and that there was the discussion as to the advisability of selling part of the lands for the payment of th? moneys advanced to purchase the land Q.b the mortgage sale, aucl that the propoial for ail immediate sale was not entertained because it was thogght the time Was not favourable for such sales. Mr McDonald had arranged with Mr McKcdvio for a loan of £SOOO, to enable him to purchase the land at the sale under the power, supposing it would be necessary to pay the whole a-nountof tho purchase money to the Registrar. As he was himself the mortgagee vendor, the £2OOO was of course not paid ; and, as to the balance, £3IOO, it appears that that was not paid by Mr McDonald to the Registrar. Mr McDonald, from his own point of view, was accountable to the Native mortgagors for the balance, £3IOO, Some of the Nativo witnesses prove that Mr McDonald had told them of the arrangement with Mr McKelvie, on the occasion when he offered them the alternative of the laud or the £3OOO. Such being the state of things immediately after the purchase by Mr McDonald, it appears that, notwithstanding the Natives bad made the arrangement, that the rents should be devoted to tho repayment of the advance made for saving the land, Mr McDonald did from time to time pay them, or on their account, various sums of money, amounting ir, all to nearly £I7OO. The receipt by the Natives of these payments, Mr McDonald

contends, amounts to an election to give up the land, and to be an acquiescence in the purchase by him. But there is no evidence that Mr McDonald, or any one else, warned any of them that this conduct of theirs would have the effect which he now contends it has had. It has been already noticed that, at the meeting of the Natives, when the best mode of paying off the advances was disoussed it was proposed that portions of the laud should be sold for that purpose. Within a year o c that time Mr McDonald began to make sales of the land, and from that time (April, 1881) down to Juno, 1835, sales producing a large sum were made. Now Mr McDonald contends that these sales were made entirely aS his own sales, on his own acoouut, and without any reference to the Natives ; and that, as the Natives must have known of them and made no objection, there was acquiescence by them in theso sales, and, consequently, acquiescence in tho purchase made by him. It appears from Hughes’ evidence that the Natives did know of the fact of some of the sales, but it by no means follows from this that they understood that he was making t ie sales in his own right ; for it may well have been that they supposed that such of the sales they knew of were being made for the purpose of meeting advances that had been made. It is certain that during all this time the Natives had no other adviser in relation to their position with regard to Mr McDonald s purchases than himself; and it is certain that he never gave them any definite information or advice as to their position or their rights. As to some of the sales effected by Mr McDonald, it seems probable that the Natives knew nothing of them. In 18S4 the transaction os to the Kawa Kawa Reserve took place ; the details of thi3 are fully stated in the judgment in the Court below. The consent by the Natives to this transaction is relied upon by Mr McDonald as another and still stronger act of acquiescence iu his purchase. Shortly stated, it was as follows. A Native reserve adjoined the block of land in question ; some of the grantees were interested in that reserve; it was proposed to sell that reserve ; it was necessary to have the consent of the Governor to the sale. The officers whose duty it was to advise whether'such consent should be given, had to ascertain whether tho Natives interested in thereserve were sufficiently provided for without the reserve. Upon inquiry, it was found that though they were living on a portion of the block of land purchased by Mr McDonald, they could not be deemed the owners of it; for it was subject to mortgages, and the equity of redemption appeared to belong to Mr \ cDouald. Thereupon it was arranged that £SOOO (a portion of the purchase money of the reserve) should be applied in the purchase of tho lands occupied by them. If Mr McKay, the Commissioner who made the inquiry, and the arrangement for the Natives for tho so-called purchase of their occupations, had fully explained to them their position, and their rights at this time, there would have been better reason for contending .that the Natives had by this transaction acquiesced iu the purchase by Mr McDonald. It is, however, certain that Mr McKay himself had not learnt, and was therefore incapable of explaining to the Natives their position and their rights with regard to the land. They had no legnl adviser iii this transaction ; and there is no evidence that they were in any way ma le aware of their rights, and how they would be affected by acquiescing iu Mr McDonald’s purchase, or treating him as owner of tho land. If the Natives still believed that the land was hold by McDonald only as a security for the £2OOO and subsequent advances, it may well be that they would look upen the so-called purchase of tho lands occupied by them as nothing mote than payments going towards a discharge of the encumbrances upon the lands. As to the notice to quit given by MoDonaid to the four of the Natives in ISB3, that was in no way acted upon, and cannot be relied upon by the defendaut ; for the not acting upon it, and permitting the Natives to continue iu occupation, may be argued to bo an admission of their right; while, as to the Natives, it may be said that the receipt of such a notice by them would 110 b sufficiently infoim others ol the right asserted by such notice.

‘ Aa already stated, I concur in the conclusion arrived at by Mr Justice Richmond that the position held by Mr McDonald towards tho Natives, tiff very shortly before the action, was one of great influence, arising out of their confidence and trust iu him, and the consequence is that, even if it were admitted that tho Natives did eventually acquiesce in the purchase, tho defendant cannot avail himself of that ; if such acquiescence was at the time the confidential relationship stiff continued. It is incumbent upon him to show that the alleged acquiescence was with knowledge of their right to repudiate the transaction, and after the Natives had been released from the' influence. In Allcard v Skinner, 56 L. J., Ch. 1067, Cotton, L.J., sayis : ‘Delay in asserting righta cannot in equity be a defence, unless the plaintiff were aware of her rights.’ In the present ease it is certain that the Natives were not aware of their rights ; indeed, it is, I think, almost certain that the defendaut himself never realised the effect tho position he held towards tho Natives. would have if ttyey oh quid eventually question his right to hold the laifd ps bis own. So far as tho deoree refuses to Enepeta the same relief as it granted tp the others, there is no appeal by her. I copcur however in the decree a 3 to hep right being oply for an account of tho purchase money. As to those portions of the decree which relate to the ascertainment of the proportional interests of tho plaintiffs in the land, and the completion of the title a of the plaintiffs Ruera and. Hara.no point was made at the hearing of the appeal. I however concur in those portions of this deoree. Iu my opiuion the appeal should bo dismissed, with costs on the highest scale. Thursday, November 8. (Before Richmond, Gillies, and Ward, J.J.) IN RE THOMAS GREENWOOD, DECEASED. This was an appeal from an order of Ward, J., dismissing an appeal by the representatives of tho estate of

Thomas Greenwood, deceased, from a decision of the Commissioner of Stamps, that the estate was liable to pay duty on the moneys secured by a mortgage of lands in Canterbury, New Zealand, dated 24th September, 1875, and made between Henry Hoare as mortgagor and the said Thomas Greenwood as mortgagee. Both Hoare and Greenwood were resident and domiciled in England, both at the date of the mortgage, and at the death of Greenwood. It was provided by the mortgage that all moneys payable under it should be paid to the mortgagee, his executors, administrators or assigns, or his or their agents in England. The deed was executed in New Zealand by the attorney of the mortgagor Hoare. The questions for the decision of the Court were—l. Were the said mortgage security and 1 the moneys thereby secured property of the deceased situated in the Colony of New Zealand, or a debt, moneys, or closes in action, receivable or recoverable in the said Colony, the property of the said deceased, and which, on his death, become vested in his executors as such ? 2. Was the Commission right in making his assessment ? (Richmond, J.: It is admitted on both sides in this case that the whole question turns on the construction of section 8 of the Deceased Persons Estates Duties Act, 1881. Whatever else has been said, whether in the way of citing cases or referring to other similar acts, has been merely by way of illustration. We come back to the construction of the section. The duty has been charged as upon a debt receivable or recoverable in the Colony the property of the deceased. Under the terms of section 8, it is no answer to say that the deceased had at the time of his death a foreign domicile. The words of the section prevent the application of the principle mobilia sequuntur personam. We have therefore only to consider whether the money owing on this security was adebt recoverable in the Colony. Now the debt was owing under a mortgage made in the Colony over lands in the Colony. Tho contract was made in the Colony and affected lands in the Colony. Hence the debt was recoverable from the mortgagor personally in the Colony, and was also a debt recoverable out of the land. Whatever injustice there may seem to he in the payment of double duty, the case is hit by section 8. It is also open to contend that the earlier words of the section apply, and that the security is taxable as real security situated in New Zealand, or as hind in New Zealand. It is quite certain that a mortgagee has an interest in the land, forming his security, and that is quite consistent with the rule of equity that the debt is the chief part of a mortgage. However, I rest my opinion upon the first ground that the charge is upon the debt as a debt due iu New Zealand, under a mortgage made in New Zealand, and do not wish to put it upon any other ground. I think the decision of the Court below was right. No question is raised as to the amount of the duty. Gillies, J. : I agree with what has fallen from my brother Richmond. Williams, J. : I agree also, and have nothing to add. Appeal dismissed, with costs on the lowest scale. YOUNG V. BANK OF NEW ZEALAND AND OTHERS. (Prendergast, C. J., Richmond, J., Williams, J.) This was a motion forleavo to set down a case for appeal and for hearing at the present sittings of the Court ; also to have the security to he given fixed by the Court of Appeal. It was a case in which the appellant had conducted liis case, in person in the Court below. Mr. Jellicoe appeared for the appellant,,Mr .Tripp for respondent. After hearing Mr Jellicoe, the Court refused the leave, with cost 3, L 5 ss.

Saturday, November 10th and Monday, November 12. (Before Chief J ustice Prendergast, Gillies, and Williams, J.J.) OFFICIAL ASSIGNEE OF DUNBAR (APPELANT) V. DEAL AND MANNING (RESPONDENT.) This was an appeal from a decision of Ward, J. The case in the Court below is reported in 6. N.Z.L.R., 636. Deal leased an hotel to Dunbar by memorandum of lease under the Land Transfer Act. The lease contained a covenant that if the lessee during the term erected any buildings on the land in lieu of the premises then on it the lessor would, at the expiration or sooner determination of tho term, pay to the lessee the then value of tho buildings so erected. Them wa3 a proviso that the lessor might re-enter m certain eventq, and that thereupon the said term should absolutely determine. Dunbar then mortgaged the lease to Manning and Company to secure £IOOO. Afterward, being required by the Licensing Committee to <lo so, Dunbar erected new buildings and o&Opngd 9 loan of LfiOQ from Deal to pij,y for papfc of them,’as Deal alleged, upon the condition that the L.SQQ wf is to bo a first charge qpon the amounf payable by Deal at tho ‘ teripinat jon of th 4 e lease. Dunbar became bankrupt and Deal re_entered. Ward, J., decided the questions in dispute between the parties as follows >—3. That the reentry by Real did .not operate as a total avoidance of tlie lease, and so of his covenant to pay for the buildings. 2. That the benefit of this covenant passed to Manning and Co., by their mortgage, notwithstanding that the Rand Transfer Act enacts that a mortgage under that Act is to take effect as a security only, and not operate as a transfer of the. estate charged. From the latter CpArt t bf tliis decision the Official Assignee now'appealed, and Deal, though

a respondent, was allowed tq attack the whole judgment. Messrs G.. Harper and Tripp appeared for the Official Assignee, Mr P. Holmes for the respondent Deal, and Mr Fisher for the respondent Manning and Company. Mr Fisher was only called upon upon the point whether the benefit of the covenant to pay for the buildings ran with the land, and was stopped shortly after commencing his argument. Prendergast, C.J. : I think the appellant must fail in this appeal. Whatever construction of the Act may be adopted, it is clear that the Land Transfer Act professes to give something, it gives a security. It appears to me clear, therefore, that, if the proper conclusion is that tiiis covenant by the lessor to pay the lessee is’a convenant, the benefit of which runs with the land, then, that conclusion once arrived at, it follows at once that the mortgagee had a right which the mortgagor could not interfere with. Tho mortgagor could not assign the benefit of that covenant to a third party. It is clear that the benefit of a covenant to erect buildings runs with the land, and the only doubt, in my mind, was whether in the absence of authority wo could hold that the benefit of a covenant such as this, which is not to do anything upon the land, but is only connected with another covenant to do something npon tho land, would also run with the land. But it appears now from the fuller report of Grey v. Cuthbertson in Ohitty’s Reports (vol. 2, p. 482) that the reason of that case was that the Assignee was not 1 named. Beside that the covenant related to a thing not in esse at the time of the demise. In the case in equity of Nansell v. N°rion, the question as to the benefit of the covenant did not arise, but the conclusion come to was that the burden of it ran with the land. In tho case of Gorton v. Gregory, both Erie, C.J., and Willis, J., use expressions showing that in their' opinion the burden of such a covenant as this runs with the reversion. 'T. therefore think that as tho covenant to build does manifestly touch and concern the realty, and is as to something to be done during the lease, and as this covenant to pay is corelative to the covenant to build, the covenant to pay must be held to run with the land. It follows from what I have said before, that I think a person having such a charge as is given by this mortgage has an equity over the-, benefit of the covenant, which the mortgagor cannot defeat. As to (he question of costs, I find that the Official Assignee must pay the costs of the third party, but that, as the appeal was as much in the interest.of Deal as of the Official Assignee, Deal should pay his own costs. '. Gillies, J. : I agree with what the Chief Justice lias said. In regard to the covenant, I think it is necessarily a covenant. running with the land.• « It is admitted that if the covenant were absolute to build if required and the tenant were required to build and did build, that the covenant to pay for the buildings would run with tho land. Here the tenant wa3 practically bound to build to preserve the license. It is said that a mortgage of leaseholdsunder (heLind Transfer Actamounts to a mortgage by demise only, and not by assignment. But in a mortgage by demise care would have been taken to repeat all the covenants in the lease, and the remedy would have been against the mortgagor and not against the.Jeasor. _As to the costs I agree with the Chief J ustice. (Williams, J. : I agree also. Three points were taken for the appellant— lst, that the covenant did not run with the land ; 2nd, that if it did, still the benefit of the ‘ covenant did not pass with this mort- , gage under the Land Transfer A<Tt ; and 3rd, that the lease became absolutely void after re-entry.. I take tho last first. ' It seems to mg’Riere is no manner of ground for saying that after the landlord had re-entered the right to sue on the covenant was defeated. The power of re-entry gives tho landlord right to re-enter, “and thereupon ’’ theterm of fourteen years is to “ absolutely determine.” The covenant is “ that the lessor will at the expiration or sooner determination of the said term pay,” &c. The determination and the arising of the right to payment are made', to coincide in point of time. As to the first point: It is conceded that here assigns are named. By the interpretation clause to the Land Transfer Act the assigns of both parties are expressly bound. Here we find the lessee bound to do everything {necessary to keep tho license in force. The Committee required him to rebuild, and in order to keep tho license'in force he did rebuild, and the present action depends on whether his assignee /can recover the value of the buildings from the " landlord. The covenant is that the landlord will pay at the expiration or sooner determination of the term, and that he will pay the then value. It i 3 clear that at any time tho tenant, whether the original lessee or his assignee, might have to' epect the buildings, and that the landlord op the assignee of the landlord—that is, the jandlonjf for the time being—would liaye to pay tjhe yalqe of tjjem upon the jease being determined. Then comes the duestion whether the mortgage gives the mortgagee the b°P e fit of hja coyenant, Nn doubt it. 13. a mere charge, and, where jt is of a Rase, preates no privity between the landlord and the mortgagee. But it is of all the mortgagor’s estate and interest in the land j and as this is a covenant, the benefit of which runs with the land, it will charge that benefit. It may very well be that if the lessee were not a party to the action tho mortgagee would be" out of Court. Having a mere charge, it may very well

be the mortgagee would be incapable of: suing the landlord. But the lessee is a party to the action, and the mortgagee is entitled to say, the money which you recover by virtue of your privity with the landlord you must hold subject to my charge. I think the judgment of the Court below should be affirmed. I agree with the Chief Justice as to the costs. Harper : Costs will be on the middle scale. Our claim is for L 202 odd. , Fisher : The claim is to set aside a judgment in our favour for L 663 13s. Prendergast, C.J. : The costs must be on the highest scale; M'KAY V. ORAM. This was a ca3o which was beard before the late Mr Justice Johnston, who died without given judgment. The defendant had obtained an order from Ward, J., that the plaidtiffs should set the case down for rehearing before him at the last October sittings in Christchurch, and that in default, the action should stand dismissed for want of prosecution. The plaintiff gave notice of appeal against this order, and did not set the c-ise down. The appeal was now heard. Mr Austin, for the appellant, contended that there was no rule under which such an order could be made, and that the Court had no inherent jurisdiction to make it.. The Court dismissed the appeal without calling on Mr Fisher for the respondent, but extended the time for setting down the case for a further fourteeu days from date, the appellant to pay the costs of the appeal (L2l), and the case to be reheard at the next January sittings.