66 66 S.C. 1902. KAURI TIMBER COMPANY v. DISTRICT LAND The summons set forth that the plaintiff company was the registered proprietor of an estate in fee-simple of the block in question; that on or about the 11th of June, 1896, the District Land Registrar entered a careat against the said land, which was expressed to be entered for the prevention of improper dealings, and the protection of the interests of the several Natives, as mentioned and contained in a deed of REGISTRAK. covenant, registered in the Deeds Registry Office at Auckland as No. 89727; that the deed of covenant referred to created no estate or interest in the land, and in so far as it purported to create any estate or interest it was void, as violating the rule against perpetuities; that the Registrar had refused to remove the caveat, on the following grounds. "The certificate of "title to the Natives was issued on 9th of September, 1895, "pursuant to a warrant from the Governor, as from the 13th "of December, 1875. Prior to this, certain conveyances from "the Natives to the sawmill company the predecessors in title "of the Kauri Timber Company, as well as the deed of covenant by the former company with the Natives, had been registered under the old system. When the certificate was "issued, Mr. Dufaur, solicitor to the Kauri Timber Com"pany, requested the Registrar to bring forward in the Land "Transfer title the conveyances which had been registered "as aforesaid, but this the Registrar demurred to do, inasmuch as the conveyances, or some of them, were not in “Land Transfer form; more especially because the deed of "covenant could not be brought forward also. Ultimately, "however, it was agreed between the Kauri Timber Com"pany's solicitor and the Registrar that the question of "forms should be waived; that the company should admit "notice of the covenant, which was done in writing; and that the Registrar should lodge a caveat for the protection "of the covenantees, which is the caveat the Registrar is now requested to withdraw. The deed of covenant shows clearly that the Natives are the owners in equity of the 'land, and that the company have bought only the timber, "with a right to remove it within a specified time. At the expiration of ninety-nine years, or sooner if the timber has "been removed, the Natives will be entitled to a reconveyance without making any payment. The Registrar referred "the matter to the Registrar-General of Land, pursuant to "section 196 of The Land Transfer Act, 1885,' and he has "decided that the caveat should not be removed, except under 66 66 66 6 S.C. 1902. KAURI TIMBER COMPANY V. DISTRICT order of the Supreme Court"; that the grounds so set forth by the Registrar were insufficient in law, and that the caveat ought to be removed. 66 66 The deed of covenant referred to was dated the 19th of September, 1884, and was made between the Union Steam Saw Moulding Sash and Door Company (Limited) of the one REGISTRAR part, and Kataraina te Whakaharuru and other Natives of the other part. It recited (inter alia) a deed of conveyance dated the 31st of March, 1882, made between a number of the Native owners of the one part and the company of the other part, whereby the Native owners conveyed to the company all their estate and interest in the block of land in question. It further recited that "at the time of the execution of the conveyance it was agreed by and between the parties that immediately on the said company having cut down and removed "all the available kauri timber growing on the said land and at any rate before the expiration of ninety-nine years it "should be conveyed and assigned to the persons then duly "entitled to possess the same. The deed also recited conveyances to the company by the remainder of the Native owners of their respective estates and interests in the land, and then proceeded to witness that "in pursuance of the agree"ment and in consideration of the sum of ten shillings paid by the covenantees to the company the said company for "themselves and their assigns covenant with the covenantees "their heirs successors according to Native custom and assigns that they will immediately after they shall have cut "down and removed from the said land all available trees growing thereon and in any event shall before the expiration of ninety-nine years from the day of the date of these presents convey and assure unto the covenantees their heirs "successors according to Native custom and assigns or to "such persons as may be legally entitled to succeed to inherit or claim the same as tenants in common and free from "encumbrance all that parcel of land," &c. "And the said company do hereby for themselves and their assigns cove"nant promise and agree that if before the expiration of the said term of ninety-nine years the said company or concern shall become defunct or be wound up and there shall be no "person who can legally and effectually execute and sign the "deed of conveyance necessary to carry out the covenant then "the right and interest of the said company in the said land · shall absolutely cease and determine and the said land shall 66 66 66 66 46 S.C. 1902. KAURI TIMBER COMPANY v. DISTRICT LAND "thenceforth be held possessed and enjoyed by the covenantees their heirs successors or assigns or by such person or persons as are then entitled to the same free and absolutely discharged from the said deeds of conveyance made and executed respectively by the said Kataraina," &c., "of the one part and the said company of the other part as fully and effectually and to all intents and purposes in all respects as REGISTRAR. "if the said deeds and each of them had not been made and "executed And also that if at any time hereafter during the **said term of ninety-nine years any prospecting searching for "or mining for gold or other minerals shall take place on or in the said land or any part thereof all fees due or moneys "paid for or on account of such prospecting searching for or mining by any person or persons company or companies or "body or bodies corporate shall be paid to and be deemed "to belong and be the property of the covenantees their heirs successors or assigns the deeds of conveyance herein before "in part recited to the contrary notwithstanding." 66 Bamford, for the Registrar: The reply of the Registrar is in effect that the Natives are the real owners of the land. The rule against perpetuities does not apply, any more than it would to granting an estate with a reversion to the grantor. This is the reasonable construction of the deed of covenant, which must be read with the deeds of conveyance. The Kauri Timber Company is simply the trustee of the land, and must reconvey to the Natives at the proper time and without consideration. Campbell, for the Kauri Timber Company : The deed of covenant infringes the rule against perpetuities, and is therefore bad. The rule in its simplest form, as laid down in In re Ridley(1), forbids the creation of an estate intended not to take effect till after the determination of a life or lives in being, and twenty-one years after. Saunders defines a perpetuity as a future limitation, restraining the owner of the estate from alienating the fee-simple of the property: Saunders on Uses(2). In the present case the covenant to reconvey at the end of ninety-nine years, or sooner if the timber be removed, is clearly a restriction of the company's right as owner to deal with or alienate the land. The rule against perpetuities was established for the purpose of securing the free alienation of property, and this covenant prevents (1) 11 Ch.D. 645. (2) 5th ed. Vol. i. 204. S.C. 1902. KAURI TIMBER COMPANY alienation. Any limitation must, in order to be valid, be so framed as to take effect within the time prescribed by the rule. Where there are no lives in being intervening the limit is twenty-one years. In this deed the time is ninety-nine years, or a shorter but indefinite time. The limitation in this case should have been made to take effect within twenty-one years; REGISTRAR, but, even if the timber should in fact be removed within this period, it could not affect the company's rights, as it would not render the deed of covenant valid. V. DISTRICT LAND [CONOLLY, J.-You say, then, that, had the company so chosen, it could have sold the land for possibly a very high price immediately after the deed was executed?] Yes; but the question of value or price is not to be considered in the matter. [CONOLLY, J.-Do you admit the facts stated by the Registrar as to the agreement between him and Mr. Dufaur, the company's solicitor?] Yes; but if the deed of covenant be bad no subsequent agreement between the Registrar and the company would make it good. The rule was applied in The London and South-western Railway Company v. Gomm(1), and that decision was followed in Trevelyan v. Trevelyan(2). Both these cases show that the clogging of alienation by covenant or contract is quite as obnoxious as by limitation in a devise or bequest. Bamford, in reply: The rule against perpetuities was laid down in Cadell v. Palmer(3), and was at first confined to shifting uses and exe cutory trusts, though it has since been extended to contracts; but it does not apply in this case. A future estate created by covenant for a specified or limited time does not stand on the same footing. In Gomm's case(1) the time was indefinite and unlimited. In the present case the recitals in the deed of covenant are binding on the company, and they show that the land was to be conveyed to the Natives without payment. They were, and are, the real owners. The Natives have the right to go behind the deeds of conveyance and show that, though absolute in form, they were not intended to be absolute in fact. The reservation to the Natives of the mining fees, &c., shows that they have a present equitable right in the land and, even if the rule against perpetuities is in(3) 1 Cl. & F. 372. (1) 20 Ch.D. 562. fringed by the deed, these rights are sufficient to support the caveat, for it has been held that where a trust for sale under a will was bad, as infringing the rule, yet persons entitled to the proceeds of the sale may succeed in recovering: In re Daveron, Bowen v. Churchill(1); Goodier v. Edmunds(2). I have no doubt in this case as to what my judgment must be. It is perhaps rather unfortunate, but I cannot help it-the cases, to me, seem to be so perfectly clear. The intention of the parties was, as stated in the deed of covenant, that, although the company were absolute owners, they would, when they had cut down and removed the timber, or when the ninety-nine years had elapsed, have reconveyed to the Natives for a nominal consideration. That is what they intended to do. Such an undertaking was certainly against the principle of law relating to perpetuities, and therefore, whatever their intention, I must hold the covenant to be an unlawful one, and that the caveat to support the covenant cannot itself be supported. The careat must be taken off. Registrar's costs will be paid out of the Assurance Fund, but no costs are allowed to the Kauri Timber Company. Solicitor for the plaintiff C. E. McCormick (Auckland). S.C. 1902. KAURI TIMBEA COMPANY บ. DISTRICT LAND REGISTRAR. In re SCOULLAR, AITKEN v. SCOULLAR. S.C. IN CHAMBERS. Will-Business of Testator-Conversion into Company-Shares to Trustees in WELLINGTON. Payment Power of Court to sanction. Where the trustees of a will have no power to invest the trust moneys in the purchase of shares in a company, the Court has no power to sanction a sale by the trustees to a company of a business left by the testator, the trustees taking shares in the company as payment or part-payment of the purchase-money. In re Morrison, Morrison v. Morrison (1) followed. (1) [1901] 1 Ch. 701. ORIGINATING summons taken out by the trustees and executors of the will of Arthur Scoullar, deceased. C. H. Izard for the trustees and executors. M. Myers for the beneficiaries. (1) 69 L.T. 752. Cur, adv. vult. (2) [1893] 3 Ch. 455. 1901. Nov. 1, 8. STOUT, C.J. |