Burke and Burke v Advanced Securities Limited

[2007] NZCA 562

IN THE COURT OF APPEAL OF NEW ZEALAND

CA499/07
[2007] NZCA 562

BETWEENJULIAN PAUL BURKE AND GILLIAN ELIZABETH BURKE

Appellants

ANDADVANCED SECURITIES LIMITED

Respondent

Hearing:3 December 2007

Court:Hammond, O'Regan and Ellen France JJ

Counsel:No appearance for Appellants

T M Braun for Respondent

Judgment:7 December 2007 at 11 am

JUDGMENT OF THE COURT

ALeave to appeal out of time is granted subject to the conditions set out at [21] – [22] of the Reasons of the Court.

B        We award costs of $1,500 plus usual disbursements to the respondent.

REASONS OF THE COURT

(Given by O’Regan J)

Introduction

[1]       This is an application for special leave to appeal against a decision of Associate Judge Doogue: Advanced Securities Ltd v Burke & Burke HC TAU CIV 2007-470-143 15 August 2007. 

[2]       Special leave is required because the appeal was not filed in time.  The last day for the filing of an appeal within time was 12 September 2007.  The application for special leave to appeal was filed on 21 September 2007, so it was seven working days out of time. 

[3]       The application is made under r 29(4) of the Court of Appeal (Civil) Rules 2005 (the Rules).  That rule provides that a party may apply for special leave to appeal out of time in accordance with Part 2 of the Rules if he or she wishes to have the period extended, in the event that the appeal period has expired.

[4]       The reason given for the failure to file the notice of appeal within time is that the appellants did not receive a typed copy of the judgment of the Associate Judge (which had been delivered orally) until 20 August 2007, and that this led to delays in seeking legal advice about the appeal.

The Associate Judge’s decision and the events leading to it

[5]       The decision against which Mr and Mrs Burke wish to appeal is a decision of Associate Judge Doogue delivered orally on 15 August 2007.  That judgment followed an earlier reserved judgment issued by the Associate Judge on 18 July 2007.  The 18 July 2007 judgment dealt with an application by Advanced Securities for summary judgment against Mr and Mrs Burke for the amount owing by Mr and Mrs Burke under a mortgage which they granted in favour of Advanced Securities over certain land which they were in the process of subdividing.  This mortgage was entered into on 11 November 2005, and was registered on 25 November 2005.

[6]       The principal sum secured by the mortgage was payable on 16 May 2006.  The amount was $1,075,509.83, and the last monthly instalment of rental ($12,817.72) was also payable.  The amount which Mr and Mrs Burke should have paid on 16 May 2006 was therefore $1,088,327.55.  They defaulted in making this payment.  Since then interest has been accruing.  We were told by counsel for Advanced Securities, Mr Braun, that the penalty rate under the mortgage is 24.5% per annum which means that interest accrues at a daily rate of over $800.  The total amount owing under the mortgage, assuming recovery of the penalty interest, would now exceed $1,500,000.

[7]       Advanced Securities served a notice under s 92 of the Property Law Act 1952 on Mr and Mrs Burke in September 2006, and the defaults were not remedied by the time that notice expired in November 2006.

[8]       In the judgment of 18 July 2007, Associate Judge Doogue noted that the defences put forward by Mr and Mrs Burke in opposition to summary judgment were:

(a)Advanced Securities caused delay in the issuing of the subdivisional plan because of their failure to co-operate with the Burkes;

(b)Advanced Securities was therefore exercising a power contained in its mortgage in an oppressive manner, in terms of the Credit Contracts and Consumer Finance Act 2003;

(c)The oppressive conduct would be a basis for the re-opening of the credit contract between Mr and Mrs Burke and Advanced Securities, and as a result Advanced Securities would be precluded from enforcing payment of the amount owing under the mortgage.

[9]       The Judge noted that these defences were based on assertions rather than actual evidence which, on a fair consideration, disclosed that there was substance to the proposed defences.  In any event, the conduct which was said to be oppressive occurred in the period at the end of 2006 and the beginning of 2007, some months after the default (May 2006) and the expiry of the Property Law Act notice (November 2006).

[10]     The Judge then recorded that counsel for Advanced Securities was prepared to accept that, if necessary, Advanced Securities would accept a summary judgment reflecting the position up to the end of May 2006, leaving any additional claims it might have against Mr and Mrs Burke to be litigated in the ordinary way.  The Judge directed that counsel for Advanced Securities should submit for his consideration a form of judgment which reflected that concession, and indicated that he would hear submissions on the form of judgment.

[11]     The form of judgment submitted by counsel for Advanced Securities included an order that Mr and Mrs Burke vacate and deliver up possession of the property subject to the mortgage to Advanced Securities.  This led to submissions and ultimately a further hearing (by telephone) before the Associate Judge.  That, in turn, led to the Associate Judge’s oral judgment of 15 August 2007, which is the subject of Mr and Mrs Burke’s proposed appeal.

[12]     In the 15 August 2007 judgment, the Associate Judge noted that the 18 July 2007 judgment had not adjudged the entire amount owing by Mr and Mrs Burke to Advanced Securities.  He said at [2]:

But the important point is that the summary judgment I entered was of an interim kind and did not give a definitive ruling fixing the entire amount that the Burkes owed to the plaintiff.

[13]     The Associate Judge recorded that Mr Burke had read the judgment as fixing the amount owed by Mr and Mrs Burke to Advanced Securities, and that this had led Mr Burke to conclude that Advanced Securities could be compelled to give a discharge of mortgage over the various titles in return for the payment of the sum which the Associate Judge had adjudged had been payable in terms of the summary judgment (that is, the amount owing in May 2006).  The Judge said this was fallacious, and that Advanced Securities as mortgagee was entitled to retain its security until the full amount secured by the mortgage had been paid or tendered.

[14]     Later in the judgment, the Judge noted that the question of the power of Advanced Securities as mortgagee to take possession was not a matter which was the subject of a substantial dispute in the hearing which led to the 18 July 2007 judgment.  He said he did not believe there was any proper basis on which he could decline to approve the form of the judgment which had been submitted by Advanced Securities.  He said the question of the redemption of the mortgage, as raised by Mr Burke, was not a matter which was properly before him in a hearing which was limited to consideration of the approval of the form of the judgment submitted by counsel for Advanced Securities.

Scope of the proposed appeal

[15]     The proposed appeal by Mr and Mrs Burke relates only to the 15 August 2007 judgment, which in turn relates only to the form of the judgment to be sealed as a result of the Associate Judge’s judgment of 18 July 2007.  Thus, even if the appeal were successful, the summary judgment of 18 July 2007 would remain in place. 

Submissions

[16]     Counsel for Advanced Securities, Mr Braun, submitted to us that the proposed appeal had no chance of success as presently framed, because it did not attack the summary judgment itself.  He therefore described the appeal as futile, and said that this counted against leave being given to bring the appeal out of time.  He responsibly accepted that there had not been a significant delay or any significant prejudice caused to Advanced Securities as a result of the delay, but said that the Court should not grant an indulgence where the appeal which was proposed was futile, and the conduct of the appeal would lead to unnecessary delay and expense.  In that regard he emphasised the very significant daily interest cost to Mr and Mrs Burke.

[17]     Mr and Mrs Burke were not represented at the hearing before us.  They had sought an adjournment, which was declined.  However, in their written submissions they argued that the form of judgment for sealing was required by the Associate Judge to reflect the concession made by Advanced Securities that there may be an arguable defence in relation to conduct at the end of 2006 and in early 2007.  They said the order for possession did not reflect the concession, and was therefore outside the scope of the summary judgment of 18 July 2007. 

Decision

[18]     We agree with Mr Braun that there are some difficulties in the appeal as currently framed.  But there is also a lack of clarity in the position reached in the High Court, which stems from the entry of summary judgment for the period up to May 2006, leaving for subsequent resolution, presumably in a fresh action initiated by Mr and Mrs Burke seeking remedies under the Credit Contracts and Consumer Finance Act, a number of subsequent issues. 

[19]     In view of the short delay in initiating the appeal, we do not consider it would be appropriate to deny Mr and Mrs Burke the opportunity to advance their case in this Court. 

[20]     We are therefore prepared to grant leave to Mr and Mrs Burke to pursue the intended appeal so that the lack of clarity in the High Court judgments can be resolved, if that is possible in the context of the appeals as currently framed. 

[21]     However, we grant that leave subject to terms that ensure it is prosecuted diligently and brought to a prompt hearing.  A half day hearing date is available in Auckland on 12 March 2008, and we ask the Registrar to set this matter down for hearing on that date.  We make the following timetable orders:

(a)The notice of appeal must be filed by 14 December 2007;

(b)The case on appeal must be filed and served by Wednesday 19 December 2007.  Mr and Mrs Burke should consult with Mr Braun as to the documents which need to be included in the case on appeal, as envisaged by r 40 of the Rules;

(c)Mr and Mrs Burke must also pay security for costs calculated in accordance with r 35 of the Rules no later than 31 January 2008;

(d)Written submissions must be filed in accordance with r 41 of the Rules. 

[22]     Our grant of leave is conditional upon compliance with these timetable orders by Mr and Mrs Burke.  A further condition of the grant of leave is that Mr and Mrs Burke pay to Advanced Securities by way of costs in relation to this application $1,500 plus usual disbursements.

[23]     We strongly endorse the comment of the Associate Judge that the parties should work towards settlement.  There is no dispute that the principal sum and interest up to May 2006 is owing, as the summary judgment reflects.  The submissions from Mr and Mrs Burke acknowledge this.  The remedies which Mr and Mrs Burke apparently intend to seek under the Credit Contracts and Consumer Finance Act are those available to consumers, not to business borrowers.  It is not for us to determine at this stage whether Mr and Mrs Burke can surmount that and other hurdles to obtain relief, or, indeed, whether relief would be available to them in any event, but the position is far from certain.  In those circumstances the matter cries out for a sensible commercial solution allowing for all the mortgages and charging orders on the property to be cleared and the parties to go their separate ways.

Solicitors:
Harkness Henry & Co, Hamilton for Respondent