Burke v Advanced Securities Ltd

[2008] NZCA 93

IN THE COURT OF APPEAL OF NEW ZEALAND

CA696/07 [2008] NZCA 93

BETWEEN

JULIAN PAUL BURKE AND GILLIAN

ELIZABETH BURKE

Appellants

AND

ADVANCED SECURITIES LIMITED

Respondent

Hearing:         12 March 2008

Court:             Chambers, John Hansen and Heath JJ Counsel:  A A Liddell for Appellants

T M Braun and K I Bond for Respondent Judgment:   18 April 2008 at 2.30 pm

JUDGMENT OF THE COURT

AThe appellants are granted leave to adduce the exhibits to their affidavit of 12 March 2008, but not the text of that affidavit.

BThe appeal is allowed to the extent that the words “and balance Lot 1 deposited plan 360598 (246472) with additional land amalgamated” are deleted from the sealed order for possession.

CThe respondent is granted leave to apply to the High Court for an order varying the possession order to incorporate such defined area of Lot 1 as it can establish it has a right to re-enter under its mortgage.

DIn all other respects, the appeal is dismissed.

BURKE V ADVANCED SECURITIES LTD CA CA696/07 [18 April 2008]

E          Costs are reserved, with leave to apply also reserved. The security for costs paid by the appellants must not be paid out except pursuant to the written agreement of the parties or by order of this Court.

REASONS OF THE COURT

(Given by Heath J)

The appeal

[1] Mr and Mrs Burke appeal against the entry of summary judgment against them in the High Court at Tauranga. Their appeal was filed out of time but an extension of time was granted on 7 December 2007: [2007] NZCA 562.

[2]    Mr and Mrs Burke challenge a money judgment and an order for possession of land in favour of Advanced Securities Ltd (ASL). Those orders resulted from two judgments given by the Associate Judge Doogue, in the High Court at Tauranga, on 18 July and 15 August 2007 respectively.

[3]    Mr and Mrs Burke appeal against the money judgment on the grounds that ASL failed to make initial disclosure under the Credit Contracts and Consumer Finance Act 2003 (the Act) and, subsequently, was guilty of “oppressive” conduct in terms of that Act. They contend also that the possession order ought not to have  been made.

Leave to adduce further evidence

[4]    Leading up to the appeal hearing, Mr and Mrs Burke were self-represented. Two days before the hearing, they instructed Mr Liddell. He appeared before us to make submissions on the disclosure point. We are grateful to Mr Liddell for his assistance at short notice.

[5]    Mr Liddell sought leave to adduce further evidence on appeal, in the form of an affidavit sworn by Mr Burke on the day of the hearing and various exhibits. That application was opposed by Mr Braun, for ASL, insofar it related to the narrative of the affidavit. Mr Braun consented to the exhibits being put before the Court.

[6] We are satisfied Mr and Mrs Burke had adequate opportunity to provide affidavit evidence in the High Court or to seek leave to adduce further evidence in this Court earlier. Our conclusion on that point has been influenced by earlier defaults by Mr and Mrs Burke in complying with terms imposed by this Court after they were given an extension of time to appeal: see [2008] NZCA 40. Admission of the narrative portion of the evidence would also have resulted in an adjournment of the appeal, something Mr Braun opposed.

[7]    By consent, we granted leave for the exhibits to the affidavits to be adduced on appeal. We declined leave so far as the narrative of the affidavit was concerned on the grounds that the application was brought too late, Mr and Mrs Burke had failed to comply with other orders of the Court and admission of the evidence would have caused prejudice to ASL because of the need for an adjournment.

Background to the appeal

[8]    Mr and Mrs Burke are the registered proprietors of a property situated at 1911 State Highway 39, Tauranga. In April 2004, they borrowed money from North South Finance Ltd to undertake a proposed subdivision of that land. In November 2004, they obtained a resource consent from the Western Bay of Plenty District Council to do so.

[9]    By November 2005, their debt to North South Finance Ltd had matured. At that time, it was clear that Mr and Mrs Burke would need additional finance to repay that debt and complete the subdivision.

[10]Mr and Mrs Burke applied to ASL for a loan facility. They were offered

$965,000 “to assist with refinancing existing debt and development costs”. The loan offer was made on 9 September 2005.

[11]   The loan offer recorded that a fee of $22,500 was payable to ASL, on acceptance of the offer. Acceptance was deemed to occur once the borrowers had signed an acceptance of the loan offer. The securities required included a transfer of an existing first registered mortgage over the Tauranga property (held by North South Finance Ltd) with a priority amount of $1,248,000, a third registered mortgage over the same property, with a priority amount of $1,070,000, and assignment of a life insurance policy, of at least $500,000, on the life of Mr Burke.

[12]   An “Acceptance Form” was annexed to the loan offer. That was signed by  Mr and Mrs Burke on 12 September 2005. On 14 September 2005, the solicitors for ASL forwarded relevant loan documentation to Annan and Co, solicitors, Tauranga who were then acting for Mr and Mrs Burke.

[13]   Included among the documents forwarded by ASL’s solicitors were declarations required by the Act. Both declarations were in the same form. We use Mr Burke’s declaration to set out their terms:

Declaration as to purpose of credit by Debtor

I, Julian Paul Burke, solemnly and sincerely declare that:

1.       I am one of the debtors under a credit contract that I am to enter into in respect of a Loan Agreement between Advanced Securities Limited and J P & G E Burke (as Borrower) dated 20/09/05 for a loan of $965,000.00.

2.       The credit that is to be, or may be, provided under the credit contract is to be used primarily for business or investment purposes (or for both purposes).

3.       I have read and understood the declaration.

4.       The declaration has been made by me before entering into the credit contract.

5.       This is a separate document, and is not part of the credit contract or any other document.

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the Oaths and Declarations Act 1957.

[14]   Mr Geoffrey Annan, the solicitor acting for Mr and Mrs Burke, made a declaration that Mr and Mrs Burke had executed respective declarations before him. He added:

I do not have any reason to believe that the loan advance that they are receiving is to be primarily, for personal, domestic or household purposes.

Mr Annan’s declaration is dated 14 October 2005. He also witnessed the  declarations signed by Mr and Mrs Burke respectively, on 20 September 2005.

[15]   On 8 November 2005 ASL’s solicitors wrote to Annan and Co confirming ASL’s agreement to provide an advance to Mr and Mrs Burke of  $1,075,000. Similar documentation was forwarded to Annan and Co to that made available on 14 September 2005. There is no suggestion that the November documentation represented a different transaction from that contemplated in September.

[16]   There had been some delay in completing a formal loan agreement and in arranging for North South Finance Ltd to be repaid. The difference between the sum of $965,000 (the September documentation) and the $1,075,000 (the November correspondence) is explainable by reference to additional interest and costs payable to North South Finance Ltd to repay its debt and to obtain discharges of its  securities.

[17] Mr and Mrs Burke executed declarations in November in similar terms to those signed in September: see [13]. The only differences were that the date of the Loan Agreement was stated as 9 November 2005 and the amount advanced of

$1,075,000, at an interest rate of 14.25% per annum.   In the event that Mr and     Mrs Burke made default under the loan, the rate of interest increased by 10% per annum, to 24.25% per annum. The principal advanced fell for repayment on 16 May 2006.

[18]   The linkage between the September 2005 loan offer and the loan agreement itself is explained in the terms of the loan agreement. Clause 25.1 provided:

The Relevant Documents constitute the entire agreement between the parties in relation to the transactions contemplated by this Agreement, and subject  to clause 2.1(b), supersede all previous negotiations, commitments and/or local or written agreements between the parties (including any letter of offer).

[19]   The term “Relevant Documents” was defined by cl 1.1 of the agreement as including “each letter of offer in respect of the Facility”. The term “Facility” was defined by the same clause as meaning “the loan facility evidenced by the agreement”.

[20]   Mr and Mrs Burke defaulted, by failing to repay the principal on its due date. In September 2006, ASL issued notices under s 92 of the Property Law Act 1952. They were duly served on Mr and Mrs Burke respectively. The notices advised each of default under the mortgage, in failing to pay the principal sum of $1,075,509.83 (due on 16 May 2006 when the loan expired) together with interest at the rate of 14.5% per annum from 16 April to 16 May 2006, in the sum of $12,817.72. (The ordinary interest rate had been increased from 14.25% per annum to 14.5% per annum from 22 December 2005). That made the amount in arrears $1,088,317.55.

[21]   The notices required Mr and Mrs Burke to remedy the default by paying the sum of $1,088,317.55 to ASL. The notices went on to state:

If you do not remedy each default before the 2^nd of November 2006 the mortgagee will have the right to sell the land described in the mortgage or to enter into possession of that land, and all money secured by the mortgage will become due and payable.

If the mortgagee exercises the mortgagee’s right to sell the land and the net sale proceeds are less than the amount owing under the mortgage then the mortgagee will commence action against you to recover the amount of the deficiency.

[22]   Plainly, Mr and Mrs Burke were warned that, if the default were not remedied by the time stipulated, they might be sued personally to recover any deficiency. They were also warned that ASL had the right to sell the land and to enter into possession of it, if the default were not remedied.

The High Court proceedings

[23]   In February 2007, ASL commenced proceedings against Mr and Mrs Burke in the High Court. Contemporaneously, an application for summary judgment was made. In the original Statement of Claim judgment was sought in the sum of

$1,284,773.74 together with default interest at 24.5% per annum from 9 February

2007  to  the  date of payment.    Costs on a solicitor/client basis (in terms of the mortgage) were also sought.

[24]   For the first time, in their notice of opposition to the application for summary judgment, Mr and Mrs Burke contended that the advance from ASL was “a non- business loan provided by [ASL] in November 2005, to complete the subdivision of [Mr and Mrs Burke’s] property which commenced November 2004, when resource consent issued, to create two additional titles”.

[25]The notice of opposition continued:

2. Lot 5 on the approved  plan  was for the benefit [of Mr  and  Mrs  Burke’s] daughter, and lot 4 was to be sold to offset the high development costs necessary to satisfy the conditions imposed in the consent. This is because [Mr and Mrs Burke’s] property is located on a State Highway and Transit New Zealand required substantial work to the crossing the maximise the sight distance.

[26]   Mr Burke, in an affidavit sworn on 11 May 2007 confirmed his assertion that the advance was “a non-business loan”.

[27]   In an Amended Statement of Claim filed in May 2007, an additional order was sought. ASL asked for an order for possession of three lots, being the land comprised and described in the subdivided titles. The order for possession was couched in the following terms:

(c) AN ORDER that the Defendant forthwith vacate and deliver up possession of the property contained in Lot 4 deposited plan 360598 (246475), Lot 5 deposited plan 360598 (246476) and balance Lot 1 deposited plan 360598 (247472) [sic, 246472] with additional land amalgamated; … (our emphasis)

[28]   The additional land to which the claim referred had been amalgamated into lot 1 as a result of steps taken under s 242 of the Resource Management Act 1991. ASL agrees that it never intended to take security over that additional land even though it is now comprised and described in a title over which ASL has registered a mortgage.

[29]   The application for summary judgment was heard at Rotorua on 10 July 2007. A reserved judgment was delivered by Associate Judge Doogue on 18 July 2007. Final orders were not made.  Instead, the Associate Judge left the precise  terms of the judgment to be fixed following receipt of memoranda on behalf of the parties. That was done because, during the course of the hearing, counsel for ASL accepted that, in order to avoid the need for determination of the “oppression” argument, ASL would limit its judgment to the amount outstanding at the end of May 2006, before any of the alleged oppressive conduct occurred and default interest was claimed.

[30]Associate Judge Doogue recorded the position as follows:

[20]   Mr Braun for the plaintiff was prepared to accept that if necessary the plaintiff would accept a judgment reflecting the position up to the end of May 2006 by way of summary judgment, leaving any additional claims it might have against the defendants to be litigated in the ordinary way. The plaintiff should submit for my consideration a form of judgment in draft that reflects that concession. In the usual way, the document should be served on Mr and Mrs Burke who will the right to make submissions on it. The plaintiff should do this within 14 days. Mr and Mrs Burke should respond in a further 14 days.

[21]     The plaintiff also asserts that it is entitled to legal costs on a solicitor/client basis. I accept that it is entitled to do so in terms of its contract. For reasons of consistency, the plaintiff will be limited on the summary judgment application to its costs up until May 2006. Similarly, if  it wishes to recover additional amounts it will have to do so by other means. That matter, too, should be referred to in the draft judgment and any explanatory memorandum which accompanies it.

[31]   Memoranda were exchanged as contemplated. An issue arose as to whether an order for possession should be made. The Associate Judge had not dealt with that in his judgment of 18 July 2007, even though an order for possession had been sought.

[32]In a memorandum of 20 July 2007, counsel for ASL stated:

5. In relation to the order for possession, this is framed  to  cover  the specific area over which the Plaintiff holds mortgage securities. Part of Lot  1 is not covered by the Plaintiff’s mortgage, and this part is excluded from the order for possession.

Over Mr and Mrs Burke’s opposition, Judge Doogue decided to enter judgment for possession because no separate defence related to that particular relief and he had not intended to exclude that order when giving his 18 July 2007 judgment.

[33]   A final judgment was given on 15 August 2007, after the Judge had heard from Mr Braun and Mr Burke, in person. The Judge approved a form of judgment submitted by Mr Braun for sealing. The sealed order was in the following terms:

… it is adjudged that judgment be entered against the above-named Defendants Julian Paul Burke and Gillian Elizabeth Burke, in the sum of

$1,088,317.55 plus disbursements as per the attached schedule of $1,740.00 making a total of $1,090,057.55.

It is further ordered that the Defendants within seven days of this order being sealed and served on them vacate and deliver up possession of the property contained and described in certificate of title identifier 59B/642 (South Auckland registry) and now contained in Lot 4 deposited plan 360598 (246475), Lot 5 deposited plan 360598 (246476) and balance Lot 1 deposited plan 360598 (246472) with additional land amalgamated. (our emphasis)

[34]   Unfortunately, the sealed judgment did not exclude the additional land amalgamated into lot 1, despite counsel for ASL having earlier confirmed that land did not form part of the security. Out of fairness to the Associate Judge, this point was not drawn to his attention when he approved the form of the judgment for sealing.

Competing submissions

[35]   Mr Liddell, for Mr and Mrs Burke, submitted that ASL did not give initial disclosure in accordance with the Act. That submission was based on the  assumption that the loan agreement was, in fact, a “consumer credit contract”. The Act mandates a specific regime for initial disclosure to a consumer. Relying on s 99 of the Act, Mr Liddell submitted that ASL was prohibited absolutely from enforcing the credit contract because of its failure to make initial disclosure in terms of s 17 and Schedule 1 of the Act.

[36]   Mr Burke, with our leave, made submissions on other aspects of the appeal on which Mr Liddell had not had an adequate opportunity to familiarise himself. He

recognised that the allegations of oppressive conduct were not relevant to the appeal because of the Judge’s decision to enter judgment only for the amount outstanding at the end of May 2006.

[37]Mr Burke made two complaints about the possession order:

a)First, he submitted that the order ought not to have been made because it was not contemplated by Judge Doogue’s initial judgment of 18 July 2007. He submitted that only the money judgment and costs to May 2006 were to be the subject of summary judgment, all other issues being left for trial.

b)Second, he contended that the order for possession required modification, to the extent that it went beyond the security held by ASL.

[38]   Mr Braun submitted that the argument under the Act was misconceived. He submitted that the contract was (and always had been) a business transaction to which the initial disclosure regime for consumers did not apply.

[39]   In addition, Mr Braun submitted that the loan offer did not comprise the “credit contract” to which s 14(1) of the Act applies. Rather, he submitted, the contract was the loan agreement, in respect of which declarations under s 14(1) were signed by Mr and Mrs Burke before execution.

[40]   Mr Braun submitted that Judge Doogue was right to make an order for possession, while accepting the need to modify its terms.

Analysis of competing submissions

(a)Initial disclosure

[41]   The Act is designed to protect the interests of consumers in connection with credit contracts and to provide for disclosure of adequate information to them so that

they may make informed  decisions  about  credit  contracts  into  which  they enter: s 3(a) and (b). The Act is also intended to prevent both oppressive credit contracts and oppressive conduct by creditors: s 3(g).

[42]   The Act is similar to, but does not replicate, the Credit Contracts Act 1981. It is clear from the argument we heard that some care will need to be taken in applying authorities determined under the Credit Contracts Act 1981 to circumstances now covered by the Act.

[43]   A “consumer credit contract” generally exists where a debtor is a natural person who enters into the contract primarily for personal, domestic or household purposes: s 11(1) of the Act.

[44]Section 13 of the Act provides:

13Presumption relating to consumer credit contract

In any proceedings in which a party claims that a credit contract is a consumer credit contract, it is presumed that the credit contract is a consumer credit contract unless the contrary is established.

The effect of s 13 is to require displacement of the presumption once a party to a credit contract asserts that it was entered into primarily for personal, domestic or household purposes.

[45]   Section 14 provides a non-exhaustive mechanism by which the presumption can be rebutted if there is a declaration, made by a debtor before the contract is entered into, that the credit is primarily for business and/or investment purposes. Section 14 provides:

14Effect of declaration

(1)      A credit contract is not a consumer credit contract if the debtor makes a declaration before entering into the contract that the credit is to be used primarily for business or investment purposes (or for both purposes).

(2)      Subsection (1) does not apply if the creditor, or the person who obtains the declaration, knew, or had reason to believe, at the time the declaration was made, that the credit was in fact to be used primarily for personal, domestic, or household purposes.

(3)      A declaration is effective only if the declaration is in a separate written document and the debtor confirms that he or she has read and understood the declaration.

[46] Mr and Mrs Burke made declarations in both September and November 2005. The form of the declarations is set out at [13]. The declarations are clear. Clause 2 states that the credit “is to be used primarily for business or investment purposes (or for both purposes)”, a form of wording that follows s 14(1).

[47]   We find that the credit contract in issue in this case arose from the loan offer made by ASL to Mr and Mrs Burke which they accepted on 12 September 2005.  The  September  declarations  were  not   signed   by  Mr   and   Mrs   Burke   until 20 September 2005, after acceptance of the loan. The September declarations do not meet the requirement of s 14(1) that the declaration be made before the debtors enter into the contract.

[48]   Mr Braun argued that the November 2005 loan agreement was the credit contract in issue and s 14(1) had been complied with because the Burkes signed their declarations before they executed the November contract.

[49]   The loan offer required a fee of $22,500 to be paid to ASL on acceptance of the offer. It would be strange if a fee of that magnitude could have been charged at that time if Mr and Mrs Burke were not committed to borrowing the money from ASL on acceptance of the loan offer. That conclusion is reinforced by the provisions of the loan agreement itself, to which we referred at [18] and [19].

[50]   Because no declaration as to the purpose for which the credit was to be used was executed before acceptance of the loan offer on 20 September 2005, the declarations signed by Mr and Mrs Burke in September 2005 do not operate to rebut the s 13 presumption.

[51]   The next question is whether the presumption can be rebutted by other evidence. In our view, it can.

[52]   The only evidence that the contract was a “consumer credit contract” is an uncorroborated assertion by Mr Burke in an affidavit filed in opposition to the

application for summary judgment. But, that evidence conflicts markedly with other evidence that, together, lead inevitably to the conclusion that the credit was to be used primarily for business and/or investment purposes.

[53] While the September 2005 declarations do not, of themselves, rebut the s 13 presumption, they are evidence of an intent on the part of Mr and Mrs Burke that can be taken into account in determining whether the presumption has been rebutted. The content of the September declarations is corroborated by Mr and Mrs Burke’s separate declarations made in November 2005, to the same effect. In addition, their solicitor, Mr Annan, executed his own declaration on 14 October 2005 in which he said that he had no reason to believe the advance was to be used primarily for personal, domestic or household purposes: see [14]. Finally, there is the evidence of the director of ASL, Mr McHardy, who deposed that he believed the loan was being made for business purposes.

[54]   The totality of that evidence, in our view, rebuts the s 13 presumption. Accordingly, the initial disclosure provisions of the Act cannot apply to prevent ASL from obtaining judgment for the outstanding loan.

[55]   Having reached that conclusion, it is unnecessary for us to consider the effect of other disclosure provisions, in this case ss 17 and 99 of the Act.

(b)The order for possession

(i)Ought an order to have been made?

[56]   In our view, it is clear that the Associate Judge unintentionally omitted to mention the possibility of an order for possession being made in his judgment of 18 July 2007. The judgment was interim, as it is clear the Judge intended to finalise its terms once the parties had conferred on the appropriate orders. Mr Braun had originally sought an order for possession as the Associate Judge had noted at [5] of the first judgment. In these circumstances, Mr Braun was quite entitled to include an

order for possession in the draft order he prepared and Associate Judge Doogue was entitled to make such an order in his definitive judgment.

[57]   However, it is clear that an error was made in relation to the additional land. When Mr Braun filed a memorandum after the July judgment, he put ASL’s intentions as follows:

In relation to the order for possession, this is framed to cover the specific area over which the plaintiff holds mortgage securities. Part of Lot 1 is not covered by the plaintiff’s mortgage, and this part is excluded from the order for possession.

Unfortunately, in the draft order attached to that memorandum, the land in respect of which possession was sought included “balance Lot 1 deposited plan 360598 (246472) with additional land amalgamated”. Nobody picked up that error before  the Associate Judge gave his final judgment on 15 August 2007.

[58]   We see no reason to interfere with the possession order made. The  authorities demonstrate that there are few bases on which a possession order can be resisted in a case such as this. None of them apply in this case.

[59]   At the time the order was sought, s 106 of the Land Transfer Act 1952 governed the circumstances in which an order for possession might be made.  Section 106 provided:

106. Mortgagee may, after default, enter into possession – The mortgagee, upon default in payment of the principal sum, interest, annuity, or rentcharge secured by any mortgage, or of any part thereof, may enter into possession of the mortgaged land by receiving the rents and profits thereof, or may bring an action for possession of the said land either before or after entering into the receipt of the rents and profits thereof, and either before or after any sale of the land is effected under the power of sale given or implied in his mortgage.

[60]   Section 106 was considered in Southpac Custodians Ltd v Bank of New Zealand [1993] 1 NZLR 663 (CA). After referring to Lysnar v National Bank of  New Zealand Ltd (No 2) [1936] NZLR 541 (CA) at 543-544 (Reed ACJ and Ostler J) and 545 (Kennedy J), this Court, in a judgment delivered by Hardie Boys J, said, at 668-669:

… If the mortgagee is entitled on default to enter into possession by receiving rents, or to enter peaceably into actual occupation, then there is no reason in logic or justice to postpone his entitlement to rents because it proves necessary, or indeed he chooses, to exercise his rights through the Court rather than directly. Thus, by refusing to allow peaceable entry, a mortgagor should not be in a better position than one who is co-operative with his mortgagee. Further, it is significant that s 106 uses the expression "may bring an action" rather than words such as "may obtain an order": the emphasis is on the commencement rather than the conclusion of the proceedings. We therefore adopt, for a situation such as the present, the English rule enunciated in the cases referred to above.

This of course assumes that there is no impediment to the mortgagee's right to possession under s 106 or to his right on obtaining possession under that section to receive the rents. On their cross-appeal, the first three respondents contend there is such an impediment. It is said to arise from the facts that  the mortgage did not give the mortgagee a right to possession, nor did it create a charge over the rents, whereas the debenture did create such a charge. Therefore, [counsel] argued, the Court ought not to make an order for possession under s 106 when its effect would be to defeat the prior right of the debenture holder. The Court, he contended, has a discretion, which in such circumstances should be exercised in favour of the mortgagee only where possession is required to preserve or realise the security itself.

…

This case turns on s 106 of the Land Transfer Act. The right it gives to the mortgagee to enter into possession by receiving the rents and profits is unqualified. We see no justification for introducing a qualification to the alternative means of obtaining possession the section offers. This does not mean that the Court is necessarily a rubber stamp. A Court has always a discretion to adjourn; and there may be circumstances, such as those referred to by Nourse J, where that course should be taken. But it is not necessary to decide that in this case, for no such circumstances exist here. Obviously too the Court must be satisfied that the right has been made out, and if it has not been made out an order will be refused. But that is a different matter from the exercise of discretion when the right has been made out.

There are two further pointers to the unqualified nature of the mortgagee's right. First, there is the use in s 106 of the words "may bring an action" which, as mentioned, suggest that it is the commencement of the proceedings that is significant. Secondly, there is s 91(15) of the Property Law Act. The section confers powers on a mortgagee in possession, and subs (15) provides:

"(15) For the purposes of this section a first mortgagee of any land shall be deemed to be in possession of the land if he is entitled to enter into possession thereof or to bring an action for possession thereof."

While the subsection, as it states, applies only to s 91, it suggests the expectation that a mortgagee who is entitled to bring an action for possession will obtain an order; otherwise his rights would be dependent on the order being made.

Thus it is our conclusion that under s 106 Southpac has an unqualified right to possession as a statutory incident of its mortgage, and that this right takes priority over the bank's debenture.

[61]   Statutory provisions relating to mortgagee sales are now contained in the Property Law Act 2007. We mention that to alert the parties to the different provisions that may now apply. We have not considered whether there are any material differences between the old and new regimes and should not be taken as making any comment on that issue.

[62]   For present purposes it is sufficient to hold that there was no basis on which Mr and Mrs Burke could oppose an order for possession.

(ii)Is amendment of the order required?

[63]   Plainly, amendment to the order is required. We did not hear submissions on how that might be effected. Indeed, it may be difficult for ASL to formulate an order in relation to Lot 1, now that the land comprised and described in its title has been extended, presumably with the mortgagee’s consent.

[64] In those circumstances, we uphold the possession order in respect of Lots 4 and 5 (as reflected in the sealed order set out at [33] above) and delete the words “and balance Lot 1 deposited plan 360598 (246472) with additional land amalgamated” from the order. Leave will be reserved for ASL to apply to include land within Lot 1 over which can demonstrate a right to possession under the mortgage.

Result

[65]   For the reasons given, we allow the appeal to the limited extent of removing the reference to Lot 1 from the possession order. We reserve leave to ASL to apply to the High Court to incorporate such part of Lot 1 over which it can assert a basis to exercise its rights to re-enter as mortgagee. In all other respects, the appeal is dismissed.

[66]   When ASL sealed judgment in the High Court, it did not claim its costs until May 2006. It seems to us that all questions of costs should be left until the High Court has dealt with remaining issues, such as the claim by Mr and Mrs Burke for relief based on oppressive conduct. We reserve leave, however, to either party to apply with respect to costs in this Court.

[67]   The parties should seek an early case management conference in the High Court to advance the outstanding parts of the claims.

Solicitors:

Capamagian Liddell, Tauranga for Appellants Harkness Henry, Hamilton for Respondent