Coetzee v Bank of New Zealand

[2012] NZHC 21

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2011-488-872 [2012] NZHC 21

BETWEEN  GERT-MULLER COETZEE Applicant

ANDBANK OF NEW ZEALAND Respondent

Hearing:         26 January 2012

Counsel:         G-M Coetzee in person (accompanied by P Paalvast as a McKenzie

Friend)
PL Rice for Respondent

Judgment:      27 January 2012

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 27 January 2012 at 4:00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:           Sanderson Weir, PO Box 856, Auckland 1140 (Email:  [email protected] )

Copy to:            Phillip Rice, PO Box 434, Auckland 1015 (Email:  [email protected] )

Mr G-M Coetzee, C/- 368 Queen Street, Auckland

COETZEE V BANK OF NEW ZEALAND HC WHA CIV-2011-488-872 [27 January 2012]

[1]      Mr Muller (as the applicant prefers to be called) has applied to the Court under s 145, Land Transfer Act 1952, for an order that Caveat 8934232.1 not lapse. The application is opposed by the respondent which holds a mortgage over the property at 71 Manganese Point Road, RD 4, Whangarei against the title to which the caveat has been registered.  The Bank of New Zealand (“the Bank”) opposes the application, having made an application to the District Land Registrar under s 145A, Land Transfer Act 1952, for the lapse of the caveat.

[2]      The  Bank  has  entered  into  an  agreement  for  the  sale  of  the  property, exercising its rights under the mortgage and default payments due by the property owner.

[3]      The background facts, which I draw from an affidavit by a solicitor acting for the Bank, are as follows:

2.The land in question is a residential property at 71 Manganese Point Road,  RD  4,  Whangarei  (“the  Property”)  being  all  the  land comprised and described in certificate of title NA 55C/186 (North Auckland Registry).

3.The Property is situated within a gated community and was recently appraised as having a market value between $400,000 to $450,000. The forced sale value was assessed at between $250,000 – $325,000.

4.The Bank holds a mortgage over the Property.  The mortgage was registered on 4 August 2006.

5.The owner and mortgagor of the Property is Anthea Mary Hawkins (“the Mortgagor”).  The mortgage secures a loan of $680,000 to the Anthea Hawkins Trust.  The Mortgagor is a trustee of the trust and a guarantor of the loan.

6.The Mortgagor now lives in Australia but her son, Bernard Monk, occupies the Property.   Mr Monk is a member of the Rebels motorcycle club who has been bailed to reside at the Property by the Whangarei District Court on charges including possessing methamphetamine for supply.

7.There  is  also  a  caveat  registered  against  the  title  in  favour  of Headland   Farm  Park  Limited   which  protects  an  unregistered easement but the Bank has obtained the consent of that company to the registration of its transfer by power of sale instrument and no orders are sought in relation to that caveat.

Bank commences steps to sell the Property

8.In early 2011 the Mortgagor ceased paying the mortgage instalments and requested the Bank to repossess the property.

9.On  4  April  2011  a  notice  of  demand  was  issued  by  the  Bank demanding payment of the expired loan facility and the Mortgagor’s account with the Bank.  The demand notice was issued and expired without remedy.

10.      On 9 August 2011 a Property Law Act notice demanding payment of

$700,857.02 was served by substituted service on the mortgagor.

11.       The Bank then commenced steps to sell the Property by mortgagee sale.  In a letter dated 12 October 2011 the Mortgagor was informed that the property would be sold by tender.

12.The sale process was hampered by Mr Monk refusing access to agents and potential purchasers to inspect the Property.   The Mortgagor  was  informed  of  these  difficulties  by  email  dated

2 November 2011.

13.The Mortgagor subsequently advised that her son was willing to purchase the property for $205,000.

Lodging of Caveat

14.On or about 11 November 2011 the applicant, Gert-Muller Coetzee, lodged a caveat against any dealings with the Property claiming an interest founded on:

“Sale and Purchase agreement which Possession Passed 01

November 2011 AD”

15.The Bank was unaware of the sale and did not consent to it.  When the Bank learned of the sale it sent an email to the Mortgagor on

16 December enquiring whether she knew anything about it.  There

has been no reply to that email.

[4]      On 19 December 2011, the Bank entered into an agreement for the sale of the property to a third party for $250,000, such sale being subject to existing tenancies or occupations (if any).  The terms of sale do not require the vendor to give vacant possession.

[5]      On the same day, the Bank applied to the District Land Registrar for the lapse

of the applicant’s caveat.

[6]      Mr Muller argues that the Bank has other remedies which it could exercise and that the attempts by the Bank to remove the caveat and sell the property breach

what he describes as his inherent rights under the guarantee and what he describes as an agreement with the registered proprietor to purchase the property for $1.00.

[7]      Mr Rice argues that the relief sought by the applicant should be refused, relying on a number of grounds, only two of which need to be considered.

[8]      First, it is said that the caveat is deemed to have lapsed under s 145A(3) of the Land Transfer Act.   Second, it is said that, even if the applicant has obtained some interest in the property as a result of the purported sale and purchase agreement or guarantee, the vendor could not have given more than she had which was an estate encumbered by a mortgage and subject to the mortgagee’s prior rights which include a power of sale.  Such rights cannot be displaced without the mortgagee’s consent or

conduct which in equity would be recognised as resulting in deferral of priority.[1]

The Bank, as mortgagee, is not bound by any sale to which it has not consented and was lawfully entitled to enter into the sale and purchase agreement to the third party.[2]

[1] National Mutual Finance (1988) Ltd v Berryman HC Wellington M451/91, 2 October 1991.

[2] Canterbury Finance Ltd v Sagar Trust Ltd (1997) 3 NZ ConvC 192,571 at 192,577.

[9]      I turn to the argument that the caveat has lapsed in accordance with the statutory regime.  First, the evidence before the Court establishes that the Registrar gave notice of the Bank’s application for the caveat to lapse by a letter sent to the applicant on 20 December 2011.   It is treated by r 6.6(1), High Court Rules, as having been served on 23 December 2011.

[10]     Section 145A of the Land Transfer Act 1952 provides:

145A   Early lapse of caveat against dealings

(1)       The  registered  proprietor  of  any  estate  or  interest  in  the  land protected by a caveat against dealings (other than a caveat lodged by the Registrar) may apply to the Registrar for the caveat to lapse.

(2)       The Registrar must give the caveator notice of an application under subsection (1).

(3)       The caveat lapses with the close of the prescribed period after the date on which the notice under subsection (2) is given unless—

(a)       the caveator has earlier given to the Registrar notice that an application for an order to the contrary has been made to the High Court; and

(b)       an order to that effect has been made and served on the Registrar  within  the  prescribed  period  after  the  date  on which the notice under paragraph (a) is given to the registrar.

[11]     Regulation 39 of the Land Transfer Regulations 2002 defines the “prescribed period” referred to in s 145A(3) as being within 14 days after the date on which the Registrar has given notice to the caveator that an application has been made for the caveat to lapse.

[12]     The   application   upon   which   the   applicant   relied   initially   is   dated

23 December 2011 and was received in the High Court at Whangarei on that date. There is no evidence, however, that the Registrar was notified within the prescribed period that the application had been made.

[13]     Applying the Act and the Regulations, the caveat lapsed in accordance with the statutory regime a period of 14 days after 23 December 2011, namely, on 6

January 2012.

[14]     The position is somewhat complicated by the making of an interim order, by Woolford J, on 18 January 2012, in order to preserve what the Judge no doubt considered  to  be  the  status  quo  directing  that  the  caveat  would  not  lapse  until Mr Muller’s application had been heard and determined.

[15]     However, because the caveat had lapsed on 6 January 2012, the interim order made by Woolford J was per incuriam and a nullity.  To the extent that it may be necessary to do so, I set that order aside on that basis.

[16]     Turning to Mr Rice’s second argument, I am not satisfied on the merits of Mr Muller’s claims that the Court should interfere with the exercise of the Bank’s rights as mortgagee.   I accept on the authority of Canterbury Finance Limited v Sagar Trust that the Bank is entitled to disregard the purported sale of the property by the mortgagor, Ms Hawkins, and proceed with its proposed sale to the third party. To the extent that the lapsing of the caveat will permit that sale to proceed and title to pass

into the hands of the third party may cause unjustifiable loss to the applicant, he may exercise such other remedies as are available to him.

[17]     For the reasons given:

(a)       I order that the interim order made by Woolford J on 18 January 2012 be quashed; and

(b)      Dismiss the applicant’s application under s 143 of the Land Transfer

Act.

[18]     Costs are reserved.  In the event that the respondent wishes to apply for costs, it should file and serve a memorandum within 20 working days of the date of judgment.  Mr Muller shall have 20 working days after service to file and serve any memorandum of submissions in opposition to an order for costs.  Unless the Court directs otherwise, any such application shall then be dealt with on the papers.

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Toogood J