Dawson

[2018] NZHC 207

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-Ā-KAHU ROHE

CIV-2017-463-127 [2018] NZHC 207

UNDER	Section 119 of the Insolvency Act 2006
IN THE MATTER	of the bankruptcies of John Gilmour Dawson and Gladys Anne Dawson
AND
BETWEEN	of an application by ALLAN DONALD DAWSON and NELL DOROTHY DAWSON

Hearing:	20 February 2018
Appearances:	J R Sparrow for the Applicants
Judgment:	22 February 2018

JUDGMENT OF PALMER J

This judgment is delivered by me on 22 February 2018 at 12.30 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors:

Holland Beckett, Tauranga

Re. DAWSON and DAWSON [2018] NZHC 207 [22 February 2018]

Context

[1]      In December 2004 Mr Allan Dawson and Ms Nell Dawson loaned $447,393 to Mr John Dawson and Ms Gladys Dawson. In July 2005 $240,000 of this was recorded as secured by way of a mortgage registered over the six certificates of title of John and Gladys’s properties at 20 Union Street, Opotiki.1   No principal or interest payments have been made on the loan.

[2]      John and Gladys were adjudged bankrupt in June 2016 in Rotorua. Allan and Nell  lodged  proofs  of  debt  with  the  Official Assignee.    The  Official Assignee disclaimed any interest in the Union Street properties. This appears to have been because there was no equity in the property, given the secured mortgage.   The beneficial fee simple estate in the disclaimed land reverted to the Crown, by escheat, following the feudal origins of our system of land law discussed by Fisher J in Rural Banking and Finance Corporation of NZ Ltd v Official Assignee.2

[3]      Under the Local Government (Rating) Act 2002, the Opotiki District Council sought payment of outstanding rates from Allan and Nell, as mortgagees.  They paid

$64,194 to clear the outstanding rates and will pay the next instalment of rates.

Application

[4]      Allan and Nell apply for orders vesting the Union Street properties in them under s 119 of the Insolvency Act 2006. Section 119(3) provides the Court may make such an order if satisfied “that it is fair that the property should be … vested in the applicant”.  Allan and Nell submit it is fair the property should be vested in them because they have been  precluded from recovering their secured loan and have suffered loss from their status as mortgagees.

[5]      The application was served on the interested parties. John and Gladys consent to the application. The Official Assignee indicated by letter dated 14 December 2017

he does not object to the application.  The Treasury indicated by letter dated 9 January

1      There is evidence the parties intended the sum secured to be $300,000.

2      Rural Banking and Finance Corporation of New Zealand Ltd v Official Assignee [1991] 2 NZLR

351 (HC) at 357.

2018 the Crown does not object to the application and abided the ruling of the Court. The Opotiki District Council was served on 11 December 2017 and has taken no steps in the proceeding and has not contacted the applicants’ counsel.

Decision

[6]      I agree it is fair the property be vested in the applicants.  They have suffered loss from not being able to recover the property that was their security and yet have had to pay rates on it. The other interested parties either consent, do not object or have not bothered to advise a position.

[7]      Under s 119 of the Act I order the following property vests in Allan Donald

Dawson and Nell Dorothy Dawson:

(a)       the estate in fee simple contained in Certificate of Title GS5C/1016, legally described as Lot 2 Deposited Plan 8224;

(b)the estate in fee simple contained in Certificate of Title GS5C/1017, legally described as Allotment 386 and Part Allotment 432 Section 2

Town of Opotiki;

(c)       the estate in fee simple contained in Certificate of Title GS110/209, legally described as Allotment 385 Section 2 Town of Opotiki;

(d)the estate in fee simple contained in Certificate of Title 338291, legally described as Allotment 383 Deposited Plan 3619/AK;

(e)       the estate in fee simple contained in Certificate of Title 338292, legally described as Allotment 384 Deposited Plan 3619/AK; and

(f)       the estate in fee simple contained in Certificate of Title 338294, legally described as Allotment 429 Section 2 Town of Opotiki.

………………………….

Palmer J