Farque Ltd v Yelcich HC Whangarei CIV-2010-488-000680

[2011] NZHC 149

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2010-488-000680

BETWEEN  FARQUE LTD Plaintiff

ANDK B YELCICH First Defendant

ANDL J YELCICH Second Defendant

Hearing:         21 February 2011

Appearances: S Gloyn for Plaintiff

D Grindle for Defendants

Judgment:      21 February 2011

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:

Bytalus Legal, PO Box 34868, Birkenhead, Auckland

Webb Ross, Private Bag 9012, Whangarei

FARQUE LTD V K B YELCICH HC WHA CIV-2010-488-000680 21 February 2011

[1]      This proceeding is an application under Part 13 of the High Court Rules for vacant possession of a property. The property concerned is a 4 hectare property at the corner of Dunn and Molloy Roads, Ruawai, called in the Certificate of Title

49134, North Auckland Registry, being Lot 1, DP 312497.

[2]      Farque Ltd is the registered proprietor of the property.  It acquired its interest in the property by buying property from Basecorp Finance Ltd, who exercised its power of sale.  The proprietor who fell into default was Black Developments Ltd.

[3]      Mr and Mrs Yelcich are in occupation of the property.   They are directors and shareholders of Ruawai Properties Ltd.  Ruawai Properties Ltd was formerly an owner of the property.   The historical search copy of the certificate of title shows that Mr and Mrs Yelcich put a caveat on the title in February 2003.  Their company, Ruawai Properties Ltd, became registered proprietor on 11 July 2003.  A number of mortgages have later registered against the title to the property.

[4]      On  26   November  2007,   Black   Developments   Ltd   became  registered proprietor through having bought the property on the exercise of the power of sale by a  mortgagee.    In  effect,  Farque  Ltd  is  two  transfers  removed  from  Ruawai Properties Ltd. Mr and Mrs Yelcich no doubt were in occupation of the property through their company, Ruawai Properties Ltd.

[5]      The  present  proceedings  were  served  on  Mr and  Mrs  Yelcich  on  26

November 2010.   They did not take any steps in the proceeding until Friday, 18

February 2011, when they instructed counsel who filed a notice of opposition and an affidavit. In short, the Yelciches are out of time to take steps in the proceeding and they now seek leave to take steps despite their delay in taking steps earlier.

[6]      Their failure to take steps earlier is not adequately explained, other than that there are general assertions that the background to the matter is very complex.  For them to take steps now, they need to satisfy the Court that there is some arguable defence to the case which merits them being given the opportunity to present their case to the Court and which requires the Court to give fuller consideration of the matter.

[7]      The  plaintiff’s  affidavit  in  support  shows  that  the  plaintiff  bought  the property on the exercise of a mortgagee sale by Basecorp Finance Ltd with relatively little knowledge of the property.  It is clear that Farque Ltd had no prior connection

with the property.  Mr Yelcich does not suggest that Farque Ltd did have any prior connection with the property.  So Farque Ltd took title to the property clear of any interest of Ruawai Properties Ltd or of Mr and Mrs Yelcich.  In other words, normal rules of indefeasibility apply.  These do not need to be elaborated on.

[8]      Mr  Yelcich  raises  two  matters  in  his  affidavit.  First,  he  points  to  the agreement for sale and purchase between Basecorp Finance   and Farque Ltd, and refers to condition 16 which says:

The property is sold subject to existing tenancies or occupations (if any) including holding over by the mortgagor or any person claiming an interest through the mortgagor.

[9]      Mr Gloyn appropriately points out that that simply means that in cases of mortgagee sale, the mortgagee exercising the power of sale simply transfers to the purchaser the risk of dealing with any people in occupation.  That is a term of the agreement between the vendor and the purchaser.  The Yelcichess are not parties to that agreement.  They cannot claim that they are protected by that agreement.  The agreement simply means that the purchaser is not able to sue the vendor for breach of a term as to vacant possession, by virtue of the Yelciches being on the property. The purchaser has taken a property that somebody may be in occupation of and that he has the job of dealing with those people in occupation.  However, the fact that he has bought the property on that basis does not confer any right of occupation on Mr and Mrs Yelcich.  Mr and Mrs Yelcich are required to prove their right to occupy independently.  The Yelciches cannot claim any right to occupation by virtue of their company, Ruawai Properties Ltd, because that company’s interest in the property was extinguished on the exercise of its mortgagee’s power of sale.   Nor do they attempt to show any dealings with later owners until they get to Farque Ltd.

[10]     Second, Mr Yelcich says that he met with Mr Ritchie, the director of Farque Ltd, on several occasions.  He claims that Mr Ritchie confirmed that the Yelciches could stay on the property.  He does not say what consideration was given for their staying on the property and he confirms that no tenancy agreement has been signed. The most I can draw from that is that, if I were to accept what Mr Yelcich says, Mr Ritchie had  agreed to  grant possession on  some loose  and undefined basis and unsupported by consideration.  Even if I were to accept that, that does not mean that Farque Ltd is not entitled now to seek possession of the premises.  Apart from this reference to this conversation with Mr Ritchie alleging some consent to stay in the property in the meantime, there is nothing from which Mr Yelcich can derive any right of occupation which would be supportable in law.

[11]     Accordingly,  I do  not  see  any sensible  basis  on  which  Mr  Yelcich  can maintain his opposition to the plaintiff’s application.   The reality is that he has simply held over staying living on the property ever since the mortgagees exercised their power of sale years ago.  He has no right to stay in occupation now.  Farque Ltd has taken the appropriate course of coming to the Court and seeking an order for occupation.  Farque Ltd is entitled to orders for vacant possession, and the Yelciches are required to depart.

[12]     I  understand  that  the  Yelciches  have  carried  on  some  kind  of  farming operation on the property, even though it is only 4 hectares in size.  It is likely that there are livestock and farm equipment and machinery on the property in addition to normal household contents.   In these circumstances, an appropriate period to give them to vacate the property is one month.   I therefore make an order giving the plaintiff occupation of the property, that is, the Yelciches are required to vacate the property and are to do so by 21 March 2011.

[13]     The plaintiff will also have costs on a 2B scale.

R M Bell

Associate Judge