Frucom Engineering GMBH v Guardian Asset Securities Limited HC Auckland CIV 2010-404-4593

[2010] NZHC 1421

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-4593

IN THE MATTER OF     Caveat No. 8524846.1 South Auckland

Registry

BETWEEN  FRUCOM ENGINEERING GMBH Applicant

ANDGUARDIAN ASSET SECURITIES LIMITED

Respondent

Hearing:         29 July 2010

Appearances: Mr Bogiatto for Applicant

Mr Chisholm for Respondent

Judgment:      29 July 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE

Counsel:

George Bogiatto, P O Box 106-120, Auckland – [email protected]

Mr D J Chisholm, Auckland – [email protected]

FRUCOM ENGINEERING GMBH V GUARDIAN ASSET SECURITIES LIMITED HC AK CIV-2010-404-

4593  29 July 2010

[1]      The first call of this matter was today.  Mr Bogiatto for the applicant said that the caveat in this matter will expire approximately 18th August 2010 unless the Court makes an interim order.  The first fixture date available is 28 October 2010.

[2]      I was told from the bar that the property which is the subject of the caveat is a golf course.  The respondent is a mortgagee which gave Property Law Act notices some two years ago.  Mr Chisholm says the mortgagee is trying to negotiate a sale of the golf course and that the prescence of the caveat (and these were not his exact words but I think were the substance of what he said) was an embarrassment to those negotiations and it was not just a matter of the mortgagee requiring to be in a position of giving clear title and settlement under any agreement that came about; the sale of the property was inherently less attractive because of the prescence of the caveat.   As a result of the caveat delays will continue to be experienced by the mortgagee in exercising its power of sale with corresponding large financial losses resulting.

[3]      Mr Chisholm declined to consent to the making of an interim order.   He accepted there is jurisdiction to make such an order but he said an order should only be made in circumstances where the caveator can show a prima facie case for the continuation of the caveat.  This the respondent cannot do, Mr Chisholm submitted. He focussed  his  attention  on  the fact  that  the  applicant  in  this  case  is  Frucom Engineering GMBH, an Austrian company.  The caveat that was registered was said to  be  based  upon  agreements  to  mortgagee  and  agreement  to  purchase  dated  7

January 2010 between the Pacific Palms International Resort and Golf Club, the caveator.     The  caveat  therefore  is  based  upon  agreements  to  mortgage  and agreements to purchase between the owner and Frucom.  Specifically, the evidence shows that on 7 January 2010 a company called Euro Capital Markets Limited and Kaimai Palms Golf Resort Limited entered into an agreement whereby the latter granted a mortgage over the land in consideration of an advance of Euro $8,000,000. The second part of the transaction was as follows:

Kaimai Palms Golf Resort Limited hereby further agrees to sell Euro Capital Markets Limited 49% of the company’s shares as nominee for Frucom GMBH (FE) of Austria ...

[4]      The arguments for the respondent were that Frucom’s involvement in any arrangements can only be for the purchase of shares in the company which is the registered proprietor and that is not something that will support a caveat.  Even if under the first part of the transaction an agreement to mortgage had been validly granted, any rights on behalf of the mortgagee to register a mortgage would not avail against the respondent which would be able to exercise its power of sale without in any way being required to take into account an agreement to mortgage that might have been entered into between Euro Capital Markets Limited and Kaimai Palms Golf Resort Limited.  Therefore Mr Chisholm said there was no prima facie basis upon which the applicant could seek extension of its caveat.

[5]      Mr Bogiatto said that his client wishes to file and serve affidavits in reply to the material which had been filed by the respondent and because the applicant is domiciled in Austria that was going to take some time.  He was not therefore in a position to argue the matter before me today and he said that I should make an order in any event sustaining the position until the Court could deal with it.

[6]      It seems to me that there is a good argument to be made that if there was a proper basis for the applicant’s application it would have been disclosed by now in the  evidence  that  it  has  already filed  and  the  question  of  whether  there  was  a caveatable interest was unlikely to be materially advanced by any affidavits in reply. However one cannot be categorical about that and that it would be unfair to require Frucom to deal with the matter today.

[7]      I offered to deal with the matter at the end of my list on 2 September 2010 but unfortunately that is not suitable to the respondent.  Mr Chisholm did however wish to take me up on the alternative possibility which I offered which was that the matter could be referred to a Duty Judge list to further consider any interim order that might be made.  Mr Bogiatto did not oppose that approach.

[8]      The orders that I make are these:

a)        There will be an interim order sustaining the caveat until further order of the Court;

b)        The applicant has until 12 August 2010 to file any affidavits in reply.

c)        The proceeding is set down for one half-day fixture on 28 October

2010 at 10 a.m.  This is without prejudice to the respondent making any application to the Civil Liaison Judge for an expedited fixture elsewhere.  If the fixture on 28 October 2010 is not required, counsel should advise the Registrar promptly of that fact.

[9]      The applicant is to file and serve synopsis of submissions and a bundle of all Court papers relevant to the present application pursuant to r 7.39, ten working days prior to the fixture and the respondent to file and serve synopsis five working days prior to the fixture.   The proceeding is to be placed in the Duty Judge List on 16

August 2010 at 10 a.m.

J.P. Doogue

Associate Judge