Gerken v Boyle

[2024] NZHC 2347

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2024-425-65

[2024] NZHC 2347

UNDER

the Property Law Act 2007, s 83, s 109(1)(a), s 110(a)(iii) s 111

IN THE MATTER

of an application for an order to discharge mortgages

BETWEEN

ALLAN LESLIE GERKEN, SANDRA MARY GERKEN and PETER JOHN

BROOKLAND, as trustees of the Gerken Family Trust

Applicants

AND

CLIFFORD RAYMOND BOYLE and THOMAS ARTHUR TAYLOR

Respondents

Hearing:

1 August 2024

(Telephone Conference)

Counsel:

G S Williamson for Applicants

Judgment:

21 August 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

GERKEN v BOYLE [2024] NZHC 2347 [21 August 2024]

[1]    In  1996,  the  trustees  of  the  Gerken  Family  Trust  (the  Trust)  granted   a mortgage to Clifford Raymond Boyle and Thomas Arthur Taylor. The mortgage was registered against two titles owned by the Trust.

[2]    The loan was for $50,000 and was to permit the Trust to purchase the Otautau Hotel (the Hotel). The term of the loan was three years to be repaid by regular instalments with a final payment in April 1999.

[3]    The evidence of Mr Brookland, a professional trustee of the Trust and an accountant of Invercargill, is that the loan was repaid in full, however, the mortgage was never discharged. That evidence is confirmed by Allan and Sandra Gerken, the other trustees of the Trust. The reason why the mortgage was not discharged when the loan was repaid is not known.

[4]    However, with the Trust recently deciding that it wished to sell the Hotel, the fact the mortgages were still on the titles was discovered.

[5]    Both mortgagees are deceased. Death Certificates have been produced that show that Mr Boyle died on 10 September 2017 and Mr Taylor died on 12 May 2010.

[6]    While the sworn evidence of the Trust is that the mortgage was repaid, given the length of time since the repayment date, no records confirming repayment are available.

[7]    Pursuant to s 109(1)(a) — s 111 of the Property Law Act 2007 (the Act), the Trust applies for an order discharging the mortgage over the two titles.

[8]Section 109(1) of the Act provides:

109     Redemption when mortgagee cannot be found, etc

(1)A mortgage over property may be discharged by a court under sections 110 and 111 or by Public Trust under section 112 if—

(a)a person who is entitled to receive, or has received, payment of the amounts secured by the mortgage is out of the jurisdiction, cannot be found, or is dead; or

(b)it is uncertain who is entitled to receive payment of the amounts secured by the mortgage.

[9]Section 110(a) of the Act provides:

110     Redemption by order of court

A court may, in a circumstance referred to in section 109(1), make—

(a)all or any of the following orders on the application of the current mortgagor or any other person entitled to redeem the mortgaged property:

(i)an order to determine, in the manner that the court thinks fit, the amounts secured by the mortgage that would have been payable if the discharge of the mortgage had been sought under sections 97 to 101:

(ii)an order that the total amount determined under subparagraph (i) be paid into court:

(iii)an order declaring that all amounts secured by the mortgage have been paid in full:

[10]Section 111(1) of the Act provides:

111        Certificates and orders operate as discharge of mortgage

(1) A certificate by the Registrar that the amount ordered to be paid into court under section 110 was so paid, or a sealed copy of an order of a court declaring that all amounts secured by the mortgage have been paid in full, has effect as if it were a duly executed mortgage discharge instrument under section 83.

[11]   Accordingly, the above sections of the Act permit the Court to create what amounts to a duly executed discharge of mortgage (s 111(1)) where the mortgagee is dead (s 109(1)(a)) and the Court is satisfied that all amounts secured by the mortgage have been paid in full (s 110(a)(iii)).

Service on the executors of the estates

[12]   Pursuant to a Minute on 9 July 2024, I directed that the respective executor and trustee of each of the deceased respondents’ estates be served in their capacities as executors and trustees (Messrs John Clifford Boyle and Ross David Jackson).

[13]   The Trust was granted leave to utilise the originating application procedure, on the ground that Mr Williamson, counsel for the Trust, believed that the application would not be contested.

[14]   Given the assumption that administration of each estate concluded long ago,  I directed that, in the interests of avoiding unnecessary costs, it would be sufficient if the executors of the estates confirmed by letter or memorandum that their respective estates had no interest in the mortgage and did not wish to be heard, if that indeed was the position.

[15]   Each executor was served on 22 July 2024. Each executor received an explanatory letter, a copy of the application and a copy of my 9 July 2024 Minute. Each executor was requested to confirm receipt and advise their position, that is respond to my invitation to advise by letter or memorandum their position.

[16]   John Boyle has provided a letter as executor and trustee of the estate of Clifford Boyle confirming that the estate has no interest in the mortgage and does not wish to be heard.

[17]   Ross Jackson, as executor and trustee of the estate of Thomas Taylor, also confirms that Mr Taylor’s estate has no interest in the mortgage.

[18]   Mr Jackson suggested that the beneficiaries of Mr Taylor’s estate should be contacted. While there is no direction for those beneficiaries to be served, counsel have confirmed they are not aware of the existence of any outstanding loan.

[19]   All the circumstances point to the amount secured by the mortgage as having been repaid. The repayment date was in 1999. The idea that the debt would have been left outstanding for more than a decade after that date, as at the date of the death of Mr Taylor in 2010 and not actioned, speaks for itself. In the unlikely event that the debt was overlooked in Mr Taylor’s estate, then of course Mr Boyle as mortgagee could have pursued repayment of the debt.

[20]   The trustees consent to the removal of the mortgage over the two titles. In those circumstances, pursuant to s 20(1)(g) of the Senior Courts Act 2016, I have jurisdiction to make the orders sought.

Orders

[21]   Accordingly, as I am satisfied the mortgagees are both deceased and that the secured debt has been paid in full, there is an order pursuant to s 111(1) of the Act declaring that all amounts secured by mortgage no. 242684.4 registered against Record of Title SL212/77 (Southland Registry) and mortgage no. 242684.4 registered against Record of Title SLA2/84 (Southland Registry) have been paid in full.

[22]   Section 111 of the Act provides such an order has effect as if it were a discharge of mortgage. Strictly speaking, the order sought declaring that the said mortgage can be discharged is not required but for the avoidance of doubt, I make an order that mortgage no. 242684.4 can be discharged.

[23]There is no order as to costs.

Associate Judge Lester

Solicitors:

Hewat Galt, Invercargill