Hart v ANZ National Bank Limited

[2012] NZHC 1704

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2583 [2012] NZHC 1704

BETWEEN  BARRY JOHN HART First Plaintiff

ANDWOODHILL STUD LIMITED Second Plaintiff

ANDWOODHILL HOLDINGS LIMITED Third Plaintiff

ANDMALORY CORPORATION LIMITED Fourth Plaintiff

ANDANZ NATIONAL BANK LIMITED Defendant

CIV-2012-404-3693

AND UNDER                  Section 143 of the Land Transfer Act 1952

IN THE MATTER OF     Caveats numbered 9106604.1, 9106604.2 and 9106604.3

BETWEEN  ANZ NATIONAL BANK LIMITED Applicant

ANDBARRY JOHN HART First Respondent

ANDSERENELLA HOLDINGS LIMITED Second Respondent

ANDWOODHILL FARMS LIMITED Third Respondent

ANDWOODHILL STUD LIMITED Fourth Respondent

ANDWOODHILL HOLDINGS LIMITED Fifth Respondent

HART v ANZ HC AK CIV-2012-404-2583 [12 July 2012]

ANDMALORY CORPORATION LIMITED Sixth Respondent

Hearing:         12 July 2012

Counsel:         L A O'Gorman for the Applicant/Respondent

B J Hart on own behalf

Judgment:      12 July 2012

ORAL JUDGMENT OF VENNING J

Solicitors:      Buddle Findlay, PO Box 1433, Auckland 1140

Counsel:       B J Hart, PO Box 47016, Auckland

[1]      There are two sets of related proceedings before the Court.   The first is a proceeding  by Mr  Hart  and  related  companies  against  the ANZ  National  Bank Limited seeking injunctive relief.   The second is an application by the bank for orders removing a number of caveats lodged by Mr Hart or entities related to him, against properties which the bank holds security over.

[2]      The applications were before the Court this morning at 10 am.   Mr Hart sought  an  adjournment  of  the  applications.    That  application  was  opposed  by Ms O’Gorman for the bank.   She noted that this was the second application by Mr Hart and the related entities for injunctive relief in relation to the bank’s exercise of its rights as mortgagee.  I declined the application for adjournment but acceded to Mr Hart’s request that the matter stand down until 2.15 pm to give him time to prepare for the hearing.

CIV-2012-404-2583

[3]      When the matter was called at 2.15 this afternoon, Mr Hart indicated he no longer opposed the bank’s opposition in relation to the injunction and indicated he would withdraw the application for interim injunction.

[4]      Ms O’Gorman opposed the matter being dealt with on that basis given what had occurred on an earlier date.  In relation to that, I note that the first application for interim injunction by Mr Hart in these proceedings was before the Court on 21 June. On that date counsel was granted leave to withdraw in Mr Hart’s presence, and that the Court was advised the application was to be withdrawn. The Judge dismissed the application.   Ms O’Gorman was concerned that the same position might arise in relation to the injunction application before the Court today and the bank would be faced with a further application.

[5]      Given the background to the matter, I indicated to Mr Hart that I would only be  prepared  to  deal  with  the  matter  without  hearing  full  argument  on  it  if  he undertook that no further application for interim injunction to prevent the bank exercising its powers of sale as mortgagee would be made.  Mr Hart sought time to consider his position.

[6]      I should also record that Mr Hart raised whether it was appropriate for me to preside over the hearing as Mr Hart had appeared as counsel before me in a number of criminal trials in which I have presided.   I indicated to Mr Hart that the only relationship I had with him was as a Judge sitting on those criminal proceedings in which Mr Hart was counsel and that I was not embarrassed by that in dealing with these applications.  I also noted that there would be few Judges in Auckland who had not had dealings with Mr Hart on that basis.  Judicial resources are limited and as Duty Judge this matter has been allocated to me.  I see no reason to recuse myself.

[7]      After Mr Hart had take time to consider his position, he confirmed that he was prepared to give an undertaking to the Court that he would not pursue further injunctive relief against the bank to prevent the bank’s mortgagee sales and also confirmed he would not oppose the application to remove the caveats in the related proceedings.

[8]      On that basis I consider it unnecessary for Ms O’Gorman and the bank to proceed formally with the opposition to the second application for injunctive relief. However, I record that Ms O’Gorman was ready and able to deal with the matter substantively.   I also record that the Court had time to deal with the matter substantively and that the applicants, Mr Hart and the related companies, had the opportunity to put their full case in support of the interim injunction before the Court but chose not to do so.

[9]      Finally, I record the undertaking referred to above.   On the basis of the matters I have referred to I formally dismiss the application for interim injunction.

[10]     I reserve the issue of costs and at Ms O’Gorman’s request direct that the bank file and serve any application and submissions in relation to costs within seven days and that any parties served with the application for costs respond within a further seven days.  Costs will then be dealt with on the papers or, if a hearing is necessary, a hearing can be convened.

CIV-2012-404-3693

[11]     I move to consider the other proceedings, caveat proceedings.   They were first  before  the  Court  on  3  July.    In  those  proceedings  the  bank  seeks  orders removing various caveats lodged by Mr Hart on behalf of companies related to him, against titles which the bank holds mortgages over and which the bank is in the process of selling by way of mortgagee sale pursuant to its powers as mortgagee.

[12]     In addition, the bank seeks further orders that any other caveats lodged by Mr Hart,  or  companies  related to  him,  against  any of the  properties subject  to  the injunction proceedings be removed from the titles.

[13]     On 3 July Associate Judge Sargisson directed that any notice of opposition be filed and serve by 8 July and any affidavits in support of the opposition by 10 July. No affidavits have been filed in support of the opposition but a notice of opposition was filed on 9 July (being the first day after 8 July, a Sunday).

[14]     The grounds of opposition to the orders sought by the bank are essentially a repetition  of  the  facts  of  the  second  application  for  interim  injunction  and  the grounds set out to support that application for interim injunction.  It is also said that a lease between Woodhill Farms Limited and the lessee was entered on 20 May 2002 which predated the bank’s mortgage and as such had priority.

[15]     As noted, no evidence was filed in support of the notice of opposition.  Also, as noted, Mr Hart did not oppose the orders sought.  However, given the nature of those  proceedings,  and  because  this  was  the  bank’s  application,  I  heard  from Ms O’Gorman as to the merits of the bank’s position and application.

[16]     The bank seeks removal of the caveats on two principle grounds.  First, abuse of process and second, that the bank’s position and power of sale as mortgagee is paramount.

[17]     In relation to the abuse of process issue, the bank notes that although the first application for interim injunction was dismissed on 21 June, the interests relied on to

support the caveats were not disclosed at that time, but the caveats in relation to two of the properties were registered on 25 June.  She also noted that the respondents to the injunction proceedings had then sought to lodge caveats on 5 July in relation to the third property. At no stage were those interests disclosed prior.

[18]     More substantively, the bank takes the position that, as it has never consented to any of the sales nor the lease relied on to support the caveat, the interests of the purchasers and lessee under those agreements and lease are subsidiary to the bank’s interests as mortgagee which must prevail.

[19]     The  applicable  principles  relating  to  caveats  have  recently  been  drawn together by Judge Faire in the case of Chen v ANZ National Bank Ltd:[1]

[1] Chen v ANZ National Bank Limited [2012] NZHC 1083.

[17]      The applicable principles which apply when considering applications pursuant to s143, 145 and 145A of the Land Transfer Act 1952 are well known and can be shortly stated. They are:

(a)       Ss 143, 145 and 145A of the Land Transfer Act 1952 give no guide as to the circumstances in which the court may make an order that a caveat be removed:  Catchpole v Burke;

(b)       If it is clear that there was no valid ground for the lodging of a caveat, or that the interest which in the first place justified the lodging of  the  caveat  no longer  exists, such a  caveat  should  be removed:  Sims v Lowe;

(c)       The onus under s 143 of the Land Transfer Act 1952 lies on the caveator to show that he has a reasonably arguable case for the interest he claims: Castle Hill Run Ltd v NZI Finance Ltd;

(d)       The caveat, being a creature of statute, may be lodged only by a person upon whom a right to lodge it has been conferred by statute.   It is not enough to show that the lodging and continued existence of the caveat would be in some way advantageous to the caveator:   Guardian Trust & Executor Co of New Zealand Ltd v Hall;

(e)       What the caveator must establish is an arguable case for claiming an interest of the kind referred to in s 137 of the Land Transfer Act 1952; and

(f)       Even if the caveator  establishes an arguable case for the interest in the land claimed, the court retains a discretion to make an order removing the caveat although it will be exercised cautiously: Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd.

[20]     For present purposes the particularly relevant facts are, that in relation to the power of sale by the mortgagee bank and its right to exercise that power of sale, the bank’s   position   is   paramount:   Congregational   Christian   Church   of   Samoa Henderson Trust Board v Broadlands Finance Ltd.[2] The fact that a third party may have entered into an agreement to purchase or lease the mortgage property does not stand in the way of the its exercising powers of sale unless the bank consented to the

sale, and the bank was purporting to exercise its rights in a manner inconsistent with that consent.[3]

[2] Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Ltd

[1984] 2 NZLR 704.

[3] Westpac New Zealand Ltd v Set Kien Law [2012] NZHC 1065; Westpac Banking Corporatio v

Famularo HC Auckland M1092/98, 23 September 1998.

[21]     In this case the bank has not consented in any way to the sales which are relied on to support the caveats.  There is no basis for them to take any prior interest to the bank’s interest, nor to the purchaser pursuant to the bank’s power of sale as mortgagee. That is confirmed by s 105 of the Land Transfer Act.

[22]     In the present case, as in the case of Chen, the interests claimed in the caveat in relation to the agreement for sale and purchase have no priority and are entitled to no protection in respect of the registration of any transfer executed by the bank in its exercise of its power of sale.  As Judge Faire observed, the registered proprietor’s interest in the land ends with the transfer by the mortgagee (in this case the bank) to the bank’s purchaser.  From that point in time nothing could support the caveat.

[23]     The position is the same in relation to the lease.   Section 119 of the Land Transfer Act confirms that no lease is binding upon the mortgagee except so far as the mortgagee has consented to it.  In this case, the lease relied on, although dated in

2002  (I  note  there  is  no  evidence  before  the  Court  about  that  lease),  was  not registered against the title and there is no evidence to suggest that the bank has in any way consented to it.

[24]     For the same reasons as those noted above, any interest under that lease is

subservient to the bank’s interest as mortgagee and would be terminated by the

transfer by the bank to its purchaser pursuant to a mortgagee sale.

[25]     I am satisfied, on the basis of the submissions and evidence before the Court, that the applications to remove the existing caveats and for the further additional orders, are appropriate, given the steps that Mr Hart, and companies associated with him have taken in the related proceedings.  I record here that Mr Hart’s position is that he does not oppose the application for the orders removing the caveats but that he does not necessarily accept the position Ms O’Gorman has outlined to the Court is correct.

[26]     I am however satisfied that the orders sought are appropriate and accordingly make orders in terms of the draft attached to this judgment.

[27]     The issue of costs also arises on this proceeding.  Again at Ms O’Gorman’s request, I reserve the issue of costs.   Any application for costs together with submissions in support should be filed within seven days.  Any response should be filed and served within seven days.  The matter can then either be dealt with on the

papers or a hearing convened if one is required.

Venning J