Heazlewood v Joie de Vivre Canterbury Ltd

[2015] NZCA 127

IN THE COURT OF APPEAL OF NEW ZEALAND

CA499/2014
[2015] NZCA 127

BETWEEN	SUSAN MARIE HEAZLEWOOD Appellant
AND	JOIE DE VIVRE CANTERBURY LTD Respondent

Hearing:	14 April 2015
Court:	Ellen France P, Randerson and Miller JJ
Counsel:	A M Corry for Appellant J E Bayley for Respondent
Judgment:	23 April 2015 at 4.30 pm

JUDGMENT OF THE COURT
(ON APPLICATION TO VARY STAY)

Pending delivery of our substantive judgment in this appeal we make the orders referred to in paragraph [7] below.

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REASONS OF THE COURT

(Given by Miller J)

1. This judgment responds to the respondent’s application for an order varying the stay pursuant to which Mrs Heazlewood’s notices of claim numbered 9632714.23 and 9792260.5 remain lodged against the titles to the property at 321 and 361 Russley Rd, being the land comprised in titles 526291 and 647771 (Canterbury Registry).[1] 

   [1]Counsel are agreed that the judgment must apply to both, although they were lodged at different times and are the subject of separate proceedings.

2. Substantial agreement was reached at the hearing about the variation, subject to the question whether the notice is sustainable in law.  The orders below broadly reflect that agreement.

3. The orders are made pending delivery of our judgment in this appeal and in the exercise of the Court’s jurisdiction to stay a judgment on terms, and pursuant to leave reserved in a judgment of 17 November 2014.[2]  They are intended to preserve the position of all parties by permitting development of a proposed carpark and to protect bona fide external creditors who are owed money for development of the Russley Rd property.  For that purpose, it is proposed that funds be borrowed against the security of the property.

   [2]Heazlewood v Joie de Vivre Canterbury Ltd [2014] NZCA 550.

4. In making these orders, we should not be taken to accept the respondent’s claim that Mr Heazlewood, or interests associated with him, are unable to arrange the necessary funding for Russley Rd, or that he lacks appropriate incentives to do so.  We intend that Mr Heazlewood, or other entities associated with him, should not be able to access equity in the property pending our substantive judgment.  For this reason the orders do not permit the repayment of advances made to the Boulder Trust by the Restart Trust, another entity associated with Mr Heazlewood, unless Mrs Heazlewood should agree to that course of action. 

5. By way of context, the notices are preventing the respondent (“JDV”) from transferring the property to LNV Trustees Ltd (“LNV”), a trustee company of the law firm Lane Neave, pursuant to an agreement for sale and purchase entered in July 2012.  LNV holds its equitable interest in the property as trustee for the
   Boulder Trust.  It is LNV that is to borrow from an external financier, not being anyone associated with Mr Heazlewood, to develop the property, and it is LNV that is indebted to creditors for the property’s development and associated expenses.  The interest claimed by Mrs Heazlewood through her marriage to Mr Heazlewood is said to extend to any interest in the land held by the Boulder Trust, which is associated, to use a neutral term, with him.

6. LNV is to give the following undertakings to Mrs Heazlewood and this Court:

   (a)The lender under the mortgage is to be independent of Mr Heazlewood.  Mrs Heazlewood will be advised of the lender’s identity as soon as that is known, and in any event not less than seven days before the transfer is registered.  The loan is not to exceed $2.5M.

   (b)All moneys drawn down under the loan secured by the mortgage will be paid to the trust account of Lane Neave, to be held on behalf of LNV in its capacity as the trustee of the Boulder Trust.

   (c)Loan moneys drawn down will be used only to pay existing and future debts of the Boulder Trust, excluding the repayment of the advance which is outstanding and owed to the Restart Trust, and further excluding payment of any sum to any other entity known by LNV to be associated with Mr Heazlewood.

   (d)All payments made from the advance will be on account of legitimate expenses or obligations of the Boulder Trust, including the completion of its proposed development of the carpark and the payment of legal and consultancy costs incurred in relation to the development and Environment Court proceedings associated with a roading designation.[3]

   (e)Before any payment is actually made in respect of any future invoice, LNV will provide a copy of the relevant invoice or supporting document to Mrs Heazlewood.  Should she object by notice in writing to LNV within five working days of receiving such advice, LNV will refer the matter to an independent person appointed by agreement or, failing agreement, the President of the Canterbury branch of the New Zealand Law Society, for decision.  Absent objection, the invoice may be paid.

   (f)LNV will not without Mrs Heazlewood’s consent make or authorise any income or capital distribution to any beneficiary of the
   Boulder Trust or make or authorise any resettlement.

   (g)LNV will not sell the land or any part of it other than to the Crown or a requiring authority (this in the context of proceedings involving Christchurch International Airport Ltd and the New Zealand Transport Agency).  In the event of such sale, LNV is to retain the net proceeds.

   (h)No other funds will be borrowed by LNV in its capacity as the trustee of the Boulder Trust.

   [3]The costs concerned are identified in paragraph [9] of a letter of 19 November 2014 from Lane Neave

7. Mr Heazlewood is to give the following irrevocable undertaking to Mrs Heazlewood and this Court:

   (a)Pending the outcome of the appeal, he will not remove LNV as trustee of the Boulder Trust, or appoint any other person as trustee or appoint any other person to be an advisory trustee or other appointee of the Trust; nor will he exercise any power to add or remove beneficiaries.

8. We order that on the giving of these undertakings, the following instruments only are to be registered or lodged in a single dealing: withdrawals of Mrs Heazlewood’s notices of claim, the transfer to LNV, a mortgage securing a loan to LNV as trustee for the Boulder Trust, and fresh notices (or a single notice, if possible and at her election) of claim by Mrs Heazlewood.  The stay granted in this Court’s judgment of 17 November 2014 is varied accordingly. 

9. The parties may vary the undertakings by agreement and advise the Court of such change by joint memorandum.  In the event that they cannot agree, there will be leave to apply.  Application should be made to this Court, rather than any other, pending delivery of our substantive judgment.

Solicitors:
Godfreys Law, Christchurch for Appellant
Rhodes & Co, Christchurch for Respondent