Keast v Crown Worldwide (NZ) Limited (t/a Crown Relocations)
[2021] NZHC 2143
•5 August 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-328
[2021] NZHC 2143
BETWEEN NICHOLA JANE KEAST CHARLES PENNEY
Plaintiffs
AND
CROWN WORLDWIDE (NZ) LIMITED
(trading as CROWN RELOCATIONS) First Defendant
FIRST MORTGAGE CUSTODIANS LIMITED and FIRST MORTGAGE MANAGERS LIMITED
Second DefendantsHI TECH SECURITY DISPOSALS LIMITED
Third Defendant
Hearing: 5 August 2021 Appearances:
Nichola Jane Keast First Plaintiff in person No appearance for Charles Penney
John Armstrong for the First Defendant
James McDougall/Melissa Chester for the Second Defendants Angela Hansen/Laurel Sheppard for the Third Defendant
Judgment
5 August 2021
ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL
Solicitors:
Armstrong Murray (John Armstrong), Auckland, for the First Defendant
Holland Beckett (James McDougall/Melissa Chester), Tauranga, for the Second Defendant Heimsath Alexander (Angela Hansen/Laurel Sheppard), Auckland, for the Third Defendant
KEAST v CROWN WORLDWIDE (NZ) LIMITED [2021] NZHC 2143 [5 August 2021]
[1] Ms Keast and another are trustees of the Soho Trust which owned a property in Henderson and another at Waiuku. They mortgaged the properties to First Mortgage Custodians Ltd and First Mortgage Managers Ltd, the second defendants. They defaulted under the mortgage. The mortgagees obtained an order for possession of the Waiuku property and later sold it. Ms Keast and Mr Penney, the plaintiffs, had their household contents, and tools of trade at the Waiuku property. They left them there when the mortgagees took possession. Later the mortgagees moved their belongings into storage after they had sent warning letters to Ms Keast, asking her to uplift the contents herself. While the contents were in storage they also asked Ms Keast to uplift these goods. Later the mortgagees had the belongings destroyed.
[2] Ms Keast and Mr Penney now sue for damages for the loss of their possessions. Crown Worldwide (NZ) Ltd removed the chattels from the Waiuku property and stored them on behalf of the mortgagees. Hi Tech Security Disposals Ltd destroyed the belongings of Ms Keast and Mr Penney on the instructions of the mortgagees.
[3] Ms Keast and Mr Penney sue all the defendants in conversion and for trespass to goods. They say that they were not given the opportunity to remove their belongings from the property themselves, because the mortgagee served a Trespass Act notice on them, and they did not consent to their household belongings being sold or destroyed. They put the value of the items taken at $286,138, but they say that some of the items had a personal sentimental value, such as Ms Keast’s wedding dress and family photographs, and they seek extra damages for that loss.
[4] Crown and the mortgagees have applied for summary judgment. When defendants apply for summary judgment, the court applies the principles laid down in the Court of Appeal’s decision in Westpac Banking Corp v M M Kembla New Zealand Ltd.1 There is no dispute as to those principles.
1 Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [58]–[64].
[5] Crown’s position is that it did no wrong. It did not convert the household contents when it uplifted them and stored them at the request of the mortgagee, and it is not liable for trespass to goods. It was not the one that decided to have Ms Keast’s and Mr Penney’s belongings destroyed.
[6] The mortgagees acknowledge that there was a bailment of the goods, but they say that they were acting within their rights in removing Ms Keast and Mr Penney’s belongings from the property, putting them into storage and later having them destroyed. They say that they gave Ms Keast clear warning. They requested her to remove the belongings from the property first and repeated the request once the belongings were put into storage. Only when their warnings were ignored did they have the belongings destroyed.
[7] Hi Tech Security Disposals Ltd has filed a statement of defence, but it has not applied for summary judgment.
[8]There are two main questions:
(a)Were the mortgagees entitled to remove the plaintiffs’ belongings from the Waiuku property and put them in storage?
(b)Were they entitled to have those belongings destroyed?
The questions need to be kept separate.
[9] On the first question, the mortgagees have satisfied me that when they took possession of the mortgaged property at Waiuku they were entitled to remove the plaintiffs’ belongings and put them into storage. That gives Crown a proper defence to the causes of action against it.
[10] On the other hand, the mortgagees have not satisfied me to the summary judgment standard that they were entitled to have the belongings destroyed. That is apparently a new question in New Zealand. Before the Court gives a decision on this apparently new point, there should be a full trial where the facts should be fully examined. Ideally the plaintiffs should obtain legal representation so that their case
can be presented to its best advantage. The result will be that while Crown succeeds on its summary judgment application, the mortgagees’ summary judgment application fails.
The evidence
[11] The mortgagees are custodial trustees for Trustees Executors Ltd and hold the assets of the First Mortgage Trust Group Investment Fund on behalf of Trustees Executors as trustee. In December 2015 they advanced funds to the trustees of the Soho Trust and took a mortgage security over the property at Waiuku, and another property in Henderson. Ms Keast was one of the trustees and one of the borrowers. Mr Penney, her partner, was not.
[12] There were defaults under the mortgage. The mortgagees began steps to enforce their rights. When they could not obtain access to the Waiuku property, they brought a proceeding seeking possession. On 30 October 2017, Venning J made a possession order in their favour against Ms Keast and Ms Riordan as trustees of the Soho Trust, and against Ms Keast personally.2 They were to provide vacant possession by 30 November 2017. While he does not say so in his decision, I take it that he intended to give the defendants time to remove their belongings from the property. Venning J also gave judgment for the outstanding principal interest owing under the mortgage. At the time of the hearing, the plaintiffs were represented by counsel. At some stage later that lawyer no longer acted for Ms Keast. It is not entirely clear to me for how long he had instructions from her after that hearing.
[13] The mortgagees had the order for possession sealed in early December 2017 and sent the sealed order to Ms Keast’s lawyers. On 11 December 2017 a process server served a notice under the Trespass Act 1980 on Ms Keast at the Waiuku property. The notice required her to leave both the Waiuku property and the Te Atatu property. The notice did not say that Ms Keast was free to go back onto the property. The mortgagees say that they took physical possession of the property on 13 December 2017.
2 FM Custodians Ltd v Keast [2017] NZHC 2654.
[14] An email from the lawyers for the mortgagees to the lawyer who had acted for Ms Keast on 14 December 2017 advised that the mortgagees had taken possession, that the locks had been changed and that the contents would be being taken away by a removal company. The date for that had not yet been fixed, but notice was given that Ms Keast would be able to remove her possessions from the property if she contacted the mortgagees. The email recorded that there was a chest freezer and fridge freezer containing food, and the mortgagees wanted to give Ms Keast the opportunity to remove her food and other belongings.
[15] On 19 December 2017 the mortgagees’ lawyers wrote again to Ms Keast’s lawyer, advising that her property was now held by Crown Relocations and giving contact details for Crown and Crown’s reference number. The letter included this:
If Ms Keast does not collect her belongings from Crown by 31 January 2018, FMC will either sell or dispose of the items. In the event FMC sells any of the items, the proceeds of sale will be reimbursed to Ms Keast personally, as they are her personal items and do not form part of the security.
The letter went on to state that FMC accepted no liability for the items, and Ms Keast should ensure that they were covered by her insurance policy.
[16] There was further email correspondence. The mortgagees’ evidence includes emails on 20 December 2017. It appears from that that Ms Keast had received at least one of the emails from the lawyer. An email of 21 December 2017 from the mortgagees’ solicitors to the lawyer who had acted for Ms Keast again requested that Ms Keast contact Crown Relocations and arrange to collect her belongings.
[17] Crown went on site, uplifted the belongings, and put them into its storage facility in Albany. It made an inventory of the items it uplifted. On 16 January 2018 the lawyers for the mortgagees wrote to the lawyer who had acted for Ms Keast, advising that Ms Keast had not yet collected her property from Crown. The letter said that the property would be held in storage until 31 January 2018. There was apparently no response.
[18]The credit and risk manager for the mortgagees says in her affidavit:
In around mid-February 2018 we decided that FMC would not seek to sell Ms Keast’s belongings. This was for several reasons. We did not consider that FMC had any right or obligation to sell the belongings. Another reason was that the value was considered to be relatively low, and selling would be administratively difficult.
The point here is that the mortgagees had their own doubts whether they could sell the belongings.
[19] They went ahead with the sale of the Waiuku property. It sold by auction on 28 February 2018. The sale settled on 27 March 2018. In the meantime, Ms Keast and Mr Penney’s belongings remained in storage. The mortgagees have put in evidence an email of 8 March 2018 which provides quotes apparently from Crown, as to the costs of collecting the belongings, delivering them, and also ongoing storage costs. The mortgagees’ email asked Ms Keast to let them know what she would like to do. There was apparently no response, according to the mortgagee.
[20] On 12 March the lawyers wrote again to Ms Keast. The letter again requested Ms Keast to uplift the belongings and to do so by 23 March 2018 (within eleven days). The letter included this:
Our client has given you many opportunities to arrange collection of your belongings from Crown Storage. We note the original timeframe for collection expired on 31 January 2018, being almost six weeks ago. Our client will dispose of these belongings if they remain at Crown Storage on 24 March 2018. This is your final opportunity to arrange collection.
The letter added that the costs of storage would be charged to Ms Keast as the borrower under the mortgage.
[21] In April an email from the mortgagees to the third defendant advised of the decision to remove the contents from storage and have them destroyed by the third defendant. The third defendant provided a quote. The removal did not happen until 31 May 2018.
[22] Crown’s evidence is that its business involves collecting, relocating and storing chattels, including household belongings. In December 2017 it agreed with the mortgagees to remove and store the household belongings from the Waiuku property. They were duly stored at a storage facility in Albany under contract between the
Crown and the mortgagees. The mortgagees warranted they had all the necessary permits, approvals and authorities to allow Crown to enter on the property and to store the belongings. They collected the goods on 21 December 2017 and made an inventory. They were stored under the name of Rachel Bush, the person at the mortgagees who had arranged for the belongings to be removed and stored by Crown.
[23] In January 2018 Ms Keast emailed Crown advising that her possessions had been put into storage by the mortgagees. She would not be in a position to have them delivered to a property for two weeks. She asked Crown to keep on storing them. Crown replied, seeking confirmation. Ms Keast indicated that the goods may be held under instructions from the mortgagees.
[24] Ms Keast emailed Crown again on 7 March 2018. From the correspondence it appears that Crown referred her back to FM Custodians. It appears from Ms Keast’s evidence that she was sent from pillar to post between Crown and the mortgagee. She did however request a price to have the items relocated. The mortgagee’s evidence shows she was given a quote.
[25] I am satisfied from the evidence that Crown only stored the goods, and it was not involved in any decision to destroy them. It allowed the mortgagees to uplift the goods when they wanted to have them destroyed by the third defendant.
[26] Ms Keast has given an affidavit. She says that because she received the Trespass Act notice she stayed away from the property. She does not necessarily accept that she received all the correspondence which the mortgagee relies on. She did contact Crown with a view to trying to uplift her goods, but was referred back to the mortgagee. On her account she could not make any headway with the mortgagees.
Discussion
[27] Some aspects of the case are not controversial. The defendants do not challenge Mr Penney and Ms Keast’s claim that they owned the household contents at the Waiuku property. But for the mortgagees taking possession of the Waiuku
property, they do not challenge Mr Penney and Ms Keast’s right to possession of those contents.
[28] Mr Penney and Ms Keast did not mortgage their household contents to the mortgagee. The mortgagees had a mortgage only over the realty, not over the plaintiffs’ personal assets. The mortgagees have not put the mortgage in evidence. They do not rely on the terms of the mortgage, except insofar as the mortgage gave them the powers to take possession of the property on default and later sell it after having complied with the formalities under the Property Law Act 2007. Apart from those rights to take possession of the real estate and sell it, they do not say that the mortgage gave them any express powers to sell or dispose of other property of the plaintiffs.
[29] The plaintiffs’ causes of action in trespass and conversion are appropriate to test the lawfulness of the defendants’ actions. Mr McDougall pointed to what seems to be a drafting slip in the statement of claim, which does not plead that the mortgagees had the belongings destroyed. I bear in mind that Mr Penney and Ms Keast do not have legal assistance. That seems to be an inadvertent omission which could be repaired by amending their statement of claim. Apart from that drafting slip I regard these causes of action as appropriate to test the lawfulness of the defendants’ actions, but I note that an alternative cause of action might be for breach of bailment, under which the defendants would have the burden of proof.
[30] As to what is required for a claim for trespass to goods, and for conversion, Tipping J said in Wilson v New Brighton Panelbeaters Ltd:3
The essence of trespass is an unlawful interference with possession of goods. The essence of conversion is an unlawful denial of the plaintiff’s rights to his goods or an unlawful dealing with the plaintiff’s goods by asserting a temporary or permanent dominion over them in a manner inconsistent with the plaintiff’s rights thereto. By unlawful I mean without lawful justification.
Thus the initial act of taking possession of the goods of another while it will be a trespass if performed without lawful justification, will not be conversion unless the person taking possession knows that he is thereby infringing the plaintiff’s rights in the goods. But any dealing with the plaintiff’s goods after coming into possession of them, is a conversion if it amounts to an assertion of temporary or permanent dominion in a manner
3 Wilson v New Brighton Panelbeaters Ltd [1989] 1 NZLR 74 (HC) at 80.
constituting an infringement of the plaintiff’s rights in relation to the goods. This is so, whether or not there is knowledge of such infringement and even if the person dealing with the goods is acting honestly and without negligence. That is why the respondent in the present case, by taking possession of the appellant’s goods without lawful justification albeit innocently and without negligence, committed a trespass to those goods.
A person who comes into possession of another’s goods innocently and without being the original taker does not commit trespass to those goods because there is no direct interference. Nor is he guilty of conversion unless and until he asserts some temporary or permanent dominion over the goods in a manner inconsistent with the plaintiff’s rights; but on so dealing with the goods he is guilty of conversion even if he is honestly and reasonably in ignorance of the plaintiff’s rights. This is why a mere custodian from the original taker or a carrier of the goods on behalf of the original taker, if acting in ignorance of the plaintiff’s rights, commits no conversion by his temporary possession unless and until he does something with or to the goods which amounts to an assertion of permanent or temporary dominion inconsistent with the plaintiff’s rights. Examples of such inconsistent conduct are the delivery of possession to a third person or changing the character of the goods. Simple retention in these circumstances or redelivery to the person who handed the goods to the custodian or carrier in the first place is not per se a conversion.
(Emphasis added).
Removing and storing the household contents
[31] As to the first issue, the mortgagee removing the household contents and putting them into storage, there is helpful guidance from the decision of the Court of Appeal in Cribb v FM Custodians Ltd.4 In that case a mortgagee had taken possession of a property where the mortgagor had left his belongings. The mortgagee removed the belongings and put them into storage. The mortgagor delayed uplifting them. There was no question in that case of destruction of the goods. The mortgagee sued for its costs of storage and was successful at first instance and on appeal. The Court of Appeal recognised that a mortgagee who obtains an order for possession of property under ss 137 and 139 of the Property Law Act 2007 is entitled to possession of the land, and with that the right to eject others from the land as necessary. A right to possession is enough. Actual possession is not required. Once a mortgagee has obtained an order for possession, chattels left behind by mortgagors are considered to be trespassing, and a mortgagee in lawful possession of the land is entitled to enjoy
4 Cribb v FM Custodians Ltd [2018] NZCA 183, (2018) 19 NZCPR 153. Leave to appeal refused:
Cribb v FM Custodians Ltd [2018] NZSC 90.
possession of the land free from trespassing chattels. The Court described the position of a mortgagee who had taken possession of land on which a mortgagor’s or a third party’s chattels were located as having become an involuntary bailee of those chattels. The Court adopted this definition from Palmer on Bailment:5
An involuntary bailee may be defined as a person whose possession of a chattel, although known to him, and the result of circumstances of which he was aware, occurs through events over which he has no proper control, and to which he has given no effective prior consent.
[32]The Court said:6
A mortgagee who takes possession of a property, which contains inside it chattels belonging to or under the control of a mortgagor or a third party who is aware of the mortgagee’s right to possession, may be in the position of an involuntary bailee. In such a situation possession of the chattels has not been sought by the mortgagee, and the mortgagee finds them in the property without that mortgagee’s permission or consent, despite the mortgagee’s expressed wish to take possession of the property by an earlier date. The chattels are likely to be an impediment to any sale. In such circumstances the mortgagee must, if it has acted reasonably by having given fair notice, be able to remove and store the chattels.
[33] On the facts the mortgagee had acted reasonably by requesting the mortgagor to remove the chattels. When the mortgagors did nothing, the mortgagee was entitled to remove them, store them, and forward them once the mortgagor provided an appropriate address. The Court upheld the mortgagee’s claim against the mortgagor for the costs of removing and storing the chattels. It applied dicta from English cases that an involuntary bailee has to do what is right and reasonable in the circumstances of the case. Those obligations are less onerous than those on a voluntary bailee, for example a gratuitous bailment.7
[34] The Cribb decision answers the first question, whether the mortgagee was entitled to remove and store the goods. Because the mortgagee was entitled to possession of the Waiuku property and had obtained an order for possession of the property, it was entitled to remove the plaintiffs’ belongings after having first given the plaintiffs the opportunity to remove them themselves. The steps that the mortgagee took in this case are in keeping with the Cribb decision. On a summary judgment
5 Norman Palmer Palmer on Bailment (3rd ed, Thomson Reuters, London, 2009) at [13–001].
6 At [27].
7 Elvin & Powell Ltd v Plummer Roddis Ltd (1933) 50 TLR 158.
basis I find that up to the stage where they put the goods into storage, the mortgagees acted in accordance with the responsibilities of an involuntary bailee under the Cribb decision.
[35] That finding also applies to Crown. It was in a sense a sub-bailee under the involuntary bailment. To the extent that the mortgagee was meeting its responsibilities as an involuntary bailee by storing the goods with Crown, Crown likewise has a defence to a claim of breach of bailment, and as a consequence also a defence to any claim for trespass to chattels or for conversion.
[36] Following Tipping J’s decision in Wilson v New Brighton Panelbeaters Ltd, Crown was not the initial taker of the goods but acted as custodian of the initial taker. While the goods were in its storage, it did not deny Ms Keast’s rights. Its actions in referring her back to its customer were not a denial of her rights, and do not give the plaintiffs a claim for conversion against it.
[37] I also accept its evidence that it had no part in the decision that the household contents should be destroyed. That was the mortgagees’ decision alone. Accordingly, under the Cribb decision, Crown cannot be liable for trespass to goods, conversion of goods, or breach of bailment. It has therefore established that none of the present causes of action can succeed. Nor could any new cause of action for breach of bailment. There will be summary judgment for Crown.
Destroying the contents
[38] The question of destroying the household contents is different. It is not covered by the Cribb decision. Removing the contents from the mortgaged property and putting them into storage may be consistent with recognition of the plaintiffs’ rights to possession of the household contents. The mortgagee may not be under a positive duty to return the contents to the plaintiff, but a mortgagee may be required to hold them under the involuntary bailment until they are uplifted.
[39] On the other hand, destruction of the household contents is inconsistent with a mortgagee holding chattels under a bailment. In an unreported decision, Property Life Insurance Ltd v Edgar, which is referred to in Palmer on Bailments, Mahon J said:8
The present state of the law is that such a person [the involuntary bailee] is not liable for subsequent disposal of the goods to a third party if he does so without knowledge of the title of the true owner, and if he acts without negligence.
In this case the mortgagees did know the title of the true owners and acted deliberately to have the chattels destroyed. They cannot claim the benefit of Mahon J’s dictum.
[40] The difficulty for the mortgagees can be seen in this statement in Palmer on Bailment:9
There is at common law no general right to dispose of goods which a bailor has refused or is unable to collect.
[41] Authorities said to support this proposition are Prager v Blatspiel Stamp and Heacock Ltd, Sachs v Miklos and Munro v Willmott.10 Those cases recognise that where goods are held under a bailment, a sale may sometimes be justified in circumstances of necessity, as might be the case with perishable goods and livestock. But circumstances of necessity have been considered very restrictively and applied generally only in a limited number of cases. There must be an actual commercial necessity dictating disposal for a bailee to escape liability for conversion. The bailee must act prudently and bona fide in the interests of the owner. The cases indicate that for all practical purposes the bailee must have been unable to communicate with the bailor before disposal. In the cases I have referred to, the bailee had been holding goods for a long time, years. In each case the courts found that the bailees who had sold the goods had acted unlawfully and in breach of the owners’ rights. In Munro v Wilmott, a case where a car had been stored for years, it was held that inconvenience to the bailee was not enough to justify a sale.
8 Property Life Insurance Ltd v Edgar HC Auckland A496/77, 31 March 1980 at 17, cited in Palmer on Bailment, above n 5, at [13-018].
9 At [13-050].
10 Prager v Blatspiel Stamp and Heacock [1924] 1 KB 566, [1924] All ER 524 (HC); Sachs v Miklos
[1948] 2 KB 23 (CA); and Munro v Willmott [1949] 1 KB 295.
[42] Given what is stated in Palmer on Bailment and these decisions, it is far from clear that a mortgagee in the position of the mortgagees in this case had a right to sell the goods. The mortgagees seem to have recognised that, because they had doubts as to their ability to sell the goods. If they had doubts as to their ability to sell the goods, they must also have had doubts as to their ability to destroy them.
[43] There are two English cases which have upheld the actions of a mortgagee who disposed of chattels left on a property after the mortgagee took possession. They are Da Rocha-Afodu v Mortgage Express Ltd, and Campbell v Redstone Mortgages Ltd.11 Those cases can be distinguished because the mortgages in those cases gave the mortgagee the express power to dispose of the chattels if the mortgagee took possession. In the Da Rocha-Afodu case, the mortgage said inter alia:12
The following will apply if we take possession of the property:
If you have left any goods or animals at the property, we may take the following steps on your behalf and at your expense. Firstly, we may remove and store the goods and animals. Then we may either dispose of them or if we know that they do not belong to you, return them to their owner.
[44] The mortgagees in this case do not rely on any provisions of the mortgage to justify the destruction of the belongings. They have to rely on the common law, but the common law may not be much help. Palmer concludes the discussion of the point with these words:13
Clearly this is one situation in which the common law is incapable of supplying a satisfactory solution.
[45] It is arguable here for the plaintiffs that circumstances of necessity had not arisen. At most the mortgagees found it inconvenient to carry on paying storage costs, uncertain when the mortgagors would uplift their belongings.
[46] The mortgagees point to the many letters they wrote which clearly gave notice to Ms Keast that she was at risk of her belongings being disposed of. They say that when she did not react that entitled it to have them destroyed. That position was
11 Da Rocha-Afodu v Mortgage Express Ltd [2014] EWCA Civ 454; and Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch).
12 At [20].
13 At [13-050].
considered in the English Court of Appeal’s decision in Sachs v Miklos. Lord Goddard CJ said:14
If a gratuitous bailee writes to the bailor and says: “I am no longer willing to hold your property. Please remove it,” and the bailor makes no answer and takes no step, and if that letter is followed up by another, which he receives, saying in effect: “As you have not answered my letter and taken any steps to remove your property, please understand that I shall sell it if you do not remove it or tell me what to do with it,” and again there is no answer, it might be that a court could infer that the owner of the property was so disinterested in it that he was impliedly assenting to the sale. There are, of course, certain difficulties though in the way of finding that, because of the doctrine that silence does not give consent...
[47] The difficulty with an argument that Ms Keast impliedly consented to her goods being destroyed when she did not answer the letters is her conduct in contacting Crown. It shows that she had an ongoing interest in having her belongings returned to her.
[48] It was also suggested that she can be treated as having abandoned the goods. That argument fails when the test for abandonment is considered. Here I refer to Garrow & Fenton’s Law of Personal Property in New Zealand, and the discussion at
2.30.15 It is apparent from the text that the question of abandonment turns on the
subjective intention of the owner. It is arguable for Ms Keast that she had not abandoned any interest in her belongings, because she was still taking steps to have them returned to her, even if her efforts were misdirected. That will be a matter for full examination at trial.
[49] There is another aspect: the manner of disposal. The mortgagees had the goods destroyed instead of selling them. Their position is that they could do what they thought was best, without having to dispose of the goods to the best advantage of the owners. That position has to be compared with their duties as mortgagees of the Waiuku property. Under s 176 of the Property Law Act 2007 they were under a duty of reasonable care to obtain the best price reasonably obtainable at the time of sale. That duty applied when they exercised the express power to sell the property under the mortgage. It would be curious if they were not under a similar duty when it came
14 Sachs v Miklos [1948] 2 KB 23 (CA) at 37.
15 Roger Fenton Garrow and Fenton’s Law of Personal Property in New Zealand (7th ed, LexisNexis, Wellington, 2010).
to selling the belongings over which they had no interest and the power of sale is doubtful. Destroying the household contents instead of putting them up for sale may not be consistent with using proper efforts. On that point the mortgagees submitted that the goods were of little value, but there is no hard evidence on that point. The evidence in support is poor and mainly hearsay.
[50] In summary, I dismiss the mortgagees’ summary judgment application. The case will have to go to a full hearing, and there will be the usual interlocutory steps including disclosure.
[51] I encourage Mr Penney and Ms Keast to obtain legal representation. That will enable the court to make an informed decision with full evidence after hearing full legal argument.
[52] There is also the question of costs. Crown has succeeded in its application and would normally be entitled to costs. Mr Penney and Ms Keast do not have legal representation, and so they are not entitled to costs against the mortgagees. Given the contractual warranties by the mortgagees, I wonder whether the mortgagees might meet Crown’s costs on the summary judgment application. I do not make any decision on that, but I encourage the parties to confer and see whether that will remedy the matter. I invite parties to confer as to costs. If costs orders are sought, memoranda may be filed for costs to be decided on the papers.
[53] I also direct the Registrar to arrange a face-to-face case management conference for further directions.
…………………………………….
Associate Judge R M Bell
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