LandsAirWater Counsel v Shortt

[2024] NZHC 1493

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-001174

[2024] NZHC 1493

UNDER

High Court Rules 2016

IN THE MATTER

of an interim injunction

BETWEEN

LANDSAIRWATER COUNSEL

Plaintiff

AND

VITTORIA SHORTT

First Defendant

PHILLIP DAVIES/BARFOOT AND THOMPSON

Second Defendant

Hearing:

6 June 2024

Appearances:

T Whetu-Waiti for Plaintiff

S Gollin and A Kim for Respondent

Judgment:

6 June 2024

Reasons:

6 June 2024

REASONS FOR JUDGMENT OF VENNING J

This judgment was delivered by me on 6 June 2024 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           MinterellisonRuddWatts, Auckland Copy to:   T Whetu-Waiti

LANDSAIRWATER COUNSEL v SHORTT [2024] NZHC 1493 [6 June 2024]

Introduction

[1]                 An entity styling itself as LandsAirWater Counsel filed proceedings seeking an interim injunction to prevent a mortgagee sale of a property held in the name of René Archner and Lydia Ann Miller at Maungaturoto.

[2]                 The application is opposed. The defendant seeks orders striking out or granting summary judgment on the claim.

[3]                 After hearing from the advocate for the plaintiff Tane Whetu-Waiti and hearing briefly from Mr Gollin for the defendant, the Court indicated that the application was legally incoherent and the proceedings would be struck out with the reasons to follow. These are the reasons.

Background

[4]                 I take the background from the affidavit of Bryce Nicol, the head of Collections and Credit Solutions of the ASB Bank New Zealand Ltd (ASB).

[5]                 On or about 19 March 2015 ASB as lender entered a facility agreement with René Archner and Lydia Ann Miller (the borrowers) pursuant to which ASB advanced to the borrowers:

(a)a floating term loan of $200,000 for a term of 240 months (20 years); and

(b)a term loan (fixed for an initial period of 24 months) of $300,000 for 240 months (20 years).

[6]                 The agreement was subject to ASB’s retail general terms and conditions. The loans were provided to assist the borrowers to purchase the property at Maungaturoto.

[7]                 ASB received documents from the solicitor acting for the borrowers on the purchase of the property confirming execution of a mortgage in favour of ASB which was subsequently registered against the titles to the property. The solicitor’s certificate confirmed that the law firm had positively identified the borrowers and that each of

the documents (including the loan agreement) had been validly executed and constituted legal, valid, binding and enforceable obligations of the borrowers and mortgagors. In reliance on those documents ASB transferred the $500,000 to the solicitors for the borrowers to enable the settlement of the purchase. On 24 March 2015 the property was transferred to the borrowers and a mortgage registered against the titles in favour of ASB.

[8]                 The borrowers ultimately fell into default under the loan agreement. ASB has taken a number of steps in an attempt to deal with the borrowers in relation to the default. The borrowers have refused or declined to engage. Instead they have issued trespass notices and made a number of demands of their own, including issuing invoices to the ASB. Ultimately the ASB’s solicitors issued a Property Law Act (PLA) notice for the outstanding arrears in October 2023. The notice was served in accordance with an order for substituted service obtained from this Court. Following expiry of the notice without compliance ASB instructed Barfoot & Thompson Real Estate (Barfoot & Thompson) to commence marketing the property. ASB’s solicitors also wrote to confirm that all money secured by the mortgage had become due and owing as a consequence of the expiry of the PLA notice.

[9]Mr Nicol confirms that as at 18 May 2024, an outstanding balance of

$365,130.72 is owing on the loans and the deduction account was overdrawn in the amount of $67,701.28. Interest continues to accrue.

[10]              Barfoot & Thompson have marketed the property for sale by tender. The date for submission for tenders for the property has closed. Under the terms of the tender ASB has until 7 June 2024 to accept one of the tenders for the sale of the property.

Jurisdiction

[11]High Court Rule 15.1 provides:

15.1     Dismissing or staying all or part of proceeding

(1)The court may strike out all or part of a pleading if it—

(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b)is likely to cause prejudice or delay; or

(c)is frivolous or vexatious; or

(d)is otherwise an abuse of the process of the court.

…

(4)       This rule does not affect the court’s inherent jurisdiction.

[12]              Further, although the Registry accepted the plaintiff’s documents for filing this Court retains its inherent jurisdiction to control its processes and protect them from abuse.

[13]              The proceedings issued by the entity LandsAirWater Counsel are defective in a number of ways. First, they disclose no reasonably arguable cause of action. LandsAirWater Counsel is itself not a legal entity. It is not an incorporated body. It has no standing in relation to the relationship between the ASB and the borrowers.

[14]              Next, ASB is not named as a party to the proceedings. Instead, the plaintiff has chosen to name Ms Shortt, the CEO of the Bank as a defendant. There is no lis between the borrowers, the mortgagors and Ms Shortt.

[15]              Next, there is no cause of action recognised by law in the pleaded claim. The application for injunction cites a number of statutes and says it is made in reliance on:

[t]he principles of fairness and natural justice, Imperials Laws applications Act 1988 section 5 …the common laws of England…shall continue to be part of the laws of New Zealand…; And Schedule 1.(1354)28 Edw 3,c (Liberty of Subject 1354) and (1368)42 Edw 3,c 3.(Observance of Due Process of Law Statute 1368).

[16]              As I suggested to Mr Whetu-Waiti the purported claim for injunction is legally incomprehensible.

[17]              A principal feature of the proposed claim appears to be a demand that the defendant Ms Shortt and her agents “subject the original contract with wet ink signatures of all parties”, and “submit a full forensic audit by a chartered accountant (IRS transcripts) for the incoming and outgoing ledgers for … customer and beneficial owner”.

[18]              It is correct that apparently the Bank no longer holds an original of the loan document. However, as Mr Nicol deposes:

ASB does not hold the original of the Agreement. This is because ASB does not retain original loan and other facility documents. Instead, ASB holds an electronic copy of such records, resulting from scanning the original or receiving a scanned copy attached to an email or as a facsimile. This avoids the need for physical storage required for original documents and to improve accessibility. These electronic documents are stored securely by ASB on its systems in a format that presents any editing or alteration to them.

[19]              Attached to Mr Nicol’s affidavit is a copy of the facility agreement. The copy records the signatures of René Archner and Lydia Ann Miller as borrowers. In addition as noted, the Bank holds a solicitor’s certificate and the mortgage document was registered with the District Land Register and is registered against the relevant titles. The mortgage was registered by electronic instruments certified by the borrowers’ solicitors.

[20]              As I attempted to explain to Mr Whetu-Waiti the Court determines proceedings before it on the basis of the evidence before it, and in civil matters, that is on the balance of probabilities. The Court is satisfied that the borrowers entered the loan agreement, a copy of which is annexed to Mr Nicol’s affidavit, and that the loan agreement and mortgage were duly executed and in the case of the mortgage duly registered against their titles.

[21]              Next, I accept the alternative submission for the ASB that the proposed claim is frivolous or vexatious. The evidence in Mr Nicol’s affidavit confirms the steps the borrowers have taken to frustrate ASB’s enforcement of its rights under the loan agreement and mortgage. They include assertions of trespass and the issuing of ridiculous invoices and statements to the ASB totalling in excess of $420 million.

[22]              Although it is unnecessary to go further, I also accept the point made in ASB’s application to strike out that the naming of Ms Shortt individually and Mr Davies as a defendant is an abuse of process. The naming of Ms Shortt as the Chief Executive is unnecessary and I infer, designed to cause embarrassment.

[23]              For the above reasons the Court is satisfied that the claim proposed by LandsAirWater Counsel is frivolous and vexatious and an abuse of process.

[24]              The credibility of the Court and the civil justice system would be put in issue and questioned by reasonable members of the public if the Court were to allow proceedings of this nature to be pursued. Parties to commercial transactions are entitled to certainty and to rely on the obligations and rights contained in contractual documents. They should not be vexed with fanciful and nonsensical arguments such as the applicants purport to raise and advance in this case.

Result

[25]              For the above reasons the proceedings are fundamentally flawed and were struck out.

[26]              I make no order for costs as the additional costs the ASB has been put to will be covered by the terms of the loan agreement. It is apparent that the borrowers have sanctioned the actions of the purported plaintiff and thus put the ASB to the further unnecessary expense of responding to the proceedings which were entirely without merit.

Venning J