Lau v NZHB 2002 Limited (formerly known as New Zealand Home Bonds Limited)
[2015] NZHC 3097
•7 December 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-2322 [2015] NZHC 3097
BETWEEN E E LAU
Applicant
AND
NZHB 2002 LIMITED (FORMERLY KNOWN AS
NEW ZEALAND HOME BONDS LIMITED)
Respondent
Hearing: 7 December 2015 Appearances:
E E Lau, Applicant in person
D M Lester for RespondentJudgment:
7 December 2015
ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL
Solicitors:
GCA Lawyers, Addington, Christchurch, for Respondent
E E LAU v NZHB 2002 LIMITED (FORMERLY KNOWN AS NEW ZEALAND HOME BONDS LIMITED) [2015] NZHC 3097 [7 December 2015]
[1] This case concerns caveat 6156893.3 which is lodged against the property with identifier NA446/235. The address of the property is 672 Mount Albert Road, Royal Oak, Auckland. The title to the property shows the name of the caveator as New Zealand Home Bonds Ltd. The interest claimed in the caveat is:
An interest as mortgagee pursuant to an agreement to mortgage dated
18 August 2004 by Shirleen Shia Ling Sim, mortgagees, the registered proprietors of the said land in favour of New Zealand Home Bonds Ltd
(mortgagee).
[2] Mr Lau applies for an order removing the caveat. His application refers to s 145A of the Land Transfer Act 1952. That is the provision by which a caveat may be sustained upon the Registrar-General sending a notice to a caveator. The provision which Mr Lau must have intended to rely on is s 143 of the Land Transfer Act.
[3] The registered proprietor is Shirleen Shia Ling Sim. She is the former wife of Mr Lau. In response to my questions, Mr Lau advised that their marriage had been dissolved in 2006. They tried a reconciliation in 2010 but it had not worked.
[4] The copy of the computer entry in the register shows these interests on the property:
(a) a mortgage to TSB Bank Ltd granted in May 2004,
(b) the caveat by New Zealand Home Bonds Ltd lodged in September
2004,
(c) two further caveats: one lodged in March 2005 and another in
February 2010,
(d)a notice of claim of interest under s 42 of the Property (Relationships) Act 1976 by Mr Lau lodged in March 2010,
(e) a charging order absolute lodged in September 2010 by Moncrieff
Pastoral Ltd, a judgment creditor, and
(f) a statutory land charge under the Legal Services Act 2011 lodged in
April 2011.
[5] While Mr Lau does not presently have a registered estate or interest in the property, he claims that he may have an interest in the property upon a division of the property under the Property (Relationships) Act. That division may take place either by agreement under that act or by obtaining orders from the Family Court. Mr Lau advised me that he has, as yet, taken no proceedings under the Property (Relationships) Act to obtain any orders for division. Given the limitation provisions
under the Property (Relationships) Act,1 and the long period that has elapsed since
the marriage was dissolved, he should be aware that he may face limitation difficulties in any proceeding that he might bring under that act. This case does not, however, concern his Property (Relationships) Act claim against his wife. It concerns his challenge to the caveat lodged by New Zealand Home Bonds Ltd.
[6] It is necessary to note some procedural matters. The respondent was formerly known as New Zealand Home Bonds Ltd but its evidence shows that it is now known as NZHB 2002 Limited. Accordingly I amend the name of the respondent to NZHB 2002 Limited. The evidence for the respondent shows that there is another company now known as “New Zealand Home Bonds Ltd”. That is a different entity from the respondent in this case.
[7] Another matter is that NZHB 2002 Ltd applied for security for costs. When both applications were first called, Faire J gave directions for both applications to be heard together today. As I have heard the merits of Mr Lau’s application to remove the caveat and am giving a decision on it now, the application for security for costs has become academic. It will only be necessary to consider an application for security for costs if a case is to have a substantive hearing later. Neither Mr Lau nor Mr Lester objected to my dealing with the caveat application without addressing the
security for costs question.
1 Property (Relationships) Act 1976, s 24.
[8] Mr Lau applied for non-party discovery. Edwards J heard that application and dismissed it.2 It is not necessary for me to deal with any questions of non-party discovery. I deal with the case on the basis of the evidence filed.
[9] The background to this matter is that Ms Sim made an agreement with NZHB
2002 Ltd in August 2004. She had entered into an agreement to buy three apartments in an apartment block in central Auckland. She did not have the funds to pay the deposit on the purchase. Instead, she agreed with New Zealand Home Bonds Ltd (as it was then known) that it would give a bond for payment of the deposits. The agreement contains this term:
7. The Applicant agrees that to better secure amounts due to NZHB the applicant shall, when NZHB elects, execute in favour of NZHB a mortgage over the property(ies) in which the Applicant has, in this document, declared equity and over any other property(ies) which they, jointly or severally, now or in the future, own in New Zealand) and/or a charge over any other property what so ever kind or nature. (together the “Property”). Such mortgage(s) are to be in the standard Auckland District Law Society all obligations form and any other charges over other property to be in such form as is commonly used at the time of execution of the mortgage(s) or charge(s).
[10] Further facts relating to the transaction between Ms Sim and New Zealand Home Bonds Ltd are set out in the Court of Appeal’s decision in Sim v New Zealand Home Bonds Ltd.3 In short, Ms Sim did not complete the purchase of the apartments. The vendor cancelled the agreement and re-sold. New Zealand Home Bonds Ltd enforced its rights under the agreement, having paid out under the bond. New Zealand Home Bonds Ltd initially sued and applied for summary judgment in
the Christchurch District Court. Ms Sim appealed from that decision. Fogarty J dismissed the appeal.4 In a later decision he granted leave to appeal to the Court of Appeal. The Court of Appeal dismissed the appeal from the decision of Fogarty J. I note from the decision of the Court of Appeal that Mr Lau gave affidavit evidence in
opposition to the summary judgment application in the District Court.
2 Lau v New Zealand Home Bonds Ltd [2015] NZHC 3023.
3 Sim v New Zealand Home Bonds Ltd [2010] NZCA 192, (2010) 11 NZCPR 530 at [6]-[21].
4 Sim v New Zealand Home Bonds Ltd (2009) 10 NZCPR 747.
[11] As between Ms Sim and New Zealand Home Bonds Ltd, there is no room for argument as to her indebtedness, especially given that the decision of the District Court has been upheld both in the High Court and in the Court of Appeal.
[12] New Zealand Home Bonds Ltd takes a point as to standing. Section 143(1)
of the Land Transfer Act says:
143 Procedure for removal of caveat
(1) Any such applicant or registered proprietor, or any other person having any registered estate or interest in the estate or interest protected by the caveat, may, if he thinks fit, apply to the High Court for an order that the caveat be removed.
[13] In Gill Construction Co Ltd v Morgan, Clifford J identified those who could apply as:5
(a) an applicant to bring land under the Land Transfer Act; (b) the registered proprietor; or
(c) any other person having any registered estate or interest in the estate or interest protected by the caveat.
[14] In Solomona v Solomona6 I held that a person who did not have a registered estate or interest within the classes identified by Clifford J, did not have standing to apply under s 143 of the Land Transfer Act. The submissions for New Zealand Home Bonds Ltd note also that that was followed by Mander J in D v D.7 I apply those decisions. That means that as he does not have a registered interest Mr Lau does not have standing under s 143 to apply for the removal of the caveat.
[15] It is necessary to note that an application to remove a caveat under s 143 is a summary procedure. It is open to parties with competing interests in a property to bring substantive proceedings for the court’s determination of their respective interests in that property. For example, if Mr Lau were a subsequent unregistered mortgagee and he wished to challenge the standing of a higher-ranking unregistered
mortgage, while he could not apply for removal of a caveat lodged by the prior
5 Gill Construction Co Ltd v Morgan (2009) 10 NZCPR 317 (HC) at [22]-[24].
6 Solomona v Solomona [2012] NZHC 1195, (2012) 13 NZCPR 399.
7 D v D [2014] NZHC 2122.
mortgagee, it would nevertheless be open to him to begin substantive proceedings to challenge not the caveat lodged by the higher-ranking mortgagee, but the higher- ranking mortgage itself. The restriction on standing under s 143 only goes to the right to challenge the caveat which protects the interest but does not impose a bar on a person holding an unregistered interest in land from challenging those who may rank higher by appropriate substantive proceedings.
[16] The finding that Mr Lau does not have standing is sufficient to dispose of this application. Notwithstanding that, NZHB 2000 Ltd is anxious to satisfy me that, aside from the standing objection, it does have a legitimate caveatable interest in the property. On that, I record that as the caveator it has the burden of proof. It is however required to show no more than an arguable case for the interest it claims.
[17] NZHB 2002 Ltd is a creditor of Ms Sim under the agreement of 18 August
2004. The findings of indebtedness in the earlier proceedings are conclusive against Ms Sim. I consider that they are conclusive against Mr Lau also. Because the courts have held Ms Sim to be a debtor – and the debt is secured by an interest in the property – and Mr Lau is claiming that under the Property (Relationships) Act he may obtain an interest in the property, he cannot assert any greater interest in the property than Ms Sim herself. In short, Mr Lau is a privy under the res judicata rule. Not only is NZHB 2002 Ltd a creditor for the judgment debt, but it has security through cl 7 of the agreement of 18 August 2004. That clause is sufficient to allow NZHB 2002 Ltd to lodge a caveat against the property. I am satisfied that there is an arguable case in favour of the interest claimed by NZHB 2002 Ltd.
[18] In opposition, Mr Lau raised two points.
[19] He contended that the agreement of 18 August 2004 had been cancelled. That argument was presented in the Court of Appeal. Panckhurst J addressed it at paragraphs [24]-[29] of the Court’s decision. Referring to relevant facts, he recorded:
This history is incompatible with the bare assertion that the agreement was cancelled by mutual agreement in September 2004. We accept that Mr Lau’s evidence is not credible and does not raise a creditable defence.
[20] Second, Mr Lau submitted that the properties in the agreement had been on- sold and the bond agreement was not enforceable by reason of those sales. That matter was also covered in the decision of the Court of Appeal. It seems to be common ground that the liquidator of the vendor did onsell the properties. At paragraph [19] of the Court’s decision, Panckhurst J referred to the cancellation provision in the agreement for sale and purchase under which a re-sale by the vendor gave rise to the cancellation of the agreement for sale and purchase.
[21] I also record that at paragraph [20] the Court recorded the payment by NZHB
2002 Ltd to Hanover, an assignee of the bond.
[22] The matters that Mr Lau has raised have already been addressed in the proceedings under which NZHB 2002 Ltd has obtained judgment. As a privy of the registered proprietor, it is not open to Mr Lau to challenge those findings. He is bound by them, just as much as Ms Sim is.
[23] It appears that the judgment debt has not yet been paid. Mr Lester advised that NZHB 2002 Ltd is content to bide its time before enforcing its judgment. Mr Lau did not contend that the debt had already been discharged. Given that there is an undischarged liability which is supported by the agreement to mortgage, I see no basis for ordering the removal of the caveat even if Mr Lau did have standing to apply.
[24] In these circumstances then, I dismiss the application to remove the caveat.
[25] As it has succeeded, there is an order that NZHB 2002 Ltd be paid costs on the application on a category 2 basis, plus disbursements as approved by the Registrar. The costs are to include costs in opposing the application for non-party discovery, including the appearance on 30 November 2015.
[26] I encourage the parties to confer as to costs to see if they can reach agreement. If they cannot reach agreement, memoranda may be filed.
……………………………………..
Associate Judge R M Bell
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