Le v Khang

[2013] NZHC 2985

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003998 [2013] NZHC 2985

BETWEEN  DONG HUY LE and PHUONG THI NGUYEN LE

Plaintiffs

ANDNGUYEN DUY KHANG Defendant

Hearing:                   12 November 2013

Appearances:           J Ropati for Plaintiff

No appearance for Defendant

Judgment:                12 November 2013

ORAL JUDGMENT OF VENNING J

Solicitors:           John Ropati, Auckland

Copy to:            Defendant

LE v KHANG [2013] NZHC 2985 [12 November 2013]

[1]      This is an application for summary judgment.   It is not the usual type of application for summary judgment.  The plaintiffs seek to have a mortgage registered against  a  property  in  their  name  removed.    The  mortgage  is  in  favour  of  the defendant Mr Khang.  I am satisfied that Mr Khang has been served with and has notice of the proceeding and has taken no steps to oppose it.  To deal with the matter it is necessary to set out the background in a little detail.

[2]      In June 1991 the plaintiffs agreed to purchase a bakery business from a third party, Mr Nguyen.  The purchase price was $89,000.  Payment was to be made by

$35,000  cash  with  the balance to  be vendor finance,  that  vendor finance to  be provided by Mr Nguyen.

[3]      To complete the settlement of the purchase the plaintiffs signed a number of documents.   One of the documents they signed was a mortgage in favour of the defendant.  That mortgage was subsequently registered over the plaintiffs’ property in July 1991.  The defendant is apparently a cousin of Mr Nguyen, the vendor of the bakery.  However, Mr Khang had no interest in the bakery.  Why the mortgage was in his name is not clear to the plaintiffs or to the Court.  Mr Khang, the defendant, did not advance any moneys to the plaintiffs.   As noted it was to be a vendor advance.

[4]      In any event the plaintiffs made regular payments under the vendor advance as they understood it to be.   They made those payments directly to Mr Nguyen. They understood their obligation in relation to the vendor finance to be satisfied.

[5]      When the plaintiffs sought to sell their property in 1996 Mr Khang refused to discharge the mortgage.  There were further communications between the solicitors for the parties, the last of those communications from Mr Khang being in October

1999.

[6]      The maturity date of the loan was 28 June 1996 in accordance with the agreement between the parties.  Any moneys owing remaining unpaid by 28 June

1996 were to be paid on that day.   On that basis any claim by Mr Khang was required to have been brought by 28 June 2008.

[7]      The plaintiffs have pursued an application to have the mortgage discharged from their title by way of summary judgment.   They raised two causes of action. First, in reliance on s 112 of the Land Transfer Act 1952 and second, a lack of consideration.

[8]      As discussed with counsel I consider the plaintiffs best claim is under s 112 of the Land Transfer Act.

[9]      The Limitation Act 1950 applies.   Section 20(1) of that Act prevents any action being brought to recover a principal sum secured by a mortgage after the expiration of 12 years from the date when the right to receive the money accrued.

[10]     Section 20(4) of the Act provides that no interest shall be recoverable in any action after the expiration of six years from the date the interest became due.

[11]     It is apparent that those sections would prevent the defendant from seeking to recover any moneys from the plaintiffs under the personal covenant contained in the mortgage documents.

[12]     Section 112 of the Land Transfer Act provides:

112     Discharge of mortgage where remedies thereunder are statute barred

(1)       The High Court may make an order directing a registered mortgage to be discharged if, on an application for the purpose made to it by the registered proprietor of an estate or interest in land subject to the mortgage, it is satisfied—

(a)       that  the  granting  of  relief  in  respect  of  a  claim  by  the mortgagee  for  payment  of  the  money  secured  by  the mortgage would be prevented by the raising and establishment of a limitation period or other limitation defence under the Limitation Act 2010 or any other enactment; and ...

[13]     As discussed with counsel generally an application under s 112 of the Land Transfer Act directed at obtaining a discharge of the mortgage would be brought under Part 18 of the High Court Rules, 18.1(d), rather than by way of summary judgment as is the case.

[14]     However, I am prepared to regularise the proceedings in reliance on r 1.5.

[15]     The defendant is aware of the proceedings and has taken no steps.  On the affidavit evidence before the Court, the Court can be satisfied that the relief sought is appropriate and s 112 of the Land Transfer Act applies.  In the circumstances there is no need for the Court to consider the second cause of action raised.

[16]     Accordingly there will be an order directing that the registered mortgage number C284725.1 registered against the title to land contained and described in Certificate of Title NA 83D/236 be discharged in accordance with s 112 of the Land Transfer Act, together with an order for the plaintiffs’ costs against the defendant on

a 2B basis together with disbursements as fixed by the Registrar.

Venning J