Magna Trust Company Limited v Lau

[2024] NZHC 956

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-781

[2024] NZHC 956

UNDER

the Land Transfer Act 2017, section 142

IN THE MATTER OF

an application for an order that caveat no.12790677.1 be removed

BETWEEN

MAGNA TRUST COMPANY LIMITED

Applicant

AND

EE KUOH LAU

Respondent

Hearing:	26 April 2024
Appearances:	Patrick J Shanahan-Pinker for the Applicant No appearance for the Respondent
Judgment:	29 April 2024

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

[Order for removal of caveat]

This judgment was delivered by me on 29 April 2024 at 10:00am

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

K3 Auckland (Edwin Morrison/Patrick Shanahan-Pinker), Auckland, for the Applicant

MAGNA TRUST COMPANY LIMITED v EE KUOH LAU [2024] NZHC 956 [29 April 2024]

[1]                 The applicant, Magna Trust Company Limited, has by originating application dated 3 April 2024 applied for the following orders:

(a)a caveat under instrument No.12790677.1 (the Caveat), registered against the property at 2 Rathgar Road, Henderson, Auckland, being the land legally described as lot 7 on Deposited Plan 40011 and contained in Record of Title Identifier NA1A/411 (the Property) be removed in accordance with s 142 of the Land Transfer Act  2017  (the LTA); and

(b)the respondent pay to the applicant costs and disbursements of and incidental to the application and any orders thereon.

[2]                 The matter was heard at the Auckland High Court at 10:00am on 26 April 2024. Mr Shanahan-Pinker appeared as counsel for the applicant and there was no appearance by the respondent.

Background

[3]                 On 22 April 2022 the applicant and Golden Circle Two Investments Limited (GCTIL) entered into a loan agreement where the applicant was the trustee and GCTIL was the borrower (the Loan Agreement). The Loan Agreement provides the applicant with the ability to place a first-ranking mortgage over the Property and that mortgage was registered on 26 April 2022 under instrument number 12437332.2  (the Mortgage).

[4]                 On 3 February 2023 GCTIL defaulted under the Loan Agreement. On 1 May 2023 the applicant served two notices under s 119 of the Property Law Act on GCTIL, and a notice under s 122 of the Property Law Act on the guarantor under the Loan Agreement, Jian Tan.

[5]                 The default was not remedied within the required time-frame and the applicant exercised its power of sale, entering into a sale and purchase agreement on 15 March

2024 in respect of the Property with Md Mehedi Hasan Khan Chowdhury as purchaser (the Agreement). Settlement under the Agreement is due on 1 May 2024.

The caveat

[6]                 On 24 July 2023 the respondent lodged a caveat over the Property, which was registered on 26 July 2023, in respect of the following interests:

(a)As beneficiary under a constructive trust of which the registered owner of Property, GCTIL, is trustee;

(b)A sale and purchase agreement dated 9 September 2022 between GCTIL and the respondent; and

(c)A prepaid lease from 9 September 2022 to 9 September 2047 derived from the subdivision costs and management costs contributed by the respondent, between GCTIL and the respondent.

[7]                 The caveat currently prevents settlement of sale of the Property under the Agreement.

[8]                 On 20 March 2024 the applicant’s solicitors wrote to the respondent, seeking removal of the caveat by close of business on 25 March 2024 on the following grounds:

(a)the respondent’s claimed interests over the Property are subordinate to the Mortgage; and

(b)the applicant had no prior knowledge of the respondent’s claimed interests prior to the registration of the Mortgage.

[9]                 No response has been received from the respondent and the caveat has not been removed.

Applicant’s submissions

[10]              Mr Shanahan-Pinker for the applicant submits there are two primary grounds for seeking an order under s 142 of the LTA:

(a)if the applicant has a first ranking mortgage over the Property, the applicant ought to be able to exercise its power of sale of the Property;

(b)the respondent has no caveatable interest in the Property.

[11]              Mr Shanahan-Pinker submits that the applicant had no knowledge of the interest that the respondent claims in the Property, and has never consented to them. He submits the respondent’s claimed interest in the Property are subordinate to the Mortgage due to the applicant’s indefeasibility of title and should not prevent the applicant’s ability to exercise its power of sale under the Mortgage to sell the Property following the default by the registered owner.

Result

[12]              I am of the view that the caveat should be removed from the title to the Property. The Applicant had no knowledge of the interest claimed in the respondent’s caveat and has never consented to those interests prior to registering the Mortgage. The interests claimed by the respondent in the caveat are subordinate to the Mortgage due to the applicant’s indefeasibility of title, and should not prevent the applicant from exercising its power of sale under the Mortgage to sell the Property following the default by the registered owner.1

Orders

[13]I make the following orders:

1      Cantab Management Limited v Greagh Investments Limited HC Hamilton, M.95/02, 20 November 2002 at 29, and Public Trust v Toussaint (2004) 5 NZConv.C 1940 34.

(a)The Caveat is to be removed from the title to the Property in accordance with s 142 of the Land Transfer Act 2017.

(b)The respondent is to pay the applicant’s costs of the application together with disbursements.

…………………………….. Associate Judge Taylor