Marac Finance Ltd v Greer HC Auckland CIV-2010-404-4957

[2011] NZHC 13

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-4957

BETWEEN  MARAC FINANCE LIMITED First Plaintiff

ANDKERRYN DOWNEY AND ALAN ISAAC Second Plaintiffs

ANDMURRAY JOHN GREER First Defendant

ANDEQUITABLE PROPERTY HOLDINGS LIMITED

Second Defendant

Hearing:         11 January 2011

Counsel:         TB Fitzgerald for Plaintiffs

MD Arthur and JA McMillan for Defendants

Judgment:      11 January 2011

ORAL JUDGMENT OF RODNEY HANSEN J

Solicitors:           Bell Gully, DX CP20509 for Plaintiffs

Chapman Tripp, P O Box 2206, Auckland 1140 for Defendants

MARAC FINANCE LIMITED V MURRAY JOHN GREER HC AK CIV-2010-404-4957 11 January 2011

Introduction

[1]      The plaintiffs apply for summary judgment to recover rental on land to which they claim to be entitled under a General Security Deed (GSD).  The rental was paid to the first defendant, Mr Greer, who had been appointed by the second defendant (EPHL) to collect the rent on its behalf.  After operating expenses, the net rentals amount to some $1.8m.

[2]      The summary judgment application has a fixture for one day on 24 January

2011.   The defendants apply for an adjournment.   They say they cannot properly prepare their defence in the time available.

Grounds of application

[3]      The fundamental question in the substantive proceeding is whether the first plaintiff (Marac), as the GSD holder, or EPHL as mortgagee, is entitled to the rent. EPHL at all times held the mortgage as a security custodian for the benefit of a fund, the Equity Property Mortgage Fund (the fund) which was managed by Equity Property Finance Limited (EPFL).  The fund has since been disestablished, with the result that the beneficial owner of the assets that made up the fund is an associated company of EPFL, Equitable Mortgages Limited (In receivership).

[4]      Equitable Mortgages was placed in receivership on 29 November 2010.  The receivers were asked to by counsel for the defendants to advise whether the fund would indemnify the defendants.  No decision had been reached or conveyed when, on 17 December 2010, the receivers were replaced by Mr Brendan Gibson and Mr Grant Graham of KordaMentha.

[5]      The defendants have asked the new receivers to advise whether an indemnity is available in the event judgment is given against them.  The receivers deposed in December, soon after their appointment, that they had not had time to properly

consider the issue.  An adjournment was then sought to enable them to have further time to address the issue.

[6]      The existence or otherwise of an indemnity is said to be material to the defendants’ opposition to the summary judgment application.  One of the defences raised is that the rent was received by the defendants in good faith and they have so altered their position in reliance on the validity of the payment that it would be inequitable to require them to make restitution or restitution in full.

[7]      On  the  other  hand,  if  an  indemnity  is  available,  the  conduct  of  the receivership  will  be  directly affected  and  the  receivers, so  it  is  said,  will  have insufficient time before the proposed hearing to properly understand the issues and give instructions.

Grounds of opposition

[8]      The plaintiffs oppose an adjournment.  Mr Fitzgerald points out that there has been no evidence given in relation to the indemnity issue.   He submits that an adjournment would involve a significant further delay, until at least April according to enquiries made on behalf of the plaintiff,  and that would be inimical  to the summary judgment process.   He is concerned that the plaintiffs’ position may be prejudiced as a result as there is little information available about the financial position and dealings of the Equitable group of companies who have had custody of the funds.  I do not understand him to include the second defendant in that category as it is a wholly owned subsidiary of Trustee Executors Limited and is not part of the Equitable group of companies who claim a beneficial interest in the fund.

Decision

[9]      I am not persuaded that an adjournment is warranted.  There has already been a considerable delay in allocating a hearing for the application which was filed on

30 July 2010.    The  fixture  was  allocated  at  the  first  call  of  the  application  on

16 September and timetable orders made for the filing of evidence and submissions.

Evidence has been filed in accordance with the timetable and the plaintiffs’ submissions were filed in accordance with an amended timetable agreed to by the parties.   In accordance with that amended timetable, the defendants’ submissions were to have been filed by 17 December or soon after.  Because of the developments I have referred to, the defendants have yet to file submissions.

[10]     Although Mr Arthur seeks an adjournment of four weeks only, the reality is that if the 24 January fixture is adjourned, the delay is likely to be much longer, conceivably as long as the three months which the plaintiff’ enquiries suggest.  In all the circumstances, I consider a delay of that order is unacceptable in the context of this application, unless compelling circumstances require it in the interests of justice. I am satisfied that such circumstances do not exist.

[11]     I am not without sympathy for the difficulties faced by the receivers and their advisers and the time constraints under which they are being required to operate. However, it seems to me that it is not unrealistic, despite the intervention of the holiday period, to expect the receivers and their advisers to form a view on the issue of whether or not an indemnity is available to the defendants.  That is a view that, as I understand it, can be reached on the basis of facts which are not in contention and which I would have thought would be of relatively narrow compass.

[12]     If, despite their best endeavours, the receivers and their advisers are unable to come to a view on the indemnity issue in the time available, the consequence will be that the defendants will be obliged to advance the defence of change of position which,  had  the  existence  of  an  indemnity been  confirmed,  it  would  have  been unnecessary for them to pursue.  I see that as potentially more to the disadvantage of the plaintiffs than the defendants.

[13]     While it is regrettable that the imminent fixture and their late appointment will require the receivers to address an important issue under some considerable time pressure, I discern inconvenience rather than prejudice as a consequence.  Against that I accept, as I have earlier indicated, that the plaintiffs will be prejudiced by the significant delay likely to follow the grant of an adjournment.  The application for an adjournment is accordingly declined.

[14]     Mr  Arthur  requires  further  time  to  file  submissions.     Although  not satisfactory to the plaintiff, appreciative of the difficulties he faces, I direct that the defendants’ submissions are to be filed by 5.00 p.m. on 19 January.