Mawhinney v Nags Head Horse Hotel Limited
[2017] NZHC 455
•15 March 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2017-404-000280 [2017] NZHC 455
BETWEEN PETER WILLIAM MAWHINNEY AS
TRUSTEE OF BOULDER TRUST First Plaintiff
PETER WILLIAM MAWHINNEY AS TRUSTEE OF THE WAITAKERE FOREST LAND TRUST
Second Plaintiff
PETER WILLIAM MAWHINNEY AS TRUSTEE OF FOREST TRUST
Third Plaintiff
AND
NAGS HEAD HORSE HOTEL LIMITED Defendant
CIV-2017-404-000258
BETWEEN NAGS HEAD HORSE HOTEL LIMITED Applicant
ANDPETER WILLIAM MAWHINNEY AS TRUSTEE OF WAITAKERE FOREST LAND TRUST
First Respondent
FOREST TRUSTEE LIMITED (IN LIQUIDATION)
Second Respondent
SIXTY-SIX AUCKLAND LIMITED Third Respondent
CIV-2016-404-000653
BETWEEN PETER WILLIAM MAWHINNEY Applicant
ANDNAGS HEAD HORSE HOTEL LIMITED Defendant
MAWHINNEY AS TRUSTEE OF BOULDER TRUST v NAGS HEAD HORSE HOTEL LTD [2017] NZHC
455 [15 March 2017]
Hearing: 15 March 2017 Appearances:
Applicant in person
A Low and T Kelly for RespondentsJudgment:
15 March 2017
JUDGMENT OF LANG J
[on application for orders staying execution of judgment]
This judgment was delivered by me on 15 March 2017 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
[1] These proceedings all relate in one way or another to longstanding attempts by Nags Head Horse Hotel Limited (Nags Head) to exercise its power of sale as mortgagee of a property situated at 131-149 Anzac Valley Road, Waitakere (the property). The property is currently owned by the Second Respondent, Forest Trustee Limited (Forest Trustee). This Court has been closely involved in the sale process.
[2] On 10 March 2017, Moore J delivered a judgment in which he determined issues arising in two of the proceedings.1 In CIV-2017-404-258 (the caveat proceeding), the Judge made an order removing a caveat lodged by Mr Peter Mawhinney against the property. The caveat purported to protect Mr Mawhinney’s interest as the lessee of the property under an agreement to lease dated 15 December
2009. In CIV-2017-404-280 (the injunction proceeding), Moore J dismissed an application for an interim injunction preventing Nags Head from completing the sale, and also struck out the statement of claim filed by the applicants in that proceeding.
[3] The applicants have now appealed to the Court of Appeal against the judgment of Moore J and also against earlier directions made by Palmer J in CIV-
2016-404-653. In that proceeding Nags Head sought and obtained directions in relation to the exercise of its power of sale as mortgagee.
[4] The applicants seek a stay of directions made by Palmer J on 17 February
2017 and the orders made by Moore J in order to preserve their appeal rights. They say their appeal rights will be rendered nugatory in the event that a stay is not granted.
Background
[5] The background to all three proceedings is fully set out in the judgment of
Moore J.2 It is sufficient for present purposes to say that Nags Head registered a
1 Nags Head Horse Hotel Ltd v Mawhinney [2017] NZHC 401.
2 At [6]-[17].
mortgage against the property on 27 August 2010. The mortgage secured a term loan of $420,000 made by Nags Head to Mr Peter Vesey, the owner of the property at that time. It remains registered against the title to the property notwithstanding the subsequent transfer of the property to Forest Trustee.
[6] Nags Head has been endeavouring since mid-2013 to exercise its power of sale under the mortgage after the term loan was not repaid on the due date in 2012. This Court has approved the sale process undertaken by Nags Head through a judgment delivered by Brewer J on 29 July 2016 in CIV-2016-404-653,3 and Minutes issued by Palmer J in the same proceeding on 17, 22 and 24 February 2017. Palmer J also gave Forest Trustee several further opportunities to repay the loan and thereby avoid the property being sold by the mortgagee. To date the loan remains
outstanding.
[7] The caveat proceeding relates to a caveat lodged by Mr Mawhinney against the title to the property, ostensibly to protect his interest as lessee under an agreement to lease dated 15 December 2009. Under the terms of the agreement the lessee had an option to purchase the property for the sum of ten dollars. That option could be exercised at any time up until 31 December 3009. The lessee paid the sum of one dollar in order to obtain the option.
[8] Matters have moved on significantly since Moore J delivered his judgment on
10 March 2017. At 3.19 pm on 13 March 2017, shortly before its solicitors became aware of the application for stay, Nags Head manually lodged the sealed order removing the caveat for registration with the Land Registry in Hamilton.
[9] Nags Head then completed the sale of the property on the afternoon of
14 March 2017. It did so after I issued a Minute earlier that day allocating the application for stay a fixture at 12 noon today. I pointed out in the Minute that at present there was nothing to prevent Nags Head from completing the sale because the order made by Moore J had immediate effect. I expected Mr Mawhinney, who is a seasoned litigant with detailed understanding of the Court’s procedures, to respond
immediately with an application for interim relief until the hearing today.
3 Nags Head Horse Hotel Ltd v Mawhinney [2016] NZHC 1740.
Regrettably he did not take that step. There was therefore nothing to prevent Nags Head completing the sale of the property. The documents relating to the transfer of the property were lodged with the Land Registry electronically immediately after the sale was completed yesterday afternoon.
[10] Mr Mawhinney advised me at the hearing today that he has now lodged a notice of appeal against the judgment of Moore J and the directions given in the Minute of Palmer J on 17 February 2017. He says he sent the appeal documents to the Court of Appeal in Wellington by courier yesterday. Both appeals have been lodged within 20 working days of the decisions that are the subject of the appeal.
Relevant principles
[11] The filing of an appeal to the Court of Appeal does not operate as a stay of execution of any decision that is the subject of the appeal.4 However, the court appealed from and the Court of Appeal have concurrent jurisdiction to grant a stay of execution pending determination of an appeal.5
[12] In general terms, an application for stay of execution of a judgment will require the Court to balance the competing rights of the party in whose favour the judgment has been given against the need to preserve the position of the appellant in the event that the appeal may be successful.6
[13] Factors that may be taken into account include whether the appeal will be rendered nugatory in the event that a stay is not granted, the bona fides of the applicant in prosecuting the appeal, whether the successful party will be injuriously affected by any stay and the effect on third parties. In the end, the issue becomes one
of overall balance of convenience.7 Although obviously difficult to assess at such an
early stage, the apparent strength of the appeal may also be taken into account.8
4 Court of Appeal Rules, r 12(1)(b).
5 Rule 12(3)(a).
6 Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.
7 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ (HC) at
[9]; Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].
8 Keung v GBR Investment Ltd, above n 7, at [11].
[14] Mr Mawhinney has refined the relief that he asks the Court to provide pending determination of his appeal in a bid to counter the events of the last 48 hours. He now asks the Court to grant relief in the form of an order preventing the Land Registry from processing the documents that have already been lodged for registration. He says the Court can still take this step because he ascertained through searching the title to the property this morning that neither the order removing the caveat nor the transfer of the property to the purchaser has yet made its way onto the title. He anticipates that the latter may take some time because a transfer by a mortgagee pursuant to a power of sale under a mortgage is apparently scrutinised by the Land Registry with some care.
Decision
[15] I consider the relief that Mr Mawhinney seeks is problematic because it goes well beyond an order staying execution of a judgment. Rather, it seeks to restrain a third party, namely the Land Registry, from carrying out its lawful function. It also impacts severely on the right of the purchaser (and its mortgagee) from receiving the statutory protection of indefeasibility of title.
[16] Quite apart from these issues, however, I consider the application for stay or interim relief faces insurmountable hurdles.
The judgment of Moore J
[17] In practical terms, the only decision in respect of which the Court could grant relief or a stay of execution of the judgment delivered by Moore J is that granting the application for an order removing Mr Mawhinney’s caveat. Moore J’s decision declining to grant an interim injunction could not be the subject of a stay of execution or interim relief because there is no order currently in existence that could be subject to a stay or in respect of which relief could be granted. An order could theoretically be made staying the effect of Moore J’s decision to strike out the statement of claim, but an order of that type would not assist the applicants in any meaningful way.
[18] I consider the application for an order removing the caveat was bound to succeed because Mr Mawhinney was not the lessee under the agreement to lease relied upon to support the caveat. This issue was not raised before Moore J, no doubt because Mr Mawhinney first produced a copy of the agreement to lease when he filed an affidavit annexing that document ten minutes before the hearing before Moore J was due to begin. As a result, neither counsel nor the Judge had an opportunity to consider its implications.
[19] The caveat states that Mr Mawhinney is the caveator. It then describes the caveatable interest upon which he purports to rely as:
An equitable estate and interest arising from an agreement to lease to the caveator dated 15 December 2009 known to, consented to and binding on the lessor and registered proprietor Forest Trustee Limited.
(Emphasis added)
[20] It follows that Mr Mawhinney could only sustain the caveat if he could show that he was the lessee under the agreement to lease. However, the lessee named in the agreement to lease was “North Kaipara Nominees Limited as Trustee of the Anzac Valley Forestry Trust”. The statement in the caveat that Mr Mawhinney was the lessee under the agreement to lease is therefore demonstrably incorrect as a matter of fact.
[21] Mr Mawhinney was both a trustee of the Anzac Valley Forestry Trust and a director of North Kaipara Nominees Ltd. As a result, he would have been entitled in his capacity as a director of the latter to sign the caveat on behalf of North Kaipara Nominees Ltd if that company had been named as caveator. In his own right, however, Mr Mawhinney was never a party to the agreement to lease. For that reason he has never held any interest in the land that would support a caveat. This fundamental defect cannot be corrected. I therefore consider that Nags Head was entitled to obtain an order removing the caveat on this ground alone.
[22] I accept the submission for Nags Head that Moore J elected to exercise his discretion against permitting the caveat to remain on the title. I consider the factors on which he relied to be persuasive, and demonstrate that the prospects of any appeal
succeeding are remote. I deal with those issues when considering the application to stay the effect of the Minute issued by Palmer J on 17 February 2017.
The Minute of Palmer J issued on 17 February 2017
[23] In this Minute Palmer J gave approval for Nags Head to enter into an agreement under which it sold the property to a third party for the sum of $1.65 million. Mr Mawhinney opposed the direction being made, and put forward an offer by a Trust with which he was associated to purchase the property for $5.455 million. That offer contained a cash component of $1.5 million. Palmer J did not consider this to be a realistic offer for reasons he set out in his Minute. He also concluded that Nags Head had conducted a proper sales process, and that the proposed sale ought to be permitted to proceed.
[24] Nags Head and the purchaser have now completed the sale of the property on the basis of Palmer J’s approval. I accept the submission for Nags Head that it is now too late to unwind that process. Money has changed hands and undertakings have been given. If Mr Mawhinney wished to prevent that occurring, he ought to have acted quickly after the delivery of Palmer J’s Minute. At the very least, he ought to have applied for a stay prior to the point at which Moore J determined the application for an order removing the caveat. I consider that the delay in filing the application for stay is inexcusable and would result in significant prejudice to both Nags Head and the purchaser if it was to be granted at this point.
[25] Other factors also point firmly against the granting of a stay of execution. The reasons articulated by Moore J for granting Nags Head’s application paint a compelling picture of Mr Mawhinney using every means at his disposal to thwart the lawful sale of the property by Nags Head to the proposed purchaser. In doing so he was deliberately trying to circumvent the orders and directions made by both Brewer J and Palmer J even though he did not take any steps to challenge these by way of appeal. Furthermore, Mr Mawhinney has endeavoured to prevent the sale from occurring even though he could have achieved that outcome immediately by repaying the amount due under the term loan agreement.
[26] Furthermore, the fact that the loan still remains unpaid suggests that Mr Mawhinney and the entities associated with him do not have the means to repay it. That in turn gives rise to a very strong inference that they do not have the ability to purchase the property from Nags Head at a price greater than that offered by the current purchaser as they say they wish to do.
[27] Finally, Mr Mawhinney elected not to disclose the existence of the agreement to lease until the eleventh hour. In particular, he failed to disclose it when Brewer J and Palmer J were being asked to make important directions in relation to the sale of the property. The very late disclosure of the document raises questions as to its provenance and authenticity, as do the highly favourable terms upon which the lessee may exercise the option to purchase.
Result
[28] The application for stay of execution of the judgment of Moore J and the
Minute of Palmer J is dismissed.
[29] Nags Head is entitled to costs on a category 2B basis together with disbursements as fixed by the Registrar.
Lang J
Solicitors:
Alexandra Low & Associates, Auckland
Copy to: Applicant
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