Mike Pero Mortgages Limited v Pero

[2018] NZHC 2136

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2014-404-2193

[2018] NZHC 2136

UNDER

the Companies Act 1993

IN THE MATTER

Of MPRE Limited

BETWEEN

MIKE PERO MORTGAGES LIMITED

Plaintiff

AND

MIKE PERO

First Defendant

MPZ ONE LIMITED formerly known as MIKE PERO MARKETING LIMITED

Second Defendant

MPRE LIMITED
Third Defendant

MIKE PERO REAL ESTATE LIMITED

Fourth Defendant

Hearing:

13 & 15 August 2018

Counsel:

N Till QC & M E Gall for the applicants (the first and second defendants)

I G Hunt (on 15 August 2018 only)
G Blanchard QC & J Lethbridge in opposition (for the plaintiff)

Judgment:

17 August 2018

JUDGMENT OF DUFFY J

This judgment was delivered by me on 17 August 2018 at 4.30 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

MIKE PERO MORTGAGES LIMITED v MIKE PERO, MPZ ONE LTD & ORS [2018] NZHC 2136 [17 August 2018]

[1]                 This application is about whether there are proper grounds to maintain a charging order over the personal property of the first and second defendants following payment of the judgment debt. Some understanding of the procedural steps taken in this proceeding is required.

[2]                 On 21 December 2016 and 10 October 2017, Katz J gave judgment in this proceeding.1 The judgment was sealed by order of this Court dated 4 December 2017, which directed the first and second defendants to pay the third and fourth defendants the sum of $2,179,370.34 inclusive of GST (the sealed order). In addition, the first and second defendants were ordered to pay the third and fourth defendants the sum of

$291,720.27, being interest under the Judicature Act 1908. The total sum in the sealed order came to $2,471,090.61 (the judgment sum).

[3]                 Then, on 27 October 2017, in separate proceedings (CIV 2017-404-1405) this Court granted the plaintiff leave to enforce the judgment sum.2 This explains why the charging order to secure the judgment sum was sought by the plaintiff, and why the opposition to discharge of the charging order is brought by the plaintiff, rather than by the third and fourth defendants.

[4]                 Pursuant to r 17.42 of the High Court Rules, after judgment is sealed a charging order may be issued without leave at the request of the entitled party (being here, the third and fourth defendants). In reliance on this rule, on 21 December 2017, the plaintiff’s solicitors, on behalf of the third and fourth defendants, filed a request in this proceeding for the issue of a charging order over the personal property of the first and second defendants securing payment of the amount for which the entitled parties “have obtained judgment” (being the judgment sum of $2,471,090.61). They also sought interest and costs.

[5]                 On 22 December 2017, this Court issued a final sealed charging order in this proceeding on the requested terms (the 2017 charging order). This order secured the

1      Mike Pero Mortgages Ltd v Pero [2016] NZHC 3185; Mike Pero Mortgages Ltd v Pero [2017] NZHC 2486.

2      Mike Pero Mortgages Ltd v Pero [2017] NZHC 2647. The authority the Court granted to the plaintiff to act on behalf of the third and fourth defendants was limited to enforcing the judgments and orders of the Court in this proceeding.

judgment sum (the sum of $2,471,090.61), together with additional sums of money in the form of interest and costs on the judgment sum.

[6]                 Accordingly, it is clear to me that the 2017 charging order was obtained by the plaintiff and made by this Court solely for the purpose of securing the judgment debt, together with the additional sums of interest and costs to which the third and fourth defendants were then entitled.

[7]                 On 15 June 2018, the first and second defendants paid the total sums of money secured under the 2017 charging order directly to the bank account of the fourth defendant. The plaintiff’s solicitor had refused to accept payment. Once this payment was made, the first and second defendants reasonably expected that discharge of the charging order would follow. However, the plaintiff will not agree to its discharge. This unhelpful conduct on the part of the plaintiff has meant that the first and second defendants have been obliged to apply to this Court for discharge of the charging order.

[8]                 The plaintiff opposes the application for discharge. The notice of opposition sets out grounds of opposition which refer to alleged complaints the plaintiff now raises in its own right in separate legal proceedings against the first and second defendants (CIV 2017-404-1035).3 The plaintiff contends that those complaints are either related to or a continuation of the type of matters that were determined in this proceeding.

[9]                 Nonetheless, the complaints the plaintiff now makes, or seeks to make, in CIV 2017-404-1035 are no more than unproven allegations (judgment is yet to be given on them). Ordinarily, if a party seeks to obtain a charging order before judgment, leave is required, and such leave will only be granted in limited circumstances.4

[10]             Insofar as the plaintiff may be concerned about its ability to enforce the relief it seeks in proceeding CIV 2017-404-1035 it would ordinarily have to satisfy the

3      The plaintiff is a defendant in CIV 2017-404-1035 and a counterclaim plaintiff. For convenience I will continue to refer to it as the plaintiff which is what it is in this proceeding. It wants to amend its counterclaim in CIV 2017-404-1035 to include further complaints, which it also relies upon to justify its refusal to agree to the discharge of the 2017 charging order.

4      High Court Rules r 17.41.

requirements of r 17.41 before it could obtain a charging order before judgment. Here, it seemingly attempts to improve on that position by simply refusing to agree to the discharge of the 2017 charging order, which it obtained for the benefit of the third and fourth defendants.

[11]             However, the matters of established complaint in this proceeding have now been remedied by the judgment sum ordered by Katz J. Payment of the judgment sum and the additional sums properly secured under the 2017 charging order has extinguished liability for those complaints. Insofar as the plaintiff may view the conduct underlying those complaints as ongoing, this is something that is presently unproven. And insofar as the plaintiff has fresh complaints to bring against the first and second defendants, once again such complaints are unproven. Until the allegations made in CIV 2017-404-1035 are successfully proved and a sealed judgment to that effect is issued, such allegations cannot support a charging order being granted without leave of the Court. There is no basis for the plaintiff to keep the 2017 charging order alive.

[12]             Accordingly, the plaintiff’s refusal to agree to the discharge of the 2017 charging order is without foundation. Indeed, for the reasons already given, such refusal is unreasonable, oppressive and an abuse of this Court’s process. This is particularly made clear by the plaintiff’s position that if the first and second defendants agree to the amendment of the plaintiff’s counterclaim in CIV 2017-404-1035 (the setting down date has past), then the plaintiff will consent to the discharge of the 2017 charging order. Moreover, I note that the plaintiff’s argument in support of maintaining the 2017 charging order for use in CIV 2017-404-1035 omits reference to any rule of procedure or relevant authority that supports their stance, which further suggests it lacks foundation.

[13]             In short, the plaintiff is in no position to bargain about the discharge of the 2017 charging order. Now that the fourth defendant has been paid all the moneys the 2017 charging order secured (which the plaintiff accepts), there is no basis for this charging order to remain in force.

[14]             If the plaintiff wants to make further claims against the first and second defendants in CIV 2017-404-1035, which is yet to be determined, the plaintiff must comply with the requirements for obtaining charging orders before judgment before it can enjoy the benefit of a charge on the first and second defendants’ property.

[15]             Accordingly, I am satisfied there is no proper basis for the opposition to the application to discharge the charging order. It follows that this order is discharged.

[16]             The first and second defendants understandably sought costs against the plaintiff on a solicitor client basis. This was made clear in their application for discharge. Thus, the plaintiff has been on notice of this risk. The parties have leave to file memoranda on costs, and should address whether costs should be awarded on the basis sought by the first and second defendants.

Result

[17]The charging order issued on 22 December 2017 is discharged.

[18]             The first and second defendants are to file costs memoranda by 24 August 2018.

[19]The plaintiff is to file costs memoranda in response by 7 September 2018.

[20]             The first and second defendants are to file any memoranda in reply by 14 September 2018.

Duffy J