Moggridge v Parsons

[2012] NZHC 1252

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-188 [2012] NZHC 1252

BETWEEN  ALAN JOHN MOGGRIDGE AND JENNIFER MOGGRIDGE Applicants

ANDTIMOTHY DOUGLAS PARSONS AND KATRINA MARY HUDSON Respondents

Hearing:         6 June 2012

Counsel:         AJ Golightly for Applicants

No appearance by first named respondent

K Millard for Attorney-General (abides decision of the Court) Judgment:     6 June 2012

(ORAL) JUDGMENT OF LANG J

[on application for orders under s 200 of the Property Law Act 2007]

ALAN JOHN MOGGRIDGE AND JENNIFER MOGGRIDGE V TIMOTHY DOUGLAS PARSONS AND KATRINA MARY HUDSON HC WHA CIV-2012-488-188 [6 June 2012]

[1]      This  proceeding  concerns  a  residential  property  situated  at  23  Cockburn Street, Onerahi, Whangarei.  The respondents, Mr Parsons and Ms Hudson, are the owners of the property.   The applicants, Mr and Mrs Moggridge, are mortgagees. Mr and Mrs Moggridge now seek an order under s 200 of the Property Law Act

2007 (“the Act”) authorising them to purchase the property.

[2]      There appears to be no dispute that Mr Parsons and Ms Hudson owe Mr and Mrs  Moggridge  more  than  $300,000.    They  are  in  default  under  the  mortgage securing the advances, and Property Law Act notices have been served on them by substituted service authorised by this Court.

[3]      Mr Parsons has been served with the present proceeding, also by substituted service, but has taken no steps.  He apparently now lives in Australia.  Ms Hudson is bankrupt, and the Official Assignee has disclaimed her interest in the property.  As a consequence, her interest in the property is escheat to the Crown.   The Attorney- General has filed a memorandum indicating that he does not propose to take an active role in this proceeding, and will abide the decision of the Court.

[4]      The principles to be applied when the Court exercises its jurisdiction under s

200 of the Act are now reasonably well established.[1]    In short, the Court will only permit a mortgagee to acquire a mortgaged property when it is satisfied that the price that the mortgagee is prepared to pay for it reflects the best price that is reasonably attainable in respect of the property as at the time of acquisition.[2]    The purpose of this  approach  is  to  ensure  that  a  mortgagee  does  not  benefit  financially  at  the expense of the mortgagor.

[1] Re Canterbury Building Society (2009) 10 NZCPR 370 at [20] (HC); Lake Terrace Investments Ltd v Lakeland Enterprises Ltd (2009) 10 NZCPR 721 at [23] (HC); Condon v Southland Building Society (2010) 12 NZCPR 92 at [13] (HC).

[2] Condon, n 1 at [13].

[5]      In the present case, the last formal valuation of the property is dated 9 August

2010, and ascribed a value of $220,000 to the property.   That valuation assumes,

however, that required remedial work has been carried out on the property.   This work  was  necessary because  Mr Parsons  and  Ms  Hudson  carried out  extensive building work without the necessary building consents, and to a defective standard. This will require remediation before the property can be sold.  The cost of repairs is likely to be in the vicinity of $70,000.  Latest estimates by real estate agents put the value of the property at between $120,000 and $130,000.

[6]      Given the amount that Mr Parsons and Ms Hudson owe to Mr and Mrs Moggridge,  the value to be  ascribed  to  the  property is  somewhat  academic.    I propose, however, to adopt a conservative approach and to value the property at

$150,000.  This approach uses the valuation obtained in August 2010, but deducts from it the value of repairs necessary to place the property in a saleable condition.

[7]      I am satisfied that Mr Parsons and Ms Hudson have effectively abandoned the property, and that it will not be possible for Mr and Mrs Moggridge to realise their security until such time as they take possession of the property and carry out the necessary repairs to bring it up to a saleable standard.  Adoption of a sale price of

$150,000 ensures that the financial interests of Mr Parsons and Ms Hudson are not jeopardised.

[8]      I am therefore satisfied that is appropriate to grant permission to Mr and Mrs Moggridge to purchase the property using their power of sale under the mortgage for the sum of $150,000 and I make an order under s 200 of the Act accordingly.  The

purchase price may be set off against the amount owing under the mortgage.

Lang J

Solicitors:
Crown Law, Wellington

Marsden Woods Inskip & Smith, Whangarei