Pepper New Zealand (Custodians) Limited v Busch
[2013] NZHC 1335
•7 June 2013
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2012-419-1230 [2013] NZHC 1335
BETWEEN PEPPER NEW ZEALAND (CUSTODIANS) LIMITED Plaintiff AND
PATRICIA ELAINE BUSCH First Defendant
MEGAN BUSCH Second Defendant
Hearing: 31 May 2013 Counsel:
Appearance:
KF Lee for plaintiff
PE Busch, first defendant in person
Judgment:
7 June 2013
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for stay of execution of judgment]
This judgment was delivered by me on 7 June 2013 at 10am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: McVeagh Fleming, Auckland 1140
P Busch, Karapiro
PEPPER NEW ZEALAND (CUSTODIANS) LTD v BUSCH [2013] NZHC 1335 [7 June 2013]
The application
[1] The first defendant applies for an order that the judgment I delivered on
13 February 2013 be stayed. The application refers to an appeal to the Court of Appeal. I have assumed, for the purposes of this judgment therefore, that this is an application made in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. Although the application refers to r 24.10, it is clear that Part 24 of the High Court Rules has no application, as that part deals with insolvency matters.
The judgment
[2] My judgment ordered that the defendants shall, within 21 days of the date of delivery of the judgment, vacate and deliver up possession of the property at
41 Karapiro Road, Cambridge, being that parcel of land containing 25.1730 hectares more or less, being Lot 2 on Deposited Plan 35819 and described in computer freehold registered identifier SA31D/336 (South Auckland Registry).
The grounds in support of the application
[3] It is necessary to consider a number of documents to ascertain all the grounds that are apparently advanced in support. In summary, the defendant submits:
(a) An appeal has been filed with the Court of Appeal; (b) It is just that a stay be granted;
(c) At the time the first defendant sold her property to Ms Elizabeth Mary Lambert on 21 January 2012, she was not in default under her mortgage;
(d)Likewise, she was not in default at the time she entered into a 99-year term lease with Ms Lambert or, for that matter, at the time a subsequent 95-year sublease was entered with her daughter;
(e) Her daughter, the second defendant, is not a mortgagee and holds a valid sublease pursuant to the lease;
(f) The first defendant resides at the property with her daughter and, allegedly, is a guest of her daughter;
(g)If the order is not stayed she will have to find alternative accommodation for her daughter and herself and certain animals;
(h) She did not sign the memorandum of terms of mortgage; and
(i)The memorandum of mortgage terms contains no provision allowing the plaintiff to take possession of the land that is subject to the mortgage.
The court’s approach to a stay application
[4] The application is made in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. Of particular significance are subrules 3 and 4 which provide:
(3) Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on application,—
(a) order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or
(b) grant any interim relief.
(4) An order or a grant under subclause (3) may—
(a) relate to execution of the whole or part of the decision or to a particular form of execution:
(b) be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.
[5] I am required to balance two principles. First, a successful litigant should not be deprived of the fruits of his or her litigation. Secondly, an appellant should not be deprived of the fruits of a successful appeal: Duncan v Osborne Building Ltd.1
[6] However, in balancing the two principles, the courts have considered a
1 Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.
number of matters. They include:2
a) Whether, if no stay is granted, the appellant’s right of appeal will be rendered nugatory;
b) Whether the successful party will be injuriously affected by the stay; c) The bona fides of the applicants as to the prosecution of the appeal; d) The effect on third parties;
e) The novelty and importance of questions involved;
f) The public interest in the proceeding;
g) The overall balance of convenience and the status quo; and
h)Whether the appellant has demonstrated a sufficiently arguable point to be considered on appeal.
Background
[7] The background to this case is set out in [13]–[21] of the judgment of
13 February 2013.3 I adopt that summary and therefore do not repeat it.
The plaintiff ’s position
[8] The plaintiff submits that the first defendant’s intended appeal is devoid of
merit and lacks any reasonable prospect of success because:
(a) The first defendant’s position on appeal fails to address the plaintiff’s
paramount rights and powers as registered mortgagee, protected by
2 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 at [9], Videbeck v Auckland City Council HC Auckland M 1053-sw02, 21 October 2002 at [7]. The above factors were cited with approval by the Court of Appeal in Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].together with an additional factor, namely the apparent strength of the appeal..
3 Pepper New Zealand (Custodians) Ltd v Busch [2013] NZHC 187.
the principle of indefeasibility conferred upon it by ss 62 and 106 of the Land Transfer Act 1952; and
(b)The first defendant’s actions in purporting to sell the property, or sell possession of the property, without consent of the plaintiff as registered mortgagee has no effect on the plaintiff’s indefeasible rights and powers which take priority over the interests possessed by the first and the second defendant and any purported transferee of those rights.
[9] Ms Lee submitted that the plaintiff should be entitled to receive and enforce the benefits of the judgment for vacant possession. She noted that the first defendant has neither proposed nor offered any acceptable form of security for the plaintiff’s judgment. In addition, she noted the first defendant could provide no security in the event that her appeal failed. She noted that the first defendant, under any capacity either as mortgagor or as tenant, is paying nothing in respect of the occupation that is currently being enjoyed. The plaintiff seeks an order for possession so that it can facilitate a sale of the property under its entitlement to exercise its power of sale as mortgagee.
A consideration of factors relevant to the appeal
[10] Ms Lee accepted that if the present application for stay is refused, then the first defendant’s appeal will be rendered largely nugatory. However, this is by no means a decisive factor. That is particularly so when one considers the overall position and the lack of any real merit in the appeal and any real prospect of success. Ms Lee referred me to Philip Morris (New Zealand) Ltd v Liggett & Myers Tobacco Co (NZ) Ltd as an example of a case where a stay of execution was refused, even
though it had the effect of rendering the appeal nugatory.4 In Palmerston North City
Council v Birch Associate Judge Gendall refused a stay of execution of an order for possession against a former mortgagee.5
4 Philip Morris (New Zealand) Ltd v Liggett & Myers Tobacco Co (NZ) Ltd [1977] 2 NZLR 41 (CA).
5 Palmerston North City Council v Birch [2012] NZHC 3248.
[11] I next consider whether the successful party will be injuriously affected by a stay. This is a case where the first defendant is in default of her mortgage obligation and has been since March 2012. She has paid nothing whatsoever to the plaintiff in that time. She has free use of the property, not only to live but also to graze her livestock. There is no evidence that she has sufficient equity in the property to arrange any other form of finance to retain the property. The charges for rates and, of course, the costs of legal representation in relation to this case are continuing to be incurred. In my view, the plaintiff will be injuriously affected by the stay.
[12] I next consider the bona fides of the appeal. Counsel advises that the notice of appeal was filed on 18 February 2013. Security for costs has not been paid. No acceptable form of security has been provided. I was told that there is an application to review a Registrar’s decision refusing to grant a dispensation from security, but that apparently has not yet been resolved.
[13] I next consider the position of third parties. There is a second mortgagee involved in this case. It clearly will be affected by delay.
[14] I next consider the novelty and importance of the questions involved. There is, in fact, no degree of novelty in the position advanced by the first defendant in this case.
[15] Ms Lee, in her carefully prepared submissions, noted correctly the lack of relevance of the authorities referred to in Ms Busch’s materials in the following way:
43.1The Supreme Court decision in Westpac New Zealand Ltd v Clark [2009] NZSC 73 relates to a forged but registered mortgage and the effect of the forged mortgage and loan documents. There is no allegation of fraud made in this proceeding and therefore the decision is of no relevance.
43.2The High Court decision of Isaac Construction Company Ltd v McDonald (1997) 3 NZConvC 192,523 (HC) whereby Holland J found that the defendant had an equitable interest in the land was overturned on appeal. Isaac Construction Company Ltd v McDonald (1998) ANZ ConvR 499.
43.3In the High Court decision of James v Oamaru Licensing Trust HC Timaru AP4/03, 23 May 2003, John Hansen J held that there had been no default capable of remedy. However, in the present
proceeding there clearly has been a monetary default – Ms Busch failed to pay her mortgage repayments due under the loan.
43.4Further it is unclear why Ms Busch has relied upon Associate Judge Bell’s decision in Waterhouse v Westpac New Zealand Ltd [2012] NZHC 1578. The decision does not support Ms Busch’s arguments. If anything, it reinforces the plaintiff’s submission that as holder of a registered first mortgage, it has an interest that takes priority over any interest that the defendants might assert in the property.
[16] In addition, Ms Busch made reference to the Treaty of Waitangi. I will not analyse that further because the argument was put up by the person who has assisted Ms Busch with this case, Ms Elizabeth Lambert, in ASB Bank Ltd v Lambert when the argument was dismissed.6
[17] The papers also refer to the doctrine/statute of quia emptores. Clearly, the doctrine has no relevance to this case. Ms Lee correctly submitted that quia emptores ceased to have effect as part of the laws of New Zealand pursuant to s 365(1) of the Property Law Act 2007. As such, s 5 of the Imperial Laws Application Act 1988, which is relied upon by the first defendant, is not applicable and is of no relevance to the current proceedings.
[18] Ms Busch next refers to the fact that the memorandum of mortgage does not contain a provision which allows a mortgagee to take possession. The answer to that is to be found in s 106 of the Land Transfer Act 1952, which allows for a mortgagee to enter into possession on the mortgagor’s default.
[19] Ms Busch further referred to the fact that she did not sign the mortgage terms. When one considers the mortgage instrument that was signed by Ms Busch, it clearly refers to and incorporates the mortgage terms. There is no substance in this argument either.
[20] There is no issue of public interest in this proceeding.
[21] If I consider the balance of convenience, it is in favour of declining the application for stay.
6 ASB Bank Ltd v Lambert [2013] NZHC 947.
[22] This case is an attempt to challenge the principle of indefeasibility. I dealt with the position in [28] of the judgment of 13 February 2013.
Conclusions
[23] When I weigh up all these matters, I reach the conclusion that a stay in this case is not justified and is therefore refused.
Costs
[24] Counsel asked that I reserved costs. I record that the hearing involved approximately a quarter of a day’s time. The case clearly is Category 2 case. If counsel and Ms Busch cannot agree on the appropriate cost orders, memoranda in
support, opposition and reply shall be filed and served at seven-day intervals.
JA Faire
Associate Judge
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