Public Trust v Gargan - [2013] NZHC 1058

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2013-470-8 [2013] NZHC 1058

IN THE MATTER OF an application for directions under the
Property Law Act 2007

BETWEEN PUBLIC TRUST Applicant

ANDIAN WALTER GARGAN AND ELIZABETH SUSANNE COLLINS- GARGAN
First Respondent

ANDELIZABETH MARY LAMBERT Second Respondent

Hearing: 22 April 2013

Appearances: F Collins for Applicant
No appearance for First Respondents
E Lambert Second Respondent in person

Judgment: 10 May 2013

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on
10 May 2013 at 5 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Gibson Sheat, Wellington – finn.collins@gibsonsheat.com
Ms E Lambert - lizlambert@hotmail.com

Copy:
Mr and Mrs Gargan, Tauranga

PUBLIC TRUST V GARGAN AND ANOR HC TAU CIV-2013-470-8 [10 May 2013]

Background

[1] Public Trust applies for directions under the Property Law Act 2007 (“the Act”) as to the payment of the net surplus proceeds of sale held by them following a mortgagee sale of property at Wintrebre Lane, RD 1, Tauriko, Tauranga. It is necessary to provide the factual background to this proceeding in order to make directions.

[2] The property at Wintrebre Lane had belonged to Mr and Mrs Gargan, the first respondents. This property was security for a loan owed by the Gargans to Public Trust. The Gargans became liable to repay that loan on 3 October 2011. They did not pay and subsequently the Public Trust issued notices, personally served on the Gargans on 12 December 2011, pursuant to s 119 of the Act making demand for the amount in default. Defaults were to be remedied by 3 February 2012. The defaults were not remedied. The Public Trust became entitled to exercise its power of sale over the property and subsequently entered into an agreement for sale and purchase on 9 May 2012, with settlement to occur 25 May 2012.

[3] However, without consent of Public Trust, on 23 April 2012, the Gargans sold the property to Ms Elizabeth Lambert, the second respondent, for $1. Included in the agreement was a term stating “the vendor and the purchaser agree that the vendor may purchase the fee simple back at any time for the sum of $1.00 ... any caveat on the title will be removed at that stage. Vendor retains the title, no conveyance.”

[4] On 25 April 2012, the Gargans entered into a deed of lease with Ms Lambert for 99 years and agreed to pay rent annually. On 30 April 2012, Ms Lambert then registered a caveat, claiming her interest was possession pursuant to the before mentioned sale and purchase agreement. The Public Trust applied to remove the caveat which was unopposed due to Ms Lambert being adjudicated bankrupt on 28
May 2012. The caveat was removed 25 June 2012. On 15 July 2012, the Gargans then purported to buy back the property from Ms Lambert for $1.

[5] Neither the sale to Ms Lambert nor the purported buy back by the Gargans was done…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Public Trust v Gargan

Details

AGLC: Public Trust v Gargan [2013] NZHC 1058
Case: [2013] NZHC 1058
Decision Date: 10 May 2013

CaseChat Overview and Summary

The case of Public Trust v Gargan involved an application for directions under the Property Law Act 2007, brought by the Public Trust against Ian Walter Gargan, Elizabeth Susanne Collins-Gargan, and Elizabeth Mary Lambert. The Public Trust sought directions regarding the payment of the net surplus proceeds of a mortgagee sale of a property located at Wintrebre Lane, RD 1, Tauriko, Tauranga. The Gargans had sold the property to Lambert without the Public Trust's consent, and the Public Trust subsequently sold the property to a third party. After satisfying its mortgage, the Public Trust was left with a surplus of $142,676.91. The Gargans had refused to accept the surplus and provided no bank account details, while Lambert filed a notice of opposition and affidavit in support, arguing against the Public Trust's entitlement to the surplus. The central issues in the case were whether the Public Trust was required to cancel the buyback arrangement entered into with Lambert, and whether the Public Trust was required to issue fresh notices under the Act before exercising its power of sale.

The Court found that the Public Trust was not required to cancel the buyback arrangement as it did not consent to the sale to Lambert, and therefore the lease was not binding on the Public Trust. The Court also determined that the Public Trust was not required to issue fresh notices under the Act before exercising its power of sale, as the Gargans did not enter into transactions with Lambert until after the notices had expired. The Court concluded that the sale to the successful purchaser was valid and gave that purchaser indefeasibility of title. The Gargans were the only people entitled to the surplus proceeds of the mortgagee sale. The Court found that the Public Trust held the surplus proceeds on trust for the Gargans, pursuant to s 185(1)(f) of the Property Law Act 2007. The Court ruled that s 77 of the Trustee Act 1956 could be applied in this case, as it would address the situation where a mortgagor can be found but refuses to take money they are rightfully entitled to.

In conclusion, the Court granted the Public Trust's application for directions and ordered that the Public Trust deal with the unclaimed surplus in accordance with s 77 of the Trustee Act 1956. The parties were required to confer concerning the matter of costs and disbursements on the application, and if they were unable to agree, they were to file memoranda not exceeding four pages in length for each party within 21 days from the date of the judgment.

Orders