Re Far North District Council

[2021] NZHC 329

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2020-488-106

[2021] NZHC 329

UNDER

section 110 Property Law Act 2007 and the High Court’s inherent jurisdiction

IN THE MATTER

of an application for an order for redemption

BETWEEN

FAR NORTH DISTRICT COUNCIL

Applicant

Hearing:	On the papers
Counsel:	C Martin for the Applicant
Judgment:	1 March 2020

JUDGMENT OF GAULT J

This judgment was delivered by me on 1 March 2020 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr C Martin, Henderson Reeves Connell Rishworth Lawyers Ltd, Whangarei

RE FAR NORTH DISTRICT COUNCIL [2021] NZHC 329 [1 March 2020]

[1]    The Far North District Council (FNDC) seeks to discharge a mortgage over a property at 4 Te Kahikatoa Peninsula Road, Kaeo (the property).1 FNDC applies without notice for permission to commence this proceeding by way of originating application. The substantive proceeding seeks the following orders in the alternative:

(a)a declaration that all amounts secured by the mortgage have been paid in full, under ss 109 and 110 of the Property Law Act 2007 (the Act); or

(b)an order that the mortgage be discharged, with that order having the same effect as a duly executed mortgage discharge instrument under   s 83 of the Act, pursuant either to s 111 of the Act or the Court’s inherent jurisdiction.

Background

[2]    FNDC is the current owner of the property, which was vested in it when it succeeded the Whangaroa County Council (WCC).2

[3]    The relevant mortgage registered against the title to the property dates back to 1974.3 The mortgagees, Mr William John Cameron Bond and Mr George Ernest John Hutcherson, together with Mrs Mary Froude Bond, had purchased the land and operated the Tauranga Bay Motor Camp on it. When they decided to retire, they decided to sell the property to WCC at a reduced price as a gift with the intention that it remain a motor camp rather than be split up for residential or commercial development.

[4]    The mortgagees reached an agreement with WCC whereby the property was transferred to WCC and in return a mortgage was secured against the title in favour of the mortgagees. The mortgage secured a $52,550 debt plus interest, and the mortgagees were to be paid half-yearly instalments of $1,800.

1      More particularly described as Part Lot 1 Deposited Plan 54531, record of title NA26B/334.

2      The Local Government (Northland Region) Reorganisation Order 1989.

3      Memorandum of Mortgage 314246.3. As a result of the Local Government (Northland Region) Reorganisation Order 1989, any reference to WCC in any instrument or other document is to be read as a reference to FNDC.

[5]    Clause 18 of the mortgage agreement provided that notwithstanding that the amount owing under the mortgage shall not have been paid, the mortgagor’s liability for payment shall immediately cease and determine and the mortgagor shall be entitled to a discharge of the mortgage at the date of the death of the last surviving mortgagee and of Mrs Bond, subject only to:

(a)the liability of the mortgagor to remedy any antecedent breach of the mortgage; and

(b)the mortgagor paying upon demand any death, succession or other duties.

[6]    Mrs Bond died on 6 September 2004, Mr Bond died on 2 February 2005 and Mr Hutcherson died on 28 November 2006. Following their deaths, a discharge of the mortgage was provided to WCC – but it was never registered and now cannot be found.

[7]    FNDC wishes to have the mortgage discharged so it can grant a new registered lease to the current operator.

Leave to commence proceeding by originating application

[8]    This proceeding is not of a kind that can be commenced by way of originating application as of right pursuant to rr 19.2 to 19.4 of the High Court Rules 2016. However, under r 19.5, the Court may permit any proceeding to be commenced by way of originating application if this would be in the interests of justice.

Such permission may be sought without notice.4

[9]    As submitted by Mr Martin, counsel for FNDC, I consider it is in the interests of justice for this  matter to proceed by  way of  originating application.   There is    in reality no opposing party and a full statement of claim is not required.5 The mortgagees and Mrs Bond died many years ago, and clause 18 of the mortgage is clear. Indeed, a discharge of mortgage was provided at the time.

4      High Court Rules 2016, r 19.5(2).

5      Jones v HW Broe Ltd (1989) 5 PRNZ 206 (HC) at 207.

[10]   Accordingly, I grant leave to commence this proceeding by way of originating application. I also accept Mr Martin’s submission that there are no other interested parties and so dispense with service.

Substantive relief

[11]   It is appropriate to deal with the substantive application on the papers now, given it relates to a non-contentious and essentially procedural matter.

[12]   Section 109 of the Act provides that a mortgage may be discharged under     ss 110 and 111 if a person who is entitled to receive payment of the amounts secured by the mortgage is dead. Section 110 provides that the Court may make an order to determine the amounts secured by the mortgage (and order that amount be paid into Court) or an order declaring that all amounts secured by the mortgage have been paid in full. Section 111 provides that a sealed copy of an order declaring that all amounts secured by the mortgage have been paid in full has effect as if it were a duly executed mortgage discharge instrument under s 83. In Country Hospitality Management (NZ) Ltd v McCullough, s 109 did not apply but Woodhouse J considered the Court has power to make an order that will have the same effect as a duly executed mortgage discharge instrument either under s 111 or the Court’s inherent jurisdiction where the total amount owing and secured by the mortgage had been paid and the defendants had failed or refused to provide a discharge of the mortgage.6

[13]   Here, FNDC no longer holds records confirming that all amounts secured by the mortgage were repaid in full and that FNDC otherwise discharged its obligations. However, Mr Fountain, who was the solicitor acting for the mortgagees, confirms that he provided a discharge to FNDC in 2006. To the best of his knowledge and belief, FNDC faithfully discharged its obligations under the mortgage agreement, and no taxes were incurred that would have been payable by FNDC pursuant to clause 18.

[14]   In those circumstances, whether or not all amounts secured by the mortgage had been repaid in full, I am satisfied that FNDC was entitled to a discharge pursuant to clause 18 of the mortgage, that a discharge was indeed provided, and that the Court

6      Country Hospitality Management (NZ) Ltd v McCullough [2012] NZHC 818 at [5]-[7].

has power under the Act or its inherent jurisdiction to make an order that will have the same effect as a duly executed mortgage discharge instrument under s 83. I accept that FNDC is entitled to a discharge of the mortgage.

Orders

[15]I make the following orders:

(a)granting leave to commence this proceeding by way of originating application; and

(b)that mortgage 314246.3 registered against the title to the property at   4 Te Kahikatoa Peninsula Road, Kaeo (Part Lot 1 Deposited Plan 54531, record of title NA26B/334) be discharged.

Gault J