Ryan v Lobb
[2023] NZHC 2452
•1 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001591
[2023] NZHC 2452
BETWEEN VERENA COLLEEN RYAN
First Plaintiff
DIGBY JOHN NOYCE
Second PlaintiffAND
STUART JAMES LOBB
First Defendant
LOCKHART TRUSTEE SERVICES NO. 56 LIMITED
Second DefendantWAG TRUSTEES (2020) LIMITED
Third Defendant
Hearing: 24 August 2023 Appearances:
No appearance by or on behalf of the First Plaintiff H L Thompson for Second Plaintiff
R J Latton for First and Third Defendants
No appearance by or on behalf of the Second DefendantJudgment:
1 September 2023
JUDGMENT OF POWELL J
This judgment was delivered by me on 1 September 2023 at 4.30 pm pursuant to
r 11.5 of the High Court Rules
…………………..
Registrar/Deputy Registrar
Solicitors/Counsel:
Patterson Hopkins, Auckland
McMahon Butterworth Thompson, Auckland
VERENA COLLEEN RYAN v STUART JAMES LOBB [2023] NZHC 2452 [1 September 2023]
[1] The third defendant, WAG Trustees (2020) Limited (“WAG”), has applied for a stay of execution of part of a judgment of Edwards J issued on 19 June 2023 (“the 19 June 2023 judgment”).1
Background to the stay application
[2] The background to the 19 June 2023 judgment was summarised by Edwards J in the following terms:2
[1] The primary asset of the Lothbury Trust [“Trust”] is the former family home located in Remuera, Auckland [“Property”]. Mr Lobb lives in the Property with his father and daughter.
[2] A receiver was appointed to the Trust in July 2020 and all three trustees were removed. A short time later, WAG Trustees (2020) Ltd (WAG) took assignment of a mortgage from Westpac Bank (Westpac) registered over the Property [“Mortgage”]. WAG is the sole trustee of a family trust associated with Mr Lobb’s father.
[3] WAG says the Mortgage secures a loan made to Mr Lobb personally which was used to discharge a debt owed to Westpac by Mr Lobb and Ms Ryan. The receiver disputes that position, contending that the Mortgage does not secure any obligation at all.
[4] By judgment dated 6 April 2023 [“the judgment of Hinton J”], this Court ordered Mr Lobb to give vacant possession of the Property and directed the receiver of the Trust to sell it. Directions regarding the distribution of the sale proceeds were also made, and leave was reserved to the receiver to seek further orders, including in relation to the Mortgage.
[5]There are two applications determined in this judgment:
(a) An application by the receiver of the Trust for declarations and an order discharging the Mortgage.
(b) An application by Mr Lobb to stay the [judgment of Hinton J] pending determination of an appeal.
(Footnotes omitted).
[3] Having considered the issues Edwards J confirmed that the registered proprietors of the Property did not owe any money or other obligations to WAG and the mortgage held by WAG “does not secure the repayment of any debt or the performance of any obligation whether of the registered proprietors of the Property or
1 Ryan v Lobb [2023] NZHC 1518.
2 At [1]–[5].
Mr Lobb or at all”.3 Her Honour also directed Mr Lobb to “take all reasonable steps without delay to discharge the Mortgage”, and reserved leave for the receiver (the second plaintiff, Mr Noyce) to seek further orders from the Court in the event a discharge of the Mortgage was not obtained within a reasonable time.4 Mr Lobb’s application for a stay of the judgment of Hinton J was also dismissed.5
[4] WAG subsequently filed an appeal against the findings in relation to the Mortgage but the refusal to grant a stay was not appealed.
[5] No steps to register a discharge of the mortgage were taken following the 19 June 2023 judgment. As a result the receiver sought an order that WAG discharge the mortgage within five working days of the grant of the order, failing which the Registrar of this Court would execute a discharge of the mortgage on behalf of WAG. After a further hearing Edwards J made an order giving effect to [94(b)] of the 19 June 2023 judgment. Specifically the order made pursuant to [94(b)] was to have effect as if it were a duly executed mortgage discharge instrument under s 83 of the Property Law Act 2007 (“the Mortgage Discharge Order”). Her Honour directed that this order lie in Court pending determination of WAG’s application for stay of the 19 June 2023 judgment.
[6] In advance of the hearing of the stay application the receiver made an open offer with the intention of obviating the need for WAG to pursue the stay application. Specifically the receiver offered on an open basis to consent to orders in the following terms:
(a)Promptly following settlement of his sale of the Property, the Receiver will pay [WAG], in cleared funds, without deduction, in the sum of
$1,400,000, as contemplated in [the judgment of Hinton J].
(b)In addition to paying [WAG] the sum of $1,400,000 referred to in (a) above, the Receiver will, after first implementing order no.5, listed at
[176] of [the judgment of Hinton J], withhold from net proceeds of the sale of the Property a further amount (“the Stakeholder Amount”), being the sum of:
3 At [94(a)] and [94(b)].
4 At [94](c) and [94(d)].
5 At [95].
(i) $105,963.75, which is the difference between the sum of
$1,505,963.75 (being the total amount advanced by [WAG] to [Mr Lobb]6 under a deed dated 3 September 2020) and the sum of $1,400,000; and
(ii) Whatever sum is due (as at the date of settlement of the Receiver’s sale of the Property) to Norfolk Nominees Limited by [WAG], by way of accrued interest (including interest paid to Norfolk Nominees by [WAG] – but not interest paid by Mr Lobb – and further accrued but unpaid interest) on the sum of $1,363,535.75 advanced by Norfolk Nominees Limited to [WAG] and on-lent by [WAG] to Mr Lobb provided that –
(iii) If the remaining net sale proceeds are less than the sum of the amounts in (i) and (ii) above, then the Stakeholder Amount will be that lesser amount.
(c)Either the Receiver or his Solicitors must hold the Stakeholder Amount in an interest bearing trust account pending the determination of [WAG’s] appeal in CA 388/2023, whereupon the Receiver must deal with the Stakeholder Amount and any accrued interest on the Stakeholder Amount, in accordance with the Court of Appeal’s judgment.
(d)The Mortgage Discharge Order is hereby released, with the effect that the Receiver may now use it to discharge [WAG’s] mortgage over the Property without any further delay or requirement.
WAG’s submissions on the stay application
[7] Although unsuccessful in preventing a hearing of the stay application, the offer by the receiver significantly reduced the ambit of that application. In the end Mr Latton on behalf of WAG did not attempt to argue that a stay was necessary but simply sought as amendments to the orders offered by the receiver:
(a)That WAG considered the withheld sums (being the amounts other than the $1,400,000 to be paid out to WAG following settlement) should be withheld out of both Ms Ryan and Mr Lobb’s shares rather than just out of Mr Lobb’s as proposed by the receiver; and
(b)that the proposed orders drafted by the receiver “would release the sums withheld in the event that [WAG] authorises it to do so”.
6 It is noted that there is an error in the receiver’s memorandum dated 22 August 2023 which refer to the first plaintiff (Ms Ryan) rather than the first defendant (Mr Lobb). See Ryan v Lobb, above n 1 at [16] and [17]
[8] Mr Latton accepted that the receiver was bound by [176(5)] of the judgment of Hinton J which directed the receiver as follows:7
50 per cent of the sum reached by deducting from the gross sale price [of the property] only the costs of sale, the receiver’s costs and the sum of $1.4 million is to be paid to the Verena Ryan Family Trust.
[9] While accepting that this order was binding on the receiver, Mr Latton submitted it was open for this Court to direct that the withheld sums also be deducted from the gross sale price and be held pending the outcome of WAG’s appeal. In the event that such an order was not made, Mr Latton submitted “there is a high risk that [WAG’s] appeal would be rendered nugatory if the Withheld Sums were only withheld from the first defendant’s share of the net proceeds of sale”.
[10] On the second, and more minor issue Mr Latton simply submitted that “it must be the case that the receiver would release the sums withheld [to Mr Lobb], in the event [WAG] authorises [the receiver] to do so”.
Discussion
[11] Given the limited nature of the argument before me it is immediately apparent that there is no possible basis to stay the 19 June 2023 judgment. I also conclude that while there is merit in making the orders proposed by the receiver, so as to give certainty to WAG, there is likewise no basis to vary those orders in the manner proposed by Mr Latton.
[12] First, the application for stay was made by WAG to protect WAG’s position pending its appeal of the 19 June 2023 judgment. As Mr Latton explained, in addition to the $1.4 million identified by Hinton J in her Honour’s judgment, there is an argument that WAG is entitled to the additional sums that the receiver has now proposed to withhold. There is no dispute that those additional sums claimed are now protected by the orders proposed by the receiver and WAG’s position is therefore secured. In such circumstances there can be no question about WAG’s appeal being rendered nugatory. The fact that the security for WAG’s position effectively comes out of Mr Lobb’s share out of the net sale proceeds of the Property is not relevant to
7 Ryan v Lobb [2023] NZHC 689 at [176].
the issue of whether WAG’s position is protected. Indeed as Mr Thompson submitted on behalf of the receiver, WAG has previously accepted that the monies borrowed by WAG were advanced to Mr Lobb and the proposed orders reflect that position.8
[13] More fundamentally, as I discussed with Mr Latton at the hearing, it is difficult to see any jurisdictional basis to withhold monies out of Ms Ryan’s share under the guise of an application for a stay of the 19 June 2023 judgment. On the contrary and as the background section to this judgment makes clear, the principal amendment sought by WAG to the receiver’s proposed orders has nothing to do with the 19 June 2023 judgment at all. Instead it appears to be an attempt to stay part of the judgment of Hinton J to which WAG was, at that time, not even a party. Moreover, as already noted, an application by Mr Lobb to stay the judgment of Hinton J was dismissed by Edwards J as part of the 19 June 2023 judgment, and that part of her Honour’s judgment has not been appealed. In addition, although Mr Lobb had appealed the judgment of Hinton J, on 8 August 2023 the Court of Appeal notified the parties that Mr Lobb’s appeal had been abandoned as a result of Mr Lobb failing to file his case on appeal. As a result in addition to the application for stay having been dismissed there is at the present time not even an extant appeal against the judgment of Hinton
J. Given that position there can be absolutely no justification for altering the order made by Hinton J at [176(5)] so as to withhold any part of the amounts payable to Ms Ryan.
[14] There is more merit in Mr Latton’s other proposed amendments as a matter of logic, including that the withheld sums must, depending on the outcome of the appeal, be payable to either Mr Lobb or WAG. However, given the extent of the litigation to date I consider a safer course for the protection of all parties is that the withheld sums are not to be paid out until further order of the Court.
Decision
[15]The application for stay by WAG is dismissed.
8 See Ryan v Lobb, above n1 at [16] and [17]
[16] Costs are payable on the application. It will be apparent from the forgoing analysis that given the orders proposed by the receiver and the lack of connection between the application for stay of the 19 June 2023 judgment and the substantive amendment sought to the judgment of Hinton J, the stay application was entirely without merit. I therefore agree with Mr Thompson of r 14.6(3)(b)(ii) and (v) of the High Court Rules 2016 are engaged such that increased costs are appropriate. I therefore order WAG to pay the costs of the stay application on a 2B basis, uplifted by 20 per cent. In the event that the figure is not able to be agreed between the parties, memoranda are to be filed within three weeks of the date of this judgment and I will determine any issue arising on the papers.
[17] Notwithstanding the dismissal of the stay application, I consider the orders proposed by the receiver are in any event appropriate and make the orders as follows:
(a)Promptly following settlement of his sale of the roperty, the receiver will pay WAG, in cleared funds, without deduction, in the sum of
$1,400,000, as contemplated in the judgment of Hinton J, delivered on 6 April 2023.
(b)In addition to paying WAG the sum of $1,400,000 referred to in (a) above, the receiver will, after first implementing order number 5, listed at [176] of the judgment of Hinton J, withhold from net proceeds of the sale of the Property a further amount (“the Stakeholder Amount”), being the sum of:
(i)$105,963.75, which is the difference between the sum of
$1.505.963.75 (being the total amount advanced by WAG to the first defendant under a deed dated 3 September 2020) and the sum of $1,400,000; and
(ii)Whatever sum is due (as at the date of settlement of the receiver’s sale of the Property) to Norfolk Nominees Limited by WAG, by way of accrued interest (including interest paid to Norfolk Nominees by WAG — but not interest paid by the first
defendant — and further accrued but unpaid interest) on the sum of $1,363,535.75 advanced by Norfolk Nominees Limited to WAG and on-lent by WAG to the first defendant provided that
—
(iii)If the remaining net sale proceeds are less than the sum of the amounts in (i) and (ii) above, then the Stakeholder Amount will be that lesser amount.
(c)Either the receiver or his solicitors must hold the Stakeholder Amount in an interest bearing trust account pending the determination of WAG’s appeal in CA 388/2023, whereupon the receiver must deal with the Stakeholder Amount and any accrued interest on the Stakeholder Amount, in accordance with the Court of Appeal’s judgment, or if the appeal is abandoned, upon the further order of this Court.
(d)The Mortgage Discharge Order is hereby released from the date of this judgment, with the effect that the receiver may now use it to discharge WAG’s mortgage over the Property without any further delay or requirement.
[18] Finally, as discussed with the parties I confirm the following timetable orders made by consent at the hearing of the stay application which relate to the receiver’s application for further directions concerning Mr Lobb:
(a)That the first defendant’s notice of opposition and affidavit/s in support be filed and served by 5 pm on Wednesday 30 August 2023;
(b)That any reply affidavit/s be filed and served by 5 pm on Wednesday 6 September 2023; and
(c)That a half day fixture be allocated for the first available date after 17 September 2023, with synopses and bundles to be filed and served in accordance with r 7.39 of the High Court Rules 2016.
Powell J
4